Monday, 10 December 2018 16:16

When is an invention "on sale?"

The Supreme Court is currently posed with the question: Does the confidential sale of an invention disqualify that invention from later patenting? Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 138 S.Ct. 2678 (2018).

The patent statute does not directly address this question, but does state that an invention is precluded from patenting if that invention was “on sale” or “in public use” prior to the filing date for that patent application. Years of case law have added to the meanings of these terms. But now there is an additional term, “or otherwise available to the public.”  35 U.S.C. § 102(a)(1).  Under which circumstances does this new term preclude patenting? Circumstances that are applicable to the certified question for the Court?

The Supreme Court has previously ruled that public use of an invention will not preclude patenting if the public use is for experimentation.  Pfaff v. Wells Elecs., 525 U.S. 55, (1998).  That Court qualified the statutory language, reading in the experimentation use.  But that Court did not rule on the “on sale” criteria except to identify a distinction between experimental use and “products sold commercially.” Is there a similar qualification of a commercial sale, supported by precedent and legislative history, that can exempt a confidential sale from being barred from patenting?

And where would “otherwise available to the public” fit in here? Does “otherwise” mean that the previous items in the list, such as “on sale,” are also to be understood as “available to the public?” Or is it a modern catch-all for new patentability conditions that were not contemplated when the provision was written in 1952?

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Following our previous report, the U.S. Supreme Court held in WesternGeco LLC v. ION Geophysical Corp. that WesternGeco, the patent owner, can recover lost foreign profits as a result of ION's infringement under §271(f)(2) of the Patent Act. WesternGeco LLC v. Ion Geophysical Corp., U.S., No. 16-1011, 6/22/18.  Justice Thomas delivered the majority opinion in the 7-2 decision.

Over ION's objection that the lost-profits damages occurred outside of the United States and the foreign conduct after ION's infringement was necessary to give rise to the infringement, Justice Thomas wrote that awarding lost-profits damages under the circumstances was a domestic application, and therefore, consistent with the presumption against extraterritoriality that presumes federal statutes apply within the U.S.

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The Supreme Court issued a unanimous decision earlier this week in Halo Electronics, Inc. v. Pulse Electronics, Inc., granting district courts the discretion to award enhanced damages up to three times the amount found or assessed, pursuant to 35 U.S.C. §284, against those guilty of patent infringement, however, limiting the award to “egregious cases of misconduct beyond typical infringement.”  The decision reverses the Federal Circuit’s two-part test, established in In re Seagate Technology, LLC, as inconsistent with the language of §284.  Seagate, which required the patent owner to satisfy an objective and subjective test before a court could increase damages for willful infringement, was found to be “unduly rigid” and confined the ability of district courts to exercise the discretion §284 conferred on them. For more on this case, visit  http://www.supremecourt.gov/opinions/15pdf/14-1513_db8e.pdf

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In an ongoing dispute between VirnetX Inc. vs. Apple Inc., Apple Inc. had challenged the validity of two asserted VirnetX patents (US Patent Nos. 6,502,135 and 7,490,151).  Apple was initially unsuccessful in its IPR institution requests, because it was time barred under the IPR statute of limitations, which requires a PTAB IPR challenge to be brought within 1-year from the date that the complaint is served on the defendant.  After several failed attempts, Apple Inc. recently circumvented the IPR statute of limitations, via 35 U.S.C. 315(c) joinder to another petitioner, The Mangrove Partners Master Fund, Ltd.

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The new Federal Rules of Civil Procedure (FRCP) will take effect on December 1, 2015, and shall govern all proceedings in civil cases commenced thereafter.  Specific to patent litigation, the 2015 FRCP eliminated the previous form patent complaints (i.e. Civil Form 18) that allowed patentees to file a complaint without specifically setting forth its theory of infringement.  After taking effect, the new FRCP will require a patentee's initial complaint to comply with the Supreme Court rulings in Twombly and Iqbal, under which the patentee must set forth sufficient facts to make a claim for relief plausible.  In patent cases, courts may therefore begin requiring a showing of which patent claims are being infringed and possibly the inclusion of at least one claim chart comparing the accused product with at least one claim.

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The standard for willful patent infringement will be reviewed this term by the Supreme Court of the United States, as reported by SCOTUSblog. The Court agreed to accept two cases that involve the issue of enchanced damages in patent infringement litigation, Halo Electronics v. Pulse Electronics, and Stryker Corp v. Zimmer. Under the Patent Act, the owner of a patent may seek triple damages where willful infringement has been proven. The Supreme Court is expected to consider the proper framework for determining whether infringement in a particular case is willful. A decision in these consolidated cases will be rendered by June 2016. 

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As discussed earlier on our blog, the Supreme Court has granted cert on two patent cases related to fee shifting under 35 U.S.C. § 285, including Highmark Inc. and Octane Fitness.  A recently issued Federal Circuit decision, in Kilopass v. Sidense Corp., may shed some light in how the Supremes might rule on the issue later this year, in which both Judge O'Malley and Chief Judge Rader issued opinions calling for the expansion of exceptional-case attorney fees.

Published in Patent