Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In a recent jury verdict out of the Eastern District of Texas involving a Section 101 issue, a jury invalidated a patent on Section 101 grounds. The case is PPS Data v. Jack Henry. By way of backstory, Judge Gilstrap denied summary judgment on the Section 101 issue finding genuine disputes of material fact as to whether certain claim elements were well-understood, routine, or conventional activities, and sent the issue to trial. The verdict form asked “Did Jack Henry prove by clear and convincing evidence that, from the perspective of a person of ordinary skill in the art, the Asserted Claims of the ‘106 Patent ONLY involve activities that were well-understood routine, and conventional as of April 28, 2000?” Jury Answer: Yes. Thus, getting past the motion to dismiss stage, or even a motion for summary judgment, does not guarantee a plaintiff victory on Section 101 issues.
2. In a recent decision out of the Northern District of Illinois, a judge decided that an insurer did not have to cover any additional costs remaining in a trademark case where the insured apparently waited 16 months after first notice of a claim against it to notify the insurance company of the claim. The court determined that such delay is at odds with language in most insurance policies regarding notifying the carrier as soon as is practicable, even in situations where the carrier was covering some of the fees, costs, and apparently settlement in the case. The takeaway here is simple – in trademark and copyright cases in particular (in terms of IP cases), when a company receives notice of a potential dispute, and especially a lawsuit filed against it, it should consult with IP counsel knowledgeable about insurance coverage issues, and tender the notice or complaint to the insurance carrier shortly thereafter.
3. In a federal civil procedure nerd’s (i.e., the author’s) dream case, the Court of Appeals for the Federal Circuit determined that there was no federal subject matter jurisdiction over a case involving contract and other state law claims. The opinion is here. Basically, an inventor of children’s car seats made to look like comic book characters secured design patents for the designs. He formed a first company that entered into a venture with a second company to exploit the designs, which resulted in a third company investing in the venture and conditioning its investment on transfer (or license) of the design patents from the first company to the second company in exchange for a small royalty to the first company. The inventor was terminated as CEO of the second company, and the second company then terminated the license of rights from the first company. The first company believed it was owed royalties under the agreement and sued for breach of contract and other state law claims under diversity jurisdiction in the Southern District of Florida. On summary judgment, the plaintiff lost on the unsettled claims and appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit initially noted that there may not be diversity jurisdiction, and remanded the case to the Southern District of Florida for formal determination as to diversity jurisdiction. At that point, the plaintiff introduced a new argument that there was federal question jurisdiction because, as the argument goes, the state law claims arose under federal patent law. On remand, the district court accepted this argument, retained jurisdiction, and sent the case back to the Eleventh Circuit. The Eleventh Circuit wound up transferring the case to the Federal Circuit for a determination of whether federal question “arising under” subject matter jurisdiction existed. In a detailed analysis pursuant to the 2013 Supreme Court decision in Gunn v. Minton, the Federal Circuit determined that there was no federal question subject matter jurisdiction and vacated the district court’s judgment and remanded the case for dismissal. In a separate disposition, the Federal Circuit vacated the district court’s attorneys’ fees award because of the lack of subject matter jurisdiction. Takeaway: Make sure you have a basis for federal court jurisdiction before you file a case in federal court. The author has previously been granted an award of attorneys’ fees for a plaintiff’s failure to file a claim with subject matter jurisdiction.