July 2013

Providing a Guaranty of Online Transactions Not Patent-Eligible, Says Delaware Court

Claims of a patent directed to “providing a guaranty service for online transactions” are not patent-eligible under 35 U.S.C. § 101, according to the court in Buysafe, Inc. v. Google Inc., C.A. No. 11-1282-LPS (D. Del. July 29, 2013). Accordingly, the court granted the defendant’s motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Claim 1 of U.S. Patent No. 7,644,019 was representative: A method, comprising: receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction; processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party, wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial… Read More »Providing a Guaranty of Online Transactions Not Patent-Eligible, Says Delaware Court

Use of Software After Expiration of License Is Copyright Infringement

A software owner was granted summary judgment of copyright infringement where its licensee had breached the applicable software license agreement, and continued to use the software after the agreement expired. Clinical Insight v. Louisville Cardiology Med. Group, No. 11-CV-6019T (W.D.N.Y. July 12, 2013). The licensee could not be saved by its allegation that it had stopped paying license fees because the software did not function properly. The plaintiff provided medical records software for cardiologists. In the midst of the plaintiff’s alleged inability to provide a working billing module, the licensee had, pursuant to the license agreement’s notice provision, stated that it would terminate the license agreement. However, the license agreement specified that return of the software and its documentation was a prerequisite to the termination becoming effective. The licensee continued using the software. Moreover, in an attempt to avoid breaching the license agreement by permitting third party use, after the licensee had been sold, the defendant had retained certain of the licensee’s employees solely for the purpose of using the software. The court first considered whether the plaintiff had breached the license agreement, and found that it had not. The license agreement was a valid contract, and the disputed billing module… Read More »Use of Software After Expiration of License Is Copyright Infringement

Full Scope of Patent Claims Must Be Enabled at the Time of Filing

The headline of this post, a truism of patent law to be sure, is nicely illustrated by the Federal Circuit’s opinion in Convolve, Inc. v. Compaq Computer Corp., No. 2012-1074 (July 1, 2013). After an inventor admitted in testimony that he had been unable to implement claimed subject matter in certain contexts until nine years after the application for the patent was filed, the District Court held the relevant claims invalid under 35 U.S.C. § 112. The Federal Circuit affirmed this holding. The claims at issue were directed to improving “seeks” in computer hard drives. A “seek” is the process of locating data on a hard drive. The claims of United states Patent No. 4,916,635 were directed to a method for “generating an input to a system to minimize unwanted dynamics in the system response.” The claims covered both “long seeks,” where data was stored in tracks on the hard drive that were far apart, as well as “short seeks,” where data was stored in tracks that were close together. The application for the ’635 patent was filed in 1988. The District Court invalidated the ’635 patent claims based on an inventor’s testimony “that he was unable to implement the… Read More »Full Scope of Patent Claims Must Be Enabled at the Time of Filing

Enforcement of a Click-wrap License Agreement

Consumers who casually, even blindly, accept “click-wrap” or “browse-wrap” license agreements will be bound by those agreements so long as the user had a reasonable opportunity to accept or reject the proffered license. A recent case provides a blueprint for how to offer, and then how to enforce, a click-wrap agreement. In Zaltz v. JDate, No. 12-CV-3475 (JFB) (ARL) (E.D.N.Y. July 8, 2013), the court held that the plaintiff was bound by the defendant’s click-wrap license agreement, and then enforced that agreement’s forum selection clause against the plaintiff, transferring the case to California. The plaintiff, Zaltz, sued the matchmaking website JDate, alleging that JDate had improperly billed and harassed her. JDate, citing the forum selection clause in its license agreement, moved to dismiss for improper venue, or alternatively to transfer the case to California. The plaintiff alleged “in a conclusory fashion that she does not believe that she agreed to such a forum selection clause,” but “the evidence suggests that she, in fact, did.” The plaintiff submitted no evidence to controvert the defendant’s proof, via an employee declaration, website screenshots, and its current website, “that plaintiff could not have signed up to participate on the site without agreeing to its… Read More »Enforcement of a Click-wrap License Agreement

Pleading Implied License as an Affirmative Defense to Patent Infringement

An implied license is an affirmative defense to patent infringement. Because the defense is, by definition, highly fact-specific, it is not always clear what allegations are required to adequately plead the implied license defense. However, requirements for pleading the defense, e.g., under an estoppel theory, are not unduly onerous.  The court’s denial of a motion to dismiss the defense in Integrated Global Concepts, Inc. v. J2 Global, Inc., No. C-12-03434-RMW (N.D. Cal. June 28, 2013), is illustrative. A complicated procedural history, including other litigation, underlies this declaratory judgment action. For present purposes, the essentials of the pleadings are that J2 brought counterclaims seeking a declaratory judgment of infringement of four patents in response to IGC’s declaratory judgment action, and IGC in turn responded to J2’s counterclaims with its own counterclaim for a declaratory judgment of implied license, among other things. The facts underlying these pleadings are also a little complicated, but necessary for understanding the basis of the implied license defense raised by IGC. The facts (which you can skim and skip below to the gist of the court’s analysis) as pled by IGC were that: In 1997 and 1998, J2 filed patent applications that subsequently issued as U.S. Patent… Read More »Pleading Implied License as an Affirmative Defense to Patent Infringement

When Is a Covenant Not to Sue Like a Patent License?

Although parties often go to great pains to distinguish covenants not to sue from patent licenses, those two legal constructs may not be treated any differently by the courts. For example, in Innovus Prime, LLC v. Panasonic Corp. & Panasonic Corp. of N. Am., Inc., No. C-12-00660-RMW (N.D. Cal. July 2, 2013), the court accepted the proposition that “[u]nconditional covenants not to sue are equivalent to non-exclusive licenses.” Accordingly, where Panasonic had received a covenant not to sue from a patent’s original owner, and then was sued by a subsequent assignee, the court granted summary judgment in Panasonic’s favor. In 1982, Phillips and Panasonic entered into an agreement in which Phillips gave Panasonic a convenant not to sue for infringement of certain patent properties, including U.S. Patent No. 5,280,350. A 2007 agreement between these parties clarified the scope of the 1982 agreement, but no one disputed that the ‘350 patent was, and remained, within the scope of the covenant not to sue. In 2008, Phillips assigned the ’350 patent to a third party; after two more assignments, the ’350 patent was owned by Innovus. Panasonic moved for summary judgment after Innovus sued it for patent infringement. The court preliminarily granted… Read More »When Is a Covenant Not to Sue Like a Patent License?

The More Patent-Eligible Subject Matter Changes, the More It Stays the Same

Perhaps the most apt characterization of the current state of the law on patent-eligible subject matter under 35 U.S.C. § 101 is attributable (albeit perhaps apocryphally) to the ancient Greek philosopher Heraclitus: everything flows. (Everything, ebbs, too.) Recent activity in the courts as well as in the USPTO’s Patent Trial and Appeal Board (PTAB) certainly bears this out. Consider: a Federal Circuit panel recently found claims patent-eligible in the recent Ultramercial case, this decision coming after a vacation and remand from the Supreme Court of an earlier Federal Circuit holding that claims there recited patent-eligible subject matter.  Moreover, Ultramercial came mere weeks after a deeply divided en banc Federal Circuit held claims not patent-eligible, albeit without reaching a majority, in the CLS Bank case. The PTAB has begun to hold claims unpatentable under Section 101, the first such case being reported here, and a series of such cases being conveniently summarized on the PatentlyO blog. Furthermore, one District Court recently held claims directed to parsing data packets not patent-eligible in the wake of CLS Bank. However, two more recent cases, one decided the day before Ultramercial, and one five days after, have held claims patent eligible under 35 U.S.C. § 101. DDR… Read More »The More Patent-Eligible Subject Matter Changes, the More It Stays the Same