Patent Baristas

A nonprofit cancer research institute has sued biotechnology company Agios and one of its cofounders for more than $1 billion, alleging they took intellectual property developed at the institute and used it to start a for-profit business.

The Leonard and Madlyn Abramson Family Cancer Research Institute, part of the Abramson Cancer Center at the University of Pennsylvania, alleges in the complaint that Dr. Craig B. Thompson and Agios Pharmaceuticals Inc. are developing cancer drugs based on  research conducted while Thompson worked at the institute.  Thompson is currently the President and Chief Executive Officer of Memorial Sloan-Kettering Cancer Center in New York although Sloan-Kettering is not a party to the suit.

According to the complaint filed in the US District Court Southern District Of New York, the Institute was created by an agreement between The Abramson Family Foundation and the Trustees of the University of Pennsylvania. The Foundation donated over $110 Million Dollars to the Institute with the condition that the money was to be used to explore new and different approaches to cancer treatment.

Dr. Thompson later created a for-profit corporation that he concealed from the Institute. After a name change, that entity became the Defendant Agios Pharmaceuticals, Inc. Dr. Thompson did not disclose to the Institute that at least $261 million had been obtained by Agios for what was described as its “innovative cancer metabolism research platform” – i.e., the description of Dr. Thompson’s work at the Institute. Dr. Thompson did not disclose that Agios was going to sell to Celgene Corporation an exclusive option to develop any drugs resulting from the cancer metabolism research platform.

Dr. Thompson joined the Institute in June of 1999 as Scientific Director and his duties included directing, overseeing and managing the Institute’s Cancer Cell Biology Program.  Thompson’s work at the Institute included developing a cancer metabolism research platform that would examine the role that metabolic changes play in the origins and progression and death of cancer cells and discovered that cancer cell growth requires an enzyme not previously implicated in cancer.

In 2005, Dr. Thompson acknowledged in a memo to the Institute that: “Over the past six years, the Institute has developed considerable intellectual property.” That memo further noted that: “Drs. Thompson and [other Institute personnel] are exploring the possibility of forming a non-profit development and therapeutics company through which the Institute could capitalize on its intellectual property.”

In 2007, Dr. Thompson reported that his work at the Institute definitely provided evidence that regular or intermittent use of drugs such as metformin could reduce the risk of cancer. He also reported that researchers at the Institute had found that an agent called AICAR had an effect similar to that of metformin in suppressing the growth of breast cancer cells.

The Institute Agreement provides for Institute-Supported Research, as follows:

“All right, title and interest with respect to all technical information, know-how, trade secrets, developments, software, methods, techniques, formulae, data, processes, inventions, discoveries, improvements, and other proprietary ideas and intellectual property (together ‘Intellectual Property’), whether or not patentable or copyrightable, that are conceived, discovered, developed or reduced to practice pursuant to or in the course of Institute Research Programs whose budgets are funded solely by the Institute (‘Institute-Supported Inventions’) will be the sole property of the Institute, subject to the other provisions of this Article 5 and the [Faculty Rights].”

On August 7,2007,  Agios was incorporated in Delaware under the then utilized name of Cancer Metabolism Therapeutics, Inc., which Thompson did not disclose to the Institute. Thompson is listed as a director of Agios beginning with its 2007 Annual Report, which was also not disclosed.

In 2009, Agios  acknowledged that Thompson was Director of the Abramson Cancer Center at the University of Pennsylvania and that Thompson was one of the three founders of Agios.  It also announced the publication in Science of an article co-authored by Dr. Thompson titled “Understanding the Warburg Effect: The Metabolic Requirements of Cell Proliferation.”

In late 2010, Thompson took a one year leave of absence from the Institute, during which he commenced work as the President and Chief Executive Officer of Sloan-Kettering and continued his affiliation with Agios.  Dr. Thompson terminated his employment  with the Institute and the University on October 31,2011.

As part of the April 15,2010 press release, Agios described itself as “dedicated to the discovery and development of novel therapeutics in the emerging field of cancer metabolism.” Agios further noted that: “The Company’s founders [including Dr. Thompson] and scientific advisors represent the core thought leaders in the field of cancer metabolism responsible for key advances, insights and discoveries in the field.”

An October 2011 reporting noted that “Agios’s scientific co-founders were three of the most renowned pioneers of cancer metabolism,” with one of them being Dr. Thompson. That reporting stated that “Craig Thompson from the University of Pennsylvania” and two others had “discovered that targeting certain metabolic enzymes could fundamentally alter cancer pathways” and took steps “to turn that discovery into a company that could be a ‘prolific discoverer of new products.'”

On November 17,2011, it was publicly reported that Agios received an additional $78 million investment from existing and new funding sources to focus on “inborn errors of metabolism.”

The Institute now believes that Thompson may have conveyed to Agios rights and/or interests related to intellectual property and inventions funded in part or in whole by the Institute, including, but not limited to, the cancer metabolism research platform that formed the focus of Dr. Thompson’s work, that was funded in part or in whole by the Institute.

Accordingly, the Institute claims to have suffered damages in an amount estimated to ultimately exceed $1 billion.

Ultimately, this will come down to facts that can be proven through written documents.  You can bet that the Institute will be subpoenaing every written document, email, telephone record and any other bit of digital fingerprint they can find to try to determine what was invented as well as when and where it was invented.

An invention takes two steps, conception and reduction to practice.  The trick will be showing who knew what and when did they know it.

Other famous IP Theft cases

A U.S. District Court ordered Nobel Prize winner and former Yale University professor John Fenn, 87, to pay Yale $545,000 in royalties and penalties, and pay their legal bills of almost $500,000 calling Fenn’s actions “fraud” and “civil theft” when he licensed the rights to U.S. Patent No. 5,130,538 to a company he partly owned.

More on the Fenn case here.

In one of the few cases where the inventor went to jail, Petr Taborsky, a former student at the University of South Florida, went to jail as a result of a dispute over technology ownership. In that case, Taborsky worked as undergraduate lab assistant on a sponsored research project and discovered a potential way to make kitty litter useful in cleaning human waste water. He was convicted of grand theft and theft of trade secrets and sentenced to probation.

Read about the tale of Taborsky here.

The USPTO is seeking nominations for the 2012 Medal of Technology and Innovation (NMTI), the nation’s highest honor for technological achievement, bestowed by the President of the United States on America’s leading innovators. A nomination form and detailed information about submission requirements can be downloaded here. All completed nominations must be submitted to the USPTO by 5:00 p.m. (ET), Mar. 31, 2012.

The medal is awarded annually to individuals, teams (up to four individuals), companies or divisions of companies for their outstanding contributions to America’s economic, environmental and social well-being. The purpose of the National Medal of Technology and Innovation is to recognize those who have made lasting contributions to America’s competitiveness, standard of living, and quality of life through technological innovation, and to recognize those who have made substantial contributions to strengthening the nation’s technological workforce.

By highlighting the national importance of technological innovation, the medal is also meant to inspire future generations of Americans to prepare for and pursue technical careers to keep America at the forefront of global technology and economic leadership.

Established by the Stevenson-Wydler Technology Innovation Act of 1980, the medal was first awarded in 1985. On August 9, 2007, the president signed the America COMPETES (Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science) Act of 2007, amending Section 16 of the Stevenson-Wydler Technology Innovation Act of 1980.

Selection Process

The National Medal of Technology and Innovation Nomination Evaluation Committee, a distinguished, independent committee appointed by the Secretary of Commerce, reviews and evaluates the merit of all candidates nominated through an open, competitive solicitation process. The Committee makes its recommendations for Medal candidates to the Secretary of Commerce, who in turn makes recommendations to the President for final selection. The National Medal of Technology and Innovation Laureates are announced by the White House and the Department of Commerce once the Medalists are notified of their selection.

Contact Information

Program Manager
Phone: (571) 272-8400
Fax: (571) 270-9100
e-mail: NMTI@USPTO.GOV

What:

American Conference Institute’s Advanced Summit on Medical Device Patents.

A medical device specific intellectual property conference to provide you with practical and tactical strategies for patent filings and challenges, which are more critical than ever in this time of sweeping change.

In response to the challenges facing the device industry in this daunting economic climate including the looming medical device tax, ACI’s Advanced Summit on Medical Device Patents provides a forum for the key players- preeminent in-house IP counsel, patent prosecutors and litigators, the PTO, and judges – to unite and share their collective knowledge to provide you with the most up to date strategies you can immediately incorporate into your practice. Featuring first-hand insight from the USPTO and retired judges in medical device litigation hotbeds including the Eastern District of Texas, this event is the premiere conference for medical device companies to devise strategies to strengthen patent rights and seize market share.

A leading industry report estimated that the device industry was worth more than $300 billion in 2011 with the U.S. representing the largest market with sales in excess of $95 billion. At this conference, expert international and domestic practitioners will arm you with the tools to heighten patent protection in both established and emerging markets.

When:

Tuesday, February 28 to Wednesday, February 29, 2012

Where:

The Omni Parker House
Boston, MA
Reservations: 212.887.9400 or 800-352-8683

But wait, that’s not all:

ACI is also offering informative and hands-on workshop:

Pre-Conference Interactive Working Group Session: Mastering the Intricacies of USPTO Practice Post-Patent Reform

Monday, February 27, 2012; 9:00 a.m. – 12:00 p.m. (Registration and continental breakfast begin at 8:00 a.m.)

How:

Register today by calling 888-224-2480, faxing your form to 877-927-1563 or online at www.AmericanConference.com/devicepatents.

PatentBaristas.com is a Media Sponsor of this event.  Readers of Patent Baristas are entitled to $200 off the current conference price tier.   The discount code you will need for this is: PB 200.

“There are three kinds of lies: lies, damned lies, and statistics.”  ~British Prime Minister Benjamin Disraeli

Surveys are everywhere and poll results are available for every imaginable topic.  In the U.S.,   there were concerns about the admissibility of surveys for hearsay reasons but legislative amendment (Rule 702 of the 1975 Federal Rules of Evidence) eliminated  objections, making surveys a legally acceptable form of evidence. In fact, the submissions of survey evidence in trademark cases have become commonplace, and judges and juries afford great weight in these types of cases to survey results.

In “Trademark Surveys: A Litigator’s Guide,” authors James Berger and Mark Halligan provide a legal guidebook on developing and critiquing trademark surveys. In addition to describing the process and different types of surveys that may be employed, the authors offer strategic insight into how best to use these surveys to save time and money.

In addition to describing the process and different types of surveys that may be employed, the authors provide strategic insight into how best to use these surveys to save time and money. The last chapter offers practical considerations when requesting the services of a survey expert, and the appendices provide a series of sample survey protocols.

A survey for litigation is a market research survey that, when properly conducted, is intellectually and methodologically closer to a controlled scientific experiment than to most forms of traditional market research. Survey evidence is useful to measure the impact of a mark or competing marks in the marketplace. For a survey to be admissible and persuasive at trial, it must be done correctly.

Consumer surveys that provide evidence of confusion are common in trademark litigation, yet the frequency of their application does not mean the method is accepted without challenge. First, it should be noted that every survey actually consists of a sampling plan, a set of questions (the survey instrument), and a method of administering the questions. Each aspect, the sample, the instrument, and the implementation, must be designed according to scientific and accepted research practice.

Surveys for litigation are used in matters involving trademarks, trade dress, false advertising and unfair competition, and have numerous purposes. They can be used to determine the likelihood of confusion between marks, that a mark has acquired secondary meaning, or whether a word, color or shape has trademark or generic significance. Additionally, survey evidence may show that a mark is famous or that use of an infringing mark is causing dilution.

The challenges in designing surveys includes 1) locating the correct population; 2) determining the appropriate form of survey administration; 3) determining how to use technical language; 4) setting up the research to accurately reflect the market conditions; and 5) evaluating the appropriateness of  trademark survey questions.  Generally, the survey should be designed such that all potential sources of bias are minimized and the questions address the specific issue required for the litigation.

If you want to conduct trademark surveys — or defend against them — it’s a must-read!  You may also want to take a look at “Linguistic Battles in Trademark Disputes“ by Roger W. Shuy.

“Trademark Surveys: A Litigator’s Guide,” by Berger and Halligan, Oxford University Press Inc, 304 pp, is available from Amazon.

About the Authors

James T. Berger is the founder of Market Strategies, a Chicago consulting firm that specializes in market surveys. He has testified or served as an expert witness in more than a dozen trials and has been deposed nearly 50 times. He has written more than a dozen articles on the subject of trademark surveys. He combines the real-world, practical orientation of a professional business person with the theoretical knowledge of the academician.

R. Mark Halligan is a partner at Nixon Peabody, where he has developed an extensive practice as an intellectual property litigator in both federal and state courts in all aspects of intellectual property law. In addition to writing many articles over his 30-year career, Mr. Halligan is a frequent lecturer on intellectual property issues and serves on the adjunct faculty of John Marshall Law School in Chicago.

What:

American Conference Institute’s Comprehensive Guide to Patent Reform For Life Sciences Companies.

With the historic passing of The America Invents Act, H.R. 1249, the United States is now facing the most significant patent reform in more than 60 years. Patent reform is now a reality.

Based on extensive research with industry experts, ACI has developed The Comprehensive Guide to PATENT REFORM For Life Sciences Companies as an advanced strategic meeting bringing together the industry thought leaders, including Teresa Stanek Rea and Janet Gongola from the USPTO and Former Commissioner for Patents, Robert L. Stoll, to analyze the practical impact of the complicated new law on your patent strategies.

Topics to be discussed include:

• What does “first  to  file”  actually  mean  under  the  AIA  requirements?  Which  system can you or should file under – the current first to invent or the new first  to  file  (or  both)?  And  how  do  you  avoid  first-to-file  bubble  filings  before  3/15/2013?
• When  can  on-sale  and  public  use  activity  be  considered  prior  art?  Has  secret  §102(f)  prior  art  been  eliminated?
• Do  you  need  to  include  best  mode  in  the  application  or  not  and  what  happens  if  you  don’t?  Is  best  mode  completely  toothless  now?  How  will  examiners  be  able  to  address  the  best  mode  issue?
• What  will  be  required  in  the  PGR  process?  What  type  of  discovery?  Expert  witnesses?  How  do  the  estoppel  provisions  alter  your  analysis  of  whether  to  engage  in  the  PGR  system?
• What  estoppel  provisions  are  associated  with  IPRs  and  how  are  these  different  from  the  inter  partes  reexamination  provisions?  When  do  you  file  a  3rd  party  parallel  IPR?
• What  does  the  prohibition  to  patenting  human  organisms  actually  mean  for  the  life  sciences  industry?
• What  qualifies  as  a  micro-entity  and  how  do  micro  entities  take  advantage  of  the  new  fee  reduction  provisions  available  to  them?  Do  you  need  to  file  an  IDS  with  prioritized  examination  applications?

When:

Where:

Flatotel
135 West 52nd StreetNew York, NY 10019
Reservations: 212.887.9400 or 800-352-8683

But wait, that’s not all:

ACI is also offering informative and hands-on workshop:

Pre Conference Primer: Patent Reform 101: Overview of the Fundamental Provisions in the America Invents Act Monday, January 30, 2012 1:30 pm  –  4:30  pm   (registration  begins  at  12:45  pm)

How:

Be sure to reserve your spot today. Register now by calling 888.224.2480; by faxing your registration form to 877.927.1563; or register online at http://www.americanconference.com/patentreform/workshop.

PatentBaristas.com is a Media Sponsor of this event.  Readers of Patent Baristas are entitled to $200 off the current conference price tier.   The discount code you will need for this is: PB 200.

What: 

New Paradigms to Fund and Move Drug Development:  Finding the Fastest Pat to Funding & Regulatory Approval

When:

January 11-12, 2012

Where:

Marines’ Memorial Club & Hotel
609 Sutter Street
San Francisco, CA 94102
www.marineclub.com

New Paradigms is guided by key individuals from biotech, pharma and the investment community to advance R&D through alternative sources of funding, non-traditional partnering strategies and innovative approaches to drug approval for the successful commercialization of new therapies. The conference is backed by an exceptionally distinguished speaking faculty with diverse experience and expertise in:

Alternative financial sources, non-profit and government funding
Meeting expectations in partnerships from investors and biotechs
Who is getting funded and who is not and why
Essential ingredients to regulatory success
Preparing and adapting for market disruptions
CEO insights on what it takes to be successful and lessons learned
What biopharma investors are looking for in biotech partners
Opportunities in China
How to conduct commercial assessment on a drug with a tight budget?
New paradigms to getting your drug approved
Executing innovative clinical trials that save time, money and improve outcomes
Plasma and imaging biomarkers that drive value and improve success rates
Best practices in reimbursement

There is also an Entrepreneurship Boot Camp offered as a pre-conference workshop to the New Paradigms conference or as a stand-alone event. There is no additional charge to attend this workshop for registered attendees of the New Paradigms event.     Schedule – Tuesday, January 10, 2012.

See the Agenda here.

Registration is here.  Readers of Patent Baristas receive a 20% discount  off each registration by using the code TLinked at registration.

Today we talk IP insurance with Robert Fletcher, president and founder of Intellectual Property Insurance Services Corporation (IPISC).

Patent Baristas:  Hello, Bob! I’m very interested in your work with intellectual property insurance. It’s one of those things that I’ve “heard” a lot about but really don’t have any first-hand experience with it. Can you explain the basics of IP insurance so that someone like me can understand?

Robert Fletcher:  IPISC wrote the first-ever IP Abatement insurance policy. This enforcement-type policy, for enforcing IP rights against infringers, has become the bed rock of the company and started IPISC on the road to success. At first the Abatement policy was the main focus and most in demand. The IP Defense policy, for defending against allegations of IP infringement, was created and first sold by IPISC in 1996 due to the demand for a defensive IP insurance product, and quickly became in high demand, and continues to be so. This demand in large part is due to the indemnification requirements for IP coverage in contracts, as well as due to the soaring costs associated with defending against IP infringement claims and the potential associated damages. The Multi-Peril policy was introduced in 2005 by IPISC, available as a rider to the Abatement and/or the Defense policies, and is likewise increasing in demand. Over the past few years, concerns about the financial consequences associated with losing a covered IP lawsuit have continued to drive interest in the policy. The Unauthorized Disclosure policy has received more interest due to the high number of companies outsourcing their confidential information to a third party in conjunction with manufacturing.

Baristas:  What seems to be the word on the street is that IP insurance is so expensive that it’s not worth it? Of course, no one seems know how expensive, just too expensive. Can it be worth it to a company? Is there a particular market size for the company that would benefit most? Can you give us some real numbers as to costs?

Fletcher:  Companies that are successful or have innovative IP are more likely to be involved, either offensively or defensively, in an IP lawsuit. According to the most recent survey by the AIPLA, the cost to litigate a patent infringement lawsuit averages $2.8M dollars when the amount in controversy is between $1M and $25M. Damages average close to $9M. With these escalating costs and exposures, insurance cost should not be the issue; it should be the company’s survival- its ability to stay in business.

The high “cost of insurance” argument is at best flawed. The small to mid-sized companies cannot really put a price on the cost of going out of business. Even the insurance underwriting process itself is beneficial and informative. It’s simply good business and legal practice to know the strengths and weaknesses of a patent whether owned by the applicant for insurance or facing him.

IPISC’s policyholders, whether small or large, understand well the value proposition represented by these products. As these products are specialized and complex to underwrite, there is a good deal of discussion with the applicant and agent prior to binding. Thus initial focus on price quickly transforms into focus on value.

There are no typical risks in this business, so it is difficult to talk about a typical premium.  There are many different factors evaluated and formulas employed to determine final risk and associated premium. For example, for the abatement coverage some of the factors affecting the risk include the number of IP to be insured and the particular industry.  Ballpark annual premium estimates for traditional abatement coverage can run from a few thousand dollars to over $25,000. for limits of one million per claim.  An average defense policy may likely be in the range of $35,000 for limits of two million per claim for a standard risk.

Baristas:  When do I need Intellectual Property Insurance? I imagine most companies start thinking about IP insurance right around the time they learn that they might be infringing someone’s IP or someone is infringing their own IP. Can they get coverage if there is already a known infringing/infringed party at the time they ask for the insurance policy?

Fletcher:  In fact, waiting until they “may be infringing” or “someone is infringing their IP” is absolutely the wrong time to think about IP insurance. As the saying goes, “you can’t get fire insurance if your house is already on fire.” The same is true with IP insurance.  Companies cannot get coverage for an existing problem; that is why IPISC encourages the applicant to be proactive about managing their IP risk by insuring early. The Abatement, enforcement, policy uses an objective test when determining infringement. Pre-existing commercial activity, whether known or unknown, is generally excluded from coverage under the enforcement policy. That is why it is important to secure coverage for intellectual property while it is in the application stage. The Defense policy excludes pre-existing “threats” of infringement, not the actual infringing activity itself. We recommend that companies secure coverage well in advance of launching their product lines and/or services.

Baristas:  I understand that there are two types of patent infringement policies: (1) defensive policies that cover you if someone sues you for violating a patent; and (2) offensive policies that help pay your attorney fees and other costs if you sue someone else for violating a patent. Does a company have to buy both? Should they?

Fletcher:  No, companies are not required to carry multiple policies, though it is recommended to fully protect a company’s IP assets. IPISC’s IP insurance Abatement, Defense and Unauthorized Disclosure policies are stand-alone, with separate limits. An insured can opt to purchase a combined policy, Abatement & Defense, but will share the aggregate policy limits (which may be greater than the stand-alone policy). The Multi-Peril policy is available as a rider to the Abatement and/or the Defense Insurance policy, which may or may not share the limits of the underlying policy. It may also be available as a stand-alone policy with separate limits, but still tied to an Abatement and/or a Defense policy.

Baristas:  Many people claim that neither type of patent insurance is a good investment. What factors go into figuring if the insurance is a good buy?

Fletcher:  The policies really are game changers, especially when the policyholder is going up against a larger company, either defensively or offensively, as the policies level the playing field and allow the policy holder to get to the decision based on the merits and not on who has the deepest pockets. Many times the best investment is simply holding an IP insurance policy.

In recent years the infringement allegation scenario has been worsened by a common problem, the much publicized NPEs, a.k.a. “Patent Trolls”, who are notorious for suing companies for the sole purpose of extracting royalties, frequently irrespective of the lawsuit’s merit. Defense insurance policy specific to cover IP risk is the only viable solution. The Enforcement policy provides the means to enforce IP rights against infringers. This scenario is frequently triggered by a “grass-hopper” (a term coined by Chief Judge Randall Rader of the CAFC), which refers to entities that leap in and practice an invention, knowing that the patent holder can do nothing about it. The question is; how does failing to invest money on an insurance premium to protect a company’s most valuable asset, IP, avert either the “Troll” or “Grasshopper” disasters? It doesn’t.

Baristas:  Would the Comprehensive General Liability Insurance (CGL) policies typically obtained by businesses provide coverage?

Fletcher:  Obtaining CGL coverage for patent litigation continues to be a difficult and unpredictable endeavor. Companies may turn to their CGL policies for coverage, but most insurance companies exclude any coverage for IP; and, patents are frequently, specifically excluded. Any coverage for IP under a CGL policy is extremely rare and explicitly limited to the cases where “Advertising Injury” involves the patent claims directly covering the act of advertising itself. Otherwise, a Defense insurance policy specific to cover IP risk is the only viable solution. Companies are well advised to proactively obtain insurance coverage specifically tailored to address their most valuable asset, intellectual property rights. Instead of taking the chance on CGL coverage, a company can obtain a dedicated policy where patent infringement allegations can be explicitly insured without the need to litigate coverage through trial and appeals courts. These dedicated IP policies can even cover the cost of pursuing a CGL carrier in those exceptional cases where it should provide coverage.

Baristas:  Are issues that come up during litigation covered by the policy such as invalidity counterclaims, declaratory judgments or anti-trust issues?

Fletcher:  As part of the Insured’s defense, the Defense policy automatically extends coverage to the cost of an invalidity defense to a charge of infringement, the cost of patent re-examination proceedings initiated as a defense arising out of a lawsuit for infringement and coverage for damages are available (IPISC covers damages back to the date the infringing activity began.) The Abatement policy covers retaliatory declaratory judgments as they arise during the course of approved litigation; and, initial DJ actions if the Insured can charge infringement.

Baristas:  Are there any downsides to getting insurance? Does it make it more likely to be sued? Is the review of the intellectual property prior to quoting a premium discoverable in a subsequent trial?

Fletcher:  Holding an IP insurance policy often makes an insured entity less likely to become involved in frivolous litigation, because the potential opponent can be put on notice of the insured’s financial ability to reach a decision on the merits.

IPISC works with applicants and insureds to minimize exposure of communications to discovery, through use of common interest and non-disclosure agreements, and aggressive defensive response to discovery requests on grounds of relevance and privilege.  Recently, a U.S. District Court fully granted IPISC’s motion to quash a subpoena, noting that “it is difficult to determine whether any particular request may be satisfied without violating work-product and/or attorney client privilege,” and that “the unusual nature of the insured/insurer relationship in the patent context also cautions the Court against allowing such an overbroad request.”  American Medical Systems, Inc. v. Biolitec, Inc., No. 3:11-MC-13-H (W.D. Ky. May 24, 2011).

Baristas:  Does the coverage apply just in the US or worldwide? What about changes in the law like the Patent Reform Act? Does the coverage remain the same or do law changes reshuffle the deck?

Fletcher:  Worldwide coverage is available under all of our policies. The companies do not have to be domicile in the US.

As a result of patent reform, patents are expected to become stronger and more valuable, making companies more likely to enforce their rights granted by patents. While the America Invents Act may limit the litigious disposition of some non-practicing entities, companies arbitrarily accused of infringing activity will continue to be the subject of IP litigation disputes. Due to this uncertainty of the outcome of impending patent disputes, companies are realizing now more than ever that it is critical to have protection for their intellectual property assets in place through specialized IP insurance products. Coverage remains the same and is not dependent upon changes in the law.

Baristas:  OK, you must have some really good war stories. Tell us the scary things that have happened — and give us names.

Fletcher:  Sure…Sensormatic Electronics Corp. v. EAS Sensorsense, Inc.  (ED Texas; No. 04-cv-167-TJW) A federal court jury in Marshall, TX rejected the patent infringement allegations of Sensormatic Electronics Corp against WG Security Equipment, Inc. and EAS Sensorsense, Inc. (Insured through IPISC). The plaintiff filed suit in alleging infringement of three patents, one of which related to shoplifting deterrence tags or electronic article surveillance (EAS) tags.  The jury found unanimously that none of the claims of any of the patents were infringed. The jury’s decision was reportedly the first verdict in the Eastern District of Texas for a defendant accused of patent infringement in the past twenty-one cases that have gone to trial. Our Insured stated that the defendants would have been more exposed with less guidance and resources had it not been for their patent infringement defense insurance policy through IPISC that covered the litigation costs and any potential liability. “You never know when you will need insurance,” said Art Fuss of EAS. “Unless you have gone through the experience of defending your company in patent litigation it is hard to identify what is and is not necessary in those circumstances.”

Baristas:  Bob, you’re a good sport. Any other advice for companies already freaked out but this article?

Fletcher:  Intellectual property exposure can be a significant risk to companies, yet many legal and insurance professionals are not proactively advising their clients about the availability of IP coverage. Assessing your IP risk and ensuring companies have the right protection in place for this potentially costly exposure is essential to a company’s overall financial survival. You do not have to be an IP insurance expert, but it is important to work with proven IP insurance experts.

Robert Fletcher is the President and CEO of Intellectual Property Insurance Services Corporation (IPISC).  In addition to founding IPISC 20 years ago, Mr. Fletcher is a patent attorney with more than 40 years of experience in the prosecution of patents and the business and legal phases of patent practice. He holds degrees in Chemical Engineering and Law from the University of Wisconsin and an MBA from the University of Louisville.   He can be contacted at bfletcher@patentinsurance.com or 502-491-1144.  (www.patentinsurance.com)

The United States Patent and Trademark Office (USPTO) published the amended rules governing practice before the Board of Patent Appeals and Interferences (Board or BPAI) in ex parte patent appeals.

The USPTO amends the rules to:

Remove several of the briefing requirements for an appeal brief, provide for the Board to take jurisdiction over the appeal earlier in the appeal process, no longer require examiners to acknowledge receipt of reply briefs, create specified procedures under which an appellant can seek review of an undesignated new ground of rejection in either an examiner’s answer or in a Board decision, provide that the Board will presume that the appeal is taken from the rejection of all claims under rejection unless cancelled by an applicant’s amendment, and clarify that, for purposes of the examiner’s answer, any rejection that relies upon evidence not relied upon in the USPTO action from which the appeal is taken shall be designated as a new ground of rejection.

The notable changes to the rules are:

(1) The Board will presume that an appeal is taken from the rejection of all claims under rejection unless cancelled by an amendment filed by appellant (final Bd.R. 41.31(c));

(2) the Board will take jurisdiction upon the filing of a reply brief or the expiration of time in which to file such a reply brief, whichever is earlier (final Bd.R. 41.35(a));

(3) the requirements to include statements of the status of claims, status of amendments, and grounds of rejection to be reviewed on appeal and the requirements to include an evidence appendix and a related proceedings appendix are eliminated from the appeal brief (final Bd.R. 41.37(c));

(4) the Board may apply default assumptions if a brief omits a statement of the real party-in-interest or a statement of related cases (final Bd.R. 41.37(c)(1)(i) and (ii));

(5) for purposes of the examiner’s answer, any rejection that relies upon Evidence not relied upon in the Office action from which the appeal is taken (as modified by any advisory action) shall be designated as a new ground of rejection (final Bd.R. 41.39(a)(2));

(6) an appellant can await a decision on a petition seeking review of an examiner’s failure to designate a rejection in the answer as a new ground of rejection prior to filing a reply brief (final Bd.R. 41.40) and thereby avoid having to file a request for extension of time in which to file the reply brief; and

(7) the examiner’s response to a reply brief is eliminated (final Bd.R. 41.43 [removed]). A more detailed discussion of the final rule follows.

Further information relevant to particular rules appears in the analysis of comments portion of the final rule.

Applicability Date: This rule is applicable to all appeals in which a notice of appeal is filed on or after January 23, 2012.

See:  Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals