Mar 06

Inter Partes Reviews – How Will They Affect the Future of Patent Litigation?

by Douglas Wentzel, Penn Law ’16.

When the America Invents Act (AIA) went into full effect on March 16, 2013, it brought along with it some major changes to American patent law. The most significant change was to switch the American first-to-invent patent-filing system to align with the system used around the world, first-to-file. Along with this major change came a new kind of “post-grant” proceeding called inter partes review, or IPR. Post-grant review proceedings are used to allow parties to challenge the validity of recently granted patents outside of federal court – in the Patent and Trademark Office.

The IPR proceedings have a number of features that distinguish them from the post-grant reviews of the past and from federal court litigation. IPRs promise decisions on the validity of a patent within 12-18 months of the filing for review. Such relatively quick turnaround, in an age when getting a patent filed takes upwards of three years, has been made possible by lowering the claimant’s burden of persuasion on the invalidity claim from “clear and convincing” to “preponderance of the evidence” and also by allowing for only limited discovery. By charging a minimum of $27,200 for IPRs, it would seem initially that such a review is much cheaper than litigating in federal court as well.

Despite the efficiencies that IPRs aimed to create for challenging patent validity, the fact that these proceedings are still relatively new means that attorneys need to prepare for them more and in different ways than they may have for post-grant proceedings in the past. More time spent means more cost to the client, which has the potential to destroy the cost savings of IPRs. Currently, factoring in reasonable attorney’s fees to prepare the IPR petition – around $75,000 – brings the total for these reviews to over $100,000. Because of lawyers’ inexperience with these proceedings, they still have not fully embraced IPRs, and there is good reason for their hesitation. While IPR decisions are appealable to the federal circuit, IPRs have estoppel effects, which could be very bad news for claimants. The AIA states that on appeal, the claimant in an IPR cannot allege that a patent claim is invalid “on any ground that the petitioner raised or reasonably could have raised” during the IPR. 35 U.S.C. §315(e)(2). So, if a claimant does not succeed on their invalidity claim in the IPR, they may be estopped from alleging their only bases of invalidity in any subsequent actions, thereby cutting them off from having a method of challenging the validity of what may very well be an invalid patent.

While it is easy to dwell on the negative aspects of such a new post-grant review, it seems reasonable to expect that as time goes on and more firms and lawyers get comfortable with the proceedings they will lower the price of their services while their preparation time is drastically reduced as well. As with many things though, only time will tell.

For more information on the new IPR regime, see and both of which served as sources for much of the information in this post.

Feb 11

When Copyrights Infringe the Law

Ignorance is no excuse for breaking the law. After all, the law is readily available. Unless it’s not.

In an engaging and interesting post on RegBlog, Jessica Bassett discusses the current debate in a subcommittee of the U.S. House of Representatives over federal standards that are not spelled out in the Code of Federal Regulations (uncopyrighted and free for all to access) but instead incorporated in the Code by reference to a private standard-setting organization responsible for setting those standards but under no obligation to provide them for free. Unsurprisingly, this has sparked some debate in the subcommittee responsible for reforming the copyright law. For the full discussion and the interesting arguments for and against “secret laws,” see Jessica Bassett, House Subcommittee Airs Debate Over Secret Law, REGBLOG (Feb. 11, 2014),

Jan 28

IP Rights at Issue in the Largest Free-Trade Pact in History: Debating a Global Strengthening of Intellectual Property Rights in the TPP

By Sherry Shen, L ’16

What do Salt Lake City and Singapore have in common? Normally not very much, but officials from the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam have been burning the midnight oil in these two cities in order to conclude one of the most pivotal and sweeping free-trade pacts in history. The countries involved have a combined GDP of $28 trillion dollars or roughly 40% of the world’s GDP, and the agreement, known as the Trans-Pacific Partnership (TPP), seeks to enhance trade and investment among all the TPP partner countries. In the course of negotiations, some items that have drawn the most controversy, and still remain to be resolved, concern intellectual property.

Critics of the negotiations include internet freedom activists and advocacy groups who largely oppose the TPP on the grounds that it goes too far in mandating enforcement and criminal prosecution of those who unknowingly violate intellectual property rights. The expansiveness of the agreement and the fact that the negotiations are highly secretive have further fueled critic’s concerns that these negotiations will have extensive negative ramifications for users’ freedom of speech and right to privacy, as well as hinder  innovation. While drafts of the agreement have never been officially released to the public, drafts of the Intellectual Property Chapter that have surfaced on Wikileaks indicate that U.S. negotiators are pushing for the adoption of copyright measures far more restrictive than currently required by international treaties. Because all partner countries will be required to conform their domestic laws to the provisions of the Agreement, these critics contend that the negotiations threaten to further entrench controversial aspects of US copyright law, such as the Digital Millennium Copyright Act (DMCA).

In contrast, proponents of the agreement argue that in order to ensure the efficacy of the TPP, the United States needs to continue to insist on strong intellectual protections in order to foster innovation and job creation. These proponents insist that strong protections on copyrighted music and movies, patents, and pharmaceutical data protection are necessary because they provide the incentives required for innovators and scientists to invest in new ideas and research. Furthermore, because intellectual-property driven businesses are responsible for over 40 million American jobs, weaker intellectual property laws pose a serious threat.

While some of the arguments for and against stronger intellectual property rights have been aired in the past, what is particularly noteworthy about these discussions is the potential impact the outcome these negotiations will ultimately have both in the United States and globally. The Economist may have best captured the tension of the situation:

 “Some 100 Japanese officials descended on the tiny sultanate of Brunei in Borneo
this week to pursue it. Malaysian politicians are working themselves up about the
threat it poses. And, in Washington, at the office of the United States trade
representative, “the lights are on all night; they’re sending out for pizzas,” says
Mike Moore, New Zealand’s ambassador.”

The ultimate result of these negotiations remains to be determined, but it is certainly an outcome worth following, and we will be tracking their progress on the blog as more details are finalized and released.

For more on this topic, see for the full leaked chapter on intellectual property chapter of the TPP.

For more sources that go more in depth into the differing opinions on intellectual property rights in the TPP, see the following:

(1)  The Economist provides a broad overview.

(2)  The Electronic Frontier Foundation advocates for weaker intellectual property provisions and more disclosure of the TPP negotiation process.,

(3)  Curtis Bramble, president pro tem of the Utah Senate and chair of the Intellectual Property Subcommittee of the International Relations Task Force at the American Legislative Exchange Council present his opinion on why intellectual property rights should be strengthened in the TPP.

Nov 23

Deterring Patent Trolls: A Small Voice for the Trolls

By Weining Bai, Penn Law ‘16

In the event that you’re not fluent in I.P. law jargon, and for some reason happen to be reading this, how does the term “patent assertion entity” grab you? Most will probably find the term neutral or perhaps even constructive, and have no idea what it means. Google it, and one of the top results you will see, is the link to the Wikipedia entry for “Patent Troll.” Now that probably sounds much more familiar.

A patent assertion entity, or PAE, is a neutral alternative phrase embraced by those who are not yet thoroughly convinced that organizations this term describes warrant the unfriendly label of “troll.” A PAE essentially owns patents and does not practice those patents but enforces those patents, making its money through litigation, or, more often, settlements.

PAEs have also recently assumed the role of the Scourge of innovation and competition, being widely blamed by public officials and academics for “economic waste” through frivolous litigation and settlement expenses. The magic number floating around is $29 billion – the direct cost that PAEs imposed on U.S. bodies in 2011 according to a BU Law study. In the PAEs’ opposing corner now stand the FTC, bipartisan members of Congress, and the president of the United States. In a forceful White House press release, the president accused that PAEs “hijack somebody else’s idea and see if they can extort some money out of them.” The previous entry on this blog by Ms. Craning-Rush details the pending executive and legislative measures aimed at PAEs.

However, there remain some who have not fully committed to membership in the anti-Troll lynch mob. In a recent speech this summer, FTC Commissioner Maureen Ohlhausen approached the issue from a more neutral perspective, noting that PAEs offer the means to resolve a “market inefficiency,” namely, large companies who infringe on IP rights of those who don’t have the resources to operate a business while litigating to protect their own IP rights. The Commissioner’s words echo the sentiment of a “troll” himself, CopyTele CEO Robert Berman, who claims that the patent inventors whose rights he enforces do not consider themselves cheated. But rather, they are “Davids” who don’t have the resources to individually litigate against the “Goliaths” who either “steal” IP rights, or use a stronger bargaining position to “bully” their way to cheaper buyout of smaller inventors’ IP rights.

Perhaps one PAE executive likening his own work to Biblical heroes isn’t dispositive of much, but his message seems to hold more water when one examines the special interests who have lobbied for and jumped to applaud these pending anti-Troll measures – Google, Apple, Samsung, Oracle, Nokia …. The list certainly invokes plenty of tech Goliaths. Granted, a tech corporation’s wealth should in no way disqualify it from legislative protection against frivolous lawsuits. However, this does suggest that the pro-troll argument perhaps holds some water after all.

Further, it remains to be settled whether the current public image of PAEs as extortionists who leverage litigation costs for profit, is based more on anecdotal or empirical evidence. A report released by the Government Accountability Office concluded that only around 20% of patent suits are brought by PAEs. Also, some new empirical research has denounced the patent troll “myth,” instead attributing the explosion in patent litigation to other factors such as procedural changes required by the America Invents Act or the raw increase in the overall pool of patents and patentees. Further, patent economists have also noted the difficulty in categorizing many participants in the secondary market for patents into the sort of “trolls” described by the popular media.

If we rush to arm the anti-Troll interests with the full package of legislative and administrative weapons on their wish-list, we subject innovation to a double-edged sword. Heightened requirements for pleading specificity, more latitude on attorney fee shifting, and stricter limits on discovery will all undoubtedly deter frivolous lawsuits. But such procedures can easily deter legitimate ones as well. If the PAE business model is fully dis-incentivized, it remains inconclusive whether small inventors and start-ups will benefit on the net. The only ones who seem guaranteed to be popping champagne are the tech Goliaths.

Not too long ago, special interest empiricism convinced plenty of politicians and the public that greedy “ambulance chasers” were a leading cause for the rising cost of healthcare. Decades later, empirical research from health economists has largely debunked the importance of malpractice litigation to health care expenses. Nevertheless, the anecdotal evidence of “ambulance chasing” and its evils was posited to elicit substantive tort reform, promising to turn the tide on America’s rising health care costs. This time, shouldn’t patent economists have a chance to at least put more numbers and variables on both sides of the equation, before we fully commit to the warpath against the Trolls?

Nov 13

Save the Date for the 2014 PIPG Symposium!

Mark your calendars for this year’s Penn Intellectual Property Group’s Annual Symposium. This year’s conference will take place on March 20th and will focus on a host of issues related to the rapidly changing world of patent law. For more information on the conference, to register, or to participate as a sponsor, please reach out to Jordan Romanoff ( or Jenny Liu ( See you there!


2014 Symposium Logo

Nov 07

Deterring Patent Trolls (Part 2): Proposed Legislation Raises the Bar on Infringement Litigation

by Casey Kraning-Rush, Ph.D.,  L’16

In 2011, a Boston University study found that business entities in the United States incurred $29 billion in direct costs due to acts by patent assertion entities (PAEs), sometimes referred to in the media as patent trolls. PAEs are companies which enforce patent rights by alleging infringement with the aim of collecting licensing fees or settlement costs, without actually manufacturing the products covered by their patents. This past June, President Barack Obama publically urged Congress and the United States Patent and Trademark Office (USPTO) to take steps towards reducing abusive lawsuits by enacting legislation and examination rules aimed at increasing specificity in both claim language and infringement allegations.

On October 23rd, the Chairman of the House Committee on the Judiciary, Rep. Bob Goodlatte (R-VA), introduced a bipartisan reform bill to combat misuse of the U.S. patent system. The proposed bill, entitled the “Innovation Act” (H.R. 3309) specifies a number of provisions and amendments to the Leahy-Smith America Invents Act, which took full effect on March 16, 2013. The bill identifies several measures designed to discourage patent trolls from bringing meritless lawsuits. Key provisions of the Innovation Act include:

(1) Enacting More Specific Pleading Requirements: The proposed legislation seeks to revise pleading requirements in patent cases to align more closely with the standard set by the Supreme Court in the landmark cases Bell Atlantic v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). In these cases, the Court revised its interpretation of Rule 8 of the Federal Rules of Civil Procedure, concluding that a pleading must include sufficient factual content for the court to reasonably infer, beyond a mere possibility, that the opposing party is liable for the alleged misconduct.

While this standard has been widely implemented, confusion has arisen in the district courts regarding how best to resolve the apparent conflict between the Twombly/Iqbal standard and Form 18: Complaint for Patent Infringement. Form 18 requires a plaintiff to simply state that he owns the patent in question, that the defendant has infringed the patent, and that the plaintiff has given the defendant notice of the infringement. Treating Form 18 as the authoritative guide to pleading in patent cases, district court judges have been reluctant to implement a higher standard of pleading not required on the form. PAEs have capitalized on these relaxed guidelines, stating broad infringement claims and forcing defendants to either settle a potentially specious suit or face a costly discovery process.

The proposed legislation seeks to abolish Form 18 and replace it with an updated form requiring a plaintiff alleging infringement to specifically identify the infringing claim of the patent, the accused product or feature being used to infringe, and an explanation of where each element of each claim is found within the accused product or feature.

(2) Limitations on Initial Discovery: Additionally, the bill proposes a system in which, if the court finds it necessary to obtain additional information to construe the meaning of the claim in question, it can limit initial discovery to address only this issue. Discovery in patent cases can be a protracted affair, and discovery pertaining to claim construction often occurs with the rest of discovery, even though claim construction issues are at the heart of an infringement case, if not entirely dispositive. By focusing on this element of discovery first, the legislation aims to reduce the overall costs of discovery.

(3) Implementing a Fee-Shifting System: While filing a patent infringement suit is a relatively inexpensive proposition, litigating a case through trial can cost millions. As the law currently stands, a court is at liberty to award attorney fees to a prevailing party in “exceptional circumstances” only. By initiating a “loser pays” system, in which the non-prevailing party pays all the litigation costs, lawmakers hope to both deter patent trolls from initiating frivolous litigation, and also provide an avenue for meritorious defendants to meet claims head on without the deterrent of litigation costs. This process will be particularly important for smaller companies who may not have the capital to comfortably fund litigation. Importantly, if the court finds that the position of the non-prevailing party was substantially justified, it has the liberty to exempt that party from this provision.

(4) Greater Transparency in Patent Ownership: Finally, in order to prevent PAEs from using shell companies to hide the actual parties in interest, this legislation requires full disclosure to the court and all involved parties of the assignee of the patent in question, any party with a sublicense for the patent, and any entity that has a financial interest the patent.

Thus far, the primary opposition to the proposed bill comes from parties expressing concern about the effects of these changes on universities and research institutions, which often operate in a manner similar to PAEs in licensing their patents very early to larger manufacturing companies, while still retaining their intellectual property rights. The chief concern being purported is that these entities may face difficulty in enforcing their patents or successfully disputing infringement claims. Additionally, there is concern that smaller companies may avoid bringing lawsuits out of fear of losing and incurring all of the resulting court costs.

Nevertheless, initial reaction to the bill has been largely positive, with the patent community largely supporting the bill. This legislation takes important steps necessary to enable the judiciary to begin the tough battle against combating the ever-increasing number of PAEs preying on large and small businesses alike.

For a complete look at the proposed Innovation Act (H.R. 3309):

For a brief section by section overview of the Innovation Act:

Oct 30

Deterring Patent Trolls: SCOTUS Cases to Watch

By Kaiyi Xie, L’16, USPTO Reg. No. 70381

Non-practicing entities (a more sanguine term for patent trolls) most directly burden small and medium-sized companies with litigation and settlement costs. This cost totaled $29 billion in 2011, according to Boston University School of Law researchers. That’s more than the government shutdown’s $26 billion cost to the U.S. economy, and constitutes a staggering 11.7% of total R&D spending by defendant companies.
Currently, there is a provision in Federal law that could potentially be used to deter patent trolls. 35 U.S.C. § 285 awards attorney fees to the winner of patent litigation in “exceptional cases.” Sans misconduct somewhere along the way, an exceptional case in patent litigation is a case (1) brought in subjective bad faith, and (2) where the litigation was objectively baseless. E-Pass Techs., Inc. v. 3Com Corp., 559 F.3d 1374, 1379 (Fed. Cir. 2009). Nonetheless, there has been some renewed interest in extending the statute’s intentional chilling effect. Part of this drive comes from the burgeoning prominence of patents in global commerce as well as the recent overhaul of the patent system by the America Invents Act.
The Supreme Court recently granted certiorari for two cases that deal with allocation of attorney’s fees under § 285.
The first case is Octane Fitness, LLC v. Icon Health and Fitness, Inc., in which the Federal Circuit’s two-prong test is being challenged as nearly impossible to wield as a shield against the frivolous litigation of patent trolls. The appellants in Octane argue that judicial interpretation of § 285 has narrowed its use more than Congress intended.
The second case on cert is Highmark Inc. v. Allcare Management Systems, Inc., which asks whether a District Court’s finding of fact that a suit was objectively baseless and brought in bad faith deserves deference by the Federal Circuit upon appeal.
Anyone interested in the patent troll debate ought to be watching these cases closely, as well as any potential new legislation coming down the pipeline (though given the sloth-like nature of the current Congress, I wouldn’t recommend holding your breath).
For an interesting economic analysis of patent trolls’ activities in the U.S., see The Direct Costs from NPE Disputes by Professors Bessen and Meurer of Boston University School of Law, available at

Oct 16

Beware of “Trademark” Hijackers: International Firms Welcome Changes to Chinese Law

By Sherry Shen, Penn Law ’16

The idea that China has not had the strongest track record in intellectual property law may be an understatement. In July of this past year, Apple paid a hefty settlement fee of $60 million dollars to Proview Technology so that it could use its own trademark for its latest version of the iPad in China – an example of a prevalent phenomenon in China known as trademark hijacking. Fortunately, in late August of this year, China made significant revisions in its trademark laws, which will be implemented on May 1, 2014. While many of the effects remain to be seen, experts are in agreement that these amendments are a significant step in the right direction.

Under current Chinese trademark law, international companies looking to protect their trademarks in China are beholden to China’s dubious “first to file system.” The “first to file system” works just the way it sounds: the first to file the trademark application gets the registration. This system, while not unique to China, has facilitated “trademark hijacking.” Trademark hijacking occurs when opportunists research foreign enterprises that intend to do business in China, then use this research to file applications for trademarks that are similar or identical to the established trademark held by the foreign enterprises. Under the rigid “first to file system,” these applications are normally granted. When this occurs, international companies (who are the true owners of the brand) will then have no choice but to buy back their own trademark, often at an exorbitant price, in order to legally sell their goods in China. The “trademark hijackers” are able to do this because the Chinese Trademark Office does not require applicants to submit supporting materials on first use or intent to use. Many well-known western retailers have fallen victim to this tricky practice including Schroeder KG, Sainsbury’s, John Lewis, Top Shop, and most notably technology goliath, Apple Inc.

These exceptionally visible examples highlight the importance of the new changes in Chinese Trademark Law that are going to be implemented in May of next year. Some of the more notable changes are:

(1)   Addressing Bad Faith Applications:  As Chinese law currently stands, registrations made in bad faith or for well-known mark are cancelled. However, the cancellation process is expensive and difficult to navigate.  One of the most important changes is a general good faith requirement for trademark filings, so that every trademark application must be filed in good faith.

(2)   Increase in Damages: Giving teeth to the good faith provisions, the new laws will impose penalties on trademark lawyers who act in bad faith. Penalties up to five-hundred percent of the profits earned from infringement can also be award to cases where the defendant is found to have made these applications in bad faith.

(3)   Direct Dispute Process: The institution of a dispute process may also undercut trademark hijacking by allowing an aggrieved party or true owner of the trademark to directly oppose a trademark application if it can show that the party filing the application knew or should have known of the trademark due to a relationship with the aggrieved party.

(4)   Co-Infringers/ Repeat Infringers: To further discourage bad behavior, the law has also increased penalties for those who assist infringement or serially offend. Under the new law, any person who deliberately assists an infringer now risks liability for the infringement. Further, anyone found to infringe repeatedly in a 5 year span will be subject to more severe punishments.

These are but a few of the more notable changes in Chinese Trademark Law. Additional changes to the law are aimed at making the application process more amenable towards non-Chinese parties, and also aim to approval time. Overall, many businesses welcome these changes to Chinese intellectual property law, which hopefully signal a recognition by the Chinese government of the dire need to address this deceitful practice.

To learn more about the coming changes in Chinese trademark law, the article below provides a more expansive discussion:

Oct 15

Update: Studios File Supreme Court Petition in Aereo Case

Major broadcasters filed a Supreme Court petition on Friday (ahead of today’s filing deadline) alleging that the online streaming service infringes on the broadcaster’s copyright to publicly perform their works. Aereo’s technology allows consumers to access broadcasts of the content outside of the licensed cable and satellite platforms.

More info from the Wall Street Journal:

Oct 11

Shutdown Jeopardizes Negotiations: Major American I.P. Interests in Asia on the Line. by Weining Bai L’16

As the temporary shutdown of government drags on in Washington, media outlets have gone to great lengths outlining its damaging impacts: our fish are no longer inspected as thoroughly, and the Panda Cam blackout is raising plenty of social media outrage. However, little attention has been paid to President Obama’s cancelled trip to Bali, where 21 heads of state currently gather for the Asia-Pacific Economic Cooperation (APEC) summit. Far more than a simple loss of formality, the President’s absence seriously jeopardizes negotiations that have far-reaching consequences in geo-politic, trade barriers, and, you guessed it, international intellectual property rights disputes.

Occurring concurrently at the APEC summit is the Trans-Pacific Partnership (TPP) negotiations involving 12 APEC nations, including the United States, Japan, Canada, Australia, and developing economies on the Pacific Rim like Malaysia, Brunei and Vietnam to establish the first broad trans-pacific free trade agreements of such scale.
The TPP agreement will include an intellectual property rights chapter including provisions for intellectual property protection for pharmaceutical developers. The American Provision for the I.P. Chapter of the TPP demands longer monopolies for pharmaceutical patent holders and heightened enforcement of existing UN regulations governing patent infringement. The new standards sought by the American provision are notably stricter than current UN regulations protecting patents internationally. Many developing economies, including those attending the TPP, depend on generic off-brand drugs for affordable access to medicine. There is significant political pressure within these countries to block or mitigate the American Provision. Indeed, critics of this American Provision have charged President Obama with attempting to impose American patent laws on the rest of the world.

There is hope that the Bali negotiations will finalize a trans-Pacific free trade agreement. Should the United States push through its proposed measures, the TPP will not only protect American patent rights in current TPP nations, but also set a working precedent from which the United States can negotiate with other major Asian economies, including China and India. China especially has expressed interest in joining the TPP in a few years. Should the United States be able to expand on current intellectual property right protection in East Asia through the TPP negotiations, the ramifications of convincing China and/or India to conform to these new standards would be huge. Expanding patent and copyright protection for American enterprises in Chinese and Indian markets has the potential to increase American exports to and lower our trade deficit with Asia by billions of dollars.

In Bali right now, the American negotiating position has been significantly weakened by Obama’s unplanned absence. After months of technocrats talking out logistics, the TPP negotiations have moved into the phase where heads of state make the political calls on the controversial points. This soap opera in Washington has forced the U.S. to negotiate without a comparable authority at the tables. The leaders in Bali still maintain that negotiations are in the final phase, and will be finalized by the end of 2013. This, then, will essentially be the last occasion for every TPP head of state to convene personally and strike the necessary compromises. The shutdown has forced the President to abandon this crucial stage of the negotiations, and jeopardizes the chances America’s agenda will be realized in the final agreement. Future windfalls American businesses and inventors could reap from this new standard of international intellectual property rights enforcement now hangs in the balance.

If you’re interested in keeping up with the negotiations in Bali, official updates from the United States Trade Representatives can be found here:

The American Provision that’s being proposed at the TPP conference has been provided to the public by Representative Darrell Issa, and can be found on the Citizens Trade official site:

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