April 2016

Patent Owners May Not Sue Customers of Those Who Prevailed in Showing the Accused Products Did Not Infringe, Even Under a New Theory of Infringement
by John C. Paul, D. Brian Kacedon, and Robert C. MacKichan III
The Supreme Court recently declined to review a June 2015 Federal Circuit ruling in SpeedTrack, Inc. v. Office Depot, Inc., which enforced the Kessler doctrine to bar a patent-infringement suit against a customer of a manufacturer who prevailed against the patent owner. SpeedTrack accused Office Depot and other customers of Oracle Corp. of infringement because of their use of Oracle’s Endeca Information Access Platform software (“the IAP software”). The Federal Circuit barred SpeedTrack's claims under the Kessler doctrine based on an earlier case SpeedTrack lost against Walmart in which Endeca (later purchased by Oracle) had intervened and received judgment that its IAP software does not infringe the patent. SpeedTrack’s claims against Office Depot and other Oracle customers were barred even though SpeedTrack alleged a new theory of infringement from the Walmart case. In its decision, the Federal Circuit rejected SpeedTrack’s multiple challenges to the application of the Kessler doctrine. Notably, for the first time, the Court found that the Kessler defense may be invoked by an accused customer without the need for the seller to intervene to “protect the unencumbered sale” of products previously found not to infringe.

Patent Owner Who Retains Rights to Practice Need Not Be Joined in Enforcement Actions by Its Licensee
by John C. Paul, D. Brian Kacedon, and Daniel F. Klodowski
The Federal Circuit Court of Appeals recently held that a licensor did not need to be joined in its exclusive licensee’s patent infringement case despite the fact that the licensor retained the right to practice the patent, concluding that the licensor’s right to practice the licensed patent was not a “substantial” right.

Consulting Agreement Did Not Assign Patent Rights from Pre-Agreement Contributions
by John C. Paul, D. Brian Kacedon, and Matthew Luneack
The Federal Circuit recently analyzed whether a consulting agreement provided for an assignment of the consultant's patent rights stemming from his contributions prior to the agreement’s effective date. The agreement required the consultant to list all of his prior inventions and provided that the failure to list any such prior inventions constituted a representation that none existed. The company argued that certain work performed by the consultant prior to the effective date and not listed in the agreement was assigned to the company. Disagreeing, the Federal Circuit found that nothing in the agreement suggested the consultant’s prior inventions would be assigned to the company, and that the representation of no prior inventions failed to prevent the consultant from licensing such inventions to competitors of the company that engaged the consultant. As a result, when the company sued a competitor for patent infringement, the competitor obtained a license from the consultant on the prior relevant invention of the consultant and relied on that license as a defense to the patent infringement suit by the manufacturer. The case, however, was remanded to the district court to determine whether the consultant’s prior work continued after the effective date such that rights in the work would be assigned to the company.

Motivating Suppliers to Take a License by Suing Several Customers Was Not Improper and Did Not Justify Awarding Attorney Fees
by John C. Paul, D. Brian Kacedon, and Chen Zang, Ph.D.
A Delaware court recently found that, absent other aggravating factors, a patent owner’s strategy of filing multiple patent infringement suits against customers to get suppliers of an accused product to take licenses was not an improper motivation meriting the patent owner to pay the attorney fees of the customers it sued.

Patent Damages May Not Include Value of a Standard and Need Not Be Based on Smallest Salable Unit
by John C. Paul, D. Brian Kacedon, and Andrew E. Renison
The Federal Circuit recently vacated a $16.2 million damages award where the district court failed to exclude the value of the patent attributable to a standard. The Federal Circuit agreed with the district’s court’s methodology to the extent it relied on the parties’ actual licensing discussions. But the Federal Circuit explained that reasonable royalties for all standard-essential patents—not just those subject to a RAND commitment—must not include any value flowing to the patent from the standard's adoption.

Resources
Standard-Essential Patents and Pooling Update
Litigation, settlements, legislation, regulations, acquisitions
March – April 2016 Update

Events
LES USA and Canada
Spring Meeting
April 26-28, 2016

LES Australia and
New Zealand Meeting
May 4-6, 2016

LES International Annual Meeting
May 15-18, 2016