Precedent-Setting Patent Cases to Follow in 2011

Wealth of Ideas Newsletter, January 2011

In last month’s newsletter, we featured a brief rundown of some of 2010’s most important patent lawsuits, and one – Microsoft v. i4i – that is shaping up to be a big story in 2011. This month, we look at three more cases that are likely to make headlines (and that just might be precedent-setting) in the year to come.

Stanford v. Roche: Of Inventors, Institutions and Federal Grants

We saw this one coming. Back in our November 2010 issue, we reviewed Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, more simply known as Stanford v. Roche.

Case background: Simply stated, a researcher/inventor who had signed an agreement with Stanford to assign all patents arising from his work while employed there was simultaneously employed by Cetus – a company later acquired by Roche – where he signed an agreement assigning patent rights to Cetus from the time his patent applications were filed.

Though chronologically speaking, the Stanford agreement had been signed first, it only required the inventor to assign the patents (which relate to a method of HIV testing) to the university after they had issued. Thus, Roche could lay claim to the patents from the time of filing the applications, whereas with Stanford, acquiring the patent rights required a second, later step.

Complicating the case further, the Bayh-Dole Act of 1980 comes into play – legislation that allows universities, nonprofits and small business owners the rights to intellectual property conceived or reduced to practice as a result of federally-funded research projects. Stanford complains that, if Roche prevails, its rights could be terminated as a result of a researcher’s side deal with another employer; Roche argues that Stanford’s rights to the patents-in-suit were not terminated by the inventor’s agreement with Cetus, but must be shared with Roche.

What’s at stake: Ultimately, what the Supreme Court must decide is who controls the patent rights, including the right to assign, in cases such as this one. Will it be the university or the researcher?

Global-Tech, Pentalpha and SEB: Out of the Frying Pan, Into the Deep Fryer

This case has caused indigestion for all parties to the litigation, and very likely for users of the infringing product as well! In Global-Tech Appliances Inc. and Pentalpha Enterprises Ltd. v. SEB SA, the patent-at-suit covers elements of a deep fryer.

The issue: What kind of behavior, on the part of an alleged infringer, constitutes “deliberate indifference” of a known risk of infringing a competitor’s patents? The outcome of this case at the Supreme Court could affect how easy it is for a patentee to prove inducement of infringement – and that’s important because a finding of induced infringement means a bigger damages award.

Case background: Plaintiff SEB S.A. sued a group of manufacturers and retailers of deep fryers, including Global-Tech Appliances and Pentalpha Enterprises Ltd. SEB produced evidence at trial that Pentalpha based its deep fryer on SEB’s design. Before offering its deep fryers for sale, Pentalpha had a patent counsel perform a “right to use” (or “freedom to operate”) search, analyze 26 patents unearthed as a result of the search, and produce a freedom-to-operate opinion. SEB’s Patent No. 4,995,312 (the ‘312 patent), however, was not uncovered in the course of the search – in no small part because Pentalpha hadn’t mentioned whose design they were using for their deep fryer.

Despite the fact that the U.S. patent number was not marked on the SEB deep fryer that Pentalpha bought in Hong Kong for the purpose of disassembling it and copying its design through reverse-engineering, Pentalpha’s claim of ignorance of SEB’s patent rings false for two reasons:
1. Pentalpha had had previous business dealings with SEB regarding one of Pentalpha’s patented steamer products, so the companies weren’t exactly strangers to one another.
2. Pentalpha’s president was a named inventor on 29 U.S. patents, and thus could hardly plead ignorance of the U.S. patent system.

The bottom line seems to be that if the SEB deep fryer had been mentioned to the U.S. patent attorney who conducted the “right to use” search, the SEB patent certainly would have been uncovered.

What’s at stake: The Supreme Court will decide whether SEB’s claim of induced infringement is valid considering that the patentee hasn’t produced direct evidence of infringement. Is it enough that the alleged infringer deliberately ignored a known risk of infringement? How do you definitively prove that you didn’t believe a product was patented, and that you therefore didn’t believe you were infringing? The outcome of this case could have considerable ramifications on how the law of inducement is applied in future lawsuits.

Therasense, Inc. and Becton Dickinson: Questionable Conduct?

From questions of patent ownership and induced infringement, we move on to a case whose outcome may shine some light on the murky issue of inequitable conduct, Therasense Inc. et al. v. Becton Dickinson & Co. et al.

Case background: Therasense – now an Abbott Laboratories subsidiary renamed Abbott Diabetes Care Inc. – brought multiple patent infringement cases against Becton Dickinson & Co. and Bayer Healthcare LLC over three patents related to blood glucose test strips. The district court determined that two of the patents were not infringed, and the third was unenforceable due to inequitable conduct – namely, due to the fact that Therasense had deliberately withheld information during the prosecution of that patent.

To be more precise, Therasense – when applying for both U.S. and European patents on the same invention – disclosed information to the European patent examiner that they did not disclose to the U.S. patent examiner. The issue at hand has to do with the concepts of materiality and specific intent:
1. Materiality – Was the withheld information material to the prosecution of the patent?
2. Specific intent – Did the individuals filing the patent application subjectively believe that the prior art reference was immaterial at the time of withholding?

The CAFC has agreed to rehear the case en banc – with a full court.

What’s at stake: Patent attorneys, patent owners and inventors hope that the outcome of the case will bring clarity to the rules of inequitable conduct. Clear definitions of materiality and intent to deceive would, presumably, help patentees to avoid the charge of inequitable conduct – which is frequently raised, but infrequently proven, by defendants in patent infringement cases.

So there you have them: Three cases that just might make a big difference in the way certain patent laws are interpreted and applied. Stay tuned to this newsletter, our Patent News page and our Wealth of Ideas blog for the latest developments!