U.S. Supreme Court and Patents 2015-2016 Term Patent Disputes Forum South U.S. Supreme Court and Patents 2015-2016 Term Brett Bachtell, Qualcomm Incorporated Debra Condino, Allergan plc Craig Countryman, Fish & Richardson P.C. Ted Dane, Munger Tolles & Olson LLP Danielle Williams, Principal, Fish & Richardson

U.S. Supreme Court and Intellectual Property Today: Three patent cases decided in the 2015-16 Term Three patent cases accepted for review

2016 Supreme Court Patent Cases Halo Electronics v. Pulse Electronics, Inc., 136 S.Ct. 1923 (June 13, 2016) willful patent infringement and enhanced damages. Stryker Corp. v. Zimmer Surgical, Inc., 136 S.Ct. 1923 (June 13, 2016) willful patent infringement and enhanced damages. Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (June 20, 2016 ) patent claim construction standard to use in IPR post-grant proceedings.

Holdings From Halo and Stryker Enhanced damages are “generally reserved for egregious cases of culpable behavior” “The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Court has discretion (not an obligation) to enhance damages based on a finding of subjective bad faith, even if the defendant’s conduct is not objectively reckless The defendant’s subjective belief is now assessed “at the time of the challenged conduct.” Preponderance standard, not clear and convincing Abuse of discretion review, not de novo

Cuozzo’s Holdings The Court approved use of the existing USPTO “Broadest Reasonable Interpretation” (“BRI”) claim construction standard in PTAB proceedings The BRI standard has been used in all USPTO proceedings for many years. The Court rejected changing the standard for IPRs to the Markman procedure used by District Courts to determine the correct construction based on the contents of the patent, its prosecution history and the prior art. The Court affirmed the Federal Circuit’s decision that the AIA does not permit appeal of decisions by the PTAB whether or not to institute an IPR. The Court left open the possibility that the bar against judicial review is not absolute if an appeals raises constitutional questions. The Court specifically suggested lack of due process or indefiniteness as potentially appealable issues.

Patent Cases the Supreme Court Has Agreed to Hear Life Techs. Corp. v. Promega Corp. – Cert. granted June 2016 – induced infringement. SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods. – Cert. granted May 2016 – patent laches. Samsung Electronics v. Apple – Cert granted March 2016 – design patent damages for iPhone.

Life Techs. at the District Court Promega is the exclusive licensee of a patent (kits for genetic testing with multiple components) Life Techs is a competitor of Promega, and admits to making and selling kits  One component of the kit is made in U.S. and then shipped to a foreign manufacturing site for assembly  Kits sold worldwide Not disputed that U.S. sales constitute infringement under § 271(a)  Jury awarded Promega damages for sales outside U.S. on the theory that the foreign sales constitute infringement under § 271(f)(1) District Court said Promega failed to prove infringement as a matter of law, based largely on its interpretation of § 271(f)(1) Promega appealed

Life Techs. at the Federal Circuit Holding Life Techs’ actions could constitute infringement under § 271(f)(1) which creates liability for infringement for a person who supplies “all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.”  Questions Presented Can Life Techs “actively induce” itself to assemble kits? The statute only requires specific intent for the components to be combined. Can a single component can be “a substantial portion”? Yes, a single component is “a portion” of all components and stated that Taq polymerase is a substantial component, even by itself, in part because the kit is inoperable without it.  

Life Techs. at the Supreme Court Questions presented: Whether the Federal Circuit erred in holding that a single entity can “actively induce” itself to infringe a patent under 35 U.S.C. §271(f)(1). Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. §271(f)(1), exposing the manufacturer to liability for all worldwide sales. NB: Supreme Court denied certiorari as to whether a third party is required for inducement.

SCA Hygiene Prods. Question Presented: Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286. Key Issue: Is question governed by Supreme Court’s holding in Petrella v. Metro-Goldwyn-Mayer that laches cannot prevent damages from being recovered for entire three-year limitations period of Copyright Act because doing so would override Congress’s clear intent. Federal Circuit In contrast to Copyright Act, Congress intended to allow laches to co-exist with Patent Code’s six-year limitation on recovery of patent damages. Decision may turn on whether Supreme Court applies general principles treating laches as inapplicable where statute of limitations exists or instead views laches as having a unique place in patent law

Samsung v. Apple First design patent case to be heard in over a century (last case was Gorham v White (1871) relating to flatware). Patent Act Section 289 - design patent infringers “shall be liable to the owner to the extent of his total profit.”

Samsung v. Apple at the District Court April 2011 – Apple sues Samsung alleging it copied its designs and is infringing its software and design patents, among other allegations August 2012 – Jury awards Apple $1 billion finding Samsung infringed 3 design patents (black rectangle shape, raised frame/bezel, layout of 16 icons) March 2013 – Judge Koh reduces $1 billion award by $400+ million and orders retrial on damages November 2013 – Retrial results in $290 million award to Apple (total damages award is $929 million) April 2014 – Jury awards Apple $120 million and Samsung $160,000 in second trial December 2015 – Samsung agrees to pay Apple $548 million

Samsung v. Apple at the Federal Circuit Samsung appeals the design patent infringement award Federal Circuit’s Holding: Section 289’s “clear statutory language prevents us from adopting a ‘causation rule’ [even if that] makes no sense in the modern world.” Rejects Samsung’s argument that an award should be limited to profits from the portion of the product as sold that incorporates or embodies the subject matter of the patent.

Samsung v. Apple at the Supreme Court Question Presented: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

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