Philip Brooks' Patent Infringement Updates

ACLU's Chris Hansen Discusses Biotech Patent Ruling

The following is excerpted from a November 11, 2009 post at the Bulletproof Blog drawn from a recent interview with Chris Hansen, staff attorney with the ACLU First Amendment Working Group. In the interview, Mr. Hansen discusses the impact of the recent U.S. District Court ruling that a lawsuit challenging patents on human genes can move forward, as well as what this means for the biotech industry.  The suit is centered around the idea that patents on human genes violate the First Amendment and patent law because genes are “products of nature.”:

...the ACLU First Amendment Working Group,...scored a major victory on November 2 when the United States District Court for the Southern District of New York ruled that its lawsuit challenging patents on human genes can go forward.

Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office, et al., originally filed on May 12, charges that two patents on genes associated with hereditary breast and ovarian cancer are illegal. The patents, owned by the University of Utah Research Center, are licensed to Salt Lake City-based Myriad Genetics. Along with claims that the patents restrict scientific research and patient access to medical care, the suit contends that patents on human genes violate First Amendment and patent law because genes are "products of nature."

The American Civil Liberties Union was joined in the suit by the Public Patent Foundation, a not-for-profit affiliated with the Benjamin N. Cardozo School of Law.

What will be the impact of this case?

Chris Hansen: That depends on whether we win it or lose it. The next step is to try it in the U.S. District Court for the Southern District of New York. After that I would expect appeals all the way to the Supreme Court, which might well agree to hear a case of this magnitude.

The issue of whether human genes can be patented has been around a long time and it seemed the Patent Office had concluded the debate was resolved in favor of patent-holders. At the very least, Judge [Robert] Sweet’s decision not to dismiss should disabuse them of that notion.

If we succeed, the potential impact can best be measured by the fact that 20% of the genes in the human body are now patented. Among them are genes associated with Alzheimer's disease, muscular dystrophy, colon cancer, asthma, and many other illnesses

Read the full post here.

Tessera Technologies Provides Update on Legal Actions

The following is excerpted from a November 2, 2009 Business Wire item found at Trading Markets:

On Oct. 30, 2009, the International Trade Commission (ITC) announced that it will review portions of the Initial Determination by the Administrative Law Judge (ALJ) in the ITC action brought by Tessera against certain DRAM manufacturers and sellers. The Commission will review, among other things, whether the respondents infringed the Tessera patents asserted in the action. The Commission's Final Determination is scheduled to be issued by Dec. 29, 2009. The action is Investigation No. 337-TA-630 (DRAM ITC action).

The DRAM ITC action originated in December, 2007, when Tessera took legal action against Acer, Inc., Centon Electronics, Inc., Elpida Memory, Inc., Kingston Technology Co., Inc., Nanya Technology Corporation, Powerchip Semiconductor Corp., ProMOS Technologies Inc., Ramaxel Technology Ltd., Smart Modular Technologies, Inc., and TwinMOS Technologies, Inc. alleging patent infringement.

See the full item here.

TSMC vs. SMIC Ends with $200M Settlement

The following is excerpted from a November 9, 2009 Semiconductor International article by David Lammers:

Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC, Hsinchu, Taiwan) settled its trade secrets lawsuit with Semiconductor Manufacturing International Corp. (SMIC, Shanghai, China) today, with SMIC agreeing to pay $200M in cash and an undisclosed amount of stock and warrants to TSMC. Judge Steven Brick discharged the jury in the two-month-long civil trial in the California Superior Court in Oakland, Calif., saying that "unexpected news is not always bad."

Keker & Van Nest (San Francisco), the law firm which represented TSMC, said the court-approved settlement awards TSMC "$200M and an undisclosed amount of stock and warrants. The Court will maintain jurisdiction to enforce the judgment until it is finally satisfied. All the other terms of the Settlement are confidential."

While the detailed settlement terms are confidential, SMIC may disclose them in filings with securities regulators. In the case of the December 2005 settlement, SMIC divulged the terms several months later, both with the U.S. Securities and Exchange Commission (SEC), and with the Hong Kong stock exchange.

Read the full article here.

India Angered by Generic Drug Seizure

The following is excerpted from a November 4, 2009 article at the Bangkok Post:

India accused the European Union Wednesday of violating WTO norms by confiscating generic drugs made by Indian pharmaceutical companies, a report said.

The latest incident, which occurred October 19, related to the seizure by French customs officials of copycat anti-clotting tablets made by a Mumbai firm, the Press Trust of India said.

Shipment of the drug, clopidogrel, was destined for Venezuela, the news agency said. The customs authorities who seized the tablets alleged patent infringement.

"It (the confiscation of drugs) is a violation of existing WTO norms when it comes to shipments meant for a third country destination that are seized,'' Commerce Minister Anand Sharma said, according to the news agency.

India mostly exports off-patent generic drugs in conformity with the Trade Related Aspects of Intellectual Property Rights (TRIPS).

This was the 18th time generic drugs meant for developing countries had been confiscated during transit within the EU, although the manufacture of the drug in India and sale in the destination country were legal, Indian officials said.

Read the full article here.

TSMC Court Win a Major Blow to China's Biggest Chip Maker

The following is excerpted from a November 5, 2009 article by Dan Nystedt at Computerworld:

Taiwan Semiconductor Manufacturing (TSMC) has won a major victory over China's biggest chip maker in a court case that could have wide ranging implications for the loser.

A jury at the Superior Court of California in Alameda County voted in favor of TSMC in the case against Semiconductor Manufacturing International (SMIC). TSMC had sued SMIC in a case involving theft of trade secrets, patent infringement and breach of contract over a prior settlement between the two companies.

The next phase of the trial, to assess damages against SMIC, begins Thursday. The damages alone could be enough to force SMIC to seek a buy-out, according to Randy Abrams, research analyst at investment bank Credit Suisse.

TSMC could be awarded up to US$1 billion in damages, and could also win an injunction preventing infringing chips from entering the U.S., Abrams wrote in a research note. Since SMIC ended the third quarter of this year with US$500 million in cash and $1.1 billion in debt, a big financial penalty and an injunction would seriously crimp SMIC's ability to do business, he said.

Read the full article here.

Complex Patent Suits: The Use of Special Masters for Claim Construction

The following is excerpted from the above-titled article by Neil A. Smith (partner with Sheppard, Mullin, Richter & Hampton LLP) from the September/October 2009 print edition of the American Bar Association's Section of Intellectual Property Law's Landslide:

When a complex patent infringement case arises, it can be in the client’s or the court’s best interest to bring in an expert on patent law and technology—as a special master—to assist the judge. Special masters can provide value to all parties in complex patent litigation by contributing in the area of most complexity and importance: claim construction. Even though claim construction is reviewed de novo on appeal by the Federal Circuit, a recent study commissioned by the Federal Judicial Center has shown that claim constructions in complex patent cases stand up better on appeal when a special master was involved in the process.

The use of a special master in patent litigation is now an established practice. Since the founding of our government, U.S. courts have had an inherent authority to appoint special masters. Federal courts, where patent cases are exclusively held, enjoy statutory authority, under Federal Rule of Civil Procedure 53, to appoint a special master—though the question of whether recent changes to Rule 53 supersede a court’s inherent authority to appoint a special master is debated. Rule 53 empowers a judge to appoint a special master (1) upon consent of the parties; (2) to hold a trial proceeding and make or recommend factual findings on issues to be decided without a jury under “some exceptional conditions”; or (3) to address pretrial and post-trial matters that an available judge or magistrate judge could not effectively and timely address. However, courts prefer to assign a special master only when the parties agree, particularly because the parties may bear and share the special master’s cost.

Who are the special masters, and what experience and education do they have? Some persons serve as special masters occasionally and others serve more regularly. The recent study commissioned by the Federal Judicial Center suggested that nearly all individuals serving as special masters were attorneys possessing strong technical and legal training who often had previously served as law clerks to judges on the Federal Circuit. Special masters also possess substantial professional experience, having, on average, spent about years after law school in a variety of highly enriching legal contexts relating to patent and technology, and many have advanced degrees in law.30 Special masters, as a result, can add great value to a complex patent infringement case.

The full article is available to Section members here (or by subscription or purchase of this individual issue of Landslide for non-members).

Secret Details of Litigation Financing Deal

The following is excerpted from a November, 3, 2009 article by Alison Frankel at The Am Law Litigation Daily:

One of the frustrations of reporting on the rise of third-party litigation financing funds...is the secrecy surrounding the practice. For the most part, litigation investment funds disclose neither the individual cases they've put money into nor the size of their investments in specific cases.

That lack of transparency makes Joe Mullin's latest Patent Litigation Weekly column at IP Law & Business a journalistic coup. Mullin found court records of an ongoing breach of contract case between a small, Texas-based network-security company called DeepNines and the $250 million IP litigation financing veteran Altitude Capital Partners, which backed DeepNines' patent infringement litigation against McAfee. It's a fascinating story and a truly rare glimpse into the mechanics of a third-party litigation financing deal.

As Mullin reports, in 2007 Altitude loaned DeepNines $8 million to fund its case against McAfee in the Eastern District of Texas. DeepNines' lawyers at Fish & Richardson won an $18 million jury verdict. Facing additional exposure, McAfee eventually agreed to a settlement that Mullin has calculated to be about $25 million.

Of that $25 million, guess how much DeepNines pocketed? Less than $1 million, according to Mullin. Fish & Richardson collected more than $11 million in hourly and contingent fees. Altitude got back its $8 million, plus 10 percent interest and a $700,000 "participation fee." The fund's total take, Mullin reports, was $10.8 million, a more than 30 percent return on its $8 million investment.

The story does not end there, read the full article here.

Bilski Case's Pittsburgh Connection

From an article by Anya Litvak in the October 30, 2009 print edition of the Pittsburgh Business Times:

On Nov. 9, the U.S. Supreme Court will decide if a Pittsburgh company’s idea to protect consumers against energy price and volume swings caused by bad weather is an abstract concept or a patentable business method.

Its implications may decide the fate of patents covering everything from diagnostic medical tests to the tax advice you get from your accountant.

Rand Warsaw, president of WeatherWise USA on the South Side, will be in the courtroom as his decade-long battle for a business methods patent moves into the final leg.

Warsaw and his then-business partner, Bernie Bilski, applied for such a patent in the mid-1990s to protect their method of hedging against price and volume changes. Their plan, called a guaranteed bill, was to patent the idea of using fixed price contracts as a way to mitigate the risk that bad weather can pose to prices and the demand for energy. The contracts served to balance the risk to suppliers and consumers of energy.

Full article is available to subscribers here.  See related article titled, "Accountants, consumer groups push for passage of legislation to eliminate tax strategy patents" here.

Recommendation 45 of the WIPO Development Agenda and IP Enforcement

Mr. Sisule F. Musungu, President, IQsensato, Geneva prepared a document titled, "The Contribution of, and Costs to Right Holders in Enforcement, Taking into Account Recommendation 45 of the WIPO Development Agenda."  The report was published on September 28, 2009 for the Fifth Session of the Advisory Committee on Enforcement to take place in Geneva on November 2-4, 2009.

Some excerpts from the report:

Recommendation 45 of the WIPO Development Agenda provides that IP enforcement should be approached:

“[I]n the context of broader societal interests and especially development-oriented concerns, with a view that “the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations”, in accordance with Article 7 of the TRIPS Agreement.”

IP rights are only valuable to their holders if they are well enforced. The enforcement framework established under the TRIPS Agreement is therefore, as stated in Article 41 of the Agreement, aimed at permitting effective action against any act of infringement of IP rights, including expeditious remedies to prevent first time infringements and remedies to deter second or repeat infringement. In this context, right holders are the primary beneficiaries of the efforts to promote and enforce IP.

Recommendation 45 of the WIPO Development Agenda therefore has a special meaning for right holders. In seeking to ensure that IP enforcement activities result in balanced outcomes for a range of stakeholders, including IP right holders, the Recommendation should be seen favourably by all groups. Indeed, as already noted in this Study, the focus of the Recommendation on Article 7 of the TRIPS Agreement, essentially codifies a position that enjoys broad acceptance including by right holders. In a policy statement released by the ICC with commentary on the Development Agenda Recommendations, the group, while emphasising the importance of preventing and combating IP infringement does not take any specific issue with the Recommendation. The issue for right holders with respect to the Recommendation therefore appears to be one of degrees of emphasis.

Recommendation 45 of the WIPO Development Agenda is concerned with ensuring a balance of interests and outcomes for different stakeholders from IP enforcement efforts. Its main value therefore resides in the fact that it seeks to provide guidance for interrogating the formulation and application of IP enforcement measures and initiatives to determine whether the outcomes will be or are balanced in terms of the interests served and the stakeholders who benefit.

Consequently, as an interpretative framework, Recommendation 45 can only be given practical meaning by looking at specific cases where finding the right balance between different interests and concerns is complex. Some of the challenging cases, which have been examined in this Study, for illustrative purposes, include the application of border measures to goods in transit, the application of provisional measures, the approach to criminal sanctions and abusive enforcement practices. There are no doubt other cases that could benefit from a step by step analysis in the framework of Article 7 of the TRIPS Agreement.

Overall, the focus on balance suggests that the effective implementation of the Recommendation would be beneficial to right holders as well as other stakeholders in WIPO. Considering that right holders are the primary beneficiaries of efforts and initiatives on enforcement, it follows that they have a special stake in Recommendation 45. Going forward, their role in the implementation of the Recommendation could be examined with respect to constructive advocacy, the attention paid to safeguards and addressing abusive enforcement practices in training and capacity building projects that they undertake and with respect to their efforts to ensure that policy-making is based on credible data and research.

Rule 11 of the Federal Rules provides that by presenting to court a pleading, motion or other paper, an attorney or an unrepresented party, certifies that to the best of their knowledge, information and belief, which is formed after reasonable inquiry in the particular circumstances, the pleading, motion or other paper is not being presented, among other things, for “improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” There are clear sanctions for breaching the rule. Similar rules exist in code of professional conduct and rules of procedures in many of the WIPO Member States.

Read the full report here.

LexisNexis Semantic Search Patent Research

The following is excerpted from an October 12, 2009 post by Thomas J. Colson at the Securing Innovation blog:

LexisNexis, a leading global provider of content-enabled workflow solutions, today announced the availability of transparent semantic search technology for its full complement of intellectual property (IP) research products – enabling users to find the most precise and relevant patent search results.

Through a development alliance with Dallas-based Pure Discovery, LexisNexis has become the first provider of legal information services to integrate the power of semantic search technology with familiar Boolean search technology, giving the user greater control over the patent research process via a simple, streamlined user interface that matches their typical daily workflow.

The new semantic search solution from LexisNexis and Pure Discovery, however, overcomes such challenges to accomplish four breakthrough objectives in online search:

• Transparency: Each query is enhanced by the machine intelligence and shown to the user for their complete understanding and engagement.
• Increased control: Not only is the semantic search transparent, but users are in control with the ability to add, delete, increase or decrease the importance of all query words (concepts) in a unique visual query interface called a "querycloud.”
• Fully federated: While LexisNexis maintains one of the largest full-text patent and non-patent literature databases in the world, its semantic search platform can associate semantic searches to virtually any index, whether it resides internally or on the web.
• Scalability: The LexisNexis index includes semantic intelligence from more than 10 million full-text patent documents from the U.S. Patent and Trademark Office’s patent index, as well as Elsevier journal articles and other documents.

Read the full post here.

Troll Tracker Defamation Case Settles Before Going to Jury

The following is excerpted from a September 22, 2009 post by Joe Mullin (a reporter at IP Law & Business) at The Prior Art blog:

After four days of testimony, the "Troll Tracker" defamation lawsuit ended in a confidential settlement the day before the East Texas jury hearing it was set to begin deliberations. 

Plaintiff Eric Albritton and defendants Cisco Systems and Rick Frenkel, a former Cisco lawyer who blogged anonymously as the Patent Troll Tracker, settled the case Monday night, shortly after Judge Richard Schell ruled that the jurors would have to find "actual malice" on the part of Frenkel and Cisco in order for Albritton to win the punitive damages he was seeking from the tech giant. 

"Actual malice"—a high standard for a defamation plaintiff to meet—was established by the Supreme Court in its historic New York Times v. Sullivan decision. To prove "actual malice," a plaintiff must show that the defendant either knowingly published falsehoods as facts, or showed "reckless disregard" for the truth. In general, a plaintiff must be a public figure to trigger the "actual malice" standard. Someone considered a private figure only needs to prove that a publisher was negligent in its actions.

Throughout the litigation, Frenkel maintained that the two blog posts at the heart of the case—which he wrote about a changed date in the docket in Albritton's ESN v. Cisco patent infringement suit—contained both true facts and constitutionally protected opinion about "abusive" patent litigation in East Texas. On the witness stand, Frenkel apologized for referring to the Eastern District of Texas a "Banana Republic" in one of the offending posts, which he later revised to eliminate that reference.

A second defamation lawsuit, Ward v. Cisco Systems, has been brought by T. John "Johnny" Ward Jr., another Eastern District patent heavyweight representing ESN in its patent suit against Cisco. That lawsuit has dropped Frenkel as a defendant personally, and continues only against Cisco. It is scheduled for trial in early 2010. The ESN v. Cisco patent suit that launched the dispute also remains active.

Read the full post here.

Tax Treatment of Infringement Damages

The following is excerpted from the October 2009 issue of Sunstein's Intellectual Property Update titled, "Tax Treatment of Infringement Damages: Plan Ahead to Improve Your Results" by Thomas C. Carey:

In 1989, Pizza Hut disclosed the C&F trade secrets to IBP, another Pizza Hut supplier, without C&F’s consent, in violation of the confidentiality agreement. C&F became certain of this violation in 1993, when its representatives inspected the IBP production facility. C&F promptly sued Pizza Hut and IBP, alleging patent infringement, fraud, unfair competition and misappropriation of trade secrets. 

In its complaint, C&F stated that, as a result of the defendants’ misdeeds, C&F had suffered “lost profits, lost opportunities, operating losses and expenditures.”

By 1998, the district court had dismissed the claims based upon fraud and unfair competition, and had found the C&F patent to be invalid. After a trial, the court awarded damages to C&F on its remaining claim, for trade secret misappropriation.  In settlement, IBP paid $11 million to C&F and Pizza Hut paid $15.3 million. The settlement agreement with Pizza Hut referred to the “payment of a lump sum payment in full and complete discharge and settlement of the lawsuit,” and contained mutual releases.

C&F was an S corporation, that is, one in which company income is passed through to shareholders, who must report it on their individual tax returns. C&F’s tax returns reported the settlement funds as capital gains realized upon the sale of trade secrets. Relying on K-1s that C&F provided them, the shareholders likewise reported the amounts as long-term capital gains on their personal tax returns. 

The IRS disputed this characterization, asserting that these amounts constituted ordinary income. The taxpayers responded that the settlement was paid for damage to the C&F trade secrets, or, in the alternative, for the sale of the trade secrets to Pizza Hut.  The parties litigated the matter before the United States Tax Court.

The Tax Court began its analysis of these facts by reciting the truism, stated in an earlier ruling, that “the taxability of the proceeds of a lawsuit depends upon the nature of the claim and the actual basis of recovery. . .Where the recovery represents damages for lost profits or other items taxed as ordinary income, it is taxable as ordinary income.  Where the recovery represents damages for injury to, or destruction of, a capital asset, it is taxable as capital gain to the extent it exceeds the taxpayer’s basis in the asset.”  

Read the full article here.

CAP Applauds Exclusion From Gene Patent Infringement in Clinical Care

The following is excerpted from a College of American Pathologists (CAP) October 23, 2009 press release at PR Newswire:

The College of American Pathologists today expressed its support for a key government advisory group's recommendation to create an exemption from liability for infringement of gene patent claims when used for patient care purposes.

Last week, the Secretary's Advisory Committee on Genetics, Health and Society, (SACGHS) agreed on recommendations for the Secretary of Health and Human Services which, if adopted, would allow medical researchers to study, and pathologists to provide, genetic tests based on already-patented human genes without the threat of a patent infringement lawsuit.

The CAP opposes the issuance of human health-related gene patents because genes are naturally occurring phenomena and patenting them limits access to medical care, jeopardizes the ability to practice medicine in the best interest of patients and raises the cost of care.

In May 2009, the CAP joined as a plaintiff in a lawsuit challenging the patents held by Myriad Genetics for the genes known as BRCA1 and BRCA2, which are indicators for hereditary predisposition to breast and ovarian cancer.

History has shown that when patents are granted, subsequent exclusive license agreements and excessive licensing fees related to the patents prevent physicians and laboratories from providing DNA and RNA-based diagnostic services. Patients suffer because diagnostic test services are less readily and affordably accessible; medical education and clinical research are also threatened.

Read the full press release here.

Nokia Sues Apple for Infringement of Ten Patents

The following is excerpted from an October 22, 2009 Nokia press release:

Nokia announced that it has today filed a complaint against Apple with the Federal District Court in Delaware, alleging that Apple's iPhone infringes Nokia patents for GSM, UMTS and wireless LAN (WLAN) standards.
 
As a leading innovator in wireless communications, Nokia has created one of the strongest and broadest patent portfolios in the industry, investing more than EUR 40 billion in R&D during the last two decades. Much of this intellectual property, including the patents in suit, has been declared essential to industry standards.  Nokia has already successfully entered into license agreements including these patents with approximately 40 companies, including virtually all the leading mobile device vendors, allowing the industry to benefit from Nokia's innovation.
 
The ten patents in suit relate to technologies fundamental to making devices which are compatible with one or more of the GSM, UMTS (3G WCDMA) and wireless LAN standards. The patents cover wireless data, speech coding, security and encryption and are infringed by all Apple iPhone models shipped since the iPhone was introduced in 2007. 

See the full press release here.

Finding Similar Patents with Xyggy Patent

Xyggy Patent finds and ranks US patents based on how similar they are to the query patent(s) using item search rather than text search.  This application went live on October 16, 2009.

As an example, let's use the "412" patent from the SonoSite dispute.  Using the autocomplete box, enter the the patent number, "5722412" (or patent title) and select the patent from the list.  This part of the interface is not entirely intuitive.  The autocomplete feature requires you to highlight the patent number you entered and then a list appears from which you can choose your patent.  I initially tried just hitting enter after typing in the patent number and when that did not work, I looked for a "Go" or other type of button. Highlighting was the charm.  You can also select multiple patents to query.

The similar patents window provides a list of patents ranked with patent number and title.  As you mouse over each patent, a pop-up window opens with the patent number, title, issue date, inventor, assignee, US classification, and abstract.  Clicking on the patent will connect you to the patent at the USPTO.

Now, compare the Xyggy Patent results (200 patents - I do not know if these are all the matches or whether this is software limited) with Google Patents (almost 6 million results) and FreePatentsOnline (returns only the entered patent). 

Some suggested improvements:

1. Allow the user to select multiple patents from the list for export to a csv or other format;
2. Allow the full contents of the pop-up window (not the truncated version limited by space constraints) to be printed and exported.

Try it out and let me know what you think the pros and cons are of Xyggy Patent by commenting below.

Judge Emphatically Denies Motion to Continue Markman Hearing in Hydro-Quebec v. Valence Case

Judge Sparks in the Hydro-Quebec v. Valence Technology, Inc. case (No. A-06-CA-111-SS) in the US District Court for the Western District of Texas, Austin Division issued the following order on October 14, 2009:

BE IT REMEMBERED on this day the Court reviewed the eight volumes of pleadings in the above-styled cause, and further noting that a stack of pleadings consisting of thousands of pages and arising over 14 inches above the undersigned's desk, received a Motion to Continue the Claim Construction Hearing Before the Special Master [#137] on November 2-3, 2009, and thereafter, enters the following:

The Motion to Continue is DENIED. This lawsuit was filed on February 14, 2006, almost three years ago. As a result of agreed extensions to answer different types of negotiations between the parties and the plaintiffs bringing in new parties, it was not possible to set an order scheduling a Markman hearing until September 9, 2006, when one was entered setting the Markman hearing for February 27, 2007. However, on January 10, 2007, this Court entered an order staying proceedings until July 10, 2007, at the request of all parties as there was a reconsideration of some of the patents involved in this lawsuit by the Patents Office. The stay was continued by order of July 18, 2007, at the request of the then-existing parties. Then after an exhaustive onslaught of pleadings, motions to dismiss, motions for summary judgment, and motions for partial summary judgment was filed and determined, ultimately, another order was entered for the Markman hearing for June 23, 2009. However, as a result of an agreement between the parties, it was reset for July 29, 2009. Thereafter, by agreement of all the parties, it was reset until November 2, 2009. The order setting the Markman hearing for this date was entered on July 28, 2009, over three months in advance of the hearing date. Now counsel for the plaintiffs requests another continuance because of scheduling commitments, and the answer is an emphatic "No."

The undersigned is blessed with one of the heaviest civil dockets in the country, including other patent cases. This case will proceed and will proceed with the Markman hearing on November 2-3, 2009. If counsel cannot arrange to attend, then the plaintiffs must obtain new counsel.

Thanks to the reader who provided the order (Download 144).

Outsourcing IP? Preventing IP Infringement in China

The following is excerpted from a Bleum press release at PR Newswire and whitepaper:

Bleum, one of China's leading IT outsourcing providers to American and European companies today [October 19, 2009], published its latest whitepaper entitled "Outsource IP? Preventing IP Infringement in China" focused on the current status of IP issues in China.

This whitepaper highlights a number of changes that have been made in China to further improve international IP protection and the importance of patenting in China. It also provides guidance to help companies protect their IP when outsourcing development work to China, such as registering patents and establishing a proactive piracy prevention strategy from a cultural, legal and operational standpoint.

Since the publication of our last Intellectual Property Rights (IPR) paper in 2006, a number of changes have been made in China to further improve international IP protection, and the Patent Law has now undergone a third revision and the amended Patent Law will come into effect on October 1st , 2009. Although enforcement of IP laws continues to be a challenge, this is gradually improving along with the laws themselves. The concept of IP ownership is steadily becoming a part of Chinese culture."Companies looking for a strategic, long term outsourcing partnership will consider China as a viable destination", says Chenxi Wang, Principle Analyst at Forrester Research.

Obtain the whitepaper here.

SonoSite Announces Global Patent Settlement With GE

The following is excerpted from an October 19, 2009 SonoSite press release published at Business Wire's Enhanced Online News:

SonoSite, Inc. (Nasdaq:SONO), the world leader and specialist in hand-carried ultrasound for the point-of-care, announced today that the company has resolved all pending patent litigation with General Electric Company (GE). This includes the lawsuit filed by GE in 2008 in the federal district court in Madison, Wisconsin (case no. 08-cv-298-bbc) to invalidate SonoSite's US Patent No. 5,722,412 (the '412" patent") and a pending appeals in the Federal Circuit (case nos. 2008-1567, 2008-1568) of certain rulings in a patent infringement case filed by GE in the same Wisconsin court in 2007. The settlement also resolves a revocation action filed by GE in the Federal Patent Court in Germany relating to the '412 patent.

Under the terms of the settlement agreement, GE will make an up front payment to SonoSite of $21 million and pay an ongoing royalty on US sales and production of hand-carried ultrasound systems weighing less than ten pounds in exchange for a perpetual nontransferable worldwide license to the '412 patent family. SonoSite will receive these royalties until the '412 patent expires in 2016. The terms of the settlement provides for the dismissal of all pending legal actions between SonoSite and GE as well as a cross-license to the other party's patents asserted in the lawsuits. The settlement agreement also includes a dispute resolution process, designed to avoid future litigation between the parties.

See the full press release here.

Big Numbers

The above-titled article appears in the Summer 2009 issue of Litigation, the Journal of the Section of Litigation of the American Bar Association and is authored by D. Mitchell McFarland of Harrison, Bettis, Staff, McFarland & Weems, LLP.

In the article titled “Big Numbers” Mr. McFarland details the fictional case of Astrostaff, a Texas PEO that sued its insurance broker, Black & White, when it found that it had been defrauded on the purchase of workers compensation insurance.  The article details the manner by which a party may obtain lost profits and the proof necessary for such claims.

Mr. McFarland writes:

To prove lost profits, you and your hired expert will require in-depth knowledge of the company, its products, markets, and competition, as well as an understanding of the industry in which the company operates and the market forces to which it is subject. Your expert may use data from industry sources, comparable companies, market data, or any other source that could reasonably be expected to predict the company’s financial results.

The discounted cash flow model is the most commonly used accounting method to calculate lost profits. The difference between what “was” and what “should have been” is discounted back to present value to arrive at lost profits damages. Typically, a damages expert estimates the difference between (1) the plaintiff’s cash flow or other measure of economic income in the “but for” world and (2) the plaintiff’s cash flow or economic income in the “actual” world. The difference between these two estimates of economic income is then discounted to present value. Robert F. Reilly & Robert P. Schweihs, The Handbook of Advanced Business Valuation, 274–75 (1999).

The courts have sanctioned three methods for calculating lost profits: (1) before and after; (2) the yardstick; and (3) lost market share model.

The article is available here (subscription or membership required - or you can obtain a copy of Litigation by calling the ABA Service Center at (800) 285-2221).

Tech Patents Run Amok

Rob Preston, VP and editor in chief of InformationWeek, writes in the October 12, 2009 print issue:

Opposition to software patents, especially the specious ones, makes for strange bedfellows. Big business aligning with digital freedom fighters. The open source faithful breaking bread with the commercial software elite. All in the name of defeating so-called patent trolls whose lawsuits extract billions of dollars each year from U.S. industry--and thus every one of us.

There's a reason so many diverse interests are in agreement. This isn't just a "software industry" problem. Every company that develops software or uses a Web site that implements software processes is a potential target of the trolls.

Case in point is a suit filed last week by University of California spin-off Eolas Technologies related to its patent for technology, developed 15 years ago, that lets Web browsers "act as platforms for fully interactive embedded applications." The suit reaches beyond software industry giants such as Adobe (NSDQ: ADBE), Apple, and Google (Eolas reached a settlement with Microsoft (NSDQ: MSFT) years ago) to the likes of Blockbuster, Frito-Lay, JPMorgan Chase, and JCPenney. As my colleague Paul McDougall reported, an Eolas victory "could give the company a claim on virtually every Web site that hosts interactive applications." I'm in no position to judge the validity of the Eolas suit, but it's worth noting that it was filed in U.S. District Court in Eastern Texas, known for its favorable patent rulings.

Read the full article here.