The ITC is tightening the
scope of its jurisdiction
On the panel on ITC litigation and strategies at the US
Patent Forum in Silicon Valley this week, speakers agreed
that the International Trade Commission is changing the scope
of how much domestic industry is required, especially when it
comes to licensing.
"There is a recent trend of a tightening of jurisdiction,"
said Richard Sterba, principal at Fish & Richardson. "It is
the ITC’s response to the threat from Capitol Hill
that, 'If you can’t fix the perceived patent troll
problem, we will fix it for you.’ It is increasing
the requirements of economic domestic industry."
Panellists also noted the
difficulties posed by the internet for the ITC. For example, a
decision last year in In the Matter of Certain Digital
Models found infringement based not on tangible products,
but on computer dental files.
The question was raised of how customs can stop a
transmission over the internet. "I don’t think the
ITC is going to find it has seizure authority over domains,"
said Andrew Kopsidas, also a principal at Fish &
IP can be like Monty
Another issue identified by Sterba at Fish & Richardson
was that losers at the ITC will often continue to pursue
district court litigation.
"One trend I see at the ITC lately is [companies] lose at
the ITC and then go back to the district court and have another
bite of the apple," he said. "Nothing frustrates a client more
than decisively winning an ITC investigation only to find
themselves dragged back into district court by a plaintiff that
like the black knight in Monty Python refuses to die." (He is
– warning: comedy violence.)
He added: "A lot of people don’t realise that
the ITC statute does not really allow them to adjudicate to
conclusion a patent claim. So when there is an invalidity
finding at the ITC, that doesn’t mean anything to
the Article III court. They can come back with their own
finding and find the patents completely valid."
Other panellists noted that in practical experience,
however, they have seen very few district court judges who
don’t give deference to at least the factual
Bas de Blank, partner at Orrick, noted that some of the most
enthusiastic users of the ITC are those that have had painful
"In my experience people who have been respondents in an ITC
investigation – and hated it, thought it was totally
unfair that they had this happen to them and that it was a
miserable experience – now they want to do it to their
competitors. Some of the most enthusiastic clients for the ITC
are those that have recently been through it. Which I think
speaks to the real power of the ITC."
Why shouldn’t hedge funds file IPRs?
The filing of inter partes review petitions by hedge funds
has received a lot of attention recently. Two IPR petitions
were filed by hedge fund manager Kyle Bass’s
Coalition for Affordable Drugs challenging Acorda patents
in February. This month
Ferrum Ferro Capital filed a petition challenging an
Many believe these petitions are an attempt to drive down
stock prices to benefit from short selling. BIO
reacted to Bass’s first petition by stating he
had "opened a new door to abuse of the patent system".
However, at the forum Kevin Jakel, CEO of Unified Patents,
pointed out that everyone has the right to file a petition.
"It’s one of those things I think creates a
very visceral reaction," he said, quickly adding that Unified
– which protects its members against non-practicing
entities, including by filing IPR petitions – is not
engaged in that activity. He said this dynamic is playing out
in legislative reforms with the recently-introduced STRONG Act
including a raft of PTAB reforms.
"We should come back to the fact that if a patent is invalid
it is invalid," said Jakel. "Does it really matter who it is
that is filing to try to invalidate that patent? Should they be
able to use prior art that has already been used in district
court litigation? Maybe, maybe not. But the standing to bring
challenges before the PTAB is broad, everyone has the
opportunity to do that so the question should be should we
"Personally I think it makes for a thriving, strong patent
system that we’ve got the ability to challenge
patents that we believe are invalid. I don’t think
that there is that much harassment going on. It’s
being used creatively, but I think that’s the
system we have and if we want to fix some of those things there
are probably solutions to do that."
Forget everything you
know about Europe
"Anyone here been involved in patent litigation in Europe?"
Wragge's David Barron began his presentation by asking. "You
can forget everything you know."
Barron and his colleague Michael Schneider then gave an
overview of the confusing variables at play in the move towards
the Unitary Patent Court.
The most recent news on this is
two proposals floated by the EPO earlier this month on fees
and costs. The Office suggested renewal fees for the Unitary
Patent could be based on the price of validating existing
patents in the four most popular countries or on the price in
the top five countries but with a 25% reduction for SMEs,
natural persons, non-profit organisations, universities and
public research organizations in years 2 to 10.
In practice the first option would lead to a total cost of
€38,000 over the 20-year term and the second option would
be €43,500. In many industries, only three countries are
essential and some applicants have indicated they would go down
the national route if the fees are higher than the cost of
validating in three countries. Barron said that the cost for
validating a patent now in the UK, France and Germany was about