Intellectual Property

Starting a high-tech company is a difficult, exhausting, and thrilling endeavor – one in which founders will face seemingly endless challenges, deadlines, and make or break decisions. From a venture’s inception, founders face numerous decisions that if not thoughtfully considered can result in significant legal and financial risk.

Artificial Intelligence (AI) is now at our fingertips.  No longer a concept hidden behind the walls of Big Tech and academia, AI programs are now available and accessible to everyone.  Generative AI tools like ChatGPT have made headlines for its human-like conversation and writing, and Lensa has done the same for its ability to create original works of art. 

On January 9, 2023, the U.S. Court of Appeals for the Federal Circuit in In re Stingray IP Solutions, LLC, No. 23-102 granted a writ of mandamus, vacating a decision of the Eastern District Court of Texas which had transferred a patent infringement suit filed against foreign defendants to the Central District of California based on defendants’ post-suit consent to jurisdiction there.

Innovators developing IP strategies for 2023 are reflecting on last year’s key IP issues, including entity size designations for US patent applications, erasures of patent damage awards due to flawed expert opinions, and developments involving the ITC, artificial intelligence and machine learning, and inter partes reviews.

Grants of permanent injunctions in U.S. district court patent litigation remain uncommon since the landmark decision in eBay v. MercExchange. LexMachina’s 2021 Patent Litigation Report highlights that courts grant fewer than fifteen permanent injunctions annually in the U.S. One such injunction was recently granted in Siemens Gamesa Renewable Energy A/S, v. General Electric Co. (“Siemens”) by the District of Massachusetts. That case is notable not only because it granted an injunction, but also because it took a novel approach to balancing public interest in doing so. Specifically, the public interest considerations implicated public green energy projects. In view of the Inflation Reduction Act (“IRA”), which was signed into law and provides incentives to combat climate change by investing in technologies such as solar and wind energy, such public interest considerations may become more common.

The UK has again demonstrated the ongoing trend against hold-out, approving an order forcing Apple to commit to take a license on FRAND terms, to be determined by the court, or face an injunction. This ruling is the latest in a line of decisions favorable to SEP holders across Europe and the United States that seem to be retilting SEP licensing towards more balance between innovators (patent owners) and implementers (alleged infringers). While there is more progress to be made, and the recognition of hold-out as a real problem continues to gain traction, this new UK decision reinforces basic principles of patent law: injunctions for SEPs are a real possibility.

In 2021 the U.S. Patent and Trademark Office (USPTO) developed an Artificial Intelligence (AI) based prototype search system for use by examiners during examination of patent applications. The USPTO found searching success with the prototype, for the USPTO just launched an AI-based “Similarity Search” in the Patents End-to-End (PE2E) prior art search suite for patents examiners.

On October 5, 2022, U.S. Magistrate Judge Roy S. Payne of the Eastern District of Texas recommended denying-in-part a motion for summary judgment of no willful infringement, holding that requisite knowledge of the asserted patent and alleged infringement of that patent could be satisfied by notice of the lawsuit before the moving defendant was added as a party.

Federal courts remain split on whether the Defend Trade Secrets Act (DTSA) allows for trade secret misappropriation claims brought under a theory of inevitable disclosure. Given this current patchwork of treatment of inevitable disclosure claims across the nation, owners of trade secrets and litigators of trade secret claims should continue to stay up to date on the treatment of this issue in the jurisdictions in which they practice.

Patent owners can recover lost profits when (1) there is a demand for a patented product, (2) an absence of acceptable non-infringing alternatives, (3) the patentee had the manufacturing and marketing capacity to exploit demand for the product, and (4) the patentee can establish the amount of profit it should have made but-for the accused product. Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1285 (Fed. Cir. 2017) (reciting the Panduit factors). An implicit threshold requirement of this legal framework is actually being the entity that earns profits on the patented product.

On July 12, 2022, U.S. District Judge Alan D. Albright of the Western District of Texas denied alleged infringer Lenovo’s motion to dismiss ACQIS’s willful and indirect infringement and enhanced damages claims, holding that patent owners need not allege egregious infringing behavior to assert a claim of willful infringement.

The power of Rule 11 – as with any weapon – must be employed diligently and with good judgment, as recently reiterated by the Northern District of Ohio.

While litigants may oft use Rule 11 prematurely or inappropriately, it does have its proper time and place when deployed as intended. In the patent context, examples include when claim elements are clearly missing in an accused product but a patent owner refuses to withdraw infringement allegations or, conversely, when a defendant continues to contest infringement when all claim limitations are clearly present in the accused product. Rule 11 grounds also arise in different contexts, as in the recent case of Imprenta Services, Inc.v. Karll.

The United States Supreme Court denied certiorari in the closely observed case American Axle & Manufacturing, Inc., v. Neapco Holdings LLC. The Court’s refusal to hear the case disappointed patent practitioners nationwide—and likely also members of the Federal Circuit Court of Appeals, which itself has been clamoring for guidance.

We previously discussed which portions of an artificial intelligence/machine-learning (“AI/ML”) platform could be patented or protected under trade secret, such as related to biotech and synthetic biology.  Equally important to the discussion of how to protect components of an AI/ML platform, however, is the extent to which copyright protection may be useful or beneficial to the developer of the platform.  In this post, we explain what can be protected by copyright in an AI/ML platform.  We also explore when it is appropriate to protect portions of AI/ML platforms using a copyright, how to properly enforce copyrights, as well as when to consider using copyright protection over patent or trade secret protection.

Avanci’s pool retains its 5th Circuit win, in a slightly different way, after an unusual turn of events where the panel rescinded its prior opinion and issued a new one. The new opinion  affirms the district court’s ruling that Continental failed to state a claim under the Sherman Act (antitrust laws) thereby dismissing the case.  The original opinion found that Continental lacked standing to pursue its claims because it was not a third party beneficiary of the standard setting organization contract. Although the new ruling leaves some questions unanswered in the long-running dispute between a would-be implementer (Continental) and holders of standard essential patents (SEPs), the opinion rejects applying the antitrust laws in the SEP/FRAND context.

Used properly, Open Source Software (OSS) is an excellent tool. It saves your business time and money, enables interoperability of product platforms, and developers love it. But used improperly, it can be financially and operationally devastating. For example, the statutory damages for failure to properly adhere to the OSS copyright notice can be up to $150,000 per act of infringement. Those damages can quickly add up to serious consequences, whether preventing a sale or merger of your company or the destruction of the value of the affected products. Another serious risk is that once OSS is used in your code base and deployed in distributed products, if your tech teams are not monitoring and applying bug fixes, known vulnerabilities become Trojan horses of opportunity for bad actors. The good news is that protecting your company from these types of risks is rather simple. We have outlined below key steps and processes in-house counsel should take to work with your business stakeholders to mitigate these risks.   

On June 8, 2022, the DOJ, USPTO, and the National Institute of Standards and Technology (NIST) (collectively, the Agencies) issued a new statement on FRAND licensing (2022 Statement) providing no set policy regarding Standards Essential Patents (SEPs), which should inure to the benefit of patent owners. By issuing this statement and declining to adopt their 2021 Draft Policy (2021 Draft Policy), the Agencies effectively neutralized their policy on SEP licensing and provide no guidance to parties in SEP licensing discussions. Even with no guidance, however, the Agencies are reserving the right to police negotiations and prosecute opportunistic behavior by either side in a case-by-case basis, creating a circumstance where negotiators may not know if they are raising the Agencies’ ire. Though knowledge of the evolving multinational case law related to SEP license negotiation provides reasonable understanding of the necessary procedure. 

Successful ITC trade secret complainants follow these rules before filing the complaint in Section 337 investigations:

To be a successful trade secret litigant at the ITC, it is critical to be mindful of unique substantive and procedural aspects of Section 337 litigation.  These differences offer both promise and peril for complainants.