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On June 13, the U.S. Supreme Court ruled that human genes cannot be patented. Writing for the unanimous court in Association for Molecular Pathology et al. v. Myriad Genetics, Inc., et al., Justice Clarence Thomas laid out the reasoning.
The Patent Act permits patents to be issued to “[w]hoever invents or discovers any new and useful … composition of matter,” 35 U.S.C. §101, but “laws of nature, natural phenomena, and abstract ideas ‘are basic tools of scientific and technological work’” that lie beyond the domain of patent protection.
Taking obvious care not to demean the research done at Myriad, the court stated Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes. Myriad did not create nor alter either the genetic information encoded in the BRCA1 and BRCA2 genes or the genetic structure of the DNA.
“Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy [a] §101 inquiry.” Locating the BRCA1 and BRCA2 genes did not render the genes patent eligible as “new compositions of matter.”
The court also addressed complementary DNA, or cDNA, artificial DNA molecules that alter or recombine raw genetic materials in new ways. cDNA is not a “product of nature,” so it is patent eligible under §101.
For analysts with biotechnology clients, essentially the court followed the reasoning laid out in the amicus brief submitted by the United States. You can read that here, off the American Bar Association site.
After an 11-year battle, Pfizer Inc. and Takeda Pharmaceutical Co. reached a $2.15 billion settlement with Teva Pharmaceutical Industries Ltd. and Sun Pharmaceutical Industries Ltd. for patent infringement damages resulting from their market introduction of generic Protonix in the U.S. while the patent for the active acid reflux treatment ingredient (pantoprazole) was still in force.
The split of the proceeds will interest analysts: Takeda (through acquisition) is the patent owner, and Pfizer owns an exclusive license. Pfizer will get 64% of the settlement’s proceeds, and Takeda will get the rest.
Good news for fashion trademark owners (and others): Counterfeiters and facilitators can be found liable for infringement.
On May 31, 2013, in Coach, Inc., et al. v. Goodfellow, the United States Court of Appeals for the 6th Circuit entertained the question of whether a flea market operator can be held contributorially liable for trademark infringement by vendors. Plaintiff (Coach) originally brought suit under the Lanham Act, alleging that a Memphis flea market operator is liable for sales of counterfeit products at his flea market, even though the flea market owner was not doing the selling.
Invoking Inwood Laboratories, Inc. v. Ives Laboratories, Inc., in which the Supreme Court held that liability under the Lanham Act includes those who facilitate the infringement, the appellate court upheld a jury award of $5 million in damages.
Background: Frederick Goodfellow owned and operated a Memphis flea market doing business as The Southwest Flea Market as a sole proprietorship. The flea market rented 75 to 100 booths to vendors at the rate of $15 per day Thursday through Sunday each week.
On Jan. 15, 2010, Coach sent a letter to Goodfellow, notifying him of counterfeit sales of Coach products at the flea market, advising him of the potential violation of both federal and state laws, and demanding that all sales of counterfeit Coach products cease.
On March 26, 2010, the Shelby County Office of the District Attorney General notified Goodfellow that counterfeit sales of Coach items were continuing at the flea market and that Goodfellow was in willful disregard of the law.
On April 23, law enforcement officers raided the flea market and seized evidence of counterfeiting.
On June 10, Coach filed for judicial relief. After a Coach investigator discovered continuing sales of counterfeit Coach products in February 2011, law enforcement officers conducted another raid on March 4, 2011, and still another on June 23, 2011, during which more than 4,600 counterfeit Coach products were seized and the flea market was shut down.
One of the key factors in this case was the flea market owner’s indifference to the counterfeiting. Though some minor, remedial moves to stem counterfeiting were employed, the court listed what was not happening:
- The flea market’s employees never received any training to identify counterfeit goods;
- There was no evidence that any vendors had been expelled or rejected for selling counterfeit products;
- There was no evidence that vendors even had been questioned as to whether their goods were counterfeit or authentic;
- The flea market did not have a license to sell Coach products;
- No one inquired of vendors whether they had licenses;
- Vendors were not required to sign a statement agreeing, as a condition of renting a booth, that they would not sell counterfeit products; and
- Even after some discussions with vendors about counterfeiting, Goodfellow admitted knowing that infringement continued.
Taking all this into account, the court found: “Thus, even if we consider all the evidence of remedial measures, it fails to undermine the district court’s conclusion that Goodfellow engaged in ‘ostrich-like practices.’”
The jury at the district court level awarded $240,000 per mark for 21 total infringed marks and granted Coach permanent injunctive relief. The 6th Circuit upheld that judgment plus attorneys’ fees.
Retail sales of licensed merchandise worldwide increased 1.6% in 2012, rising to $153.2 billion from $150.8 billion in 2011, according to The Licensing Letter and an all-new supplement to International Licensing: A Status Report.
The regions showing the largest annual rise in retail sales of licensed goods were the still-emerging areas of Central and Eastern Europe, up 6.4% in 2012; Latin America, up 4.5%; and the Middle East and Africa, up 4.3%. Asia also saw increases in retail sales of licensed goods of 1.7% in 2012, with strong sales in China, India, Southeast Asia, and Korea tempered by continued struggles in Japan.
As expected, the so-called BRIC countries (Brazil, Russia, India, and China) all ranked among the top 10 as measured by their rates of growth in retail sales of licensed merchandise. New to the top 10 growth markets is Turkey.
IP Value Wire can supply sample pages and other information on the 49 countries covered in the Status Report.
IP Value Wire has reported extensively on the attempts to curb the power of nonpracticing entities, aka patent assertion entities, that, in the president’s words, “don’t actually produce anything themselves.” Little is written in support of such businesses, and the administration recently revealed a multipronged strategy to limit their ability to exercise and enforce patent rights duly owned.
Now a 47-page white paper issued by Yale faculty warns against an overreaction, suggesting strongly that patent assignments have long been a part of the patent landscape in the U.S., and the availability of assignment options represents a significant portion of patent value. Implied in the paper is the admonition that the U.S. should tread carefully in regulating patent assignments, lest they adversely affect the very “innovation” they are trying to stimulate. “Throughout U.S. history, the alchemical lure of the market for patents has provided a powerful incentive for technological creativity at the same time as it has attracted opportunists,” the paper says.
The authors point out that NPEs are not a new phenomenon, nor is the practice of inventors assigning their invention to others. In fact, through most of U.S. history, it has been common for inventors to profit from their ideas by selling off or licensing the patent rights.
“Researchers Zorina Khan and Kenneth Sokoloff compiled a dataset on the careers of nineteenth-century ‘great inventors’ whose technological achievements were important enough to merit entries in the Dictionary of American Biography. They found that inventors who started their own businesses accounted for less than a quarter of the patents obtained by this group during the late nineteenth century.” For instance, Thomas Edison depended heavily on assignments to finance the early stages of his inventive career.
Trade secrets are certainly a consideration in every technology license. The addition of trade secrets to a patent license in technology has been estimated to increase its value as much as three to 10 times. Jim Singer at IP Spotlight blogged on last week’s panel discussion in New York City about the value of trade secrets in patent licensing. At that meeting, Bruce Berman, CEO of Brody Berman Associates, confirmed that, in his experience, patent licenses that bundle patents with trade secrets or other know-how are, indeed, the most valuable.
BVR’s Licensing Trade Secrets: Overview and Sample Agreements discusses what constitutes trade secrets and how they affect value. This overview is followed by examples of several different kinds of real agreements (technology, management, joint venture, etc.) that license trade secrets or know-how in one way or another. By reviewing the full text of the agreements, readers learn how companies characterize and monetize their trade secrets. Specific attention should be paid to the language used, the enhancements to the economic value of the license the trade secrets add, the industries where this is a common practice, and the actual royalty rates.
On June 27, Mark Zyla of Acuitas will present a detailed look at valuation of know-how, an intangible that is becoming an ever-increasing part of a firm’s value. Mark will look at the legal protections provided to these assets and the valuation techniques best suited for their appraisal.
Valuation of e-commerce websites is very difficult to assess. The announcement that Quebecor Media agreed to sell its jobboom and Reseau Contact websites to Mediagrif Interactive Technologies was accompanied by the purchase price: $65 million.
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