Hot Issues in Patent Law

1. Hot Issues in Patent Law Steven G. Saunders ssaunders@bromsun.com 617-443-9292

2. Topics • Basics • Portfolio development • Litigating patents • Demand letters • Patent ownership • IP holding companies • Due diligence in M&A context • Downward slide of patent rights

3. Basics • Why patent a technology? • Often provides exclusivity for a limited period • Considerations • Marketing the technology • License revenue • Competitor patent activity • Raising money • Inventor recognition

4. Statutory Requirements • Usefulness • Novel • Non-obvious

5. Beware of Traps • One year statutory bar • Absolute novelty in many foreign jurisdictions • Offer for sale • Experimental use

6. Procurement Process • Learn about the invention • Search prior art • Form US and non-US filing strategy • File in US and/or non-US jurisdiction • Receive office actions and prepare responses • Allowance and issue fee payment • Continuations

7. Portfolio Development • Common problems • Learning about existence of inventions • Educate R&D, marketing, management • Incentives • Capturing details of the invention • Invention disclosure forms • Proving early conception and reduction to practice • Lab notebooks • Test procedures • Prototypes

8. IP Creation Process

9. Asserting Patents Against Third Parties • Patent Litigation is very complex • Legal Issues • Evolving standards seemingly not refined • Factual Issues • Technology • Not straightforward fact patterns • Decision-makers commonly not versed in patent law or technology • Very expensive • Typically costs $2MM and up

10. Pre-Complaint Considerations • Do claims cover relevant product? • Literal or equivalent infringement • Which defendant to sue? • Are the claims strong? • Breadth of the claims • Prior art • Remedial action to strengthen patent • File complaint first or engage in settlement discussions? • Laches or estoppel risk • Declaratory judgment risk

11. Litigation • Markman hearing – unique to patent law • Construe meaning of claims • Damages • Floor: reasonable royalty • Lost profits • Injunctions • These should be paramount considerations in crafting claims

12. Responding to Demand Letter • Preliminary steps • Confirm not abandoned • Review patent family and related foreign patents • Clearance opinion to avoid willfulness? • Knorr-Bremse and Seagate cases • Similar analysis still is very useful • Response • Send prior art? Risks • Ask for more information to learn their position? • Answer substantively? Arrange meeting? License?

13. Patent Ownership • Inventor initially assumed to own • Employment agreements • Assignment to employer • Hired to invent doctrine • Shop rights

14. IP Holding Companies • Benefits • Centralized management • Tax benefits – Delaware and Nevada • Drawback • No lost profit damages

15. Due Diligence in M & A Context • Classic Due Diligence • Value Proposition

16. Classic Due Diligence • Issues • Does the company own all of its patents? • How much term is left in those patents? • Does the company infringe any third party patents? • Are the patents valid? • Any applications still pending?

17. Value Proposition • What value does the portfolio bring to the deal? • Analyze claim scope • Consider relevant market • Design around possibilities

18. Downward Slide of Patent Rights • Willful Infringement – Seagate • Inducement - DSU • Doctrine of Equivalents – Festo • Injunctions – eBay v. MercExchange • Obviousness – KSR v. Teleflex • Declaratory Judgment Actions – Medimmune • Reasonable apprehension of suit relaxed • Recent PTO Rule Changes • Dramatic changes to patent filing and prosecution strategies

19. Questions?