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George Washington Law Intellectual Property Panel Symposium

Posted By Camille Barr, Mar 29, 2011

On Friday, March 18, 2011, a handful of KHIPLA members attended a truly outstanding symposium in San Francisco’s Ritz-Carlton Hotel, “George Washington Law Intellectual Property Panel Symposium.” The bland title belies the tremendous content of the two-panel symposium that hosted some of the heaviest hitters in intellectual property law. 

The symposium was sponsored by the IP Program at the George Washington School of Law in Washington, DC as a networking opportunity for GW alumni and current members  with the IP world in California. There were two panels: “IP in the Modern Boardroom” and “IP in the Courtroom.” The keynote address was delivered at lunch by the Chief Judge of the Federal Circuit, Randall Rader.

IP in the Modern Boardroom

The first panel addressed the major IP issues that corporate counsel currently faces. The panel was focused on issues in the high tech industry, which is understandable given its composition of some of the biggest players in high tech:  Bruce Sewell, general counsel of Apple, Mark Chandler general counsel of CISCO, Mike Jacobson, general counsel of eBay, Matthew Zinn, general counsel of TiVo, and Dave Anderman, general counsel of Lucasfilms.

One major issue that all participants identified was the persistent problem of lawsuits from non-practicing entities (NPEs). NPEs do not produce content, but simply collect patents which they assert against practicing entities. Mark Chandler of Cisco noted that he was managing three infringement cases at a time ten years ago, while today he is handling 50. Chandler noted that patent pools and standard-setting organizations, in which technology owners of related technologies band together and contract to forego infringement actions, is one way to solve the problems of excessive litigation. However, NPEs generally do not participate in patent pools and thus they cannot reduce the large fraction of current patent litigation which involves NPEs. Matt Zinn, of TiVo, expressed the group’s frustration with the high incidence of infringement litigation by saying that patent owners had a stark choice – 1. to give up on enforcing IP altogether, 2. to start patent-holding companies isolated from the production company to handle all litigation matters, or 3. to stay in the trenches and enforce your patent. Most participants agreed that choice number three, as difficult as it is, is likely to be the route pursued by them simply because the companies were in the business of producing and selling their own products, and giving up on enforcing IP was an unacceptable choice.

Related to the problem with NPEs and the very high number of IP litigation suits was the issue of uncertainty in damages. Michael Jacobson of eBay said that the problem is that the sum total of all infringement suits against any given technology can potentially be greater than the value of the technology itself – an obvious problem for any technology producer. And M. Chandler noted that judicial rulings such as that of Georgia Pacific, with its 15-factor test for determining damages (and applied a number of times by the Federal Circuit), makes predicting the outcome of any damages ruling extremely unpredictable. Chandler also discussed a very interesting dynamic regarding the exclusion of damages reform in the Patent Reform bill (S.23) currently moving through Congress (it has passed the Senate and is awaiting action in the House). While the issue of damages is clearly demanding reform by many, it was excluded from S.23 at the urging of stakeholders, including Cisco and Eli Lilly. Apparently, these stakeholders believe that despite the current problems, the courts are making great strides in fixing the damages issue (e.g. in Cornell Univ. v. Hewlett-Packard, 2010 U.S. App. LEXIS 15736 (Fed. Cir. 2010)), and they prefer to throw their lot in with the judicial rather than the legislative process.

Another issue mentioned by the participants is the problem of venue. M. Chandler noted that with the high degree of venue flexibility and thus possibility of choosing plaintiff-friendly venues (e.g. E. Dist. of Texas), plaintiffs can easily game the system, which is a problem according to the participants. Bruce Sewell of Apple clearly expressed that the game of winning in court has clearly become the outcome of our patent laws over the “advancement of science and the useful arts.” Venue choice is dealt with in the Patent Reform bill, and will restrict the ability of choice of forum.

The case of TiVo raised an additional issue that the participants were concerned about – the enforcement of judicial rulings finding infringement. In TiVo v. EchoStar, TiVo won a judgment against EchoStar for patent infringement. However, this was five years ago, and EchoStar continues to manufacture the disputed DVRs, and has in the meantime gone from clear market inferiority to market dominance. Matt Zinn of TiVo, explained that EchoStar managed to avoid the injunction by proposing a “design-around” technology two years after the injunction, which the District Court also rejected. EchoStar, however, then continued to pursue judicial appeals of a contempt order and other judicial alternatives, all the while continuing production. Zinn, clearly frustrated by the situation, proposed that the courts solve this type of a problem by forcing parties to bring design-around claims at the beginning of an infringement trial, and not use it as a tool to string along litigation and gain the advantages of infringement until the end of the patent’s life.

A final issue discussed by the panelists was the problem of USPTO reexam procedures which 1. go on too long, 2. are misunderstood by the investing public (e.g. the PTO pro forma issues an initial rejection in a reexam, which has nothing to do with the eventual outcome, and the public and juries don’t  understand the relative lack of import of an initial rejection; this problem is compounded by the concurrent running of reexam and District Court proceedings), and 3. because of the high rejection rate and viewing of the patent from completely new examiner’s eyes, often results in a patent that the patentee didn’t know he had. M. Jacobson summed up the problem with the statement that it’s “important to acknowledge that the piece of paper [in your hand] is not always a patent.” M. Zinn recommended that District Courts stay proceedings until the final outcome of any reexam procedure to solve the problem of the PTO and Dist Court rulings coming out opposite of each other. 

In the question-and-answer session, the Chief Judge of the Federal Circuit, Randall Rader asked all the participants what they would reform in Federal Circuit jurisprudence if they could reform one thing. Two of the four respondents (Sewell and Jacobson) said “Bilski,” wanting greater clarity on the patentability of business methods after the Supreme Court’s distinctly vague recent ruling on this issue. M. Chandler said damages reform, and D. Anderman said the international harmonization of forum in IP cases. Anderman had discussed the problems Lucasfilm is facing in defending the copyrightability of Star Wars storm troopers in England, and suggested that a single forum in which worldwide IP issues could be resolved would be desirable. 

Keynote Address: Chief Judge Randall Rader

Chief Judge Rader gave a spirited, informative, and highly enjoyable keynote address at lunchtime. After presenting attendees with a choice of topics that he would address, he spoke (by popular vote) on the cultural divide between the Supreme Court and the Federal Circuit. 
He first acknowledged the common understanding that the Federal Circuit (FC) focuses on issues in the commercial world and its interest in defining bright-line rules to keep business moving rapidly, while the Supreme Court (SC) balances gargantuan interests of privacy versus the rule of law. Thus the SC avoids bright line rules so that it can continue to balance issues on a case-by-case basis. CJ Rader noted the aggrandizement of the role of judges in the SC. He suggested that the differences between the courts is analogous to the differences between technology and the law, and between science and philosophy.

CJ Rader also noted a less commonly known issue that he said the SC does not sufficiently appreciate – the requirement for vast technological expertise when using SC-esque balancing tests. He noted that the balancing test for obviousness decided by KSR v. Teleflex has clearly added a lot more technical delving that previously required under the FC’s “teaching, suggestion, motivation” test. CJ Rader said that having bright-line tests moderates the need for technical expertise by lower court (and FC) judges, who, despite their substantial skill, understandably face monumental challenges in comprehending the increasingly technological detail presented in patent litigation. He suggested that the two court cultures need to learn from each other and perhaps end up with a compromise in which the bright-line rules are kept, but have a little bit of flexibility worked into them. He also suggested that the SC place a greater value on the marketplace. 

During the question-and-answer session, CJ Rader said that the increase in FC en banc review will likely continue because the court recognizes the singular power it has in determining the course of intellectual property law, and helps ensure well-reasoned use of that power by en banc review. CJ Rader, tying this question into the larger theme of the address, noted that one reason the SC likely overturns FC decisions with regularity is its discomfort with the FC’s strong power to determine the course of patent law. Finally, when asked how the court can deal with the issue of a single NPE patentee suing many defendants concurrently and the problem of 50 defendants being given the same amount of courtroom time as the single plaintiff, CJ Rader said that lawyers need to bring these suits to the Federal Circuit so that these clear abuses can be adjudicated.