IP

Akamai Provides a New Induced Infringement Standard, But How Do We Use It?

Ryan J. Connell, MJLST Lead Articles Editor

In the spring 2013 issue of the Minnesota Journal of Law, Science & Technology Mr. Roy D. Gross examined the use of circumstantial evidence to prove inducement of infringement. Mr. Gross’s article is titled Can an Inference of Intent to Induce Infringement of a Patent Be Drawn Where Other Reasonable Inferences Exist? An Examination of the Use of Circumstantial Evidence to Prove Inducement of Infringement. Mr. Gross ultimately argues that that the doctrine of specific intent to infringe in patent cases should be harmonized with the standard used for inequitable conduct.

It is important to discern the boundaries of specific intent to infringe in light of the recent Akamai case. Akamai Techs. Inc. v. Limelight Networks Inc., 692 F.3d 1301 (Fed. Cir. 2012). In Akamai the Federal Circuit arguably made it easier for a patent owner to hold a person liable for induced infringement of a method claim when no single person performed all the steps of the method. The Akamai decision still requires the alleged inducer to have the specific intent to induce infringement. Akamai, 692 F.3d at 1308. The results of Akamai are mixed then, on one hand patent owners can now go after those who induced infringement but never induced a single party to infringe the patent. On the other hand the patent owner must still provide evidence of a specific intent to induce infringement.

Proving induced infringement is a difficult task. Direct evidence of inducement is often hard to come by and the patent owner must often resort to using circumstantial evidence to prove specific intent. Mr. Gross suggests courts to weigh the following three factors, in light of circumstantial evidence, when determining if the requisite intent is present: (1) nexus; (2) control; and (3) mitigating evidence of intent not to infringe.

Akamai has closed an undesirable loophole in patent law. For Akamai to reach its full potential however, courts and litigators need to understand how to weigh circumstantial evidence that may be more strained in cases where a patent is collectively infringed as opposed to directly infringed by one actor. Articles such as this can help the legal community understand how to use circumstantial evidence in light of the new induced infringement standard.


Will AIA Post-Grant Procedures Reduce Litigation?

by Nihal Parkar, UMN Law Student, MJLST StaffNihal-Parkar-Thumbnail-White-Back.jpgThe America Invents Act (AIA) was signed into law in 2011 and fully went into effect on March 16, 2013. The AIA resulted from efforts to strengthen the US patent system and bring it in conformity with global patenting standards. One of the aims of the AIA was to reduce post-grant litigation related to patent validity. It is common for alleged infringers to challenge the validity of patents that are asserted against them in court. However, such litigation can be expensive and protracted.

Pre-AIA patent law did provide for some processes for challenging patent validity, but they were limited. The AIA tries to expand on pre-existing post-grant patent challenges by providing for patent challenge procedures that mirror litigation (discovery, witness examination, and so on) at an alternative forum for resolving validity disputes: the Patent Trial and Appeal Board at the US Patent and Trademark Office.

It is interesting to contrast pre-AIA scholarly analysis of patent challenge procedures and suggested reforms with post-AIA studies. The Minnesota Journal of Law, Science & Technology provides two contrasting articles on point. An earlier, pre-AIA article by Matthew Sag and Kurt Rohde, Patent Reform and Differential Impact (8 Minn. J.L. Sci. & Tech. 1, 2006) proposed a multistage post-grant review process. They addressed the lack of discovery and other issues in pre-AIA post-grant processes, and concluded that discovery would be unnecessary as long as the scope of reviewable issues was kept narrow. A recent MJLST note by Kayla Fossen, The Post-Grant Problem: America Invents Falling Short (14 Minn. J.L. Sci. & Tech. 573, 2013), reviews the changes introduced by the AIA, and points out that post-grant processes cannot really undo the damage created by ineffective pre-grant procedures. Therefore, the AIA is unlikely to significantly impact post-grant litigation.


Shapewear Patent War: Case of the Bad Patent?

by Jennifer Nomura, UMN Law Student, MJLST Staff

Thumbnail-Jennifer-Nomura.jpgWhen most people think of patents they think of the latest computer technology or advances in medical science; but what about women’s shapewear? For those unaware of what shapewear is, it’s basically the modern version of a corset; it keeps everything pulled in, but (hopefully) more comfortable than a corset. Heather Thomson, founder of Yummie Tummie, has a patent on some of her styles of tank-top shapewear. Corset_Patent_Image.jpgWhen she found out that Spanx, a competing company, was making a very similar looking piece of shapewear, Thomson wasn’t happy. Thomson sent a cease-and-desist letter to Sara Blakely, founder of Spanx and then took to social media to complain. Websites like Forbes and the Huffington Post picked up the story. So far, the situation sounds fairly typical of other patent infringement cases, so why all the press coverage? Did I mention that Heather Thomson is a TV star of Bravo’s Real Housewives of New York? Needless to say, Thomson is not afraid of a little drama. Thomson has declared war against Blakely and Spanx. But Sara Blakely is not the underdog in this situation. Blakely founded Spanx in 2000 and is now a self-made billionaire. Blakely has now filed a declaratory judgment action in court alleging that Spanx is not infringing any of Yummie Tummie’s patents.

Spanx has been in the shapewear business 8 years longer than Yummie Tummie and has its own patents, so this might be the case of the “bad patent”. In an article entitled Patent Reform and Differential Impact, published in Issue 8.1 of the Minnesota Journal of Law, Science & Technology, authors Matthew Sag and Kurt Rohde define a “bad patent” as one “that should not have been issued.” But Sag and Rohde want to go further. HeatherThomasPatent-cmp.jpg They argue that the term “bad patent” should also include “a patent that was validly issued but is now the subject of hyper-assertion.” The main concern with bad patents is that they “are capable of generating significant revenues and thus have a distorting effect on the allocation of resources in the economy.” This can happen where once a patentee sends a cease-and-desist letter, even if the patent qualifies as a “bad patent,” the alleged infringer will immediately license with the patentee. Or it could be that the parties could take their dispute to court, like Spanx and Yummie Tummie. Now there will be an expenditure of money on both sides trying to settle this issue in court. There is also a drain on public resources as the conflict has to make its way through the court system. Sag and Rohde make several proposed reforms in order to remedy the problem of bad patents. One of their proposed reforms to the litigation process is by fee-shifting. Fee-shifting would require the patentee to pay the costs of litigation if the patent was invalidated based on easily-discoverable prior art. This proposed reform could push potential patent applicants to perform a more comprehensive search through current patents before submitting their application to the PTO. Fee-shifting could prevent bad patents from being issued in the first place, or at least making patentees think twice before they try to enforce their patent against an alleged infringer.

While the public’s interest in the dispute between Yummie Tummie and Spanx has more to do with the reputations of both founders, this situation could revive a push for reform to the patent litigation system. Perhaps there will be a revival of the interest to limit or eliminate “bad patents.”


Supreme Court to the Rescue: The First Sale Doctrine Survives

by Benjamin Hamborg, UMN Law Student, MJLST Articles Editor

Thumbnail-Benjamin-Hamborg.jpgAs predicted inJohn Wiley & Sons, Inc. v. Kirtsaeng: The Uncertain Future of the First-Sale Doctrine, the Supreme Court last month held, by a 6-3 margin, that the first sale doctrine does apply to works lawfully made outside of the United States. The first sale doctrine, which allows the lawful owner of a copyrighted work to dispose of that copy as he or she sees fit, was in danger of disappearing as applied to works manufactured overseas after the Second Circuit decided in August of 2011 that the doctrine only applied to works made in America.

Hailed by many as a victory for American consumers, See Gary Shapiro, Supreme Court Gives American Consumers Victory Over Copyright Owners in Kirtsaeng vs. John Wiley & Sons, FORBES (March 20, 2013, 9:16 AM), the decision also represents an important victory for American manufacturing. A decision to the contrary by the Supreme Court would have given companies in the United States, particularly publishing companies, an incentive to move manufacturing plants oversees in order to gain unlimited control over the resale of their products. In fact, any company would have been able to gain such control simply by affixing a copyrightable image or other work to an uncopyrightable product, such as a watch. Of course, as pointed out in Kirtsaeng v. John Wiley & Sons: No Good Deed Goes Unpunished, it remains to be seen whether this decision has a negative impact on the rest of the world, as publishers now have a disincentive to sell textbooks at a discounted rate in impoverished countries. See Roy Zwahlen, Kirtsaeng v. John Wiley & Sons: No Good Deed Goes Unpunished, PATENTLY BIOTECH (March 26, 2013).


Ask Not What Your Country Can Do For Your Patent . . .

by Caroline Marsili, UMN Law Student, MJLST Staff

Thumbnail-Caroline-Marsili.jpgThe candidates aren’t talking about patents (with the exception of a brief quip about IP piracy in last Tuesday’s debate). But if it’s “all about the economy,” they should be talking patent policy.

In the presidential and vice-presidential debates of recent weeks, the candidates have exchanged vitriol and “gotchas,” and have established a contrast in both policy and character for voters. Notably absent from the debates has been discussion of innovation, and more specifically, the role of IP policy in innovation. IP policy would seem an attractive platform for discussing job creation, as IP industries account for a vast portion of the Nation’s jobs and GDP (“IP-intensive industries” accounted for 27.7 of all jobs in the economy in 2010). It’s possible that the candidates find common ground on this issue. Alternatively, the topic is, for the time-being, moot in the wake of the America Invents Act, the full effects of which are yet to be seen.

Since its passage just over a year ago, some critics have expressed doubt that the Act will create jobs and promote innovation as promised. Others argue not that the Act is failing, but that it represents a misplaced effort to reform patent policy.

The solution? “Don’t just reform patents, get rid of them.” A recent working paper by Boldrin & Levine makes the bold case that our patent system is ultimately more trouble than it’s worth. The authors admit that abolishing patents “may seem ‘pie-in-the-sky'” and acknowledge the glut of transitional issues that would need addressing; just the same, they conclude that the key to reforming our patent system is to get rid of it. Their central beef with the system is the want of empirical evidence that it does what it purports to do: promote innovation and productivity. Meanwhile, there are other incentives for innovation and many negative externalities of the patent system.

Other authors have proposed less radical approaches to revamping the patent system. In her recent article in MJLST, “An Organizational Approach to the Design of Patent Law“, Liza Vertinsky also finds that empirical literature fails to decisively connect patents to innovation and economic growth. However, Vertinsky takes a more optimistic approach to the floundering patent system, arguing that policy-makers should seize reform efforts as an opportunity to tailor the patent law to innovation objectives. The America Invents Act, she argues, isn’t a significant change in the direction of patent policy and instead seeks to remedy narrower concerns with administrative backlog, litigation costs and patent quality. In her view, patent policy should be revamped to encourage innovation based on how individuals and organizations–corporations, Congress, the PTO–really function.

Vertinsky’s “organizational approach” entails a new way of thinking about patents in terms of how patent policy, informed by economic theory, should be fashioned to strengthen the organization of innovation rather than focusing on incentivizing acts of invention. For example, patent laws can be tailored to the needs of different innovation processes across different industries. While sweeping changes in patent policy are unlikely at this time (witness the battles encountered in passing and implementing the America Invents Act), Vertinsky’s proposals should inform discussion among policy-makers about what the patent system can and should do. The Obama Administration’s national innovation strategy neglected to give patent policy a more central role in encouraging innovation, but the desire to build an “innovation economy” is certainly there, and a rational and successful patent policy is vital to attaining the kinds of high-level jobs and industry the country needs and the candidates promise.

(Others think patent policy may not matter at all. What do you think?).