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2014 Patent Year in Review The Year Patent Practice Changed

Thomas D Franklin Partner, Denver Office Electronics / Software Patent Prosecution / Strategy

•  Is patent litigation becoming a more manageable problem?

○ Yes ○ No

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Unprecedented Supreme Court Activity

•  Bad year for Federal Circuit •  Fee shifting easier with more deference to

trial court. Octane Fitness & Highmark •  No limitation infringement liability. Akamai •  Cannot patent abstract ideas. Alice •  Killed “insolubly amorphous.” Nautilus •  Patentee has burden of proof even in

declaratory judgment action. Medtronic 3

•  There must be an act of direct infringement under 271(a) to prove liability for induced infringement under 271(b). (Akamai)

•  Easier to invalidate, and tougher to obtain, patents on software inventions. (Alice)

•  Encourage more invalidity challenges based on indefiniteness. (Nautilus)

•  Easier on prevailing parties in patent cases – particularly defendants – to prove entitlement to attorneys’ fees and keep them on appeal. (Octane Fitness and Highmark)

•  Encourage more DJ challenges by licensees to licensed patents. (Medtronic)

Practical Implications of Cases

ITC Developments

•  President vetoed Samsung’s exclusion order against Apple for standard essential patents (337-TA-794)

•  Domestic industry based on licensing •  Suprema killed induced infringement

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Post-grant Administrative Challenges

•  Finally there is a popular alternative to litigation – Post Grant Review (PGR) – Covered Business Methods (CBM) –  Inter Partes Review (IPR)

•  Huge increase in post-grant challenges •  Tremendous success in knocking-out

bad patents: “death squad” for patents •  Changes the cost profile for asserting a

patent 6

IPR Statistics – Terminated thru 5/1/14

Source: USPTO Slides from PTAB Roundtable in Denver on May 8, 2014

Cumulative AIA Petitions thru 5/1/14

Source: USPTO Slides from PTAB Roundtable in Denver on May 8, 2014

Patent Procurement is Changing

•  Vibrant secondary patent resale market to quickly build-out patent portfolios

•  White-hat patent trolls buying inventory before black-hat NPEs do

•  Troll insurance •  Empirical approach to patenting

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•  Is the perceived value of filing patents increasing?

○ Yes ○ No

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Patent Office Treatment of Patentable Subject Matter

•  Alice has stalled issuance in many parts of the patent office (i.e., business methods)

•  Patent office guidelines are provide no useful direction to Examiners

•  Many cases pulled from allowance with bare 101 rejections

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•  The court decisions, ITC and post-grant trends are causing a reevaluation of patent filing strategies.

○ Agree ○ Disagree

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Legislative Reform - Proposed

•  End-user protections •  Stronger fee shifting •  Heightened pleading requirements •  Expansion of covered business methods

(CBM) that can be challenged •  Curbs on abusive litigation strategies •  Transparency of patentees filing litigation

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•  Will the new Congress pass patent reform legislation in 2015?

○ Yes ○ No

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•  The court decisions over the last decade are relieving the need for patent reform.

○ Agree ○ Disagree

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Patent Take-Aways

•  Patent litigation is becoming more manageable, but still a major worry

•  Patent prosecution is becoming more difficult, but tools exist to “work smarter”

•  There are many ways to ameliorate patent risk and build patent portfolios

•  Patent litigation and patent portfolio build-out strategies are quickly evolving

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Questions?

Tom Franklin tfranklin@kilpatricktownsend.com