© 2005 Morrison & Foerster LLP All Rights Reserved Offense as Defense in U.S. Patent Litigation Anthony L. Press Maximizing IP Seminar October 31, 2005

Offense as Defense in U.S. Patent Litigation Trends in U.S. Patent Litigation The Patent War Forum Selection Patent Reexamination Markman Hearings E-Discovery Case Study: Thermage v. Syneron Syneron v. Thermage

Patent litigation is on the rise Trends in U.S. Patent Litigation

Patent litigation is on the rise Recent demonstrations of the value of investment in a patent portfolio – including portfolios owned by individuals Trends in U.S. Patent Litigation

Patent litigation is on the rise The value of investment in a patent portfolio Recent sales and auctions of patent portfolios Trends in U.S. Patent Litigation

Injunctions and damages Build up your own portfolio What your own patents give you: some common misconceptions The claims are critical Claims must be supported by specification Try to cover competitors’ products Use of children and grandchildren Be Prepared for a Patent War

Action for declaratory relief Be the plaintiff rather than the defendant The importance of forum selection How quickly cases are resolved How friendly to patentee Local patent rules Patent War: Filing First When Threatened

Patent War: Forum Selection

2163 cases analyzed Average time to termination By summary judgment – 19.6 months By jury verdict – 27.2 months Average patentee win rate – 72% Second most favorable for patentees in U.S. Compared with nationwide average of 59% Affirmed to reversed ratio 3.4 to 1 Example - The Central District of California

Reexamination in US Patent Office US counterpart to EU post-grant opposition procedures Patent owner or “third-party requester” can ask PTO to review patent’s validity Need “substantial new question of patentability” Typically based on newly located prior art PTO decides whether to re-review patent within 90 days If sought early, court will usually put a hold on litigation

Reexamination – Advantages and Disadvantages Advantages of reexamination Inexpensive compared with litigation Expertise of patent examiners compared with judge or jury PTO record can simplify issues in litigation Disadvantages of reexamination If PTO rules against requester, position in litigation aggravated For older patents, after petition filed, reexamination is “ex parte” so third party requester can’t counter patent owner’s arguments to PTO Can PTO be trusted? Announcement of new reexamination unit:

Inter Partes Reexamination New reexamination procedure for patents filed in last six years Both sides participate throughout, including appeal Recent study shows very high success rate for patent challengers BUT: if challenger loses, then barred from raising in court any claim of invalidity that could have been raised in the reexamination

Markman Hearings Unique to US patent litigation A critical phase of US patent litigation Judge answers “What do patent claims mean”? “Claim construction” determines infringement

What does a Markman hearing look like? Typically undertaken mid-way into litigation: After substantial discovery Before summary judgment motions and trial Typically two stages: Technical tutorial to judge, with graphics or animations Attorney argument about meaning of claim language Examples: -- a light source -- inside a housing -- the housing has an opening -- the opening is adjacent to the skin surface

E-Discovery

E-Discovery: Scope E-discovery refers to discovery of electronic records What’s “discovery”? Unusual feature of US litigation One party can get access to almost every record of opponent that is relevant to lawsuit No privilege against self-incrimination Party and attorneys responsible for turning over evidence, good or bad, to other side Discovery of computerized data has spawned e- discovery industry

E-Discovery: Major Issues Document retention Court decisions call for companies to stop erasure and deletion of relevant documents once litigation begins Can throw monkey-wrench into IT department procedures Restoration from back-up tapes Very expensive Who pays? Penalties Monetary sanctions Evidentiary sanctions “Adverse inference” instructions to the jury

July 2004 – Thermage files suit based on recently-issued patent claiming light plus RF energy August 2004 – Thermage files motion for preliminary injunction, targeting Syneron’s Polaris WR device September 2004 – Court denies PI motion December 2004 – Thermage expands suit by adding 5 more patents, targeting all of Syneron’s products Case Study: Thermage v. Syneron

December 2004 – Syneron acquires patent for offensive use January 2005 – Syneron files counterclaim, targeting Thermage’s only product April 2005 – Mediation June 2005 – Case settles – Syneron obtains license to Thermage’s patents and licenses recently acquired patent to Thermage Case Study: Syneron v. Thermage

© 2005 Morrison & Foerster LLP All Rights Reserved Thank You Questions: LA