Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

SP Techs., LLC v. Garmin Int'l., Inc., No. 08 C 3248, Slip Op. (N.D. Ill. Nov. 3, 2009) (Pallmeyer, J.).*

Judge Pallmeyer denied the individual inventor's ("Inventor) motion to intervene in this patent case.  Inventor sought to intervene in this case arguing that the assignment of his patent to plaintiff SP Technologies ("SPT") was invalid because SPT coerced Inventor to sign it.  The Court held that Inventor's argument was unpersuasive.  Inventor admitted signing the assignment, but argued it was under duress.  But the Court held that Inventor could not intervene, even if Inventor could prove the duress.  Inventor failed to explain why SPT would not adequately represent Inventor's interests in the case.  In fact, Inventor even agreed that his interests were aligned with SPT.  Intervention, therefore, was not proper.  Inventor was, however, free to pursue his claims in a separate suit against SPT.

*  Click here for more on this case in the Blog's archives.

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As I prepare to enjoy Chicago's Thanksgiving Day parade and then an excellent meal with my family, I am pausing to say thank you to the many people that support the Blog.  I am grateful that after more than three years of blogging, my readership continues to grow. But more than that, I am grateful for the many people that I have met and  the friendships and client-relationships that I have developed from the Blog. I also need to thank LexBlog.  In addition to being the best blog team I could imagine, they have become trusted friends and advisers. I am also appreciative of my firm for allowing me the freedom to blog.  Finally, I am grateful for my family who allow me the time to pursue blogging.

Happy Thanksgiving.

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The Northern District of Illinois is revising its Local Rules effective December 1, 2009, to comport with the Federal Rules of Civil Procedure (as well as the criminal, appellate and bankruptcy rules) changes effective on the same date.   The FRCP are being revised to change all time periods to seven day multiples to make calculating deadlines simpler.  In accordance with those revisions, the Local Rules have been revised so that all time periods less than thirty days are changed to multiples of seven, according to the following schedule:

The Local Rule 5.3(a) two-day notice period remains two days.  And the notice periods set by individual judges remain unchanged.  Weekends and holidays are not counted in calculating either of these deadlines.

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Guiness World Records Ltd. v. John Doe, d/b/a World Records Academy, No. 09 C 2812, Slip Op. (N.D. Ill. Oct. 20, 2009) (Shadur, Sen. J.)

Judge Shadur granted defendant World Records Academy’s (Academy”) Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction in this trademark dispute regarding plaintiff’s GUINESS WORLD RECORD and WORLD RECORD trademarks. Academy’s website alone did not create specific jurisdiction because it did not allow users to purchase Academy's products, it only told them how to buy the products. Academy did have limited sales into Illinois – three sales to two customers - and sent form email solicitations to world record holders from Illinois. And the Court held that Academy’s emails and de minimis sales could not create jurisdiction, either general or specific. The Court reasoned that if de minimis sales created jurisdiction, alleged intellectual property infringers could be hailed into almost any jurisdiction nationwide.

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Click here for the Seventh Circuit's new proposed pattern trademark jury instructions.*  The committee that prepared the instructions included Northern District of Illinois Judges Kendall and Kennelly, as well as a broad spectrum of attorneys from academic, government and private practice.

The pattern instructions are impressive for their thoroughness. They are also very well cited, making them an excellent primer on Seventh Circuit trademark law. Of particular note, the instructions do not include a dilution instruction because since Congress's 2006 revision of the dilution laws, there has not been sufficient appellate interpretation. 

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Donovan v. Quade, No. 05 C 3533, Slip Op. (N.D. Ill. Oct. 15, 2009) (Nolan, Mag. J.)

Judge Nolan granted in part defendants/counterplaintiffs’ motion for summary judgment in this copyright suit. Initially, the Court deemed admitted all of plaintiff’s properly supported supplemental statements of material fact because defendants failed to factually support their denials of the facts pursuant to Local Rule 56.1(b)(3)(B). The plaintiff and individual defendant were co-authors of the well-known play Late Night Catechism (“LNC”) and its primary character “Sister” a fictional Roman Catholic nun. The individuals founded defendant QDE in 2000 as a vehicle for producing LNC. The individual defendant also made plays that were derivative works of LNC and licensed them separately from QDE. Plaintiff also made derivative works, but only licensed them through QDE.

False Designation of Origin and Deceptive Trade Practices

The Court granted summary judgment as to plaintiff’s false designation of origin and deceptive trade practice claims because plaintiff did not respond to defendants’ summary judgment arguments as to those claims.

Deprivation of Copyright Revenues

Because the Court held that the parties were not governed by a partnership agreement, copyright law governed any revenues from LNC. The issue, therefore, was whether plaintiff’s plays were derivative of the parties’ joint work LNC. First, the Court held that LNC was a joint work of the parties. The parties’ copyright application identified the parties as joint authors, and plaintiff failed to put forth sufficient evidence to counter the presumption created by the application.

The Court also held that plaintiff’s later plays were derivative of LNC. Defendants put forth evidence that plaintiff’s plays all included the Sister character and, therefore, were based upon and derivative of LNC. Plaintiff’s “answers, conclusory denials” were not sufficient to overcome plaintiff’s evidence. Because the parties were joint authors of LNC and because plaintiff’s subsequent plays involving the Sister character were derivative of LNC, defendant was granted summary judgment regarding the demand for an accounting.

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Se-Kure Controls, Inc. v. Senneco Sol’ns., Inc., No. 08 C 6075, Slip Op. (N.D. Ill. Oct. 23, 2009) (Holderman, C. J.)

Chief Judge Holderman stayed the case as to plaintiff Se-Kure Controls’ ‘590 patent while Se-Kure appealed Judge Guzman’s invalidity decision regarding the ‘590 patent. The Court, however, did not stay the case as to Se-Kune’s other two patents-in-suit - the ‘807 and ‘822 patents. The Court held that defendant Senneco would be prejudiced by a delay as to the ‘807 and ‘822 patents. And the appeal as to the ‘590 patent would not simplify issues regarding either the ‘807 or ‘822 patents.

But the Court held that the burden of staying just the ‘590 patent issues would be minimal. If the ‘590 patent invalidity decision were upheld it would reduce the issues for trial. If the decision was overturned, little additional discovery would be required. And the parties had already agreed to adopt Judge Guzman’s claim constructions, with only a few additional terms requiring construction.

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SP Techs., LLC v. Garmin Int'l., Inc., No. 08 C 3248, Slip Op. (N.D. Ill. Sep. 30, 2009) (Pallmeyer, J.)

Judge Pallmeyer denied defendants' motion for summary judgment of inequitable conduct in this patent infringement case. Plaintiff SP Technologies ("SPT") asserted a patent for a touch screen keyboard that cannot be moved, resized or closed by a user. Defendants argued the patent should be held unenforceable based upon the inventor's alleged failure to disclose to the Patent Office twenty lines of code for disabling a close button allegedly copied from a website and used in the patent, as well as certain alleged prior art Palm Pilot devices.

Intent to Deceive

The Court held there were questions of fact as to the investor's alleged intent to deceive the Patent Office as to both alleged pieces of prior art. With respect to the code, there was evidence that the inventor believed there was no need to submit any evidence about a portion of the code because only the entirety of the code was relevant to patenting. Regarding the Palm devices, the inventor believed he had disclosed the Palm Pilots because they were mentioned in articles submitted to the Patent Office. 

Materiality

Regarding the allegedly copied code, the Court noted that few inventors could be considered the sole inventor of every aspect of their invention. Almost all inventions include some known components. And defendants did not prove that the single component of the invention represented by the allegedly copied code was central to patentability. The Court did, however, note that it appeared the code was likely copied as it was identical to that on the website and in other manuals, down to a misspelling. The Court accepted as evidence a printout of a copy of the website at issue from the relevant 1999 date. The copy of this website was maintained by the Internet Archive, or the Way Back Machine. The printout was authenticated by an Internet Archive employee that explained the Internet Archive’s process of maintaining historic copies of websites.

Similarly, defendants did not present sufficient evidence of the materiality of the Palm devices. Defendants offered only pictures without proof, such as a manual, that a user could not move, resize or close the keyboard.

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The Supreme Court heard oral argument in the Bilski case Monday afternoon.  Click here for a transcript of the arguments.  Here are a few of the highlights from Bilski's argument:

JUSTICE GINSBURG: But you say you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable?

MR. JAKES: They are eligible for patenting as processes, assuming they meet the other statutory requirements.

JUSTICE BREYER: So that would mean that every -- every businessman -- perhaps not every, but every successful businessman typically has something. His firm wouldn't be successful if he didn't have anything that others didn't have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That's how he made his money.

And your view would be -- and it's new, too, and it's useful, made him a fortune -- anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.

* * *

JUSTICE BREYER: So you are going to answer this question yes. You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things - (Laughter.)

JUSTICE BREYER: It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

MR. JAKES:  Potentially.

And here are some of the highlights from the government's argument:

JUSTICE SOTOMAYOR: No ruling in this case is going to change State Street. It wasn't looking at process or the meaning of "process." It was looking at something else.

* * *
 

CHIEF JUSTICE ROBERTS: Mr. Stewart, I thought I understood your argument up until the very last footnote in your brief. And you say this is not --simply the method isn't patentable because it doesn't involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the -- the process then it is patentable. I -- I -- it -- that takes away everything that you spent 53 pages establishing.

* * *

CHIEF JUSTICE ROBERTS: But if you look at your footnote, that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.

MR. STEWART: And all we've said is that it might be enough; that is, hard questions will arise down the road as to where do you draw the line, to what extent must the machine or the transformation be central --

CHIEF JUSTICE ROBERTS: So you think it's a hard question. If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it -- then it is?

MR. STEWART: I think if it's simply using a calculator for its preexisting functionality to crunch numbers, very likely that would not be enough. But what we see in some analogous areas is that the computer will be programmed with new software, it will be given functionality it didn't have before in order to allow it to perform a series of calculations, and that gets closer to the line. And again --
 

CHIEF JUSTICE ROBERTS: Well, your footnote -- I don't mean to dwell on it -- it says to identify counterparties to the transactions. So that if what you're trying to get is the -- the baker who sells bread, because you are going to hook him up with the grocer who sells, you know, in the grocery store, if you punched in in your search station, you know, give me all the bakers in Washington, that would make it patentable?

MR. STEWART: Again, we are -- we are not saying it would be patent eligible. We would have to review those facts, and the PTO would have to review those facts in the context of an actual application.

I guess the point I'm trying to make is simply that we don't want the Court, for instance, in the area of software innovations or medical diagnostic techniques to be trying to use this case as the vehicle for identifying the circumstances in which innovations of that sort would and would not be patent eligible, because the case really doesn't present any -- any question regarding those technologies. And therefore, we --

If those highlights, left you wanting more, check out the following posts that give some additional context to the cold transcript or read the tea leaves, as we all wait for a decision, likely this spring:

• 271 Patent Blog
   
• IPWatchdog (and here)
   
• Patent Docs
   
• Patently-O (and here)
   
• The Prior Art
   
• WSJ Law Blog

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If you cannot make the Applied Discovery roundtable discussion about the new Local Patent Rules that I am participating in this Wednesday, November 11, from 11:30 until 2:00pm (click here for more information and click here to register by email, but move quickly because space is running out), or if you just cannot get enough analysis of the Rules, check out what looks like it will be a great teleseminar by Law Seminars International, tomorrow from 2:00 until 3:00pm.*  Law Seminars promises to address:

• The background and history of the Rules;
   
• What the Court is trying to achieve with the Rules; and
   
• The Rules' implications for plaintiffs and defendants.

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The Supreme Court hears oral argument today in Bilski v. Kappos.  The Court will decide the proper test for Section 101 patentability and will either decide or at least significantly impact the patentability of software and business method patents.  Here are the questions presented:

1. Whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for "any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas." 
    
2. Whether the Federal Circuit's "machine-or-transformation" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect "method[s] of doing or conducting business." 35 U.S.C. § 273.

For more on the history of both the Bilski case, check out my recent article with my colleague Mike Grill in the Northwestern Journal of Technology and Intellectual Property.  Patently-O has compiled the amicus briefs -- click here for the briefs supporting Bilski or neither party, and here for the briefs supporting the government.  The briefs supporting the government include a brief by a group of Internet Retailers that, I am proud to say, cites my law review article arguing for an even application of the Twombly pleading standard as to both patent plaintiffs and patent defendants -- click here for the amicus brief and here for my article from the John Marshall Review of Intellectual Property Law.

Click here for the SCOTUSBlog's preview of the argument.  For post-argument CLE options, click here for a list of courses compiled by Patent Docs and here for information on a CLE from IPWatchdog's Gene Quinn, who plans to attend oral arguments.

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Next Wednesday, November 11, from 11:30 am until 2:00 pm, I am participating in a roundtable discussion about the Northern District's new Local Patent Rules hosted by Applied Discovery.  Blog readers have already read a lot about the Local Patent Rules -- click here, here and here for some of the Blog's analysis of the Rules.  But this panel will add valuable perspective from other members of the Chicago patent bar.  I am especially looking forward to the insights of friend and former colleague David Callahan of Kirkland & Ellis.

Here is Applied Discovery's description of the event and registration information:

Applied Discovery is pleased to offer a roundtable forum led by local experts discussing the practical consequences of the rules and the effects the rules could have on patent litigation in the Northern District of Illinois.  Virginia Henschel, vice president for e-discovery affairs at Applied Discovery will be moderating the panel.  Ms. Henschel’s distinguished career prior to Applied Discovery includes serving as counsel for Sunoco, Inc., where she managed all facets of ESI for litigation, including designing and managing defensible data collection and production for large, complex legal matters.

If you have not already registered, there is still time to join us for a spirited analysis of the new Rules with opinions from plaintiffs, defendants and the bench. 

TOPICS
• An overview of the Rules and the specific new obligations placed on patentees, accused infringers, and declaratory judgment plaintiffs.
• The effects of the new Rules on patent filings in the Northern District of Illinois.
• Scheduling deadlines and new requirements.
• Changes in the discovery process.

ROUNDTABLE PANELISTS
• Mark Ouweleen, Partner, Bartlit Beck Herman Palenchar & Scott LLP
• David Donoghue, Partner, Holland & Knight LLP
• David Callahan, P.C., Partner, Kirkland & Ellis LLP

DATE
Wednesday, November 11, 2009
11:30 am - 2:00 pm

LOCATION
Union League Club
65 West Jackson Boulevard, Room 710
Chicago, IL 60604
(Business Attire Required)

RSVP BY 11/6
If you wish to attend, please email Jennifer Towell at jennifer.towell@applieddiscovery.com as soon as possible. Space is limited.

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I recently started writing a column for the Southeast Texas Record, and its sister publications the West Virginia Record and the Madison (Illinois) Record.  The column is titled "IP for Your Business" and focuses on IP issues faced by businesses of all sizes.  The columns are not Chicago-specific, but I will post them here anyway, and with the Record's permission I will post them on the Blog because many Blog readers will find it valuable to have articles addressing bedrock IP issues, as well as how to deal with real world IP issues with a special emphasis on protecting against third party IP and monetizing your IP.  The first column (click here and here to read it) lays out seven steps for reducing patent litigation budgets while improving the quality of your case:

Increasingly, every industry and size of business feels the pain of patent litigation. Even small or medium-sized businesses are not exempt.

Most cases start the same way. A letter is sent to your company's president, CEO or general manager. The letter lists one or more patents, warns of patent infringement often with little other detail, and offers a license.

You turn to a search engine such as Google or Bing and quickly learn several facts: 1) the patent holder is a shell company, not a company that makes a product or offers a service; 2) you are one of many actual, potential or past defendants; and 3) you are angry and frustrated.

Once you get over your initial reaction, you need a plan. But how do you handle the increasing number of similar cases you are seeing, without destroying your legal budget and diverting your legal team's valuable resources from projects that are mission critical for your business?

Or as a company new to patent litigation, how do you handle your first patent dispute?

After dealing with these issues both as in-house counsel at a Fortune 100 company and as outside defense counsel, I have found that seven straightforward strategies significantly streamline case budgets while positively impacting case strategies.

1. Hire a Patent Litigator

The first thing you need to do, particularly if you do not have a general counsel or someone else with litigation experience, is to hire a patent litigator. You might be inclined to use your normal counsel, but before making that decision, make sure they have patent litigation experience. Patent litigation is a unique and complex area of law.

Many federal district courts even have special local rules for patent litigation. You want a lawyer who you trust and who has patent litigation experience. If you do not know a lawyer fitting your needs, ask lawyers and business contacts for recommendations.

You can also search for lawyers that are skilled in your technology or have expertise in your court. Also, resist the urge to delay hiring a patent litigator until you see if settlement efforts work.

Spending a little on a patent litigator during settlement talks can save large sums if the settlement falls through. Too often, a business person or lawyer that does not understand the intricacies of patent litigation will unintentionally make a statement that harms litigation positions down the road.

2. Establish A Joint Defense

If you have co-defendants, this is easy. Seek them out and set up a formal joint defense group. Make sure to determine whether you will split any costs.

You can often share invalidity experts. You can sometimes share noninfringement experts also, but even when you cannot, you can at least coordinate them. Determine who is in control amongst the co-defendants and how payments will be split before engaging the expert, not after the first bill is received.

If you are the only defendant in your case, seek out current and past defendants from other cases. They can provide valuable insights into invalidity, opposing counsel and the case strategies they found most effective. And if their case is ongoing, you likely have a common interest allowing you to establish a joint defense and take advantage of the benefits discussed above.

If your entire industry is being targeted, contact your competitors that have not been sued. They may have received a letter charging infringement. Even though they have not been sued, they can still have a common interest that allows you to collaborate.

3. Define Your Role and Manage Your Joint Defense Group

A joint defense group can be a valuable source of information and cost savings, but you must enter a joint defense group with a clear plan and clear goals. You should decide whether you want to lead the group, to actively participate or just to follow. Leading is the most expensive, but offers the most control over your defense.

Most, however, will choose active participation. This gives some control while moderating costs. Finally, smaller entities or those with little at stake in the litigation often choose to follow.

This role requires the least work and cost, while offering the benefit of at least the parties' joint defenses, like invalidity. The downsides are less of a voice in strategy decisions and less cooperation from co-defendants that may see you as a free-rider.

Even with a plan, joint defense groups can become a significant cost, as well as a time sink. There can be heavy e-mail volume, group conference calls and meetings that increase in length and frequency, and it can be difficult to make the nimble strategy corrections required in litigation when you need group buy-in.

Of course, some group communication is required. But you can manage meetings by agreeing ahead of time that every meeting requires an agenda and a time limit. Agendas and time limits avoid endless meetings full of off topic and unexpected issues that no party is prepared to answer.

Also, for larger joint defense groups and during busy portions of any multi-defendant case, like the close of discovery or claim construction, consider scheduling a set call, with agendas and a time limit allowing people to raise issues ahead of time.

Regular meetings can cut down on email traffic over small issues. When you know one or two co-defendants will require convincing of a position, consider contacting those parties one-on-one before the meeting to avoid delaying the entire group and building consensus for your ideas.

Finally, whenever possible hold meetings live. When all co-defendants are on a conference call, you run the risk of the call dragging because one or more participants are distracted with other work, office visitors, e-mail or the internet. Putting everyone in a room together minimizes distractions and encourages active participation, leading to shorter meetings.
 

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SP Techs., LLC v. Garmin Int’l, Inc., No. 08 C 3248, Slip Op. (N.D. Ill. Oct. 9, 2009) (Pallmeyer, J.).

Judge Pallmeyer construed the claims of plaintiff SP Technologies' (“SPT”) patent to a method for inputting data on a touch-screen display using a keyboard that cannot be resized, moved or closed by a user. As an initial matter, the Court noted that, contrary to SPT’s argument, the Court was not required to consider the accused products when construing the claims. Instead, the Court had discretion to consider the accused devices. And because the parties did not provide a reason to consider them, the Court chose not to include the accused products in its analysis. Here are constructions of note:

• “Plurality of date input fields” was defined as more than one field, but the fields need not simultaneously appear on the same screen.

• “Termination” referred to terminating or closing the keyboard, but not resizing or moving the keyboard as defendants argued. The ordinary meaning of terminate controlled over some statements the inventor made during prosecution that could have been read more broadly.

• “Derived input” was defined as information requested by a computer application or program, as opposed to information “desired” by a user.

Finally, the Court noted a problem with the defendants’ presentation of the evidence that will be remedied by the Local Patent Rules. Defendants cited to documents within the prosecution history by title, as opposed to using Bates numbers, making it hard for the Court to find the relevant portions of the 250 page prosecution history.  Local Patent Rule 4 requires that parties file a Joint Appendix as part of the claim construction process that is paginated and includes the prosecution history, among other documents. Click here for much more on the Local Patent Rules in the Blog’s archives.

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