Sending & Receiving Patent-Related Cease & Desist Letters
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Sending & Receiving Patent-Related Cease & Desist Letters

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Sending & Receiving Patent-Related Cease & Desist Letters

Sending & Receiving Patent-Related Cease & Desist Letters

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Sending & Receiving Patent-Related Cease & Desist Letters Sending & Receiving Patent-Related Cease & Desist Letters Presentation Transcript

  • Patent-Related Cease and Desist Letters New York County Lawyers’ Association – June 17, 2009 Mark I. Koffsky, Deputy General Counsel, SMSC
  • Sending Patent-Related C&D Letters
    • The “classic” approach
      • Opening letter to potential licensees
        • Touting the patents
        • Touting the inventor
        • Offering to meet to discuss a license
        • Use non-assertion language such as “you may be interested…”
        • Letters should be firm but not create reasonable apprehension of being sued so as not to allow declaratory judgment.
  • “Classic” Approach to Sending C&D Letters
    • Example: In Cygnus v. Alza , 92 F.3d 1153 (Fed. Cir. 1996), a letter from Alza to Anaquest, a partner of Cygnus stated:
      • “ You may not be aware of the outcome of the reexamination proceedings that had been instituted by Cygnus Corporation against ALZA's U.S. patent relating to the transdermal fentanyl dosage form.”
      • “ I thought you would be interested to know that the proceedings have been resolved in a manner which we consider to be quite favorable. . . .Although we were unable to reach an agreement relating to the marketing of the transdermal fentanyl product and ALZA has entered into an exclusive arrangement with another company, I want to assure you that I remain optimistic that there will be an opportunity for us to collaborate on some other projects.” Id . at 1156.
    • The Federal Circuit held that this letter (and other events) was not enough to allow Cygnus to bring a DJ against Alza.
  • “Classic” Approach to Sending C&D Letters
    • The “classic” approach continued…
      • Exchange of letters may continue
      • Meetings may follow
    • Endgame
      • Patentee drops the matter
      • Patentee sues alleged infringer
      • Patentee and alleged infringer enter into a license
  • Imbalance Between Patentee and Alleged Infringer
    • The “classic” approach gave wide latitude to patentees whether and where to begin litigation. Alleged infringers had a difficult time to convince a court that an actual controversy existed that was sufficient to allow for a DJ action.
      • Example: Symbol et al. v. Lemelson , 2000 U.S. Dist. LEXIS 21863 (D. Nev.), rev’d on other grounds , 277 F.3d 1361 (Fed. Cir. 2002).
    • Alleged infringers were often unable to have their non-infringement and invalidity claims adjudicated at a time of their choosing. These alleged infringers faced a situation where investment in certain technologies had to be made “at risk” without having key patent issues adjudicated.
      • Example: Teva v. Pfizer , 395 F.3d 1324 (Fed. Cir. 2005)
        • Teva was the second to file an ANDA for a generic version of Zoloft (sertraline hydrochloride). The first generic manufacturer had been sued for infringement, but had entered into a settlement agreement with the patentee. Pfizer refused to execute a covenant not to sue Teva.
        • The Federal Circuit concluded that Teva failed to demonstrate the "reasonable apprehension" of an infringement suit
  • The Imbalance Changes
    • This advantage of patentees changed significantly with the Supreme Court case of Medimmune v. Genentech , 549 U.S. 118 (2007)
    • “We must decide whether Article III's limitation of federal courts' jurisdiction to "Cases" and "Controversies," reflected in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a) , requires a patent licensee to terminate or be in breach of its license agreement before it can seek a declaratory judgment that the underlying patent is invalid, unenforceable, or not infringed.”
    • The Supreme Court held that a licensee need not terminate its license prior to bringing a DJ against the patentee.
    • In Footnote 11, the Supreme Court criticized the “reasonable apprehension of suit” test.
  • The Imbalance Changes
    • Recognizing footnote 11 in Medimmune , the Federal Circuit changed its standard in SanDisk v. STMicroelectronics , 480 F.3d 1372 (2007)
    • “Under our law, as things stood before the Supreme Court's decision in Medimmune , the district court's order in this case was correct. ST, the patentee, had offered a license to SanDisk, but had not threatened suit and had sought to continue licensing negotiations. Although ST had made a detailed showing as to why it believed SanDisk's products were within the scope of its patent rights, there is nothing exceptional in that. The Supreme Court held that a licensee need not terminate its license prior to bringing a DJ against the patentee.”
  • The Imbalance Changes
    • “The decision in Medimmune dealt with a narrow issue: whether a declaratory judgment action can be brought by a patent licensee without terminating the licensing agreement. Footnote 11 of the Medimmune opinion, however, went further and criticized this court's "reasonable apprehension of suit" test for declaratory judgment jurisdiction. I agree with the court that the footnote calls our case law into question and would appear to make declaratory judgments more readily available to parties who are approached by patentees seeking to license their patents. In particular, the reasoning of the Medimmune footnote seems to require us to hold that the district court in this case had jurisdiction to entertain SanDisk's declaratory judgment action .” Id . at 1384-85 (Bryson, J., concurring)
  • “Modern” Approach to Sending C&D Letters
    • In the post- Medimmune and SanDisk world should patentees send C&D letters at all?
    • Is it better to sue first and ask for licenses later?
      • Pros
        • Allows patentee to choose time and place of lawsuit
        • Convinces alleged infringer that patentee is serious
      • Cons
        • Requires compliance with FRCP 11
        • Raises expenses early in the licensing campaign
        • Not suing first increases risk of DJ action in a less-advantageous jurisdiction.
  • Receiving Patent-Related C&D Letters
    • Opening an investigation
    • Determining whether to engage outside counsel
      • Bandwidth; Expertise; Expense
    • Preserving privilege
      • Limit those involved in the matter to individuals who “need to know” and instruct such individuals to keep this matter confidential and mark correspondence accordingly
    • Preventing a finding of willfulness
      • In re Seagate Technology LLC , 497 F.3d 1360 (Fed. Cir. 2007)
      • Proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. There is no affirmative obligation to obtain opinion of counsel.
    • Responding to the letter