Article: January 2013 Patent Litigation Update

European Parliament Approves European Unitary Patent and Unified Patent Court: On December 11, 2012, the European Parliament approved a new patent system that, once fully implemented, would create both an optional Unitary Patent and a Unified Patent Court to handle litigation of all European patents. Ideally, the Unitary Patent option should streamline the process for obtaining patent protection in the 25 participating EU member states, and will reduce the associated fees and translation expenses.

Once the set of EU regulations are in effect (which could be as early as 2014), patentees will have the option to request that a new European patent granted by the European Patent Office be given unitary effect across all 25 participating EU member states. Applications for a Unitary Patent must be filed in English, German or French, and no other human translations will be required (automated “machine” translations may be submitted). Unitary Patents will coexist with national patents and also classical European patents that will still be available to obtain patent protection in non-participating states, including Spain, Italy, Switzerland, Turkey, Norway and Iceland.

The Agreement on a Unified Patent Court, once ratified by at least 13 EU member states including France, Germany and the United Kingdom, will create a Unified Patent Court with exclusive jurisdiction over the litigation of all European patents, including over actions for infringement, revocation, or injunctions. The Unified Patent Court will include a specialized Court of Appeal located in Luxembourg, and a set of specialized trial courts of first instance. The central division of the trial courts will be located in at least Paris, Munich and London, while local divisions will be located in one venue of each of the member states (some member states will share on venue, regional divisions) with the exception of Germany, which will have at least 3 local divisions (Düsseldorf, Mannheim and Munch, possibly Hamburg). Each trial court will be overseen by an internationally composed panel of judges and each division of the trial court will grant pan-EU relief for all of the member states (or for all of the designated contracting states of a European patent, which can extend beyond the EU). The Plaintiff can decide to file in any local division where there is an infringing activity in the member state that hosts that local division.

Gross Negligence Insufficient to Establish Deceptive Intent for Inequitable Conduct: The Federal Circuit recently clarified the level of deceptive intent required for inequitable conduct in Outside the Box Innovations, LLC v. Travel Caddy, Inc., No. 2009-1171 (Fed. Cir. Sept. 21, 2012). The Court held that gross negligence is insufficient to establish clear and convincing evidence of the deceptive intent required for inequitable conduct.

Recognizing that inequitable conduct requires evidence of the omission or misrepresentation of material information in dealings with the PTO, and also clear and convincing evidence of specific intent to deceive the PTO, the trial court found two patents unenforceable due to inequitable conduct arising out of the patentee’s failure to disclose to the PTO the existence of litigation involving the parent patent during the prosecution of its progeny. In so holding, the trial court rejected the patentee’s argument that any material omission regarding the litigation was the result of oversight, error or negligence, not deceptive intent.

On appeal, the Federal Circuit overruled the trial court, holding that “[n]egligence, however, even gross negligence, is not sufficient to establish deceptive intent.” Building on the Court’s prior holding in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc), this latest decision further raises the bar for proving inequitable conduct, confirming not only the need for clear and convincing evidence of the patentee’s specific intent to deceive, but also rejecting the notion that the requisite deceptive intent can be inferred from merely the patentee’s gross negligence.

Federal Circuit Eases Requirements for Proving Inducement Involving Joint Infringement: In a 6-5 en banc decision involving the cases of Akamai Tech. v. Limelight Networks and McKesson Technologies, Inc. v. Epic Systems Corp., the Federal Circuit has apparently loosened the standard for proving liability under the doctrine of induced infringement.

Under the Court’s prior decision in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), proof of induced infringement of method claims required a single, direct infringer who performed all of the steps of the method claim. Neither of the cases before the Court in Akamai and McKesson included such a direct infringer. In Akamai, the defendant performed some of the steps of the claimed method and induced others to perform the remaining steps. In McKesson, the defendant induced multiple parties to “collectively perform” all the steps of the claimed method, i.e., no single party performed all of the required steps for direct infringement. Both defendants prevailed at the trial court level because there was no single, direct infringer.

However, upon reconsideration, the en banc Federal Circuit expressly overruled the requirement in BMC Resources of a single entity who performs all the claimed steps of the patent. As stated in the Akamai opinion (emphasis in original):

Requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer. If a party has knowingly induced others to commit the acts necessary to infringe the plaintiff’s patent and those others commit those acts, there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement.

In the view of a majority of Federal Circuit judges, a party who induces several others to infringe collectively, or a party who performs some steps of the claimed method and induces others to perform the remaining steps, “has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer.”

Going forward, plaintiffs may find it slightly easier to prove inducement even in the absence of a single direct infringer. All of the steps of the claimed method still need to be performed, but it is no longer necessary to show that a “single entity” performed them. Nevertheless, this ruling may have a minimal impact on the number of cases finding induced infringement because such a determination still requires that the accused infringer to have knowingly induced the infringement. Additionally, the Court also limited its opinion to infringement of method claims, thereby potentially further reducing its impact on the existing patent landscape.