국제 특허분쟁 대응을 위한 특허제도 및 소송절차 국제세미나 ( 미국 / 일본 / 유럽 / 중국 중심 )

1. 국제 특허분쟁 대응을 위한특허제도 및 소송절차 국제세미나(미국/일본/유럽/중국 중심) 한국전자산업진흥회 2006. 9. 1 특 허 지 원 센 터

2. 프로그램 순서

3. 목 차 • 미국 특허제도 및 소송 ( David Hill, 장호진 ) • 일본 특허 소송 ( Seiji Ohno ) • 3. 중국 특허 제도 및 소송 ( John Z.L Huang ) • 4. 유럽 특허 소송 ( Sabine Rojahn ) • 5. EPO 제도 및 절차 ( Eric Dokter )

4. Developments in U.S. Patent Practice and Litigation David W. Hill, PartnerHojin Chang, AssociateFinnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.

5. Developments in U.S. Patent Practice and Litigationfor KEA/Finnegan Henderson SeminarSeoul, KoreaSeptember 1, 2006 David W. Hill, PartnerHojin Chang, AssociateFinnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.

6. Overview • Patent Office Proposals • Supreme Court Cases • Ebay Case (Injunctions in Patent Cases) • KSR Intern. Co. v. Teleflex, Inc (Motivation to Combine Prior Art • Patent Law Reform

7. Summary of Proposed PTO Rule Changes • Limits on continuing prosecution opportunities—only one permitted with narrow exception • Limits on divisional application practice—generally only one parent application and voluntary divisionals not permitted • Changes would apply to any application filed on or after effective date of the final rule—retroactive in effect

8. Summary of Proposed Changes On Examination of Claims • Initial examination to focus on 10 claims • all independents and designated dependents • unless supply an examination support document • applies to multiple applications containing patentably indistinct claims—PTO may require all such claims be placed in one application • Examination of other claims held in abeyance until application otherwise in condition for allowance • Changes would apply to applications filed on or after effective date of final rule, and any application in which a first Office action on the merits was not mailed before the effective date

9. Anticipated Implementation • Approximately September 2006 to January 2007??? • Expected time period of uncertain length between publication of final rule and effective date

10. Summary of Possible Strategies • Identify filings • Prosecution of current applications • Delay examination • Designation of claims in important cases • Budget/business considerations

11. Identification of Cases • Identify applications containing restriction requirements for possible divisional filings before effective date • Identify applications with valuable/meaningful unclaimed subject matter for possible continuation filings before effective date

12. Prosecution of Current Cases • Prosecute as if the last case • Try to avoid first continuing application (continuation or RCE) • Narrow the gap between examiner and applicant more quickly • Even more thorough, comprehensive, and aggressive prosecution • Early review of PTO actions/decisions for errors • Present additional patentability arguments (e.g., argue separate patentability of dependent claims) • Examiner interview • Pre-appeal brief request for review • Appeal • Petition for entry of After Final Amendment

13. PCT: U.S. Designation? • A PCT application automatically designates the U.S. • Under proposed rules, a PCT case claiming the benefit of a U.S. nonprovisional and designating the U.S. is a “continuing” application • Depending on the client and the filing strategy, consider whether to designate the U.S. • Ex. 1: regular U.S. filing, then PCT—can undesignate by filing withdrawal of designation and a Power of Attorney • Ex. 2: U.S. provisional/FP, then PCT, then U.S. national stage

14. Defer Examination • Benefit of seeing where technology is headed, then craft claims • File a provisional application • Defer for up to 3 years under Rule 103(d) • may affect PTA • check USPTO for pendency to first action before filing a petition • File original case as PCT designating U.S. and enter national stage at 30 months

15. Copying Claims • Section 135(b) gives one year from patent issuance or application publication to copy claims for purposes of interference • Do not delay once aware of claims to copy • If wait the year, may not be able to assert that amendment could not have been submitted during prosecution of the prior-filed application • File continuations before effective date in applications containing copied claims that have been cancelled

16. Await Final Rules • Await final rules before filing a bulk of new applications or designation of claims • Await final rules for appropriate strategies for preparing a new application: • Claims (e.g., scope of examined claims) • Disclosure (e.g., narrow or broad?) • Broadening reissues

17. Significant Changes Proposed For Information Disclosure Statements • Shifting work/responsibility to applicants – applicants become filter for cumulative information • Disclosure requirements increase depending on the number of cited documents and the stage of prosecution when IDS is submitted • Explicit updating statement requirement • Time frames/practices applicable to reexamination • Procedures for unsolicited information supplied to applicants

18. Injunctions in Patent Cases • Jury held that eBay willfully infringed two business method patents held by MercExchange, and awarded $35M • District court judge reduced eBay’s damages to $10.5M and did not issue injunction (275 F.Supp.2d 695 (E.D.Va. Aug 06, 2003)) • CAFC: Reversed - DC improperly denied permanent injunction (401 F.3d 1323 (Fed. Cir. 2005), reh’g denied) • USSC: general four-factor test for permanent injunctive relief applies to disputes arising under Patent Act. • district court wrong to conclude a permanent injunction had no place in patent litigation • Federal Circuit wrong to treat permanent injunctions as automatic • case remanded for district court to consider the request for permanent injunction under the traditional four-factor test, and make its equitable determination (78 U.S.P.Q.2d 1577 (May 15, 2006))

19. POST-eBAY • z4 Technologies, Inc. v. Microsoft Corp., Case No. 6:06-CV-142 (E.D. Tex. June 14, 2006) • ‘471 and ‘825 patents: methods for limiting the unauthorized use of computer software (“product activation”) • Jury: Microsoft and Autodesk infringed all three claims and that Microsoft’s infringement was willful • No proof of invalidity • $115 million in damages against Microsoft and $18 million against Autodesk • z4 requested permanent injunction against Microsoft from making, using, selling, offering for sale, and/or importing its current software products that use product activation • Microsoft will release the next generation of its software in January of 2007, and both products plan to eliminate the infringing product activation technology

20. POST-eBAY • z4 (con’t) • DC: Applying the standards set forth in eBay, no permanent injunction against infringer Microsoft • Traditional four-factor test for plaintiff to demonstrate: • that it has suffered an irreparable injury; • that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; • that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and • that the public interest would not be disserved by a permanent injunction.”

21. POST-eBAY • z4 (con’t) • DC: • First factor: irreparable harm without a permanent injunction • no presumption of irreparable harm in the context of an injunction • “z4's suggestion, that the right to exclude creates a presumption of irreparable harm, is not in line with the Supreme Court’s holding, which mandates that courts balance the traditional principles of equity when considering the remedy of a permanent injunction in patent cases.” • Microsoft only uses the infringing technology as a small component of its own software • “In the absence of a permanent injunction against Microsoft, z4 will not suffer lost profits, the loss of brand name recognition or the loss of market share because of Microsoft’s continued sale of the infringing products. These are the type of injuries that are often incalculable and irreparable.” • z4 has not demonstrated that it will suffer irreparable harm absent a permanent injunction.

22. POST-eBAY • z4 (con’t) • DC: • Second factor: monetary damages inadequate • z4 could be adequately compensated by monetary damages • Microsoft's infringement interfered only with z4's potential income from licensing its patents to Microsoft, not to any other portion of z4's market • Not too difficult to calculate damages • “a violation of the right to exclude does not inevitably lead to the conclusion that a patent holder cannot be adequately compensated by remedies at law such as monetary damages without first applying the principles of equity.” • In his concurrence, Justice Kennedy specifically mentioned the situation where a “patented invention is but a small component of the product the companies seek to produce” and states that in such a situation, “legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.” Id. (Kennedy, J., concurring).

23. POST-eBAY • z4 (con’t) • DC: • Third factor: balance of hardships • potential harm to Microsoft and to the public resulting from an injunction is significant • resources, time, and expense required to redesign Microsoft’s Windows and Office software products would create a significant hardship on Microsoft. • excessive resources,exceedingly expensive, and would delay scheduled release of 2007 Windows and Office products • Expense of “turning off” current product activation system are incalculable, • “potential hardships Microsoft could suffer if the injunction were granted outweigh any limited and reparable hardships that z4 would suffer in the absence of an injunction.”

24. POST-eBAY • z4 (con’t) • DC: • Fourth factor: public interest • “it is likely that any minor disruption to the distribution of the products in question could occur and would have an effect on the public due to the public’s undisputed and enormous reliance on these [Microsoft] products.” • “Under both aspects of z4's proposed permanent injunction, there is a risk that certain sectors of the public might suffer some negative effects. However, the Court is unaware of any negative effects that might befall the public in the absence of an injunction. Although these negative effects are somewhat speculative, such potential negative effects on the public weigh, even if only slightly, against granting an injunction. Accordingly, the public interest is likely to be disserved if a permanent injunction were entered against Microsoft.”

25. Motivation-Suggestion-Teaching • In re Kahn, 441 F.3d 977(Fed. Cir. 2006) • FC: upheld an obviousness rejection of claims reciting a reading machine based on four prior art references • E’r identified motivations to combine based on statements in the references and the nature of the problem to be solved • motivation of one of ordinary skill in the art to combine MUST BE EXPLAINED • “the motivation-suggestion-teaching test picks up where the analogous art test leaves off and informs the Graham analysis” • “In considering motivation in the obviousness analysis, the problem examined is not the specific problem solved by the invention but the general problem that confronted the inventor before the invention was made.”

26. Motivation-Suggestion-Teaching • In re Kahn (con’t) • FC: “the ‘motivation-suggestion-teaching’ test asks not merely what the references disclose, but whether a person of ordinary skill in the art, possessed with the understandings and knowledge reflected in the prior art, and motivated by the general problem facing the inventor, would have been led to make the combination recited in the claims.”

27. Motivation-Suggestion-Teaching • Teleflex, Inc. v. KSR Intern. Co., 119 Fed.Appx. 282, 2005 WL 23377 (Fed. Cir. January 06, 2005)(unpublished), pet. for cert., 73 USLW 3623 (Apr 6, 2005) • Issue: can a claimed invention be obvious without proof of some "teaching, suggestion, or motivation" to modify or combine the prior art? • Amicus brief from U.S. Solicitor filed May 28, 2006 • recommends that cert. be granted • Federal Circuit decision takes flexible framework of Graham and makes it an inflexible requirement for determining obviousness

28. Motivation-Suggestion-Teaching • KSR Intern. Co. v. Teleflex, Inc., -- S.Ct. --, 2006 WL 1725628 (2006) • Cert. Granted, June 26, 2006 • Arguments set for fall • At issue: Federal Circuit's ruling that a patent may not be found invalid for obviousness unless the prior art sets forth a “teaching, suggestion, or motivation” to combine the prior art teachings in the manner claimed in the patent

29. Patent Reform Proposals • Patent Reform Act of 2005 (House)(introduced on June 8, 2005) • Patent Reform Act of 2006 (Senate)(introduced on August 3, 2006)

30. Origins in the FTC & NAS Reports • FTC Report • 18-month publication, post-grant review, PTO financing, prior user rights, and require actual notice for willful infringement. • NAS Report • Open-ended, flexible system; post-grant review; “harmonizing” reforms (“first-inventor-to-file”); and, eliminating “subjective elements” from patent litigation (best mode, willful infringement, and inequitable conduct).

31. House Committee Print on April 14, 2005. H.R. 2795 introduced on June 8, 2005. July 26 Amendment in the Nature of a Substitute to H.R. 2795 published. September 1 “Coalition Text” distributed. House Hearings on April 20 & 27, June 9, & Sept. 15, 2005. Senate Hearings on April 25, June 14, & July 26, 2005. Patent Reform Act of 2005

32. Sec. 1. Short title; table of contents. Sec. 2. Reference to title 35, United States Code. Sec. 3. Right of the first inventor to file. Sec. 4. Right to a patent. Sec. 5. Duty of candor. Sec. 6. Right of the inventor to obtain damages. Sec. 7. Post-grant procedures & other quality enhancements. Sec. 8. Submissions by third parties. Sec. 9. Venue. Sec. 10. Applicability; transitional provisions. Patent Reform Act of 2005

33. Inventor’s Rights Contests • Whenever patents or applications for patent naming different individuals as the inventor are deemed by the Director to interfere because of a dispute over the right to patent under section 101, the Director shall institute an inventor’s rights contest for the purpose of determining the right to patent.

34. § 102 Conditions for Patentability; Novelty (Substitute for H.R. 2795) (a) NOVELTY; PRIOR ART.—A patent for a claimed invention may not be obtained if— (1) the claimed invention was patented, described in a printed publication, or otherwise publicly known— (A) more than one year before the effective filing date of the claimed invention; or (B) one year or less before the effective filing date of the claimed invention, if the invention was patented or described in a printed publication or otherwise publicly known before the invention thereof by the applicant for a patent; or

35. § 102 Conditions for Patentability; Novelty (Substitute for H.R. 2795) (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

36. Repeal of Best Mode • 35 U.S.C. § 112: must disclose best mode known to the inventor. • Often presents a difficult issue at time of application. • Increases cost of discovery. • Best mode seen as least costly of the three subjective issues.

37. Constrain Inequitable Conduct • Material misstatement or omission with intent to deceive. • Most common: failure to cite important prior art. • Other examples: concealing early offers for sale or public uses. • Can render the entire patent unenforceable.

38. Constrain Inequitable ConductAdopt “But-For” Test • If all claims in a patent are valid— “Inequitable conduct” defense is barred. • If court has invalidated one or more patent claims in an infringement action— • May move to amend the pleadings. • To establish “but for” misconduct. • Invalidated claims would not have issued in the patent.

39. Limit Compensatory Damages • Goal is to foster consistency by the courts in determining damages for patent infringement. • Damages should reflect the value contributed by the patented invention to an infringing product, no more or less. • Related to the “entire market value rule”: • Damages can be based on the entire value of an infringing product or process if the patented feature is the “basis for customer demand.” Rite-Hite Corp. v. Kelley Co., Inc. • Codifies the “apportionment” doctrine: • Courts should distinguish “non-patented elements, manufacturing process, or business risks” from value arising from the patented invention. Georgia-Pacific Corp. v. United States Plywood Corp.

40. Limit Compensatory DamagesSubstitute for H.R. 2795 • “In determining a reasonable royalty (a) in the case of a combination, the court shall consider (b) if relevant and among other factors, the portion of the realizable value that should be credited to (c) the inventive contribution as distinguished from other features of the combination, the manufacturing process, business risks, or significant features or improvements added by the infringer.”

41. Limit Compensatory DamagesCoalition Text • The patent owner must establish the economic contribution to a product or process arising from the patented invention. • The infringer can distinguish any economic contributions it has added to the product or process. • Damages must be limited to contributions arising from the patented invention.

42. Limit Willful Infringement • FTC found that some companies avoided the reading of their competitors’ patents for fear of treble damage liability, and recommended that deliberate copying or actual notice be a predicate for liability for willful infringement. • NAS found willful infringement to be one of the subjective elements that increase cost and decrease predictability of patent infringement litigation and recommended its elimination or significant modification. • The bills adopt the FTC recommendation and permits finding of willful infringement only if an infringer intentionally copies a patented invention, or continues to infringe after receiving a specific notice, without justification.

43. Post-Grant OppositionsRecommended by Both FTC & NAS • Nine month window from patent grant. • Any issue of validity a court could consider. • Parties can submit affidavits and declarations. • Affiants and declarants can be cross-examined. • Panel of three administrative law judges. • Burden of proof is “preponderance of the evidence.” • Decision in 12 months (exceptionally, 18 months). • Appeal to Federal Circuit.

44. Prior User Rights • FTC recommended enacting legislation to create “prior user rights” to protect parties from patent claims first introduced in a continuing application. • Currently, prior user rights exist only for those commercially using “a method of doing or conducting business” before a patent application is filed by another. • Both bills would enlarge prior user rights to apply all inventions, both products and processes. • Opposed by some in university community.

45. Publish All Applications • Recommended by both FTC and NAS. • Currently, applicants can request that applications not being filed abroad not be published (≈ 10%). • With pendencies in some areas exceeding five years, competitors can be ambushed by late patents. • Publication will also improve patent validity.

46. Pre-Grant Submission of Prior Art • Anyone can submit patents or publications of relevance to examination of an application. • Submission cannot interfere with ongoing examination. • Must concisely describe the relevance of each submitted document. • Existing ban on pre-grant opposition remains.

47. VenueSubstitute for H.R. 2795 • Modifies existing special patent venue statute. • Allows filing suit only in judicial district where— • The defendant resides (or is incorporated), or • The defendant has committed acts of infringement and has a regular and established place of business. • Would restrict patentees from bringing actions where they are located and where significant evidence relating to the case may be located. • Would force them to travel to a distant judicial district to bring suit.

48. Consensus exists that major changes are needed to U.S. patent law. Patent law serves many constituencies that must agree on what is a fair and balanced package. Difficult to predict when legislation will be enacted—AIPA took five years. Conclusions

49. Thank you for your attention. For questions, contact David W. Hill or Hojin Chang Finnegan, Henderson, Farabow, Garrett & Dunner, LLP 11955 Freedom Drive, Reston, VA 20190 Tel: 571-203-2735 Fax: 202-408-4400 david.hill@finnegan.com hojin.chang@finnegan.com