Enhancing the Value of our Clients’ IP Rights Mayer, Brown, Rowe & Maw LLP continues its leadership in the protection and expansion of our clients’ intellectual property rights. Over the last few years, our attorneys won significant rulings from numerous courts—domestically and internationally—that successfully expanded our clients’ rights. www.ipcounsel.com Enhancing the Value of our Clients’ IP Rights All innovative companies recog- 2 Redefining Market Power for Patents nize the vital interest they have in protecting their intellectual prop- 3 It’s Not Obvious erty (“IP”). Intellectual property 4 And the Band Played On holders must protect their rights from infringers who attack their 5 Copyrights in the Digital Age innovations. These attacks can come from a range of third parties, 6 A Model Citizen including competitors, and often 7 What Constitutes Doing Business? present a serious challenge to the business operations of an innova- 8 Windows of Opportunity Slammed Shut tor. At Mayer, Brown, Rowe & Maw LLP we are proud of our 9 Score! record of achievements in protect- 10 Winning on the German “Fast-Track” ing, defending, exploiting, and expanding the IP rights of our 11 Global Competition clients, in litigation, both domesti- cally and internationally. Each of 12 Forever Young our clients has its own unique suc- 13 Snatching Victory from the Jaws of Defeat cess story. We hope you will enjoy the select few we showcase herein. 14 Exaggerated Self-Image? Redefining Market Power for Patents In the most important Supreme Court case in years involving lower courts and by the U.S. antitrust enforcement agencies, the intersection of antitrust and intellectual property, Mayer, and subjected to virtually unanimous scholarly criticism. Brown, Rowe & Maw LLP won a historic victory for all intellectual property owners seeking to enforce their patents. Holding that these cases were no longer good law, and that In Illinois Tool Works Inc. v. Independent Ink, Inc., 126 S. Ct. Independent Ink had failed to demonstrate the existence of 1281 (2006) the Court held unanimously that the existence of any relevant market, let alone some degree of power in such a patent on the tying product does not trigger a presumption a market, the district court granted summary judgment to of market power necessary for antitrust liability. ITW. The U.S. Court of Appeals for the Federal Circuit affirmed the dismissal, in part, and reversed it in part, hold- Illinois Tool Works Inc. (“ITW”) holds a patent on the ing that the old, but not yet overruled, Supreme Court prece- piezoelectric printheads that its Trident division sells to dent mandated a presumption that Trident held market power OEMs, which build the printheads into packaging assembly in a tying product market defined by its printhead patent. The lines. The licenses to the OEMs require them (but not their Federal Circuit’s remand order would have required ITW to customers) to obtain the ink used with the printheads exclu- prove, through costly and exhaustive economic expert evi- sively from Trident. Independent Ink sought to take advan- dence, that it lacked market power. The Federal Circuit rec- tage of the installed base of Trident’s end customers by sell- ognized that the presumption had been the subject of severe ing replacement ink for use in Trident’s bottles. After criticism, but held that it was bound to follow the precedent. Trident enforced its patent rights, Independent Ink claimed that the OEM licenses constituted an improper tying agree- Mayer, Brown, Rowe & Maw partners Andy Pincus (for- ment in violation of antitrust laws. merly General Counsel of the U.S. Department of Commerce), and Chris Kelly (formerly Senior Counsel for A key element of an antitrust tying claim is market power in Intellectual Property at the U.S. Department of Justice, the market for the “tying” good, in this case the relevant mar- Antitrust Division), successfully persuaded the Court to ket in which Trident’s printhead competes. Absent market review, and then abandon in an 8–0 decision, its decades-old power, the defendant is not able to force its customers to precedents imposing the presumption. Recognizing that “a accept the tie, and the bundling of the products does not pres- patent does not necessarily confer market power upon the ent antitrust concerns. Some older Supreme Court cases held patentee,” the Court held that “in all cases involving a tying that when the tying product is protected by an intellectual arrangement, the plaintiff must prove that the defendant has property right, the requisite market power is presumed. More market power in the tying product.” The result was a signif- recently, the presumption has been rejected by a number of icant victory for all patent holders. 2 Mayer, Brown, Rowe & Maw LLP It’s Not Obvious In Knoll Pharmaceutical Co., Inc. v. Teva Pharmaceuticals In the litigation, Knoll offered this evidence of unexpected ben- USA, Inc., 367 F. 3d 1381 (Fed. Cir. 2004), the Federal efits to rebut the “obviousness” challenge to the patent. The Circuit held that a patent owner can rebut an “obviousness” trial court refused to consider the evidence. As a result, the trial challenge by using evidence of unexpected benefits discov- court ignored Knoll’s new data showing unexpected benefits ered after the patent had issued. The patent issued covered a and held that the patent was invalid on “obviousness” grounds. combination of hydrocodone (a narcotic) and ibuprofen (a non-steroidal anti-inflammatory drug or “NSAID”). On appeal, Knoll argued that the trial court erred in excluding the new evidence of unexpected benefits. To support the A series of clinical trials were sponsored to demonstrate the claim, Knoll stressed that several of the other accepted ways safety and efficacy of the hydrocodone-ibuprofen combina- to show non-obviousness (such as commercial success) relied tion specified by the patent. A generic drug company filed an on evidence obtained after the patent had issued. Therefore, Abbreviated New Drug Application (“ANDA”) to obtain by the same logic, the new evidence of unexpected benefits FDA approval to market a generic version. Pursuant to the should also be considered. Hatch-Waxman Act (the federal statute governing generic versions of patented drugs), the generic company asserted in The Federal Circuit agreed. In endorsing Knoll’s use of the its ANDA that our client’s patent was invalid on “obvious- new data, the Court held that a patentee could conduct new ness” grounds. Therefore, Knoll sued the generic company tests after the patent had issued to demonstrate the unique for patent infringement and the generic company counter- properties of the claimed invention. In so doing, the Court claimed that Knoll’s patented combination was “obvious” emphasized that the “full range” of an invention is not always because others had created similar combinations at the time understood at the time a patent application is filed. On this the patent application was filed. basis, the Federal Circuit reversed the trial court’s decision holding the patent to be invalid. In response to the “obviousness” challenge, Knoll sponsored several studies at three of the nation’s most prestigious med- Mayer, Brown, Rowe & Maw lawyer James Ferguson of our ical research institutions. Each of the studies independently Chicago office was lead counsel and successfully argued concluded that when the patented drug combination was this case on behalf of our client, Knoll Pharmaceuticals Co. administered in ratios specified in the patent, there is an unex- pectedly synergistic beneficial effect greater than the sum of the analgesic ingredients of the patented drug combination. Enhancing the Value of our Clients’ IP Rights 3 And the Band Played On In the area of copyright law, Mayer, Brown, Rowe & Maw competition, and (3) Naxos’ restorations, which upgraded the obtained an important victory on behalf of our client, Capitol sound of the original recordings, were “new products.” Records, enabling owners of classic sound recordings to obtain protection for pre-1972 works not protected under federal law. On appeal, the New York Court of Appeals (the highest court The New York State Court of Appeals’ decision in Capitol in New York State) recognized that New York law was unclear Records v. Naxos has broad significance to the recording on the scope of protection afforded sound recordings and, there- industry because it firmly establishes state common-law copy- fore, certified the question whether “Naxos [is] entitled to defeat right protection for pre-1972 sound recordings, which are not Capitol’s claim for infringement of common law copyrights in protected by the federal copyright statute. Under this decision, the original recordings.” the Court of Appeals clarified that pre-1972 recordings, includ- ing popular recordings by such artists as the Beatles, will be In a broad opinion, the Court of Appeals held that (1) “New protected by New York common-law copyright until state law York law provides common-law copyright protection to sound is preempted by federal law in 2067. recordings not covered by the federal copyright act, regard- less of the public domain status in the country of origin, if the The dispute was over Naxos’ “restored” versions of several alleged act of infringement occurred in New York”; (2) “fraud historical classical musical performances, the rights to which or bad faith is not an element of an infringement action in are owned by Capitol. Naxos had obtained the original shellac modern New York law”; and (3) “even assuming that Naxos recordings of these performances and, after attempting to had created a ‘new product’ due to its remastering efforts that upgrade the sound quality, sold CD versions of the recordings enhance sound quality, that product can be deemed to infringe in competition with Capitol’s own restorations.