Hot Issues in Patent Law Steven G. Saunders

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?