MCLE EBay Seminar (June 2008)

8/14/2019 MCLE EBay Seminar (June 2008)

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gesmer.com/mcleseminar


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Continental Paper(1908)


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never used


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never licensed


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"non-practicing entity"(NPE)


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Supreme Court:

no obligation to makeuse or vend the

invention


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patent grant is right

to exclude othersfrom making, using or

vending


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"Anything butprevention takes

away the privilegewhich the law

confers upon thepatentee"


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Carbice Corp (USSC 1931):"the [patent] owner can,

of course,prohibit

entirelythe mfg., sale, or

use of [the invention]


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Harford-Empire (USSC1945):set price for use by othersuse and refuse to license

neither use nor license


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U.S. v. Line Material (USSC

1948):"a patent confers a

monopoly so this courtdecided in Paper Bag"


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Zenith Radio (USSC 1969)"The heart of [legal monopoly]islegal monopoly is the right toinvoke the State's power to

prevent others from utilizing hisdiscovery without his consent"


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MercExchange v. eBay

(E.D. Va)


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Patent 5,845,265:"Consignment nodes"Thomas G. WoolstonFiled: November 7,

1995


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"What is claimed is:1. A system for presenting a datarecord of a good for sale to amarket for goods, said marketfor goods having an interface toa wide area communication

network for presenting andoffering goods for sale to apurchaser, "


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District Court: Lack of commercial

activity willingness to license

business method patent


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permanent injunctiondenied


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Federal Circuit:

right to exclude is"essence" of patent

property right


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General Rule:Permanent

injunction issues,except in "rareinstances"


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case must be

"exceptional to justifythe denial of a

permanent injunction"


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"practice" = irrelevant


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eBay v. MercExchange,547 U.S. 1015 (May 15,2006)


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U.S. Const. Art. I,8,cl. 8:


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"promote the progressof science and useful

arts, by securing forlimited times to

authors and inventors


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the exclusive rightto their respective

writings anddiscoveries"


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35 U.S.C. 261 :

"patents shall havethe attributes of

personal property"

*


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*

35 U.S.C. 154(a)(1):"the right to exclude

others from using,offering for sale or

selling throughout theUnited States"


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35 U.S.C. 283:"courts havingjurisdiction of casesunder this title maygrant injunctions inaccordance with theprinciples of equity


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Justice Thomas:

"right to exclude"distinct from "provisionof remedies"


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Four-factor test:


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3. equity warranted

considering balanceof hardships; and4. public interest not

disserved


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no categorical rule for

nonpracticingpatentees, but:


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university researchersself-made inventors


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Thomas:

"we hold only that"


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"equitable discretion"


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"traditional principles

of equity"


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Roberts (Scalia, Ginsburg):

injunctive relief in vastmajority of casesCourt is not "writing on a

completely clean slate"


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"a page of history is

worth a volume oflogic"


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Kennedy (Stevens,Souter, Breyer):

"right to exclude doesnot dictate the remedy"


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"nature of the patent

and the economicfunction of the

patent holder"


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"new era" of patent

holding companies"vagueness and suspect"of business methodpatents


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small componentleverage/bargaining

tool


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experience since eBay


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(1)


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z4 v. Microsoft (EDtTx2006, Davis)


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eBay:

"plaintiff must prove:"irreparable harm


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Judge Davis:

after eBay,irreparable harm not

presumed


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z4 licensor, not

competitorsmall component

no obstacle to z4licensing to others


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MS "parade ofhorribles"-

software redesignre-releasesproduct delays


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piracyindustry wide rippleeffect/OEMs


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permanentinjunction denied

reasonable royaltyimposed forpast

infringement usedfor ongoing royalty


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Finisar v. DirectTV

(EDtTx 2006, Clark)


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willful infringement

enhanced damageslicensor, not competitor

permanent inj. denied


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$1.60 per set top box


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"it is anticipated that, assophisticated entities

with experience inlicensing agreements, theparties may wish to agree

to more comprehensive orconvenient terms"


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(3)


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Paice v. Toyota

(EDtTx 2006)


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hybrid drive trains

Prius II, HighlanderLexus RH400


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irreparable harm not

presumedNPE

small component


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harm to Toyotareputation

cost of redesignpost-trial offer to

license


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harm to dealers and

suppliers harm to "burgeoning

hybrid market"


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Holding:permanent injunction

denied- "ongoing royalty"= $25/vehicle


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(4)


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Paice v. Toyota -

CAFC decision onappeal (Oct. 2007):


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jury trial?on remand: negotiatebefore court-orderedlicense

ongoing royalty rate


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Judge Rader:

remand to parties, orobtain partiesconsent


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ongoing royalty

= compulsory license


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"Pre-suit and post-judgment actsof infringement are distinct, and

may warrant different royaltyrates given the change in theparties legal relationship and

other factors"


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(5)


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permanent injunction

denied a second time


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finding of willfulness

not dispositivewillingness to license

significant factor


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obtained licensesthrough threat of

litigationdidnt seek preliminaryinjunction

business method patent


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if money is all it seeks,money is sufficient remedy

PTO reexam "impacts theequitable calculus"no B/M "second look" by

PTO


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(6,7)


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Visto v. Seven Networks

(EDtTX 2006, Ward)Brooktrout v. Eicon

(EDtTX 2007, Ward)

Marshall, Texas


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District Court Judge T. John Ward


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fact parties are direct

competitors weighsheavily

"intellectual property


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intellectual propertyenjoys its highest

value when assertedagainst a direct

competitor inplaintiffs market"


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"right to exclude is

the very essence ofthe intellectual

property at issue"


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(8)


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Akamai Technologies

v. Limelight Networks(D. Mass, Zobel)


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Graphic


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Akamai has neverlicensed

damages/reasonablecertainty

alternatives


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Limelight:Akamai prospered

restraint on monopolypower

preliminary injunction


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non-willful

cost to poorercustomers

job loss


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What questionsremain?

What have welearned?


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?


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compulsory licenserewards infringer?


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should patent holderbe compd at higher /

different rate afterfinding ofinfringement?


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eBayHearings?


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Alternative? -no forced royaltiesnew suitdamages; trebling forwillfulness; att. fees;

interest


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preliminaryinjunctions?


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Copyright, trademark?


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but we know


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"automatic" or "semi-

automatic" injunction


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presumption ofirreparable harm


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non-practicing patenteesface steep odds

"patent holdingcompanies" face extremelysteep odds


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in NPE / non-competitive cases,

threat of catastrophicresult is greatly

minimized, if not gone


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NTP v. Research inMotion


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$612,500,000

On March 3,

2006


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easier to analyze andcalculate risk


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litigation strategies


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Patent holder:practice

competelimited license deals

avoid "undueleverage" defense


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reject settlement offers

name your licensee insuitITC exclusion order?


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bait settlement offer (FRE

408?)public interest (medical,safety, defense)

workaround


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THANK YOU!


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and remember:

gesmer.com/mcleseminar

Documents

MCLE EBay Seminar (June 2008)