Thursday, June 15, 2017

Selling Patented Goods Is Exhausting

Lexmark International, Inc. "designs, manufactures, and sells toner cartridges to customers in the United States and abroad."  Impression Products refurbished and resold them, so Lexmark sued Impression Products for patent infringement.  The United States Supreme Court decided Impression Products v. Lexmark International on May 30, 2017, that a patentee who sells its patented products has "exhausted" its patent rights in that product.  Moreover, echoing its decision in an earlier copyright exhaustion case, Kirtsaeng v. John Wiley & Sons (U.S. 2016), the Court held that "[a]n authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act."  Now that the Court has decided cases in both the copyright and patent realms, the issue of exhaustion would seem to be, well, exhausted.

However, all is not lost for patent owners.  The Court suggested that patent owners might still be able to control post-sale uses of patented goods via contract.  It would not be surprising if the Court revisited this particular issue in the near future, now that contract law, not patent law, seems to govern post-sale goods.  As emphasis shifts from patents to contracts, there should be a plentiful number of contract disputes taking the place of patent enforcement actions, and some of these cases will surely raise issues of import to the Court.

Tuesday, June 13, 2017

Dancing The Right Away

The history of dance is littered with tragically unhip steps like the funky chicken, the macarena, or the Gagnam Style invisible horse-ride.  On June 12, 2017, in its Sandoz v. Amgen decision interpreting the Biologics Price Competition and Innovation Act ("BPCIA"), the United States Supreme Court made another set of moves, commonly known as the "patent dance", equally unnecessary.  According to research biologic drug company Amgen, the BPCIA entitled Amgen to an injunction ordering generic biosimilar drug company Sandoz to turn over to Amgen the marketing application it had filed with the FDA.  The Court framed the question as follows:
Is an Applicant [generic biosimilar company] required by 42 U.S.C. § 262(l)(2)(A) to provide the Sponsor [reference biologic drug company] with a copy of its biologics license application and related manufacturing information, which the statute says the Applicant "shall provide," and, where an Applicant fails to provide that required information, is the Sponsor's sole recourse to commence a declaratory-judgment action under 42 U.S.C. § 262(l)(9)(C) and/or a patent-infringement action under 35 U.S.C. § 271(e)(2)(C)(ii)?
The Court's answer was unanimous:
If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of Title 28, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.
Under this rule, a reference biologic drug company whose FDA-licensed biologic drug entered the market first may seek declaratory judgment for infringement of its patent(s) by any would-be competitor generic biosimilar company failing to provide "its biologics license application and related manufacturing information", but may not seek federal injunctive relief to obtain that application and related information.  Nevertheless, opting out of the patent dance does narrow the options available to a generic biologics company, largely letting the research biologic company decide when and how to initiate litigation.

The Court also addressed two other important issues.  It left undecided questions about whether Amgen might be able to obtain injunctive relief under California state unfair competition law, though such availability might be federally preĆ«mpted.  However, contrary to Amgen's assertion that a generic biosimilar company must provide notice to a relevant research biologics company only after its product has been licensed by the FDA, the Court instead decided that "[a biosimilar drug] applicant may provide notice either before or after receiving FDA approval", suggesting that biosimilar drugs could reach market earlier than six months after licensure.

Perhaps the most important result of the Sandoz v. Amgen decision is clarification about the patent dance.  Just as the whip and nae-nae is decidedly optional, so too, the Supremes have decided, is the patent dance.

Thursday, April 27, 2017

AUTM In Spring

The Milken Institute released its latest annual report on academic inventing, licensing, and entrepreneurship on April 20, 2017.  The report, entitled Concept toCommercialization - The Best Universitiesfor Technology Transfer, includes a league table of top technology transferors.  The top ten are as follows:
1.  University of Utah
2.  Columbia University
3.  University of Florida
4.  Brigham Young University
5.  Stanford University
6.  University of Pennsylvania
7.  University of Washington
8.  Massachusetts Institute of Technology
9.  California Institute of Technology
10. Carnegie Mellon University
Notice a remarkable performance by Utah, which hosts two of the top four universities on the list.

Monday, April 24, 2017

Syngenta Pays The China Price In Court

I had the pleasure of being interviewed earlier today on Bloomberg Radio regarding Syngenta's many litigations for introducing its genetically-modified Viptera corn into domestic and international agricultural commodity markets.  Here is a link to the interview.  Thank you very much, David Sucherman (producer), June Grasso (cohost), Michael Best (cohost), and Margaret Cronin Fisk (legal reporter) for a fun chat about a fascinating scientific, economic, and legal issue.

Wednesday, March 29, 2017

All Patents Great And Small

Professor Jevin D. West and I published a new article, entitled "All Patents Great and Small - A Big Data Network Approach to Valuation", on March 27, 2017, in the Virginia Journal of Law and Technology.  The article is freely available for download here.  Here is a summary of our article:

Measuring patent value is an important goal of scholars in both patent law and patent economics.  However, doing so objectively, accurately, and consistently has proved exceedingly difficult.  At least part of the reason for this difficulty is that patents themselves are complex documents that are difficult even for patent experts to interpret.  In addition, issued patents are the result of an often long and complicated negotiation between applicant and patent office (in the United States, the United States Patent & Trademark Office), resulting in an opaque “prosecution history” upon which the scope of claimed patent rights depends.  In this article, we approach the concept of patent value by using the relative positions of issued United States patents embedded within a comprehensive patent citation network to measure the importance of those patents within the network.  Thus, we tend to refer to the “importance” of patents instead of “value,” but there is good reason to believe that these two concepts share a very similar meaning.  Our study examines both patent litigation and patent importance, and suggests that litigated patents tend to be more important than non-litigated patents, and the higher the federal court level in which patent litigation takes place the more important the patents there litigated tend to be.  These findings are consistent with the findings of influential studies on patent value carried out by Allison et al. in 2004 and 2009, in which litigated patents were generally found to be more valuable than non-litigated patents and those litigated most often were found to be especially valuable.  Our findings also reveal marked differences in the mean and median importances of patents litigated in different federal district courts.  Finally, we find several geographic clusters of federal district courts characterized by the litigation of disproportionately important patents.  These clusters do not cleanly correspond to traditional assumptions about where, geographically, important technologies, and the owners of patents that claim them, tend to be located.  Somewhat unexpectedly, the largest federal district court cluster for highly important patent litigation spans the southern-central United States.  Future studies will attempt to address a number of additional questions that arise out of our findings in this article.
We thank the dedicated and talented staff of the Virginia Journal of Law and Technology, our research assistants who performed miracles compile and analyze mountains of data, and our many colleagues and family members who provided incisive and valuable comments and suggestions about how to improve our article.  We hope "All Patents Great and Small" will be the first in a series of articles in which we describe our work on big patent data. 

Tuesday, March 28, 2017

Temporal Patent Hygiene

Section 286 of the United States ("U.S.") Patent Act defines a window of opportunity in which a patent owner may recover for an alleged infringement:
Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action. 
In the case of claims against the United States Government for use of a patented invention, the period before bringing suit, up to six years, between the date of receipt of a written claim for compensation by the department or agency of the Government having authority to settle such claim, and the date of mailing by the Government of a notice to the claimant that his claim has been denied shall not be counted as part of the period referred to in the preceding paragraph.
In its March 21, 2017, decision, SCA Hygiene Products Aktibolag et al. v. First Quality Baby Products, a patent infringement dispute focusing on U.S. Patent No. 6,375,646 ("Absorbent Pants-Type Diaper"), the U.S. Supreme Court considered whether the ancient common law defense of laches could prevent recovery within a period specifically defined by a Congressional statute of limitations.  Laches is
the legal doctrine that a legal right or claim will not be enforced or allowed if a long delay in asserting the right or claim has prejudiced the adverse party. [Definition from LAW.COM]
The alleged diaper infringer, First Quality Baby Products ("First Quality") argued that SCA Hygiene Products Aktibolag et al. ("SCA Hygiene") waited so long before suing for patent infringement that laches precluded recovery.

[l]aches cannot be interposed as a defense against damages where the infringement occurred within the [six-year] period prescribed by [the statute of limitations in] §286.
Whether or not this is the best rule, it at least provides clarity about when an alleged infringer may or or may not be sued, providing a modicum of temporal hygiene in the often messy corpus of patent law.

Monday, March 27, 2017

Chevron Deference

A mere two days after Spring's official start, on March 22, 2017, six justices of the United States Supreme Court executed a nearly-perfect pyramid stunt in their Star Athletica v. Varsity Brands decision.  The question before the court was
whether the arrangements of lines, chevrons, and colorful shapes appearing on the surface of [Varsity Brands'] cheerleading uniforms are eligible for copyright protection as separable features of the design of those cheerleading uniforms.
The alleged infringer, Star Athletica, argued that such shapes imprinted on cheerleading uniforms are uncopyrightable subject matter because they constitute "useful articles".  The Supremes' majority opinion noted that
[t]he ultimate separability question, then, is whether the feature for which copyright protection is claimed would have been eligible for copyright protection as a pictorial, graphic, or sculptural work had it originally been fixed in some tangible medium other than a useful article before being applied to a useful article.
The Court summarized the test it would apply:
...a feature of the design of a useful article is eligible for copyright if, when identified and imagined apart from the useful article, it would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium.
Applying its test to the facts of the case, the Court explained
First, one can identify the decorations as features having pictorial, graphic, or sculptural qualities. Second, if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as “two-dimensional . . . works of . . . art,” §101. And imaginatively removing the surface decorations from the uniforms and applying them in another medium would not replicate the uniform itself. Indeed, respondents have applied the designs in this case to other media of expression—different types of clothing—without replicating the uniform. [Omitted].
Siding with Varsity Brands, the Court noted that "[t]he decorations are therefore separable from the uniforms and eligible for copyright protection. [Footnote omitted]"

Though Canal Street hawkers of knockoff clothing may now have to consider dismounting from their copyright-infringing business practices, clothing designers not wanting their designs copied will likely lead an enthusiastic cheer.  Only time will tell whether Star Athletica v. Varsity Brands leads to more or less innovative fashion.