Finnegan, Henderson, Farabow, Garrett & Dunner, LLP ...server.semiconchina.org/downloadFile/1365752284985.pdf · Investment Return in Automotive Electronics ... AIA: First-to-Invent

2013-4-8

1

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Protect Your Innovation and Maximize Your Investment Return in Automotive Electronics

Presented by Shaobin ZhuSEMICON (Shanghai) March 20, 2013

SEMICON ( ) 2013 3 20

22

Automotive Electronics

� A modern car comprises dozens of computers, including thousands of sensors/MEMS and millions of lines of code

� Vehicle-computer network

� /

�

2013-4-8

2

33


Conventional Parts60%


40%

44

Automotive Patent Litigation Arises in U.S.

PwC 2012 Patent Litigation Study, 14

2013-4-8

3

55

Reasons for Automotive Patent Litigation Rise

� Now, suppliers are performing more than 40% of all R&D, more willing to protect their investment� 20 years ago, suppliers conducted less than 10% of all R&D, with

most done by OEM automakers� OEM automakers often rely on single-source suppliers and cannot control

them like they used to� Suppliers (including those investing in automotive electronics) use

litigation as a tool to protect their market shares ==> New technologies inspire more litigation

� 40% 2010%

�

�

==>

66

Recent Patent Litigation in Automotive Electronics

� Body electronics� Magna Electronics Inc. v. TRW Automotive Holdings Corp. et. al. (2012 W.D. Michigan) (asserted

8 patents relate to headlight control using image sensing or vision system)

� Tire pressure monitoring system (�TPMS�)� Schrader-Bridgeport International, Inc. v. Continental Automotive Systems US, Inc. (2012 W.D.

Virginia)� MHL TEK, LLC v. Nissan Motor Co. (2011 Fed. Cir) (lacking standing to assert patents b/c

inventors failed to assign them to plaintiff)

� Safety and security system� Delphi Automotive Systems, LLC v. Automotive Technologies International, Inc. (2011 E.D.,

Michigan) (DJ action: invalidated 4 patents, relating to occupant sensors for airbag control, which were asserted against Delphi�s customers in Texas

� Methode Electronics, Inc. v. Delphi Automotive Systems LLC et. al. (2009 N.D. Illinois) (a weight-sensing pad used in a seat-occupant sensing system)

� Automotive Technologies International, Inc. v. BMW et. al. (2007 Fed. Cir.) (Sued more than 20 automakers; Fed. Cir. confirmed district court�s SJ of invalidity of ATI�s patent relating to crash sensing devices for an occupant protection apparatus)

� Telematics� Vehicle IP, LLC v. General Motors Corp. (2008 W.D. Wisconsin)

(asserted patents relate to a navigation device)

2013-4-8

4

77

Recent Patent Litigation in Automotive Electronics

�� Magna Electronics Inc. . TRW Automotive Holdings Corp. et. al. (2012 ) (

8 )

� ( TPMS )� Schrader-Bridgeport International, Inc. . Continental Automotive Systems US, Inc. (2012

)� MHL TEK, LLC . Nissan Motor Co. (2011 ) (

)

�� Delphi Automotive Systems, LLC . Automotive Technologies International, Inc. (2011

) ( 4 , Delphi

� Methode Electronics, Inc. . Delphi Automotive Systems LLC et. al. (2009) ( )

� Automotive Technologies International, Inc. . BMW et. al. (2007 Fed. Cir.) (20 ; ATI

)

�� Vehicle IP, LLC . General Motors Corp. (2008 W.D. Wisconsin)

88

Protect Your Innovation & Maximize Your Investment Return

1. Build effective IP portfolio2. Allocating IP risks via contracts3. Administrative validity challenges under AIA4. Licensing5. Due diligence & opinion

1.2.3.4.5.

2013-4-8

5

99

The Golden Rule

� He who owns the gold (strong patents) wins the market

�

Data Source: PatentCafe, Automaker Patent Assets Intelligence Report (2009), 23

1010

More Patents on Automotive Electronics

PatentCafe, Automaker Patent Assets Intelligence Report (2009), 39

Automakers (e.g., GM) and suppliers (e.g., Google, ATI) are filing more patents on automotive electronics

GM Google, ATI

2013-4-8

6

1111

Build Effective Patent Portfolio

� Why get patents - MARKETING tools: protect & grow your market share� Stop others (exclude)

Prevent copying� Stop others from stopping you (�freedom of action�)

Promote cross licensing or otherwise prevent injunction or large charges from competitorsNeutralize other�s patents

� -�

�

1212


� Acquisition of Patents: utility and design patentsA. Prosecution of PatentsB. Acquisition of Patents by Purchases C. Acquisition of Patents by Mergers and Acquisitions

�A.B.C.

2013-4-8

7

1313


Repackage your patent portfolios to maximize their values: Body electronics: e.g., seat positioning, door/window controlsTelematics: e.g., infotainment, navigation, communicationPower train control: e.g., engine and transmission monitoring, diagnostics and control, drive-by-wire systemsSafety and security system: e.g., ABS, suspension system, steering, tire pressure monitoring, air-bags, collision avoidanceCentral command: e.g., interconnection of different systems

/

, ABS,

1414


1. Build effective IP portfolio2. Allocating IP risks via contracts3. Administrative Validity Challenges under AIA4. Licensing5. Due diligence & Opinion

1.2.3.4.5.

2013-4-8

8

1515

Allocating IP risks through contracts

Automotive electronics suppliers to an OEM automaker or parts supplier:�Exemption

� Known liability� Unknown liability� Good faith standard

�Ensure no infringement� Good faith standard

�Indemnification�Covenant not to sue

OEM�

��

��

��

1616



1.2.3.4.5.

2013-4-8

9

1717

AIA: First-to-Invent First-Inventor-to-File

ConceptionJan. 1, 2013

2013 1 1

RTPJan. 10, 2013

2013 1 10

Old: First-To-Invent

ConceptionFeb. 1, 2013

2013 2 1

RTPFeb. 10, 2013

2013 2 10

File app.May 1, 2013

2013 5 1

File app.July 1, 2013

2013 7 1

New: First-Inventor-to-File(Mar. 16, 2013)

2013 3 16

1818

Validity Challenges in USPTO under AIA:

Ò»© Î»¹·³»

Preissuance Submissions(can provide details) (Eff: 9/16/2012)

Ex Parte Reexam(post-grant)

Post-Grant Review (PGR)(within 9 months of grant) (Eff: 9/16/2012)

9

Inter Partes Review (IPR)(after 9 months of grant) (Eff: 9/16/2012)

(Pre-AIA patents: no 9-month waiting period)9

2013-4-8

10

1919

Preissuance Submissions

Any patent application filed before, on, or after Sept. 16, 2012

�AdvantagesCostComments allowedNo limit to number of documentsNo estoppelStrawman permitted

2012 9 16

�

2020

Preissuance Submissions

�DisadvantagesPatent examiner/not reexam examinerCannot propose rejectionNo participation�Best� art overcome

�/

2013-4-8

11

2121

Nuts and Bolts

� Who can file3rd party (no Rule 56 duty)�Strawman� allowed

� TimingEarlier of:

� Notice of Allowance or � Later of six months after publication (by PTO, not WIPO) or first action

rejecting claims (RR not counted)

�56

�

��

RR

2222

Post-Grant Challenges to Patents

Ex Parte Reexam Post-Grant Review Inter Partes Review

When? After grant No more than 9 months after grant (Sept. 16, 2012, but of a patent with an effective filing date of the claimed invention on or after March 16, 2013)

9

After 9 months from grant 9

ThresholdShowing

SNQP �more likely than not that at least 1 of the claims challenged in the petition

is unpatentable� or important novel/unsettled legal question

/

Reasonable likelihood of success

Anonymity Yes No No

Estoppel None Issues raised or reasonably could have been raised by the petitioner:

PTO, district court, and ITC

Issues raised or reasonably could have been raised by the petitioner:

PTO, district court, and ITC

2013-4-8

12

2323

Post-Grant Challenges to Patents

Ex Parte Reexam Post-Grant Review Inter Partes Review

Grounds 102, 103 101, 102, 103, 112 102, 103

Before Whom?

CRU PTAB PTAB

Discovery/Evidence?

Declaration Declaration and discovery Declaration and discovery

Speed Many Years 1 to 1½ years 1 to 1½ years

Appeal Only patentee can appeal to Board and then Federal Circuit

Both parties can appeal to Federal Circuit

Both parties can appeal to Federal Circuit

2424

Post-Grant Challenges To Patents

� Post-grant challenges should be part of your patent strategy when:� You learn of an important patent� You receive a threatening letter� Litigation is filed� You are in a larger business dispute� You own the patent

��

2013-4-8

13

2525


� Less expensive than litigation� Could be a total win with no patent left� Forces patentee to fight on multiple fronts

��

2626


� Additional prosecution history� claim construction ammunition� exploit inconsistent arguments

� Cloud of uncertainty over patent validity� Preclusion of royalty payments after settlement

��

��

2013-4-8

14

2727


� Stay of parallel litigation� Ability to use the grant of a post-grant challenge as a basis for

seeking a litigation stay� Gain time/leverage to build/settle case

��

2828


� Challenge patent validity at USPTO outside of litigation (as Congress intended)

� Delay and could eliminate enforcement� Delay could simply result in change in circumstances

advantageous to accused infringer (e.g., design around)

�

��

2013-4-8

15

2929


� To assist in redesign– Patent owner focused on narrowing claims for existing

product– Use post-grant challenges to help find design alternatives

�––

3030


� Problems� Result could be a strengthened patent� Time consuming: but new PGR and IPR procedures take only

<1.5 years � May not know of all patents

��

2013-4-8

16

3131



1.2.3.4.5.

3232

Licensing

� Be proactive - seek licenses before they are needed� Establish good will � Have better understanding of business options

� Have new designs available to show patent owner options for noninfringement

��

�

2013-4-8

17

3333

� License Out: Royalties� Cross-license opportunities

� Opportunity to exploit in other geographic markets� Opportunity to exploit in non-competitive fields� Opportunity to obtain improvements by others

� Opportunity for broader business arrangements� Strategic collaboration: development, manufacturing, joint supply, marketing� Joint venture: collaboration through another legal entity� Standard & patent pool

� Vehicle for settling future disputes� Your IP assets are swords but also shields

��

��

��

��

Licensing

3434

Licensing

� Problems� May create visibility� May force licensor to act� May create willfulness problem

��

2013-4-8

18

3535



1.2.3.4.5.

3636

IP Due Diligence

� IP Due Diligence is a legal exercise� Define, examine, and analyze an IP portfolio� To reveal the value/potential problems of the IP assets

� Ownership rights surrounding the IP� Strength, scope, and enforceability of the IP� Future potential to be derived from the IP

�� /

��

2013-4-8

19

3737

Opinions of Counsel

� Opinion (typically a detailed letter or report) from attorney providing his professional assessment� Explains case law, relevant facts, and basis for conclusions

��

3838

Opinions of Counsel

� Types of opinions in patent law� Non-infringement� Invalidity� Freedom to operate� Patentability� Pre-litigation� Etc.

��

2013-4-8

20

3939

Opinions of Counsel

A useful business tool for automakers and suppliers to determine whether to:

� Adopt designs� Enter markets � Negotiate contracts with suppliers (warranties & indemnities)� Design around� Challenge the validity at the USPTO� License

�� & ��

4040

Freedom to Operate Opinion

� No valid patents/applications infringed� Provides legal protection

� Fulfills duty to avoid infringement� Courts or juries may still find infringement, but minimizes risk of

a finding of willful infringement� Shows good-faith attempt and reliance upon counsel to avoid

infringement

� /�

��

�

2013-4-8

21

4141

The Opinion Must Be Competent

� To determine competency, the Federal Circuit assesses both the qualification of the author and the content of the opinion.� The author must have appropriate technical and legal knowledge and

experience� The opinion must evidence an adequate foundation based on a review

of all necessary facts and the relevant case law� A competent opinion is not �conclusory�� A competent opinion is based on the best information known to the

client

� , � ,�

��

4242

The Opinion Should Be Prepared By Qualified and Objective Counsel

� Options for opinion counsel� Patent Attorney� Non-patent Attorney� In-house Counsel (general or patent)� Outside Patent Counsel (partner or associate)

� Opinions given by non-patent attorneys or in-house counsel may be highlysuspect and found to be incompetent

� Non-U.S. attorneys: unauthorized practice of law

��

��

2013-4-8

22

4343

Í¸¿±¾·² Æ¸« (shaobin.zhuàº·²²»¹¿²ò½±³ñïòêëðòèìçòêéêí÷

Practice includes litigation, patent prosecution, and client counseling, with an emphasis on computer software, Internet technologies, telecommunications, video processing, LEDs, and electronic technology. Participated in many aspects of patent litigation such as patent validity and infringement, technical discovery and production, deposition, Markman hearing, motion hearing, and jury trial. He has handled all stages of patent prosecution, reissue, and reexamination of disputed patents, and has rendered opinions regarding patent infringement and validity of patents.

(shaobin.zhuàº·²²»¹¿²ò½±³ñïòêëðòèìçòêéêí÷

Comments? Questions?

Documents

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP ...server.semiconchina.org/downloadFile/1365752284985.pdf · Investment Return in Automotive Electronics ... AIA: First-to-Invent