This week in IP: Coke chemist jailed, JPO invites SEP comments, and more

Counsel say IPEC costs concerns may not be fixable

A division of the England and Wales High Court intended to provide a low-cost forum for smaller intellectual property claims is being abused by “big City firm tactics”, according to practitioners, some of whom have called for change.

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Other Managing IP stories published this week include:

• FRAND rules for data is ‘lurch into unknown’, warn counsel
• Corner office podcast: Phyllis Turner-Brim, chief IP counsel at HP
• Metaverse users must read terms of use or risk losing IP
• Brands debate accounts rule shift as INTA eyes advocacy
• Super Soaker, sports bra and other inventors join Hall of Fame

‘Sue the government, not us’, Moderna tells biotech rivals

Moderna has hit back at claims that its COVID vaccine infringes two biotech rivals’ patents, telling a Delaware federal court last Friday, May 6, that the US government should face those allegations instead.

Genevant Sciences and Arbutus Biopharma, both based in Vancouver, are suing Moderna for allegedly using proprietary lipid nanoparticles (LNPs) in its breakthrough COVID vaccine.

LNPs are a key part of the technology used to deliver small molecules in mRNA vaccines that have come to the forefront of the world’s fight against COVID.

Moderna says that while it didn’t infringe any valid patents with its COVID vaccine, its status as a government supplier means it isn’t liable to face those claims in the first place.

The vaccine maker’s defence is based largely on Section 1498a under Title 28 of the US Code, which shields manufacturers from liability when supplying infringing goods to the US government.

Moderna compared its deal with the government to the use of the statute during the First World War, when it allowed the armed forces to use patented technology as part of the war effort.

“Short of war, it is difficult to conceive of a situation more within the heart of Section 1498 than the COVID crisis,” Moderna said in a motion to dismiss the complaint.

It added: “Government and private industry worked together to respond to the most severe crisis facing the nation. This is exactly when Section 1498 is meant to apply.”

Moderna was itself involved in litigation against the US government, which claimed its scientists should be named as co-inventors on key COVID vaccine patent applications.

The biotech company confirmed in December that it had stepped back from seeking grant of the patents at issue, to give it time to negotiate with the National Institutes of Health over inventorship rights.

Peru adopts EPO-administered patent system

The EPO and Peru’s National Institute for the Defence of Competition and the Protection of Intellectual Property signed two new cooperation pacts last Friday, May 6.

The agreements will see INDECOPI implement the cooperative patent classification (CPC), a patent sorting system administered by the EPO and the USPTO.

Peru will be the fifth IP office in Latin America to use the CPC. The EPO reached similar agreements with the offices of Brazil, Mexico, Chile, and Argentina.

The CPC divides patents between nine technical categories and is an extension of WIPO’s international patent classification.

“Accurate classification of patent literature is essential for the optimal functioning of the global IP community's access to patent knowledge,” the EPO said in a statement.

The EPO and INDECOPI also signed a reinforced partnership agreement, which will see them cooperate on training for activities including substantive search and examination.

Coca-Cola chemist jailed for stealing trade secrets for China

A federal judge in Greeneville, Tennessee, sentenced an ex-Coca-Cola chemist to 14 years in prison for stealing trade secrets and economic espionage, the US Department of Justice announced on Monday, May 9.

The documents submitted at trial showed that Michigan-based Xiaorong You, also known as Shannon You, stole eight trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings used inside beverage cans to set up a new company in China.

You had access to the trade secrets while working at The Coca-Cola Company in Atlanta and the Eastman Chemical Company in Tennessee.

She stole trade secrets from major chemical and coating companies such as Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams and Eastman Chemical Company. The research and development of these technologies cost almost $120 million.

Following a 13-day trial, the jury convicted You of conspiracy to commit trade secret theft, conspiracy to commit economic espionage, possession of stolen trade secrets, economic espionage and wire fraud.

“Ingenuity, innovation, and perseverance are the time-honoured trademarks of American business and entrepreneurship," said special agent in charge Joseph Carrico of the FBI's Knoxville Field Office.

“In the current global state of commerce, corporations are forced to place an increased emphasis on the protection of trade secrets and intellectual property.

“The FBI will not sit by while any nation-state attempts to steal or incentivises the theft of trade secrets from successful corporations."

The Chinese government granted millions of dollars to You and her Chinese corporate partner, Weihai Jinhong Group, to fund the new company.

The evidence presented during the court proceedings revealed that You intended to benefit the government of China, the Chinese province of Shandong, the Chinese city of Weihai and the Chinese Communist Party, alongside her corporate partner.

The FBI’s Knoxville Field Office and HSI investigated the case.

JPO invites public comments to updated SEP licensing guide

The Japan Patent Office recently revised its ‘Guide to Licensing Negotiations involving Standard Essential Patents’ and published the draft for public comments on Monday, May 9.

The revisions came after the Japanese Ministry of Economy, Trade and Industry (METI) introduced its ‘Good Faith Negotiation Guidelines for Standard Essential Patent Licenses’ in March, containing norms to be followed by rights owners and implementers during licensing talks.

Initially published in 2018, the JPO’s guide aimed to facilitate negotiations between SEP rights holders and implementers.

While the 2018 guide focused on the preliminary ruling by the Court of Justice of the EU (CJEU) in Huawei v ZTE, the latest version was drafted to include more recent SEP decisions in different parts of the world.

For instance, the revised draft noted the position of different authorities on ‘claim charts’.

The JPO noted the German Federal Court of Justice’s 2020 decision in Sisvel v Haier, in which the court recognised that it was sufficient but not mandatory for a party to provide claim charts during licensing negotiation.

On the other hand, an SEP Expert Group organised by the European Commission stated in 2021 that high-level claim charts should be provided without requiring the implementer to first sign a non-disclosure agreement.

The CJEU, however, has not expressly held that a rights owner must provide a claim chart, JPO noted.

“In view of the increasingly active discussions on SEPs, including not only the companies which are potential parties to license negotiations, but also governments of various counties, it was decided to revise this guide to ensure that the appropriate information provided by this guide is up-to-date,” said JPO.

SEP stakeholders have previously told Managing IP that they preferred the JPO’s neutral approach to METI’s implementer-focused approach regarding licensing.

Some of them, however, noted that the 2018 guide didn’t really provide any clear guidance to Japanese courts on how to approach or evaluate licensing negotiation.

Stakeholders can send their comments on the draft guide to the JPO by June 8.

Appian awarded $2bn in trade secrets row

Cloud computing company Appian was awarded $2 billion in damages on Tuesday, May 10, after rival software company Pegasystems was found to have wilfully and maliciously misappropriated its trade secrets.

The Fairfax County Circuit Court in Virginia heard that Pegasystems hired a contractor using Appian software to make video recordings of the Appian development environment so that Pegaystems could compile “competitive materials”. The activity took place between 2012 and 2014.

According to Appian, the award is the largest in Virginia state court history.

In the case, Appian contended that senior Pegasystems executives constructed fake identities to gain access to trial versions of Appian software to create competitive intelligence briefs, as they fought to maintain contracts with customers such as Bank of America.

A jury awarded Appian $2.036 billion in damages for trade secret misappropriation and also found that Pegasystems violated the Virginia Computer Crimes Act.

In a statement, an Appian spokesperson said it brought the case to trial to ensure the protection of its proprietary intellectual property, including its trade secrets.

Christopher Winters, general counsel at Appian, said: “We are very grateful that the jury held Pegasystems accountable for its wrongful conduct. We put forward strong evidence that Appian trade secrets were misappropriated by Pegasystems.

“The award of substantial damages to Appian is entirely appropriate given the nature and extent of what Pegasystems did.”

Pegasystems intends to appeal against the finding.

US senator threatens Disney copyright

Republican senator Josh Hawley introduced a bill on Tuesday, May 10, that would shorten copyright protection terms – a move critics claim is specifically targeting Disney.

Hawley’s bill would rewrite US copyright law, shortening the total term available to all copyright owners.

It would set copyright terms at 28 years (with the potential to renew for another 28 years) for all works going forward.

However, for any company with a market capitalisation of more than $150 billion, the laws would apply retroactively. Critics claim this is a cynical attempt to target Disney and strip it of its intellectual property assets.

The move has been accused of stemming from an ongoing feud between Disney and lawmakers regarding the Parental Rights in Education bill, legislation in Florida that restricts classroom discussion of sexual orientation and gender identity, and which Disney has criticised.

Last month, Florida’s governor Ron DeSantis signed a bill that would dissolve the Reedy Creek Improvement District, an area close to Orlando in which Disney exerts control over certain services such as power, water and roads.

Vidal announces examiner training and director review comments

USPTO director Kathi Vidal announced new training for examiners intended to improve the examination of patent applications on Tuesday, May 10, at her first Patent Public Advisory Committee meeting.

Vidal said the office would collaborate with the American Intellectual Property Law Association and the Intellectual Property Owners Association to develop a training initiative for patent examiners to understand the effect of their daily work on the IP ecosystem.

She noted that the training would focus on how examiners’ prosecution records were used after patents were granted, as well as on techniques to improve the records’ clarity. She added that the goal of this programme was to enhance clarity around patent rights.

“Often, examiners don’t have insight into the downstream impacts of the patents they issue. They are often not aware of post-grant challenges and litigation. They often do not hear about the success in the marketplace of patents they examined years earlier,” she said.

Vidal also said the office would publish a request for comments to get feedback on the interim director review process that the USPTO put into place after the Supreme Court Arthrex decision in June. She said the office would formalise and finalise this process after obtaining input.

The USPTO recently published two webpages describing the current director review process, said Vidal. One provides an outline of the process, and the other allows parties to check the status of a director review request.

USPTO reveals pro bono awards

The USPTO announced the recipients of the 2021 Patent Pro Bono Achievement Certificate on Monday, May 9.

These awards were intended to recognise those who volunteered significant time and effort to help financially under-resourced inventors.

Recipients included lawyers from Ballard Spahr, Foley & Lardner, Fish & Richardson and Womble Bond Dickinson. The full list was published on the USPTO’s website.

USPTO director Kathi Vidal said the cost of hiring legal representation shouldn’t be a barrier to access.

“I am incredibly grateful to all the recipients for their commitment and great work. Through efforts like theirs, we can create a system that will incentivise all Americans to innovate with the hope and dream that they can bring those innovations to impact, bettering their lives and the lives of all Americans,” she said.

The office noted that more than 125 practitioners reported at least 50 hours of patent pro bono service to a regional patent pro bono programme.

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