IP News

Johnson & Johnson Suffers $482 Million Loss in Stent Battle

Patented cardiac stents have led to yet another enormous jury verdict, once again in favor of New Jersey radiologist Dr. Bruce N. Saffran. Dr. Saffran had previously obtained a $432 million verdict against Boston Scientific Corp. for infringement of the same patent in 2008.

An Eastern District of Texas jury found that Johnson & Johnson subsidiary Cordis Corp. willfully infringed the patent, titled “Method and Apparatus for Managing Macromolecular Distribution,” enabling a treble damages award totaling $482 million.

The verdict is the seventh-biggest in the history of U.S. patent litigation. The case is Saffran v. Johnson & Johnson, Civ. No. 07-451.

Cuervo Stumbles over Jim Beam Settlement Agreement

A trial court in New York City has held on summary judgment that Tequila Cuervo La Rojena SA de CV breached a deal with Jim Beam Brands Co. that restricted Cuervo's use of a crow trademark with respect to tequila products. The agreement had been entered into as a result of a dispute between the parties in the U.S. Patent and Trademark Office in 1997.

According to the agreement, Cuervo is permitted to use a crow design on the neck and back labels of its bottles, as well as on advertisements that incorporate photographs of the bottles. However, Cuervo began to use the crow trademark on other parts of the bottle as well as in a 2007 ad campaign and on shipping boxes.

At trial over the breach of the settlement agreement, Cuervo argued that the spirit of the agreement was upheld because there was no consumer confusion and because Jim Beam did not lose any sales as a result of its use of the mark. Judge Richard B. Lowe III disagreed, holding that a minor or major breach of the contract is still a breach. Damages will be determined at a later trial.

Federal Circuit Upholds Grant of Summary Judgment Of Obviousness

In a 2-1 split, the Court of Appeals for the Federal Circuit in Tokai Corp. v. Easton Enterprises (No. 2010-1057), affirmed the district court's grant of summary judgment of obviousness. Tokai's patents relate to safety mechanisms for elongated lighters generally used for lighting barbecue grills.

After a broad claim construction order, Easton stipulated to infringement and asserted that the broadly construed claims were invalid as obvious over four prior art references. In a prelude to the Supreme Court's disposition of the Microsoft v. i4i case, the Federal Circuit held that there was no added burden in proving invalidity when some of the four prior art references had been considered by the examiner and some had not. The Federal Circuit held that the “added burden” is not required when the obviousness question is based on at least some evidence not considered by the PTO.

The Federal Circuit then affirmed the district court's ruling that there was no genuine issue of material fact regarding the scope and content of the prior art, and that there was also no error in the district court's ruling that there was no genuine issue of material fact regarding the differences between the asserted claims and the prior art. Though there was a dispute regarding the level of skill in the art, the Federal Circuit found that the patents would be obvious under either party's proposed skill level.

Citing KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), the court held that the identified, predictable solution to the known problems were available to one skilled in the art: “It would have been obvious to one of ordinary skill and creativity to adapt the safety mechanisms of the prior art cigarette lighters ' to fit a utility lighter ' even if it required some variation in the selection or arrangement of particular components.”

The ultimate conclusion of obviousness appeared to not be close, as the majority of the panel awarded costs to Easton.

Judge Pauline Newman, however, dissented from the majority, noting that the Tokai safety structure is not a result of direct combination of the prior art. Judge Newman pointed out that the safety features in the prior art all relate to conventional flint and wheel cigarette lighters, and the only elongated lighter in the cited prior art had no safety features at all. According to her dissent, the district court applied the wrong standard: “The determination of obviousness is not whether a person could, with full knowledge of the patented device, reproduce it from prior art or known principles. The question is whether it would have been obvious, without knowledge of the patentee's achievement, to produce the same thing that the patentee produced.”

Amended Patent Reform Bill Approved; White House Announces Three-Track Model

The Senate Judiciary Committee has unanimously approved patent reform bill S. 23, which will now be sent to the full Senate floor for consideration. The Senate Judiciary Committee added four amendments before the vote:

1. an amendment that would legislatively overturn the U.S. Supreme Court's ruling in Holmes Group Inc. v. Vornado Air Circulation System, 535 U.S. 826 (2002), which held that the Federal Circuit could not maintain jurisdiction over a case where the complaint does not assert a claim arising under the patent laws, but the answer contains a patent law counterclaim. The bill, if passed with this amendment, would keep such actions within the jurisdiction of the Federal Circuit.
2. an amendment that would require that post-grant review petitions be filed no later than six months after the filing of a complaint alleging infringement of the underlying patent.
3. an amendment to curtail the patenting of tax strategies, which had been narrowly tailored to avoid disruptions to patents for tax preparation software.
4. an amendment allowing courts to assess treble damages only for findings of willful infringement.

The bill provides for important changes to the current patent system, such as assigning priority to the first to file a patent application, rather than the first to invent. The United States is currently the only patent system in the world with a first-to-invent framework. The bill as currently written will also make it harder to prove willful infringement, and curtail extreme damages awards.

The bill will now move to the full Senate for consideration. There is currently no House version pending.

The White House also announced its plans to deal with the current backlog of patent applications as part of its strategy to increase U.S.-based innovation. The plan would provide for a three-track examination system, providing quicker examination to those patent applicants that are willing to pay an increased fee. According to Commerce Secretary Gary Locke, the system would get the most valuable patents issued more quickly, as determined by the applicants.

Microsoft v. i4i: Amicus Briefs Favor Microsoft's Preponderance of the Evidence Standard

Aside from Microsoft's opening brief on the merits, 25 amici have filed briefs detailing their respective positions to assist the Supreme Court in deciding the upcoming Microsoft v. i4i case (Docket No. 10-290 (Supreme Court 2011)). The AIPLA and the largest U.S. patent holder, IBM, support the status quo and argue for the current high standard of clear and convincing evidence for invalidating a patent.

The Electronic Frontier Foundation and the Public Patent Foundation both argue on policy grounds that the lower preponderance of the evidence standard is necessary to change the poor overall quality of U.S. patents. The generic pharmaceutical companies agree with this position, with Teva noting that the higher validity standard encourages patent holders to conceal prior art from the PTO and rely on the high clear and convincing evidence standard during litigation.

A group of technology companies including Google, Verizon, Comcast, Dell, Lockheed-Martin, and others argue that the lower preponderance of the evidence standard is proper. The tech companies state that preponderance of the evidence is the default standard of proof in civil litigation, including litigation about property rights. Further, they note that the PTO, when re-examining issued patents that already have its stamp of approval, uses a preponderance of the evidence standard.

Howard Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.

Johnson & Johnson Suffers $482 Million Loss in Stent Battle

Patented cardiac stents have led to yet another enormous jury verdict, once again in favor of New Jersey radiologist Dr. Bruce N. Saffran. Dr. Saffran had previously obtained a $432 million verdict against Boston Scientific Corp. for infringement of the same patent in 2008.

An Eastern District of Texas jury found that Johnson & Johnson subsidiary Cordis Corp. willfully infringed the patent, titled “Method and Apparatus for Managing Macromolecular Distribution,” enabling a treble damages award totaling $482 million.

The verdict is the seventh-biggest in the history of U.S. patent litigation. The case is Saffran v. Johnson & Johnson, Civ. No. 07-451.

Cuervo Stumbles over Jim Beam Settlement Agreement

A trial court in New York City has held on summary judgment that Tequila Cuervo La Rojena SA de CV breached a deal with Jim Beam Brands Co. that restricted Cuervo's use of a crow trademark with respect to tequila products. The agreement had been entered into as a result of a dispute between the parties in the U.S. Patent and Trademark Office in 1997.

According to the agreement, Cuervo is permitted to use a crow design on the neck and back labels of its bottles, as well as on advertisements that incorporate photographs of the bottles. However, Cuervo began to use the crow trademark on other parts of the bottle as well as in a 2007 ad campaign and on shipping boxes.

At trial over the breach of the settlement agreement, Cuervo argued that the spirit of the agreement was upheld because there was no consumer confusion and because Jim Beam did not lose any sales as a result of its use of the mark. Judge Richard B. Lowe III disagreed, holding that a minor or major breach of the contract is still a breach. Damages will be determined at a later trial.

Federal Circuit Upholds Grant of Summary Judgment Of Obviousness

In a 2-1 split, the Court of Appeals for the Federal Circuit in Tokai Corp. v. Easton Enterprises (No. 2010-1057), affirmed the district court's grant of summary judgment of obviousness. Tokai's patents relate to safety mechanisms for elongated lighters generally used for lighting barbecue grills.

After a broad claim construction order, Easton stipulated to infringement and asserted that the broadly construed claims were invalid as obvious over four prior art references. In a prelude to the Supreme Court's disposition of the Microsoft v. i4i case, the Federal Circuit held that there was no added burden in proving invalidity when some of the four prior art references had been considered by the examiner and some had not. The Federal Circuit held that the “added burden” is not required when the obviousness question is based on at least some evidence not considered by the PTO.

The Federal Circuit then affirmed the district court's ruling that there was no genuine issue of material fact regarding the scope and content of the prior art, and that there was also no error in the district court's ruling that there was no genuine issue of material fact regarding the differences between the asserted claims and the prior art. Though there was a dispute regarding the level of skill in the art, the Federal Circuit found that the patents would be obvious under either party's proposed skill level.

Citing KSR International Co. v. Teleflex Inc. , 550 U.S. 398 (2007), the court held that the identified, predictable solution to the known problems were available to one skilled in the art: “It would have been obvious to one of ordinary skill and creativity to adapt the safety mechanisms of the prior art cigarette lighters ' to fit a utility lighter ' even if it required some variation in the selection or arrangement of particular components.”

The ultimate conclusion of obviousness appeared to not be close, as the majority of the panel awarded costs to Easton.

Judge Pauline Newman, however, dissented from the majority, noting that the Tokai safety structure is not a result of direct combination of the prior art. Judge Newman pointed out that the safety features in the prior art all relate to conventional flint and wheel cigarette lighters, and the only elongated lighter in the cited prior art had no safety features at all. According to her dissent, the district court applied the wrong standard: “The determination of obviousness is not whether a person could, with full knowledge of the patented device, reproduce it from prior art or known principles. The question is whether it would have been obvious, without knowledge of the patentee's achievement, to produce the same thing that the patentee produced.”

Amended Patent Reform Bill Approved; White House Announces Three-Track Model

The Senate Judiciary Committee has unanimously approved patent reform bill S. 23, which will now be sent to the full Senate floor for consideration. The Senate Judiciary Committee added four amendments before the vote:

1. an amendment that would legislatively overturn the U.S. Supreme Court's ruling in Holmes Group Inc. v. Vornado Air Circulation System , 535 U.S. 826 (2002), which held that the Federal Circuit could not maintain jurisdiction over a case where the complaint does not assert a claim arising under the patent laws, but the answer contains a patent law counterclaim. The bill, if passed with this amendment, would keep such actions within the jurisdiction of the Federal Circuit.
2. an amendment that would require that post-grant review petitions be filed no later than six months after the filing of a complaint alleging infringement of the underlying patent.
3. an amendment to curtail the patenting of tax strategies, which had been narrowly tailored to avoid disruptions to patents for tax preparation software.
4. an amendment allowing courts to assess treble damages only for findings of willful infringement.

The bill provides for important changes to the current patent system, such as assigning priority to the first to file a patent application, rather than the first to invent. The United States is currently the only patent system in the world with a first-to-invent framework. The bill as currently written will also make it harder to prove willful infringement, and curtail extreme damages awards.

The bill will now move to the full Senate for consideration. There is currently no House version pending.

The White House also announced its plans to deal with the current backlog of patent applications as part of its strategy to increase U.S.-based innovation. The plan would provide for a three-track examination system, providing quicker examination to those patent applicants that are willing to pay an increased fee. According to Commerce Secretary Gary Locke, the system would get the most valuable patents issued more quickly, as determined by the applicants.

Microsoft v. i4i: Amicus Briefs Favor Microsoft's Preponderance of the Evidence Standard

Aside from Microsoft's opening brief on the merits, 25 amici have filed briefs detailing their respective positions to assist the Supreme Court in deciding the upcoming Microsoft v. i4i case (Docket No. 10-290 (Supreme Court 2011)). The AIPLA and the largest U.S. patent holder, IBM, support the status quo and argue for the current high standard of clear and convincing evidence for invalidating a patent.

The Electronic Frontier Foundation and the Public Patent Foundation both argue on policy grounds that the lower preponderance of the evidence standard is necessary to change the poor overall quality of U.S. patents. The generic pharmaceutical companies agree with this position, with Teva noting that the higher validity standard encourages patent holders to conceal prior art from the PTO and rely on the high clear and convincing evidence standard during litigation.

A group of technology companies including Google, Verizon, Comcast, Dell, Lockheed-Martin, and others argue that the lower preponderance of the evidence standard is proper. The tech companies state that preponderance of the evidence is the default standard of proof in civil litigation, including litigation about property rights. Further, they note that the PTO, when re-examining issued patents that already have its stamp of approval, uses a preponderance of the evidence standard.

Howard Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.