I had the opportunity to attend the ChIPs (Chiefs of Intellectual Property) conference in Washington DC this week and thought that several of the panels that I attended would be of interest to the PTABWatch readership. The organization is focused on the advancement of women in tech, law, and policy and enjoys strong participation from the judiciary, PTO, copyright office, and many prominent in-house and private-practice attorneys. For more information about ChIPs, check out the website at chipsnetwork.org.
One of the panels addressed the finality of decisions regarding patent validity, focusing on the imbalance between the fact that a finding of patent invalidity is binding whether made by the court system or the PTAB but there is no corresponding finality when a patent survives an invalidity challenge. To the contrary, a new challenge can be brought by other parties at any time. The panel included Judge Barbara Lynn of the Northern District of Texas, Judge Elluru of the PTAB, and Melissa Scanlan of T-Mobile, and was moderated by Rachel Krevans from Morrison Foerster.
Judge Lynn noted that she loves patent cases, but would really like to only have to hear them once since it is a great expenditure of resources every time they have to be tried. She emphasized the need for her to strive for consistency between cases filed not only in her court, but in other districts and in the PTAB. She explained that she always reads the PTAB decisions related to her cases and is informed by them. She also pointed out another step she had taken seeking consistency when she set up a joint claim construction hearing with Judge Rakoff (S.D.N.Y.) but as the hearing date approached, the parties before Judge Rakoff reached a settlement agreement. When Ms. Krevans asked about growing cynicism about the strength of issued patents, Judge Lynn acknowledged that the presumption of validity was intended to recognize the real value of a patented invention, but, if one were to survey people on the street, in their heart she does not think that people automatically assume that patents are valid these days.
Judge Elluru made clear that she was offering only her own opinions and not those of the PTAB. When asked if the PTAB follows what is happening in related district court litigation, she stated that the panel will make an independent determination based upon the record before it, but generally, the panel only knows what the parties submit.
Ms. Scanlan spoke as a party that frequently appears as a defendant in litigation. She recognized the inefficiencies inherent in having the ability to bring invalidity challenges in multiple forums, but, practically speaking she will use whatever tools are available to her to protect her client and shift costs back on the patent owner.
Ms. Krevans also asked about the general understanding that a patent that has survived one trial challenging its validity is stronger. Judge Lynn disagreed, stating that, in reality, it is not a decision that is binding on later proceedings and information about that earlier trial is unlikely to be admissible so would not have any effect on subsequent juries. Ms. Scanlan said that defendants generally consider it an open question whether that information will be admissible. Judge Lynn agreed that one could certainly try to get that evidence in (although it did sound like it would be an uphill battle when appearing before her).
Given the opportunity to change one thing about the law in this area, Judge Lynn would remove the AIA restrictions on including multiple defendants and broaden the scope of declaratory judgment jurisdiction to get everyone in one place to resolve their dispute. Judge Elluru would reform PTAB estoppel to include only art that was actually raised rather than that which could have been raised because she believes that is more consistent with the legislative history.
Finally, when asked if there should be some time limit placed on bringing any challenge to the validity of the patent (similar to the 9-month after issuance deadline to file Post-Grant proceedings), Judge Lynn objected that this would not make sense for companies accused of infringement that did not come into existence until after the time that deadline had passed. Ms. Scanlan expressed concern that, particularly for large companies that have wide-ranging businesses, it is nearly impossible to track all of the patents that might be important. She proposed that some sort of patent clearinghouse would be needed in each industry to provide a heads-up of upcoming deadlines to challenge the validity of patents.
Turning to a new topic that is a departure from our blog’s theme, I also wanted to discuss the Defend Trade Secrets Act panel. This panel was moderated by Jeanine Hayes from Nike and included Judge Freeman from the Northern District of California – San Jose, Lily Lim from Finnegan Henderson, Dale Cendali from Kirkland & Ellis, and Jennifer Wuamett from NXP Semiconductor.
Failure to follow your own policy provides prima facie evidence that the company recognized that it was important to do the things identified in the policy so was reckless when it did not do those things.
The panel began by identifying the biggest difference between state trade secret law and the (relatively) new Defend Trade Secrets act – the new ex parte seizure provision. This provision is intended to allow a party to obtain immediate seizure of misappropriated trade secrets but requires that the party seeking this relief provide very specific information about what information has been misappropriated and where it can be found since federal marshals would be executing any seizure and need to have that information to find what is to be seized. As a practical reality, Ms. Lim noted that she hasn’t yet seen an application for ex parte seizure that has been granted. However, for those that have been denied to date, the court usually puts a litigation hold in place and leaves open the possibility of entering a TRO.
The panel also considered what steps to protect your trade secrets actually constitute the reasonable efforts required by trade secret law. Ms. Lim pointed out that FTC guidance about what constitute sufficient protection of consumer data can help companies to identify the bare minimum of what they should be doing to protect their trade secrets. She emphasized that companies need to take into account the potential for cyber security breaches. For example, she pointed out that it is very easy to hack the cameras on all of our personal computers so one minimum step that companies may want to consider is having employees cover the camera when it is not in use
Judge Freeman pointed out that having a policy is important, but failing to enforce that policy is the biggest vulnerability that any trade secret plaintiff will face. Failure to follow your own policy provides prima facie evidence that the company recognized that it was important to do the things identified in the policy so was reckless when it did not do those things. Judge Freeman also was adamant that companies need to immediately escort out employees who are fired to prevent them from downloading information.
When asked by Ms. Cendali when a party will be required to identify its trade secrets under the DTSA, Judge Freeman acknowledged that she is likely to be influenced by her knowledge of California state law which requires the plaintiff to identify the trade secrets specifically before the case may proceed. Judge Freeman speculated that the Iqbal standard may even require that information to be included in the Complaint in order to meet the minimum pleading requirements.
If you are interested in learning more about the Defend Trade Secrets Act, Marshall Gerstein is hosting a CLE on this topic on September 27. Contact the author if you would like additional information.