The top 10 intellectual property cases of 2018

By Kirk Teska
BridgeTower Media Newswires
 
BOSTON, MA — As is the custom this time of year, the following are my top 10 IP cases of the year:

1. More than a feeling

The 1st Circuit case Scholz v. Goudreau doesn’t have much to do with IP. But it makes the list because it’s a case in Boston about the band Boston and its first album, “Boston.” Even Ernie Boch Jr. makes an appearance in the case. Rock music fans and anyone representing bands or their members should enjoy the opinion.

In a nutshell: Barry Goudreau, the band’s guitarist from 1976 to 1979, left in 1981 in return for a share of royalties from the first two Boston albums and executed a settlement agreement limiting his marketing use of “Boston” to “formerly of Boston.” 

When Goudreau joined Boch’s band, Ernie and the Automatics (or ETA), Boch advertised ETA and member Goudreau in a manner not always consistent with Goudreau’s settlement agreement.

Tom Scholz, a founding and current member of Boston, sued but lost primarily because Scholz failed to show that Goudreau had any role in drafting, approving or promulgating the advertisements not in conformance with the settlement agreement.

2. 3-D printing fiasco

Another great Massachusetts case is Desktop Metal, Inc. of Burlington v. Markforged, Inc. of Watertown involving two companies in the 3-D printing game.

Desktop sued Markforged for patent infringement. The brother of one of Desktop’s employees was an employee at Markforged, so Desktop also alleged Desktop’s secrets were leaked to Markforged. In turn, Markforged was upset that Ric Fulop, a partner of Northbridge Venture Partners, had invested heavily in Markforged and yet also founded Desktop.

Markforged’s counterclaims alleged Fulop was a trusted advisor and confidant of Markforged’s founder and CEO. Other partners of Northbridge also funded Desktop.  Markforged further claimed Desktop stole Markforged’s key employees.

After 566 docket entries, the parties settled in early October after a jury trial finding Markforged not liable for patent infringement. The case and its many pleadings should be required reading for all beginning litigators, especially if they ever end up practicing before U.S. District Court Judge William G. Young.

3. Sovereign immunity

Any legal measure available to prevent a challenger from attacking your patent greatly increases the value of the patent.

Allergan owns patents for its dry eye treatment Restasis and transferred those patents to an Indian tribe. So when various generic drug companies sought to have the Patent Office invalidate the Restasis patents, the tribe asserted sovereign immunity.

In St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc., the Court of Appeals for the Federal Circuit held immunity does not apply to some federal agency proceedings. The court relied on prior NLRB, EEOC and Federal Power Commission actions against various American Indian tribes as precedent. Thus, the tribe does not have immunity against a Patent Office review of patents held by the tribe.

4. Assignor estoppel

The Assignor Estoppel Doctrine in patent law prevents someone from selling a patent and later arguing the patent is worthless. Some, however, feel assignor estoppel prevents the eradication of bad patents in the courts.

In Arista Networks, Inc. v. Cisco Systems, Inc., (Fed. Cir. 2018), a Cisco scientist assigned his rights in a network security invention to Cisco, which Cisco later patented. The Cisco scientist/inventor later left Cisco and co-founded Arista Networks, which competed with Cisco. Arista asked the Patent Office to invalidate the Cisco patent, which the Patent Office did, in part.

The American Invents Act passed in 2011, allowing anyone who is not the owner of a patent to challenge the patent before the Patent Office via an Inter Partes Review, or IPR. Because Congress did not address assignor estoppel when it legislated the IPR procedure, the Federal Circuit held patent assignors can challenge the very patents they once held or had rights to.

The opinion thus gives patent infringers an additional method of challenging patents and could open the door to further watering-down of the Assignor Estoppel Doctrine.

5. IPRs, again

The U.S. Supreme Court decided two cases in 2018 concerning the IPR procedure whereby the Patent Office can review an issued patent and strike it down if the invention is not patent eligible, not novel, and/or is obvious.

Does the IPR procedure violate the Seventh Amendment right to a trial by jury? No, held the Supreme Court in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC.

Also, in SAS Institute, Inc. v. Iancu, the Supreme Court held that IPR petitioners must always receive a full review of the patent challenged, ending the Patent Office’s prior procedure of instituting only a “partial review.”

6. New noncompete and trade secret laws

The new Massachusetts noncompete and trade secret laws took effect on Oct. 1.  Many have previously commented on the measures, so I’ll just highlight a few key areas here.

First, the new noncompete law does not apply to many agreements such as non-disclosure/ confidentiality agreements, invention assignment agreements, and noncompetes made in connection with the sale of a business.

Second, noncompetes, even if in compliance with the new law, are not enforceable against employees who are terminated without cause or laid off.

Third, the new law applies only to noncompete agreements entered on or after Oct. 1, 2018. But, since Massachusetts courts have repeatedly stricken noncompetes for a variety of different reasons, it might be a worthwhile effort to bring all of a company’s noncompetes into compliance with the new law.

Other provisions of the law are somewhat ambiguous, such as the need for a “garden leave clause” (50 percent of the employee’s salary paid to the employee while he is prohibited from competing) or “other mutually agreed upon consideration,” and also the need for “fair and reasonable consideration” if the noncompete is entered into after the commencement of employment.

It will be up to the courts to clarify exactly what constitutes “other mutually agreed upon” and “fair and reasonable” consideration.

The trade secrets act is a little clearer and can be used to thwart vague allegations of trade secret misappropriation and, at the same time, allows for an award of treble damages and attorneys’ fees in egregious cases.

7. Patent invalidity on the pleadings

Since the Supreme Court’s Alice decision in 2014, which raised the bar for what constitutes patent eligible subject matter, a lot of business method and software patents have bitten the dust. In some cases, patents have been invalidated very early on in the litigation via a motion for judgment on the pleadings, often granted by a federal District Court judge.

The Federal Circuit has now blessed that procedure in several cases, including SAP America, Inc. v. InvestPic, LLC.

8. Application programming interfaces found copyrightable

In the 1990s, Sun Microsystems developed the Java platform and was later acquired by Oracle America. Java makes heavy use of application programming interfaces, or APIs. Google’s Android Smartphone operating system is Java based and includes 37 Oracle API packages.

Oracle sued Google for patent and copyright infringement. At the first trial, the Oracle patents were found not infringed by Google, and the APIs were held uncopyrightable. On appeal, the APIs were held copyrightable and the case remanded to determine whether Google’s copying could be excused as fair use.

At the second trial, the jury sided with Google and found fair use. At the second appeal, decided this year, the Federal Circuit reversed and found in favor of Oracle. An en banc review has been denied.

9. Patents: lost foreign profits

WesternGeco owns patents for a system that uses a lateral-steering technology to survey the ocean floor in the oil and gas exploration industry. It sued Ion GeoPhysical Corp., which began selling a competing system. WesternGeco proved Ion infringed WesternGeco’s patents and that, as a result, WesternGeco lost profits to the tune of $93.4 million.

Normally, those lost profits would be recoverable by WesternGeco. The twist here was that Ion infringed the WesternGeco patents under a special infringement statute that concerns supplying a component of a patented invention overseas. And Ion made its profits overseas due to foreign users of the technology in question. Typically, a U.S. patent applies only to infringing activities in the United States.

So, the question presented was whether or not the patent statute allows for a patent owner to recover lost foreign profits. The Supreme Court held that in this special case, the patent owner could recover lost foreign profits. As a result, U.S. patents, in some situations, more strongly protect against actions occurring in foreign lands.

10. Patent No. 10,000,000

On June 19, the Patent Office issued Patent No. 10,000,000. It took only a little over three years to hand out the last million patents, while it took about 121 years to get to the 1 millionth patent. And about half of all issued patents occurred in the last 30 years.

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Kirk Teska is managing partner of Iandiorio, Teska & Coleman in Waltham, an adjunct professor at Suffolk University Law School, and author of two books: “Patent Savvy for Managers” and “Patent Project Management.”