by Lee Gesmer | Jan 18, 2010 | Patents, Procedure
I’ve written before about how dangerous waiver is for lawyers. It lurks everywhere, like sharp coral just a few inches beneath the water off an inviting tropical beach.
In Microsoft’s recent loss to i4i in federal court in Texas affirmed by the Federal Circuit, Mister Softee (stock trader slang for Microsoft), found itself hung up on a reef with razor sharp coral when the Federal Circuit may have refused to reverse a $290 million trial verdict on what the court considered a waiver technicality.
As every experienced trial lawyer knows, trials are a virtual waiver landmine – if you don’t proffer the evidence a judge excludes, you’ve waived it on appeal. If you don’t object to jury instructions, you waive the right to challenge them on appeal. This list seems almost endless, and there’s nothing a federal court of appeals likes more than to dismiss an argument on the grounds that it was, somehow, waived during trial.
This having been said, there are a few potential waivers points that lawyers absolutely MUST keep in mind – to the point where the documents that will avoid the waiver should be prepared before trial, subject only to updating as the trial progresses and the moment of truth (or waiver) is reached. One of the most important potential waiver risks arises under FRCP 50.
Before the case goes to the jury the defendant MUST move for judgment as a matter of law (or “JMOL”) – failure to do so means the defendant has waived its right to do so following the jury verdict. Thus, even if the ultimate jury verdict is without a legally sufficient evidentiary basis, the judge may not upset it if the defendant failed to make a timely motion for JMOL. (The reasons for this are arcane, and not of great importance here, but the fact that the motion MUST be made pre-jury, in order for it to be made post-jury is very important). Best practice is to move for JMOL at the close of plaintiff’s case, and again at the close of all of the evidence.
The JMOL motion must address all issues that form the basis for the motion, and it must be specific – the lawyer cannot simply state, “We move for judgment as a matter of law because plaintiff has failed to satisfy the elements of its cause of action.” This is where the trial lawyer, who is preparing for closing argument, working on jury instructions, dealing with the client, must pay attention. The best practice is to have an associate, with a checklist, who will remind you (force you, if necessary) to address this issue.
What happened in the i4i/Microsoft case?
At the close of evidence Microsoft moved for judgment as a matter of law on various grounds:infringement, willfulness and validity of the i4i patent, but not obviousness as to a certain piece of prior art or, quite importantly, damages.
As a result, the Federal Circuit held that it was barred from considering whether the jury’s damages award was supported by the evidence. as Microsoft requested that it do. The Federal Circuit stated:
Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different. Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $200 million damages award was “grossly excessive or monstrous” in light of Word’s retail price and the licensing fees Microsoft paid for other patents. Cf. Lucent, 580 F.3d at 1325-32. As this court did in Lucent, we could have analyzed the evidentiary basis for the Georgia-Pacific factors, and whether the benchmark (XMetaL) was sufficiently comparable.
However, we cannot. Instead of the more searching review permitted under Rule 50(b), we are constrained to review the verdict under the much narrower standard applied to denials of new trial motions. . . . This standard is highly deferential: we may set aside a damages award and remand for a new trial “only upon a clear showing of excessiveness.” . . . To be excessive, the award must exceed the “maximum amount calculable from the evidence.” . . . We must affirm unless the appellant clearly shows there was no evidence to support the jury’s verdict. . . .
Under this highly deferential standard, we cannot say that Microsoft is entitled to a new trial on damages. The damages award, while high, was supported by the evidence presented at trial, including the expert testimony—which the jury apparently credited. . . . Given the intensely factual nature of a damages determination and our deferential standard of review, we are not in a position to second-guess or substitute our judgment for the jury’s.
No one can say whether the Federal Circuit would have upset the damages award had it applied the more rigorous standard that would have resulted from a pre-jury JMOL motion on damages, but clearly, one must wonder.
To thicken the plot, Microsoft has now asked the Federal Circuit to rehear the case en banc (Microsoft’s brief requesting en banc review here), arguing that the JMOL rule does not apply to damages (since, by definition, damages have not been awarded pre-jury verdict), and presenting a number of other challenges to the damages award. The brief asserts that this case represents “the largest [damages award] ever sustained on appeal in a patent infringement case.”
It’s rare for a federal circuit court to rehear a case en banc where some fundamental issue of law of broad applicability is not at stake, so it will be interesting to see how the Federal Circuit handles this request. Worst case, should it decline, lawyers will have to add to their trial checklist a JMOV motion directed at damages, even before the jury awards damages.
by Lee Gesmer | Dec 10, 2009 | Patents
Well, sort of.
You can wait until the end of the term to hear oral argument in Bilski v. Kappos, or you can listen to Professor Doug Lichtman’s students’ impassioned reading of the transcript, on the superb Intellectual Property Colloquium. I found this reading to be very accessible – a new twist on audiobooks.
IP Colloquium is by far my favorite legal podcast. Professor Lichtman has great guests and provides thoughtful commentary. This Shakespearean treatment of an appeal hearing is inspired.
(Nice summary of the background of Bilski, and what’s at issue, on Bill Trout’s blog).
And, some nice quotes from the justices, trying to figure out the limits of patent protection. Could a patent protect –
“somebody who writes a book on how to win friends and influence people?””horse whisperers?””a method for speed dating?”
“a great wonderful, really original method of teaching antitrust law?”
“actuarial tables and risk formulas?”
In the meantime the CAFC is applying its “machine or transformation” test from its en banc ruling in In re Bilski. A recent example of this is Prometheus Labs v. Mayo, issued on September 16, 2009, where the patentable invention was a “pro-drug that upon administration to a patient converts to 6M-P, which are used to treat inflammatory bowel diseases (“IBD”) such as Crohn’s disease and ulcerative colitis.” The CAFC held, among other things, that patent law does protect the transformation of natural phenomena where a method “transform[s] an article into a different state or thing.” This case will be an important contribution to post-Bilski law as applied to life science-based method claims, assuming Bilski emerges from the USSC relatively unscathed.
Update: the recording of the actual oral argument in Bilski is here (mp3 file).
by Lee Gesmer | Nov 25, 2009 | Courts, Patents
CAFC Chief Judge Paul Michel doesn’t pull punches when he states his views on problems with the U.S. patent system and the federal courts more generally, and he didn’t pull too many when he announced his upcoming retirement from the CAFC on on November 20, 2009. A few notable quotes from his speech:
On interlocutory appeals of claim construction rulings to the CAFC: A provision in a Senate patent reform bill would allow interlocutory appeals of Markman rulings. Predictably, Judge Michel doesn’t like the idea. He states that interlocutory appeals would double or triple the case load on the CAFC, and the court “can’t handle it.”
The median time to adjudicate a patent case before the CAFC? One year “from filing, to the opinion going up on the Internet.” Interlocutory appeals would double this to two years.
And, interlocutory appeals are unnecessary as a practical matter, he argues. Some interesting statistics from Judge Michel: “About 3,000 [patent cases] are filed a year, about 2,700 settled spontaneously. Of the remaining 300, about 200 are resolved on summary judgment, almost always based on claim construction. . . . The remaining 100 go to trial. . . . there almost are never second trials. There usually aren’t even first trials.”
On Upcoming Retirements from the CAFC: The CAFC has 11 active judges and five senior judges. . . . [t]he . . . little secret here is there are five other judges of our active 11 who could retire tomorrow, or take senior status. . . . [p]otentially five other seats at any time could become vacant. A year hence . . . two more will be eligible for that conversion of status. So there could be seven more vacancies within a year of tonight.”
On Diversity: “We don’t have and have never had an African-American judge on our Court. Nor do we have an Asian-American heritage judge on our Court. We do have three women out of 16, but three women out of 16 is less than a quarter — it’s half the population.”
As I’ve noted before, Massachusetts U.S. District Judge Patti Saris has been mentioned as a strong candidate for a CAFC seat.
And of course:
Earlier today, I sent a letter to the President informing him of my intention to retire from active judicial service, effective May 31, 2010. . . . I had always imagined I would stay a senior judge until I was carried out of the courthouse in a pine box. But I’ve come to a different conclusion, because I see a huge need for someone to be able to speak out on behalf of the court system generally — of the judges, the lawyers, and the litigants.
by Lee Gesmer | Apr 6, 2009 | Patents
Judge Marylin Hall Patel, a federal district judge in the North District of California (San Francisco/Silicon Valley) since 1980 and Chief Judge in the District from 1997 – 2004, is a well known federal judge when it comes to intellectual property matters. For example, Judge Patel decided the Grokster case at the district court level, which eventually was affirmed by the Supreme Court, and she has decided many patent cases. When she speaks on IP matters, one would do well to listen
Therefore, her March 26, 2009 decision in Cybersource v. Retail Decisions is of no small significance. In this case Judge Patel applied In re Bilski to invalidate two business method patent claims in U.S. Patent No. 6,029,154, titled “Method and system for detecting fraud in a credit card transaction over the Internet.” The CAFC’s decision in Bilski requires that a process either be tied to a machine or apparatus or involve a transformation, and Judge Patel held that the ‘154 patent failed this “machine-or-transformation” test.
Judge Patel held that a credit card number is not a physical object, thereby failing the “transformation” test, and she rejected the argument that because the claims were tied to the Internet they satisfied the “machine” test, since “one cannot touch the Internet.”
At the conclusion of her opinion she stated:
In analyzing Bilski, one is led to ponder whether the end has arrived for business method patents, whose numbers swelled following the decision in State Street. Without expressly overruling State Street, the Bilski majority struck down its underpinnings. This caused one dissenter, Judge Newman, to write that State Street “is left hanging,” while another dissenter, Judge Meyer, registered “an emphatic ‘yes’” to rejecting State Street, and a third, Judge Rader, queried whether the court was willing to decide that the entire field of business patents is “undeserving of incentives for invention.” 545 F.3d at 995, 998, 1014. Although the majority declined say so explicitly, Bilski’s holding suggests a perilous future for most method patents.
The observations of several Justices suggest that this issue may be expected to receive serious consideration by the Supreme Court . . . The closing bell may be ringing for business method patents, and their patentees may find they have become bagholders.
by Lee Gesmer | Mar 20, 2009 | Patents
It would be an understatement to observe that Microsoft’s patent suit against Dutch GPS vendor company TomTom has been closely watched. Why? Because Microsoft alleges that several of the patents at issue are infringed by TomTom’s implementation of the Linux kernel. In this first month of the dispute, the most urgent question has been this: will TomTom fight or fold? Now we have the answer: TomTom has decided to fight – and perhaps fight hard. Yesterday, it brought its own suit against Microsoft in a Virginia court, alleging that Microsoft is guilty of infringing several of TomTom’s own patents.
The question that many Linux supporters are now asking is this: is this good news for Linux, or bad? Here are my thoughts on that important question.
Continue reading ….
by Lee Gesmer | Mar 18, 2009 | Patents
As I’ve said so many times in this blog, it’s not the law you need to fear, it’s the judge.
In CU Medical v. Alaris Medical System (a patent infringement case involving medical valves) the patent owner/plaintiff argued that the term “spike,” described in the patent as “a pointed instrument,” included non-pointed structures, such as a tube.The California U.S. District Court trial judge didn’t take kindly to this frivolous argument (in the eyes of the judge). The judge also found that the plaintiff had made “multiple, repeated misrepresentations . . . to the Court,” another no-no.
The trial court imposed sanctions totalling $4.4 million under 35 U.S.C. Section 285 (“The court in exceptional cases may award reasonable attorney fees to the prevailing party”) as well as Rule 11 sanctions for good measure.
The CAFC affirmed. Here’s is a link to the case: CU Medical v. Alaris Medical System.
by Lee Gesmer | Mar 17, 2009 | Patents
“Justice belongs to those who claim it, but let the claimant beware lest he create new injustice by his claim and thus set the bloody pendulum of revenge into its inexorable motion”
Frank Herbert
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For those who have access to the American Lawyer (and I realize that at $430/year that’s a tiny percentage of lawyers, and almost no non-lawyers), there’s a interesting article in the March 2009 issue on the impact the Roberts Court’s patent rulings in appeals from the CAFC (six cases, six reversals) has had on the CAFC. The article, titled “The Error of Their Ways,” shows the extent to which the USSC is pushing the CAFC in the direction of a more moderate (less permissive) application of patent law. According to this article, the Supreme Court has the CAFC questioning everything they have ever known about patent law. If this article is to be believed, the Supreme Court has effected a major retrenchment in U.S. patent law.
Oh well. Who said that the law was immune from creative destruction?
You may be able to find the American Lawyer in a library, but I doubt that many libraries would pay that subscription ….
by Lee Gesmer | Mar 14, 2009 | Patents
In In re Lewis Ferguson, a March 6, 2009 decision from the Court of Appeals for the Federal Circuit, the applicant sought to patent “a marketing paradigm for bringing products to market.” After the application was denied by the various levels of the Patent Office bureaucracy for lack of patentable subject matter, the applicant appealed. The CAFC court quoted this claim from the application as an example:
A paradigm for marketing software, comprising:
a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy.
Novel and nonobvious? It may just be me, but if this isn’t a distribution system that’s been implemented a million times, I’ll be damned.
The CAFC didn’t like it either, but they didn’t even get that far. Relying on In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), the Court observed:
Applicants’ method claims are not tied to any particular machine or apparatus. Although Applicants argue that the method claims are tied to the use of a shared marketing force, a marketing force is not a machine or apparatus. As this court recently stated . . . a machine is a “‘concrete thing, consisting of parts, or of certain devices and combination of devices.’ This ‘includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.’” . . . . Applicants’ method claims are not tied to any concrete parts, devices, or combination of devices.
Nor do Applicants’ methods, as claimed, transform any article into a different state or thing. At best it can be said that Applicants’ methods are directed to organizing business or legal relationships in the structuring of a sales force (or marketing company). But as this court stated in Bilski, “[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”…
Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” . . . and as Applicants conceded during oral argument, “you cannot touch the company.”
Of course, Bilski is seeking to appeal the CAFC’s decision to the Supreme Court. If the appeal is accepted all bets are off on the “machine or transformation” test established by the CAFC in Bilski and applied here.
Here is a link to the case discussed above: In re Lewis Ferguson.
And here is a link to the Boston Patent Law Association’s (BPLA) brief urging certiorari and reversal in Bilski.
by Lee Gesmer | Mar 5, 2009 | Patents
It would be nice if lawyers didn’t have to call their clients and tell them that their company had been sued for patent infringement in the Eastern District of Texas (EdTX). “Where? Where’s that?” “What, you’ve never heard of Marshall, Texas?” you reply. “Never been to Tyler, Beaumont or Lufkin? Kind of quiet evenings after the sidewalks are rolled up, but your choice of BBQ rib joints is almost endless, and traffic isn’t a problem.”
As I’ve written before EdTX has evolved into a hotbed of patent litigation, although it has cooled a bit as of late. When you’re talking to a lawyer in Boston and you learn that he or she is heading to Texas, it’s a good bet that the destination is somewhere in the Eastern District. The EdTX has assembled some frightening statistics regarding number of patent cases (large) and the success rate of plaintiffs (high).
The lawyers in that part of the country joke that they used to do PI law (personal injury), and now they do IP law (intellectual property). But, everyone has known for a while that this couldn’t last forever, and that EdTX might lose its hold on patent litigation once W left office.
Indeed, the patent reform litigation just filed in the House and Senate has the EdTX in its crosshairs. The Senate bill states (excerpted):
A party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court. Venue is only proper were (a) defendant is incorporated; (b) defendant has its principle place of business; (c) where the defendant is permanently located and has committed substantial acts of infringement; or (d) where the plaintiff resides if the plaintiff is a nonprofit or individual inventor. The court should transfer venue to avoid evidentiary burdens when transfer can be accomplished without causing undue hardship to the plaintiff.
If passed, a provision like this would cut into the patent litigation industry in EdTX, and the lawyers there might have to return to PI once the cases in their pipeline run out. That may make them sad, but it will make lawyers and companies in the rest of the U.S. quite happy.
by Lee Gesmer | Feb 25, 2009 | Patents
Once you get a patent, it costs a lot to maintain it. For most categories of patentees, the maintenance fees after issuance are $980, $2,480 and $4,110 at 3.5 years, 7.5 and 11.5 years, respectively. If the fee is not paid, the patent is forfeited.
Top patent blogger Dennis Crouch has an interesting set of statistics on his site, discussing the “fall-off” rate of maintenance fees paid at the end of each of these periods, beginning in July 1998. The non-renewal rate is significant. As Mr. Crouch observes, the non-renewals shorten the life of the median patent from 17 years to 12 years. Click here for a more detailed explanation of the study, and a scatter plot graphic.
It’s no great surprise that many patents fail to survive, but it’s interesting to see just how many are abandoned because their owners don’t deem it to be worth the expense to keep them alive.
by Lee Gesmer | Jan 17, 2009 | Courts, Patents
According to the front page of the January 12, 2009, National Law Journal (above the fold), Massachusetts U.S. District Court Judge Patti B. Saris is on the “short list” to be appointed to the Court of Appeals for the Federal Circuit – the so-called “science court” that sits in Washington D.C. and hears patent appeals from all of the U. S. District Courts in the United States.
When it comes to patents, Judge Saris is the “stand out” judge in Massachusetts. She’s shown a liking and a knack for patent litigation, and lawyers who draw her in their patent cases are appreciative. She also is active on “the circuit,” speaking at seminars and events where judges are asked to share their thoughts on patent law issues – in other words, she’s an authority on the subject, and her influence extends far beyond her court room.
The NLJ has an extensive article, the main point of which is that the CAFC, which has 12 judges, is expected to lose as many as half that number to retirements in the next few years. Not only is Judge Saris on the short list of about 10 candidates for the CAFC, but she is one of only three judicial candidates.
Needless to say, it would be a blow to the Massachusetts federal bench if it lost a judge of this caliber, but it would be a great honor and opportunity for Judge Saris.
by Lee Gesmer | Nov 27, 2008 | Noncompete Agreements, Patents
If you’re a federal district court, that is.
The answer? You need something not every federal district has. The Eastern and Southern Districts of Texas have them. The Northern District of California has them. The Districts of Pennsylvania (Western), Georgia (Northern) and Illinois (Northern) have them. In fact, so many U.S. District Courts have them that its getting difficult to keep up. Like so many things in life, at first its an advantage to have them, and eventually it becomes necessity.
And now the U.S. District Court for the District of Massachusetts has them.
What are they? Local procedural rules that apply only to patent cases. Local patent rules recognize that patent cases present legal, technical and discovery issues that call for specialized handling. In most jurisdictions these rules require early claim identification and invalidity defenses, attempt to schedule early claim construction (by the Court or by stipulation of the parties) and generally attempt to speed up the patent litigation process. After all, plaintiffs tend to seek out jurisdictions where they can get to trial as quickly as possible, since delay only increases expenses, while speed tends to lead to settlements.
Frankly, the Massachusetts local patent rules appear on the weak end of the spectrum – they focus entirely on the initial Local Rule Rule 16.1 statement to the court, and require the parties to propose a schedule for disclosure of infringement claims and invalidity defenses, address issues associated with claim construction and tutorials for the Court (somewhat common in patent suits), and address various discovery-related issues. By contrast, the Patent Rules in the Eastern District of Texas (which attracts a great deal of patent litigation), sets strict requirements that far exceed the Massachusetts rules.
It’s unlikely that that the Massachusetts patent rules will turn Massachusetts into a hotbed of patent litigation, but you’ve got to start somewhere. Perhaps this will prove to be the first step toward rules that will turn Massachusetts into the “rocket docket” so admired by plaintiffs lawyers and feared by defendants.
