commit an ip crime do the time - dla piper

Perspectives bull Analysis bull Visionary Ideas

INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

wwwdlapipercomip_global | Issue 13 Q1 2012

A NEW BREED OF DAMAGES TRIAL

AMERICA INVENTS ACT WILL THE JOINDER PROVISIONS SAVE TIME AND MONEY

TOP FRANCHISE CASES OF 2011

GETTING CLOSER US VS EU POST-PATENT REFORM

Attorney Advertising

COMMIT AN IP CRIME DO THE TIME

UNITED STATES

It is an honor and a pleasure to have the opportunity to participate in the publication of DLA Piperrsquos IPT News As we move into 2012 it is clear that IP issues are front and center on the international stage I agree with President Obamarsquos comments when he signed the recent patent reform bill into law ldquowe have to do everything we can to encourage the entrepreneurial spirit wherever we find itrdquo Nowhere was that entrepreneurial spirit more vibrant than in the life and work of the late great Steve Jobs Reflecting on his legacy I am reminded that it is our collective privilege to be on the front lines in promoting innovation protecting intellectual property and encouraging that cherished entrepreneurial spirit Mr Jobs embodied so completely His legacy lives on particularly in the IP community where we focus each day on cutting-edge ideas technology and issues ndash including several we address this quarter

Our cover article deals with recent developments in the often underreported world of IP crimes Carolyn McNiven a former federal prosecutor discusses recent developments and best practices in dealing with IP crimes Criminals beware This issue also features an article from Sean Cunningham and Erin Gibson exploring the new landscape in patent damages law In addition our franchise colleagues explore hot topics in franchise law Finally this issue includes my own observations on how the America Invents Actrsquos joinder provision is impacting patent litigation

I look forward to hearing any feedback or comments you have that can help us bring you a publication tailored to your interests

johnguaragnadlapipercom

EDITORrsquoS COLUMN

John M GuaragnaPartner Patent Litigation

IP ROCKSFEDERAL CIRCUIT CHIEF JUDGE RADER AND BAND DENOVO ROCK THE SAN DIEGO HOUSE OF BLUES

The award-winning Intellectual Property and Technology News is now published in the United States Asia Pacific and EMEA regions Find all current and past editions of the IPT News here wwwdlapipercomipt_news

The Honorable Randall R Rader brought his classic rock band DeNovo to San Diego to headline the IP Rocks SD concert at the House of Blues on January 19 The event kicked off the second annual University of San Diego School of Law Patent Law Conference

DLA Piper was pleased to help organize the event as a lead sponsor More than 300 lawyers judges professors and professionals gathered at the House of Blues for this memorable evening

Opening bands from Qualcomm and NuVasive warmed up the crowd Then following DeNovo band member Jon Knightrsquos tongue-in-cheek proclamation ldquoAll Riserdquo Chief Judge Rader ran onto the stage wearing shades and grabbed the lead microphone He captivated the crowd as he belted out familiar tunes by Neil Young The Rolling Stones and other rock legends proving that IP does indeed rock

For more photos of this event please see wwwdlapipercomip_rocks

In support of our Global Sustainability Initiative this publication is printed on 100 recycled paper Please recycle this newsletter or share it with others

You are receiving this communication because you are a valued client former client or friend of DLA Piper The information contained in this newsletter is for informational purposes only and should not be construed as legal advice on any matter To unsubscribe from this mailing list send an email to communicationsdlapipercom or send your written request to DLA Piper Attention Marketing Department 401 B Street Suite 1700 San Diego California 92101-4297 USA Copyright copy 2012 DLA Piper llp (us) DLA Piper uk llp and other affiliated entities For questions comments and suggestions email us at IPTnewsdlapipercom or contact Diane Vislisel Senior Practice and Industry Marketing Manager T +1 619 699 3541 dianevisliseldlapipercom US Chair ndash Intellectual Property and Technology John Allcock T +1 619 699 2828 johnallcockdlapipercom Editor in Chief John M Guaragna T +1 512 457 7125 johnguaragnadlapipercomDirector Intellectual Property and Technology Licia E Vaughn T +1 619 699 2997 liciavaughndlapipercomDLA Piper llp (us) 401 B Street Suite 1700 San Diego California 92101-4297 USA

wwwdlapipercomip_global | 03

As I write this I am near the end of a trip which has taken me to our Beijing Shanghai and now Hong Kong offices By pure accident my trip coincided with the Chinese Peoplersquos Political Consultive Conference in Beijing ndash the enormous annual event involving all levels of political representatives from all over China The newspapers were filled with reports of that event and some bear special mention

One is the annual report by Chief Justice Wang Shengjun in charge of Chinarsquos entire court system observing that last year Chinarsquos judicial system adjudicated 66000 cases involving IP rights He stated ldquoThe reason behind the soaring number of IP disputes is growing awareness of IP rights and Chinarsquos push for science and technology based industriesrdquo He also reported on the need for continual court reform ldquoto boost the transparency of the courts and promote the democratic judicial systemrdquo

The second notable thing was a series of articles on the Export Import Bank of Chinarsquos work fostering Chinese investment in the US and Europe in particular in technology and knowledge-based companies The subtext of these articles is that China is becoming ever more involved in technological innovation

The future is clear China is becoming a much more innovation-based economy and it is expanding its protection of IP rights to support that kind of economy DLA Piper is very much in the center of this action With over 200 lawyers (and rapidly expanding) in Beijing Shanghai and Hong Kong we stand ready to help companies with their IP needs going in and coming out of China

johnallcockdlapipercom

AN IP EXPLOSION

John AllcockPartner Global Co-Chair and US Chair Intellectual Property and Technology

Photos by Alan Decker and David Gulley

04ensp |ensp IntellectualenspPropertyenspandenspTechnologyenspNewsenspndashenspUnitedenspStates

Audio of the webinar and the PowerPoint presentation including the list of all 11 cases are available at dlapipercomtop-11-of-2011-webinar

TOP FRANCHISE CASES OF 2011DLA Piper IPT partners Barry Heller and John Verhey recently conducted a webinar reviewing 2011rsquos top franchise cases focusing on decisions providing guidance to franchisors in running their businesses including cases dealing with noncompete provisions disclosure issues pricing controls and renewal rights Three of the most significant 2011 cases are summarized here

In KFC Corp v Iowa Department of Revenue1 the United States Supreme Court denied review

of an Iowa Supreme Court decision that has caused concern among franchisors KFC has no company-owned units in Iowa only franchised units The Iowa Department of Revenue issued a US$284658 assessment against KFC for three yearsrsquo worth of unpaid corporate income taxes plus penalties and interest KFC challenged the assessment as unconstitutional because it had no ldquophysical presencerdquo in Iowa The Iowa courts concluded it was sufficient for tax purposes

that KFC licensed its intangible property

(its trademark) to Iowa franchisees generating income for KFC

Franchisors with franchisees in Iowa

should be aware of the requirement to pay income taxes on revenue received from those franchisees Franchisors should consider whether to take advantage of Iowarsquos ldquovoluntary disclosure programrdquo allowing certain taxpayers to report (and pay) income taxes for the prior five years

1 KFC Corp v Iowa Deprsquot of Revenue 792 NW2d 308 (Iowa Dec 30 2010) cert denied 132 S Ct 97 (Oct 3 2011)

In 7-Eleven Inc v Spear2 a rare but important case involving adequacy of financial performance

representations (FPR) in franchise disclosure documents a federal district court held that an FPR need not contain information that might be material to a prospective franchiseersquos investment decision When 7-Eleven sought to terminate a defendantrsquos franchise agreement the defendant countersued claiming 7-Eleven had violated the Illinois Franchise Disclosure Act and had committed common law fraud because it did not provide historical financial information about the store the defendant had bought

The court dismissed the franchiseersquos claims saying an FPR is optional and the nature of the financial information given to prospective franchisees is left to the franchisor although its presentation must conform to disclosure guidelines The court held that in light of disclaimers in the FPR that the historical averages did not show either the storersquos actual performance or any storersquos prospective performance failure to provide sales information for the acquired store was not misleading the disclaimers explained the precise nature of the financial information and 7-Eleven was obligated to disclose only what the disclosure guidelines required

This case highlights both the importance of including appropriate disclaimers in a franchise disclosure document and the limitations on proper use of that information

2 7-Eleven Inc v Spear 2011 WL 2516579 at 4-7 (ND Ill June 23 2011)

In Doctorsrsquo Associates Inc v Uninsured Employersrsquo Fund3 the Kentucky Supreme Court

rendered an opinion important to the trend of claimants seeking to blur the

line between franchise relationships and employment relationships The Uninsured Employersrsquo Fund sought

indemnity from Doctorsrsquo Associates franchisor of Subway when an employee

of an uninsured franchisee sustained work-related injuries and received payments from the Fund After an Administrative Law Judge and the Workers Compensation Board found Doctorsrsquo Associates not liable for payments to the employee the Kentucky Court of Appeals reversed and remanded asking whether the franchiseersquos work was ldquoa regular or recurrent partrdquo of Doctorsrsquo Associates business The Kentucky Supreme Court reversed and held Doctorsrsquo Associates should not be liable because Doctorsrsquo Associates did not control its franchiseesrsquo day-to-day activities it was in the business of developing franchisees not operating sandwich shops The court also suggested agreement provisions franchisors might use to minimize the risk of having to pay workersrsquo compensation benefits for employees of their franchisees

3 Doctorsrsquo Assocs Inc v Uninsured Emprsquorsrsquo Fund ___ SW3d ___ 2011 WL 5878145 at 3-4 (Ky Nov 23 2011)

bull1 bull2 bull3

Barry Heller a partner in DLA Piperrsquos Franchise group and based in Northern Virginia focuses on franchise and distribution disputes throughout the US Reach him at barryhellerdlapipercom

John Verhey a partner in DLA Piperrsquos Franchise group and based in Chicago litigates cases in the franchise distribution and trade regulation area Reach him at johnverheydlapipercom

The panel composed of DLA Piper partners as well as academics from Bucerius Law School met in Silicon Valley to compare US patent law post-reform with current patent law in Europe Panelists noted that changes the AIA is bringing to the US patent system are likely to affect businesses worldwide because the US has the worldrsquos largest number of yearly patent filings - half filed by foreign entities With the US adoption of a ldquofirst to file systemrdquo (starting March 15 2013) inventors the panelists surmise will try to win the race to the patent office by filing earlier The overall number of applications filed is likely to increase as are prosecution costs Unlike the European Patent Office the USPTO will accept pre-issuance submissions of prior art by third parties Further a limited nine-month post-grant review is provided similar to the EPO opposition period However the US review period is followed by an inter-partes review opportunity Overall these procedures are designed to maximize prior art available to the patent office and provide early non-litigation opportunities to challenge issued patents aiming to improve the quality of patents granted

Finally the panel discussed the most popular European patenting destinations Germany France and the UK On the litigation side the panel noted the complex European patent litigation system The UK offers the speediest nullity

(invalidity) rulings and Germany where infringement and validity are determined by different tribunals is the quickest jurisdiction for obtaining an infringement ruling This means a litigant can obtain a ruling on infringement before validity is decided

The panel was organized by the American Friends of Bucerius and DLA Piper as part of a joint IP lecture series project in the US and Germany with the German American Chamber of Commerce Inc Office for the Western US and the German American Business Association acting as co-sponsors

Taking part were Prof Dr Hermann Puender Vice President of the Bucerius Law School who opened the proceedings and panelists (and DLA Piper partners) Timothy Lohse (Silicon Valley and Washington DC) Julia Schoenbohm (Frankfurt and Munich) and Brent Yamashita (Silicon Valley) Prof Dr Dana Beldiman of the Bucerius Law School and Carroll Burdick amp McDonough LLP served as moderator Present and the source of valuable comments was Claire Bennett of DLA Piperrsquos London office

Getting CloserUS vs EUPost-Patent Reform

L to R Brent Yamashita ndash DLA Piper Silicon Valley Claire Bennett ndash DLA Piper London Dana Beldiman ndash Bucerius Law School and Carroll Burdick amp McDonough Julia Schoenbohm ndash DLA Piper Frankfurt Prof Dr Hermann Puender Vice-President Bucerius Law School

What are the international ramifications of the America Invents Act for companies based within and outside of the US A recent panel discussion hosted by DLA Piper explored this subject

LEADING PATENT LAWYER STUART LUBITZ JOINS DLA PIPER IN LOS ANGELES

Stuart Lubitz an internationally renowned

lawyer with over 40 years of experience

representing major Japanese and US

technology companies on patent matters

recently joined DLA Piper as Special

Counsel in Los Angeles

Stuart was chairman and name partner

of a well-known IP boutique and later

directed the IP practices at two national

law firms He was a pioneer in representing

US high-tech startup companies and

then representing Japanese multinational

companies He developed one of the USrsquos

leading IP practices serving Japanese clients

Among Stuartrsquos clients have been such

companies as Kyocera Sharp Seiko

Epson Toshiba Olympus Ricoh Hitachi

Panasonic Sanyo Glory Minolta Casio

Murata Machinery Murata Manufacturing

Ishida Scales Dainippon Screen and

Citizen Watch as well as GE Honeywell

Fairchild Semiconductor Sperry Rand

Western Digital and others Stuart was

the first Westerner to be selected as a

director of a large Japanese public company

and one of the few patent lawyers to

serve on the board of a New York Stock

Exchange company

At DLA Piper Stuart is assisting in

expanding and developing DLA Piperrsquos

already extensive practice serving Japanese

clients in patent litigation licensing

counseling prosecution negotiation and

opinions as well as with competition

issues He has reunited with his former

partners Rich de Bodo DLA Piperrsquos

co-chair of Patent Litigation

and a leader of its Japanese

IP practice Henry

Koda the manager of

DLA Piperrsquos IP practice

in Tokyo and many other

former colleagues

Stuart LubitzSpecial Counsel

By Carolyn F McNiven


IP CRIME THREAT ASSESSMENT

This past November the National Intellectual Property Rights Coordination Center released a report entitled Intellectual Property Rights Violations A Report on Threats to United States Interests at Home and Abroad1 The 99-page report details the threat from criminal IPR violations ndash copyright trademark and theft of trade secret offenses ndash that pose a danger to US interests particularly those of US rights holders

The report provides support for many peoplersquos suspicions about the current state of IP crimes Among its key findings

Already immense threats to US IP are growing

The products being counterfeited and the techniques used are becoming more sophisticated

The role of criminal organizations including organized crime and violent gangs has substantially increased

China-based offenders are ldquothe dominant threat and dwarf all other international threatsrdquo

Most thefts of trade secrets are committed within the US by US actors

This last finding is by far the most intriguing and is actually cause for optimism It creates hope that US companies may be able to deter future thefts by convincing US law enforcement authorities to aggressively prosecute historic thefts

According to the report ldquoOne of the most common methods for stealing trade secrets from United States rights holders is a current or former employee of a United States company transferring files containing the companyrsquos trade secrets or other proprietary information onto a portable storage device such as a USB drive or CDrdquo Thus working within your company to reduce the risk that one of your employees will walk off with company secrets on a memory stick is a good place to start

STEALING FROM DOW

The breadth of US IP laws was on view earlier this year when a federal judge sentenced Wen Chyu Liu aka David W Liou to 60 months in prison for stealing trade secrets from his employer Dow Chemical Company and selling them to companies in the Peoplersquos Republic of China That sentence included a term of two years of supervised release and an order to forfeit US$600000 and pay a US$25000 fine

Liu came to the US from China for graduate studies began working for Dow in 1965 and retired in 1992 While employed at Dow he worked as a research scientist on the development and manufacture of Dow elastomers with access to trade secrets and confidential proprietary information in the production of elastomeric polymer chlorinated polyethylene (CPE) Dow is a leading producer of CPE which has numerous industrial applications from car hoses to vinyl siding

Trial evidence established Liu had conspired with at least four current and former Dow employees to misappropriate Dow trade secrets and sell them to Chinese companies Evidence showed he traveled extensively throughout China to market the stolen information and he paid current and former Dow employees for Dowrsquos CPE-related information

Liursquos prosecution which has received worldwide attention illustrates how a well-placed and motivated insider can scheme to obtain key company IP and then shop those secrets to the highest bidder

The stiff sentence Liu received not only demonstrates the seriousness of the offense but also creates an example for potential miscreants in the IP sector The threat of punishment is one of the best deterrents around But just as much taking steps to minimize the risk of employee IP theft and assisting with the prosecution of any theft will also serve to protect your companyrsquos IP

BEST PRACTICES TO DO NOW

In light of these developments companies should consider taking these steps

Assess the top threats to your IP with particular attention to insiders as potential IP thieves (this is not the same thing as treating employees as criminals)

Update your policies and procedures to minimize threats set out actions to take if threat becomes reality

Educate yourself ndashget to know the basic criminal IP laws that could apply to your company and get to know individuals at relevant law enforcement agencies If a crime takes place you will know whom to call

Regarding the last recommendation the federal government has had in place since the late 1990s several laws to punish economic espionage One of the most widely known is the Economic Espionage Act2 which criminalizes the misappropriation of trade secrets carried out with knowledge or intent to benefit a foreign power and the more general misappropriation of trade secrets that injure the trade secretrsquos owner As the distinction has blurred between multinationals and governments the most common trade secret theft and economic espionage cases have fallen into one or both of these scenarios

The US Department of Justice has put together terrific summaries of the myriad criminal IP laws showing which office within the federal government is responsible for enforcing andor interpreting a particular IP crime3

Finally educate your employees about your companyrsquos commitment to work with law enforcement to see such crimes prosecuted Use their eyes too It just might deter an IP crime

Based in San Francisco partner and former federal prosecutor Carolyn McNivenrsquos practice includes white collar criminal defense and related administrative regulatory and compliance matters for individuals and companies You may reach her at carolynmcnivendlapipercom

1 See wwwiprcentergovreportsIPR20Center20Threat20Report20and20Surveypdfview

2 18 USC sect 1831 et seq

3 See wwwjusticegovcriminalcybercrimeindexhtml and wwwiprcentergovreportsReporting20Allegations20of20Intellectual20Property20Theft20Brochurepdfview

In November 2011 the US National Intellectual Property Rights Coordination Center released its assessment of threats to United States IP and in January 2012 a scientist was sentenced to five years in prison for stealing IP from his longtime employer and then lying about the theft under oath

These developments illustrate not only that IP violations can be crimes but also that US law enforcement agencies are ready willing and able to send people to jail for IP crimes

This article discusses those developments and sets out three simple steps that IP and tech businesses can take to maximize the possibility that if they are ever victims of an IP crime the crime will be prosecuted successfully to the fullest extent of the law

08 | Intellectual Property and Technology News ndash United States


OUT WITH THE OLDhellip

In his now famous 1970 opinion in Georgia-Pacific v US Plywood Corp Judge Charles Tenney of the Southern District of New York instructed triers of fact to consider 15 admittedly malleable factors when setting a reasonable royalty rate in patent cases Only one factor asked juries to value the patentrsquos contribution over prior art And Judge Tenney was not the first to require that juries consider a hypothetical negotiation Decades earlier decisions had relied on estimates of hypothetical negotiations between parties to help value an invention1

Now combine the fiction of a hypothetical negotiation with the Georgia-Pacific factors and fast forward 37 years In 2007 Federal Circuit then-Chief Judge Paul Michel said during the first Lucent appeal ldquoThere still seems to be massive unclarity about how reasonable royalty damages are to be calculatedrdquo

Indeed there was Since Georgia-Pacific damages experts had been manipulating the 15 factors to arrive at wildly different opinions on royalty damages and their imaginary ldquohypothetical negotiationsrdquo had led to outlandish damages awards

IN WITH THE NEWhellip

Today courts already are replacing Georgia-Pacific Recent decisions have demanded real-world economic analysis of the impact the patented invention has on the market thus giving greater importance to Judge Tenneyrsquos factor nine ndash sound economic proof We thus observe three trends in patent damages jurisprudence since Cornell v HP

First courts now require economic proof of the value of an inventionrsquos improvement over prior art Courts recognize that damages should not depend on the scope of the claims in any particular patent and careful claim drafting should not enhance a patentrsquos value A proper damages analysis must therefore focus on what the invention adds to prior art

Second courts require economic proof of demand for the benefits of the patented feature This not only impacts whether the entire market value rule will apply but also how the value of the patented feature is apportioned against the value of other components

Third traditional rules of thumb such as ldquothe 25 rulerdquo are a thing of the past Courts now require economic evidence to support an apportionment of the royalty base and a reasonable royalty rate

By Sean Cunningham and Erin Gibson

In the seminal 2009 decision Cornell v Hewlett-Packard Federal Circuit Chief Judge Randall Rader sitting by designation clarified the entire market value rule doctrine Since then several Federal Circuit opinions have further refined the types of evidence required to prove patent damages The next target for refinement is likely Georgia-Pacific

This remodeling of patent damages calls for a different kind of damages trial

CRAIG OPPERMAN BRINGS LEADING IP ASSET MANAGEMENT PRACTICE TO OUR SILICON VALLEY OFFICE

As part of our commitment to expand

the depth and visibility of what is already

a nationally and internationally recognized

technology practice we are pleased to

announce that Craig P Opperman and

four other partners from Reed Smith

recently joined our Silicon Valley office

Craig focuses on intellectual property

as a corporate asset Intellectual Asset

magazine recognizes him as one of the

ldquoWorldrsquos Leading 250 IP Strategistsrdquo

Craig brings more than 25 years of legal

international corporate-executive and

engineering experience to his intellectual

property practice He has represented

patent portfolios that have generated

nearly US$200 million for their owners

Craig served as Chief IP Officer of

OpenTV and its controlling shareholder

Dutch-based MIH During his career

Craig has represented clients in industries

including social media clean tech

software e-commerce interactive TV

pay TV conditional access digital health

medical devices and semi-conductor

devices and manufacturing

Craig moved to Silicon Valley from

South Africa in 1991 He is a Stanford

Business School (SEP) alumnus holds

law and engineering degrees from the

Universities of South Africa and Cape

Town respectively and is a graduate of the

South African Naval Academy Fluent in

Afrikaans and English Craig

is admitted to practice

before the USPTO

and the South African

Patent Office

A NEW KIND OF TRIAL

The new patent damages trial involves lawyers and experts doing more homework than they did five or ten years ago This homework may be more expensive involving more customer surveying and fact witness testimony But the added expense is more than justified for a defendant who can get a 10X reduction in a damages award or a patentee who can avoid having its damages case thrown out on a Daubert challenge before trial

When the homework is done right damages experts should be able to answer these and other questions on the stand

How important and valuable to the overall product is the technological advance represented by the patent

Are there patents on other features of the product and if so what is the value of those patents

What alternatives exist in the art for implementing the advance Can consumers distinguish between the patented advance and those alternatives What is the comparable value of these alternatives

What did it cost to procure the part that embodies the patented advance What does it cost to implement the advance Do competitors pay about the same to implement similar advances or alternatives

At the time the advance was introduced what actually happened in the market Did it fluctuate in response to the advance Did the advance impact sales price

What do customers say about why they buy the product that contains the patented advance Has a regression analysis been performed to isolate the impact of the advance from other features

We see the last behavior all the time in real estate Realtors estimate the effect on market demand for a house with certain improvements such as granite countertops a remodeled bathroom or better landscaping A patent expert can similarly value actual market impact of a patented advance rather than relying on the fiction of hypothetical negotiation

A NEW BREED OF EXPERT

Traditional economists may not be the best witnesses to answer the questions above With focus shifting to real-world market impact trial experts are likely to include industry-facing technical marketing professionals such as the employees in your company charged with valuing the market and product features as part of their daily job

This new hybrid factexpert witness can provide real-world valuation of a patented advance based on actual market effects A traditional economist would then rely on this testimony to crunch the royalty numbers But having the perspective of witnesses immersed in the industry could be critical to proving up reliable admissible evidence of damages ndash or the lack thereof

The authors were fortunate to be involved in Cornell v Hewlett-Packard

Sean Cunningham a partner in DLA Piperrsquos Patent Litigation group handles patent cases through trial in district courts and in the ITC He is based in San Diego and may be reached at seancunninghamdlapipercom

Based in San Diego Erin Gibson is a partner in DLA Piperrsquos Patent Litigation group focusing on patent litigation and ITC proceedings You may reach her at eringibsondlapipercom

1 See eg Reynolds Spring Co v LA Young Indus Inc 101 F2d 257 261-62 (6th Cir 1939) Merrell Soule Co v Powdered Milk Co 7 F2d 297 300 (2d Cir 1925)

Craig OppermanPartner

By John Guaragna


Over the past several years the proliferation of multi-defendant patent cases has become a topic of significant commentary and great debate A single plaintiff often with no connection to the inventors other than having purchased the patent could assert patents against numerous unrelated companies in a single lawsuit in a venue of its choosing In examining whether the joinder of unrelated defendants was proper in patent cases courts had been looking to the permissive joinder requirements of Rule 20 of the Federal Rules of Civil Procedure focusing on the second element ndash whether common questions of law or fact would arise in the action

BENI SURPIN JOINS DLA PIPERrsquoS TECHNOLOGY SOURCING AND COMMERCIAL GROUP IN SAN DIEGO

DLA Piper recently welcomed new IPT

partner Beni Surpin to its expanding

San Diego office Beni previously led the

Intellectual Property Technology and

Commercial Transactions group and the

China IP team at Sheppard Mullin

Beni focuses his practice on counseling

international and domestic companies

in the wireless telecom health care

medical devices life sciences aviation

automotive and high-tech industries

on legal and business issues relating to

intellectual property technology and

commercial transactions He works

closely with his clients to create and

set a strategic direction and then to

structure and negotiate arrangements

that implement these goals

Benirsquos experience in domestic and

international technology and commercial

transactions covers a broad spectrum of

agreements and structures Among these

are licenses outsourcing manufacturing

supply distribution services clinical

collaboration research and development

(via both private and public funding

sources) technology acquisitions and

formation of joint ventures and other

strategic partnerships and alliances He

also assists private and public companies

in protecting exploiting and transferring

their intellectual property portfolios and

in settling IP disputes and litigation in a

way that allows them to optimize

their assets

Fluent in Portuguese

Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

The recently enacted America Invents Act (AIA) contains specific requirements for joining defendants in a single patent case In particular the AIA no longer permits joinder where common questions of law will arise in the action ndash instead only common fact questions are analyzed The AIA also explicitly prohibits joinder based solely on allegations that the defendants infringe the same patent

Recent case filing activity suggests these changes are having a profound impact In the days leading up to enactment we saw a torrent of multi-defendant patent cases in several popular jurisdictions suggesting patent plaintiffs saw real benefit in being able to sue multiple defendants in a single action In particular in the week leading up to passage of the AIA there were 140 patent cases filed nationwide with 1250 defendants However in the week following passage of the AIA there were 75 patent cases filed with only 95 defendants This data suggests the AIA is having its intended impact ndash single patent lawsuits against multiple unrelated defendants are decreasing

CONSEQUENCES OF THE NEW AIA JOINDER PROVISIONS

In addition to the dramatic impact on the composition of patent cases we can anticipate several additional consequences as a result of the AIA

More cases at least in the short term Plaintiffs intending to file new cases against many targets are now filing them separately In the short term this will mean more filing fees and more cases But will the potential higher cost and complications of multiple suits on the same patent chill patent assertion in the long run Time will tell

More jurisdictions affected Because venue may not be appropriate or convenient against single defendants in popular venues plaintiffs likely will file more suits in venues where defendants are incorporated or have operations This should spread cases more broadly throughout the US

More transfer activity Before the AIA prospects for severing a defendant and transferring to a more convenient venue were pretty dim thus many defendants chose not to seek transfer With more single-defendant cases transfers to more convenient jurisdictions should increase

More reliance on FRCP 42 for pretrial consolidation Even though the AIA will lead to fewer multi-defendant cases plaintiffs may reach similar results through

consolidation under Rule 42 of the Federal Rules of Civil Procedure The presence of numerous cases in the same district on the same patent may provide a judicial economy argument perhaps weakening the AIA

More activity through the Judicial Panel on Multi-District Litigation If more cases on the same patent spread through numerous jurisdictions multi-district litigation will increase Although the cases ultimately will be sent back to the jurisdiction of filing pretrial discovery and claim construction activity can be handled by a single judge helping to alleviate inconsistent results and inefficiency

More lawsuits against ldquostandardizedrdquo products With the AIArsquos provision for common facts we likely will see a stronger focus on cases against ldquostandardizedrdquo products Plaintiffs will look for similarities among accused products as a hook to join unrelated defendants industry standards may provide the most straightforward solution

More complicated joint defense activity Sometimes having the issues before the same judge on the same schedule in the same court made coordination among defendants quite simple and promoted a comprehensive efficient defense Spreading related cases across more judges and locales will bring new challenges to a joint defense

Additional defense costs Given the flurry of filing activity before the AIArsquos enactment it appears clear that plaintiffs viewed multi-defendant cases as more efficient and less costly than numerous single defendant cases Because the AIA increases complications for defendants in coordinating a joint defense and likely will increase motion practice in the areas of convenience transfer and multi-district litigation the overall costs for defending patent cases may grow in the short term However in the long run the potential for decreased overall patent filings of the nuisance value variety may ultimately decrease patent litigation activity and therefore total defense costs When will we know Not for a few years

It will take some time for us to be able to fully analyze the impact of the AIA on multi-defendant patent cases However one thing is clear the AIA is already having quite an impact

John Guaragna an Austin-based partner in DLA Piperrsquos Patent Litigation practice has represented clients in district courts throughout the US as well as in the ITC Reach him at johnguaragnadlapipercom


STRATEGIC FACT

During calendar year 2011 the most popular US districts for patent cases were

608

484

335

277

232

189

162

93

85

84

Eastern District of Texas

District of Delaware

Central District of California

Northern District of California

Northern District of Illinois

District of New Jersey

Southern District of New York

District of Massachusetts

District of Minnesota

Southern District of California

Source LegalMetric (used with permission)

AROUND THE WORLD AND INTO THE FUTURE

As your business reaches further across the globe DLA Piper is there Now with offices in Mexico and across Australia we continue to

strategically expand our presence in key markets around the world seeking new ways to meet your legal needs wherever you do business

Today and tomorrow at home and around the world DLA Piper is your trusted advisor

wwwdlapipercomemsp |emsp DLAemspPiperemspLLPemsp(US)

It is an honor and a pleasure to have the opportunity to participate in the publication of DLA Piperrsquos IPT News As we move into 2012 it is clear that IP issues are front and center on the international stage I agree with President Obamarsquos comments when he signed the recent patent reform bill into law ldquowe have to do everything we can to encourage the entrepreneurial spirit wherever we find itrdquo Nowhere was that entrepreneurial spirit more vibrant than in the life and work of the late great Steve Jobs Reflecting on his legacy I am reminded that it is our collective privilege to be on the front lines in promoting innovation protecting intellectual property and encouraging that cherished entrepreneurial spirit Mr Jobs embodied so completely His legacy lives on particularly in the IP community where we focus each day on cutting-edge ideas technology and issues ndash including several we address this quarter

Our cover article deals with recent developments in the often underreported world of IP crimes Carolyn McNiven a former federal prosecutor discusses recent developments and best practices in dealing with IP crimes Criminals beware This issue also features an article from Sean Cunningham and Erin Gibson exploring the new landscape in patent damages law In addition our franchise colleagues explore hot topics in franchise law Finally this issue includes my own observations on how the America Invents Actrsquos joinder provision is impacting patent litigation

I look forward to hearing any feedback or comments you have that can help us bring you a publication tailored to your interests

johnguaragnadlapipercom

EDITORrsquoS COLUMN

John M GuaragnaPartner Patent Litigation

IP ROCKSFEDERAL CIRCUIT CHIEF JUDGE RADER AND BAND DENOVO ROCK THE SAN DIEGO HOUSE OF BLUES

The award-winning Intellectual Property and Technology News is now published in the United States Asia Pacific and EMEA regions Find all current and past editions of the IPT News here wwwdlapipercomipt_news

The Honorable Randall R Rader brought his classic rock band DeNovo to San Diego to headline the IP Rocks SD concert at the House of Blues on January 19 The event kicked off the second annual University of San Diego School of Law Patent Law Conference

DLA Piper was pleased to help organize the event as a lead sponsor More than 300 lawyers judges professors and professionals gathered at the House of Blues for this memorable evening

Opening bands from Qualcomm and NuVasive warmed up the crowd Then following DeNovo band member Jon Knightrsquos tongue-in-cheek proclamation ldquoAll Riserdquo Chief Judge Rader ran onto the stage wearing shades and grabbed the lead microphone He captivated the crowd as he belted out familiar tunes by Neil Young The Rolling Stones and other rock legends proving that IP does indeed rock

For more photos of this event please see wwwdlapipercomip_rocks

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You are receiving this communication because you are a valued client former client or friend of DLA Piper The information contained in this newsletter is for informational purposes only and should not be construed as legal advice on any matter To unsubscribe from this mailing list send an email to communicationsdlapipercom or send your written request to DLA Piper Attention Marketing Department 401 B Street Suite 1700 San Diego California 92101-4297 USA Copyright copy 2012 DLA Piper llp (us) DLA Piper uk llp and other affiliated entities For questions comments and suggestions email us at IPTnewsdlapipercom or contact Diane Vislisel Senior Practice and Industry Marketing Manager T +1 619 699 3541 dianevisliseldlapipercom US Chair ndash Intellectual Property and Technology John Allcock T +1 619 699 2828 johnallcockdlapipercom Editor in Chief John M Guaragna T +1 512 457 7125 johnguaragnadlapipercomDirector Intellectual Property and Technology Licia E Vaughn T +1 619 699 2997 liciavaughndlapipercomDLA Piper llp (us) 401 B Street Suite 1700 San Diego California 92101-4297 USA







AN IP EXPLOSION
























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A NEW KIND OF TRIAL


















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bull1 bull2 bull3







































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IP practice Henry

Koda the manager of



former colleagues














STEALING FROM DOW







































































before the USPTO


Patent Office

A NEW KIND OF TRIAL


















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84






































bull1 bull2 bull3







































Exchange company











IP practice Henry

Koda the manager of



former colleagues














STEALING FROM DOW







































































before the USPTO


Patent Office

A NEW KIND OF TRIAL


















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84





















































Exchange company











IP practice Henry

Koda the manager of



former colleagues














STEALING FROM DOW







































































before the USPTO


Patent Office

A NEW KIND OF TRIAL


















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84





























STEALING FROM DOW







































































before the USPTO


Patent Office

A NEW KIND OF TRIAL


















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84



































































before the USPTO


Patent Office

A NEW KIND OF TRIAL


















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84

















By John Guaragna






































their assets


Hebrew and French

Beni has resided in

Brazil Israel and

the UK

Beni SurpinPartner

















STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84

































STRATEGIC FACT


608

484

335

277

232

189

162

93

85

84

















commit an ip crime do the time - dla piper

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