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INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS Perspectives • Analysis • Visionary Ideas

YOUR PATENT PORTFOLIO HOW MUCH IS IT WORTH AND WHAT ARE YOU GOING TO DO ABOUT IT? AN INTERVIEW WITH THE HONORABLE ARTHUR J. GAJARSA SENIOR JUDGE OF THE US COURT OF APPEALS FOR THE FEDERAL CIRCUIT UNCERTAIN FUTURE: PATENTABILITY OF GENE-BASED INVENTIONS IN THE US WILL 2012 BE THE YEAR WE SEE ENTERPRISE-GRADE CLOUD DEALS?

www.dlapiper.com/ip_global | Issue 14, Q2 2012

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How tech startups can protect IP – a Bloomberg interview with Mark Radcliffe

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Australia reforms privacy law – new legislation to be presented to Parliament

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FTC issues final privacy report – sets forth best practices, calls for legislation

We hope this blog will become a practical resource for your business. technologyslegaledge.com

EDITOR’S COLUMN Our last issue of IPT News included an article from me on likely consequences of the America Invents Act’s new joinder provisions. Well, we didn’t have to wait very long for the Federal Circuit to weigh in. On May 4, in In re EMC Corp., it granted, in part, a writ of mandamus arising out of the denial of a motion to sever and transfer unrelated defendants.*

John M. Guaragna Partner, Patent Litigation

The EMC decision is interesting for several reasons. First, it addresses the appropriate test for joinder of unrelated defendants in patent cases filed before the Act took effect – significant because so many multi-defendant cases were filed on the eve of the Act. The Federal Circuit rejected the lower court’s “not dramatically different” test, explaining joinder was not appropriate when “different products or processes were involved.” And, even when the “same” products were at issue, there must be “shared, overlapping facts” to satisfy the “same transaction” analysis. Second, the Federal Circuit noted that where joinder was inappropriate, the court could still sever and consolidate unrelated defendants for pretrial matters. This could result in a distinction without much difference from a single multi-defendant case, except each severed defendant would have a separate trial. Third, the Federal Circuit explained that multi-district litigation (MDL) could resolve efficiency and consistency concerns. I expect to see this language cited frequently as MDL becomes even more prominent in the patent case landscape. This quarter we address several other timely topics. Our cover story by Craig Opperman explains the importance of patent valuation. In addition, we are pleased to share with you Aaron Fountain’s interview with the Honorable Arthur J. Gajarsa. As always, we look forward to your feedback. How may we tailor IPT News to your interests?

[email protected]

* In re EMC Corp., ___F.3d ___, 2012 WL 1563920 (Fed. Cir. May 4, 2012).

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: www.dlapiper.com/ipt_news.

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 [email protected] or send your written request to: DLA Piper, Attention: Marketing Department, 401 B Street, Suite 1700, San Diego, California 92101-4297, USA. Copyright © 2012 DLA Piper llp (us), DLA Piper uk llp and other affiliated entities. For questions, comments and suggestions, email us at [email protected] or contact Diane Vislisel, Senior Practice and Industry Marketing Manager, T +1 619 699 3541, [email protected]. US Chair – Intellectual Property and Technology, John Allcock: T +1 619 699 2828, [email protected]. Editor in Chief, John M. Guaragna: T +1 512 457 7125, [email protected]. Director, Intellectual Property and Technology, Licia E. Vaughn: T +1 619 699 2997, [email protected]. DLA Piper llp (us) , 401 B Street, Suite 1700, San Diego, California 92101-4297, USA.

IP INDUSTRIES SPUR US ECONOMY IP-related industries support at least 40 million jobs and contribute more than US$5 trillion of the US gross domestic product – that is, about 35 percent of the GDP.1 A new report from the US Commerce Department observes that the most IP-intensive industries include semiconductors and other electronic components, pharmaceutical products, computer and peripheral equipment, medical devices, audio and video equipment, and newspaper and book publishing.2 The report states that merchandise exports by IP-intensive industries totaled US$775 billion in 2010 – more than 60 percent of total US merchandise exports.3 In a related press release,4 Deputy Commerce Secretary Rebecca Blank said, “Strong intellectual property protections encourage our businesses to pursue the next great idea, which is vital to maintaining America’s competitive edge.” USPTO Director David Kappos added, “Every job in some way produces, supplies, consumes, or relies on innovation, creativity, and commercial distinctiveness; America needs to continue investing in a high quality and appropriately balanced intellectual property system that will promote innovative, open, and competitive markets while helping to ensure that the US private sector remains America’s innovation engine.” For the full report, go to www.uspto.gov/news/ publications/IP_Report_ March_2012.pdf.

1. Dep’t of Comm., Intellectual Property and the U.S. Economy: Industries in Focus, Executive Summary, pp. v. - viii., available at www.uspto.gov/news/publications/IP_Report_March_2012.pdf. 2. Id. 3. Id. 4. Press Release, Dep’t of Commerce, www.uspto.gov/news/pr/2012/12-25.jsp (Apr. 11, 2012).

HISTORIC IP CONFERENCE IN BEIJING As I write this, I sit in Shanghai, after three days at the United StatesChina Intellectual Property Adjudication Conference in Beijing. A truly historic event, the conference drew more than 1,000 people from the IP John Allcock field. The highest Partner ranking US judges Global Co-Chair and responsible for IP US Chair, Intellectual Property and Technology adjudication, including Federal Circuit Chief Judge Randall Rader and a number of his colleagues, appeared on many panels to discuss each country’s approach to IP adjudication. DLA Piper lawyers, from Washington, DC to Hong Kong and Shanghai, attended. Most impressive was an en banc panel including seven judges from the US Federal Circuit and seven judges from China’s IPR Tribunal of the Supreme People’s Court. Lawyers from both countries discussed all aspects of IP law, including critical issues of IP rights enforcement in China. I was fortunate to be on a panel on enforcement of patent judgments, and learned much from my Chinese co-moderator, as I hope he learned from me. Impressive and enlightening, the conference highlighted for me what has been happening in China over the last few years. Most notably, one message that came through loud and clear is that innovation cannot happen without strong IP protection. We at DLA Piper have been helping clients in both China and the US to build strong intellectual property rights and to enforce and defend them. We look forward to continuing to do so.

[email protected] www.dlapiper.com/ip_global | 03

by Mark O’Conor and Ed Corry Recent press coverage will have you believe that this is the case. Many of the blockers to the enterprise-grade uptake of cloud computing have related to FUD (fear, uncertainty and doubt) and the perceived lack of relevance for customers in regulated sectors (such as pharma, financial services or the public sector). As we have seen however, cloud vendors have been turning their attention to specific regulated sectors (for example, the Salesforce offering last year, which was compliant with HIPAA) and now it would seem that financial services organizations are moving from initial “toes in the water” (virtualization and limited, low-grade cloud solutions) to more serious adoption. The newswire was recently buzzing with the news that Spanish bank BBVA will replace its current corporate Intranet with the full suite of Google applications, including email and calendars. Some 110,000 employees will be able to work jointly on internal memos and contracts using Google Docs, and will have their own BBVA social network, also housed on Google servers. Tech Europe (January 11) estimates this deal to be worth €4.4 million per year (significantly more than the apocryphal typical cloud deal size, thought currently to be in the region of only £250,000), based on a seat price of €40. It is still interesting to read that the fears, whether real or perceived, persist, so much

so that BBVA’s director of innovation, Carmen Herranz, stressed (as reported by the BBC on 11 January 2012) that all customer data and other key banking systems would “stay in our own data centres” and be completely separate from the cloud solution. This need to head off likely criticism illustrates the continuing concerns regarding security and location of data. So could this be the start of a trend? Or is this not really as newsworthy as it seems? Will banks or other regulated entities really ever put themselves in a position where anything other than peripheral (perhaps communication) systems are in the cloud? It seems unlikely that a banking platform (for example) would be cloud based in the truest sense of the word. Certainly 2012 will see another shift in gears as cloud goes further mainstream. The European Commission’s recent Public Consultation Report, published on 5 December 2011 by DG Information Society and Media, thinks so. The report concludes that the existing confusion (as to rights, responsibilities, data protection and liability, model terms and service levels) could be resolved (in whole or part) by the public sector. Key to this resolution would be certainty regarding security standards, interoperability and data portability, thus stimulating rapid deployment. At a national level, the rapidity of deployment is debatable, but nonetheless the first OJEU process

04 | Intellectual Property and Technology News – United States

for cloud services in the UK public sector continues. The call to market closed recently with 500+ responses and the Cabinet Office in the UK is now faced with the task of assuring some 1,300 individual service offerings. The framework was due to commence by the end of January 2012. It will be interesting to see the extent to which the public sector embraces this new framework, pushing the adoption of cloud in the UK (in a regulated sector) and thereby encouraging the financial services sector and other regulated industries to follow suit. A key determinant will be the terms and conditions on which cloud vendors are willing to sell, and regulated customers are willing to buy. The delta between these two camps still remains the battleground, and unlocking this issue will be the only way to truly allow cloud computing to spread.

Mark O’Conor is a partner in DLA Piper’s IPT group, based in London. He advises in all aspects of technology and sourcing, particularly in cloud computing. Reach him at [email protected]. Ed Corry is a Solicitor in DLA Piper’s IPT group, based in London. Reach him at [email protected]. This article originally appeared in the EMEA edition of Intellectual Property and Technology News, Q1 2012.

O O PR N BO

FAIR TREATMENT, ABORIGINAL RIGHTS FOR NATIVE AMERICANS Rich de Bodo has for many years been extensively involved in pro bono service on behalf of Native Americans. Rich led the team representing the Native American Rights Fund (NARF) in Cobell v. Salazar, a class action against the federal government aiming to remedy the historic mismanagement of Indian trust account funds. The case resulted in a precedent-setting US$3.2 billion settlement. Rich and the Cobell team fought to ensure that NARF, which devoted thousands of hours to the case over 15 years, would receive a fair award of lawyer’s fees and costs. Rich also served as lead counsel in Native Village of Eyak, et. al. v. Locke (co-counseling with NARF and Alaska Legal Services), in which five Native villages in south-central Alaska sought to establish their aboriginal fishing and hunting rights on the Outer Continental Shelf, entitling them to take part in commercial fisheries supervised by the US Secretary of Commerce. Rich has worked on this case since 2004. In 2008, he first-chaired the two-week trial in Anchorage, which examined whether the villagers’ Chugach Native ancestors were fishing and hunting beyond the three-mile line when Western explorers entered Alaska in the 1700s. In 2011, the case was heard en banc by an 11-judge panel of the US Court of Appeals for the Ninth Circuit. Rich worked extensively to help NARF prepare for argument and file its post-argument submissions to the court. A result is expected soon.

Richard de Bodo Co-Chair, Patent Litigation

A LEGAL MANUAL FOR NAMIBIA

For many years, Patent Litigation par tner Andrew Valentine has actively performed pro bono work in his community. In 2011, Andrew took his service to Africa, working through DLA Piper’s international pro bono arm, New Perimeter, to lead the Namibia Access to Justice Project. Andrew notes, “The Project’s goal was to create a legal manual and training materials for Namibia’s volunteer paralegal workforce – who, in a country with few attorneys, are the people providing most of Namibia’s legal advice.”

Working closely with the Namibia Paralegal Association and a group of DLA Piper lawyers and staff, the par ticipants in the Project outlined, wrote and published the Namibia Access to Justice Paralegal Manual, a compendium of essential information about Namibian citizenship, its cour ts, its constitution and substantive law, as well as advice on practical skills. Last spring, Andrew visited the Republic of Namibia, traveling throughout the country to meet with Namibian legal volunteers and learn first-hand how to improve the manual. This spring, Andrew returned to Namibia to present the manual at the Namibia Paralegal Association’s three-day annual general meeting.

L to R: Lucas Kasera (President, Namibia Paralegal Association), John Walters (Ombudsman of Namibia), Manfred Jacobs (Vice President, Namibia Paralegal Association), Andrew Valentine (DLA Piper – Silicon Valley)

Back home, Andrew continues his pro bono work in his local community, serving on the board of Community Legal Services in East Palo Alto (which he co-chaired for five years) and as a board member and secretary of Children’s Health Council. www.dlapiper.com/ip_global | 05

YOUR PATENT PORTFOLIO By Craig P. Opperman

HOW MUCH IS IT WORTH AND WHAT ARE YOU GOING TO DO ABOUT IT? In mid-April, the media was full of reports about AOL’s US$1.056 billion patent sale to Microsoft. The following week brought news that Microsoft had flipped 650 of those properties to Facebook. Next came news that Intel spent US$70 million buying patents from Aware. These transactions – coming on the heels of Nortel’s US$4.5 billion patent sale in mid-2011 – have certainly attracted significant media attention. Beyond the hype, however, the sales illustrate a fundamental shift in the way companies and investors view patents and has significant corporate governance implications.

FROM OBSCURE LEGAL INSTRUMENT TO VALUABLE ASSET

is US$ 2.1 million, then there are a lot of patents worth very little.

CORPORATE GOVERNANCE AND THE ACTIVIST SHAREHOLDER

There is no doubt the corporate executive spotlight has swung onto the monetary value of patent portfolios. No longer viewed as obscure, dust-gathering instruments, patents have vaulted into the corporate boardroom. Both transaction sizes and the per-patentproperty prices are making C-level executives and board members pay attention. Not surprisingly, everyone is talking about patent monetization, and we have seen an uptick in requests for assistance with such projects.

Herein lies the challenge: how do you determine what a patent is worth? In wine terms, how do you know whether you have a cellar of Two-Buck-Chucks or a cellar of fine Bordeaux? As with wine, setting values takes an expert. For patents, this means a professional valuation person working with someone who analyzes each patent’s claims onto a product in the market. Despite what some “valuation experts” say, this exercise cannot be done automatically. And, like it or not, the process is costly. Fortunately, once it is done properly, a business will know what its patents are worth, which to keep or sell and, for those it keeps, how each relates to its marketplace.

These questions are exceptionally important from a corporate governance (and investor/ activist shareholder) perspective. Clearly, one cannot expect to get paid a million dollars for a patent that is only worth 5 percent of that. Equally clearly, not all patents are worth a million dollars, or even $100,000, so one cannot expect to get paid Friendstersized prices. An only slightly less obvious conclusion is that if one has numerous low-value patents, it makes no sense to keep paying attorney and maintenance fees on them. Yet surprisingly many companies have piles of these low-value patents or, worse, cannot account for their individual assets’ value. Certainly, CFOs are going to be taking a long, hard look at existing assets and asking why they should be kept and not sold or abandoned.

This trend is raising important questions. What are patents worth and what drives that value? Importantly, what happens if executives think they have valuable patent properties and then discover they do not and what measures will they put in place to increase the odds of creating valuable patents? Finally, what effect will activist shareholders have? WHAT ARE PATENT PROPERTIES WORTH?

Patent assets that are not worth much cannot be monetized or add to shareholder value. So any discussion about monetization must start with a discussion about what the patents are worth. Unfortunately, patent prices – like those for art, wine or real estate – are all over the map, as shown in the chart here.

This chart tracks per-patent property price for recent publicly announced sales. Prices range from about US$130,000 per property to nearly ten times that. And these prices are for “valuable” patent portfolios. Equally enlightening is the calculated average US patent value of US$78,000.1 If this figure is correct and the high point per patent

Moto. Mob. Google

Nortel Apple et al

InterDigital Unsold

Kodak Valuation

AOL MSFT

MSFT Facebook

RealNetworks Intel

$500K

ADC HTC

$1,000K

Avistar Intellectual Vent.

$1,500K

Adaptix Acacia

$2,000K

WHAT THIS MEANS FOR PATENT PORTFOLIO MANAGEMENT

With such a wide range in values, it is inevitable that some CEOs will find their patent portfolios aren’t worth much or, at best, contain few valuable properties. I say | PRICE PER PATENT PROPERTY (2010 – 2012) | inevitable because companies have been on a patenting binge over the past two decades, yet studies show the underlying R&D protected by patent filings today is a fraction of what it was 15 years ago. Add to that the fact that today’s patent applications are put together in half the time they used be. There will be a lot of disappointed CEOs. Friendster Facebook

$2,500K

And as with so many things: buyers drive prices and strategic buyers pay a lot more than “financial” buyers. This is particularly well illustrated in the chart below. All the high prices were strategic buys (Facebook, AOL, Google); the low prices paid were by financial buyers (i.e., those wanting to license the patents).

How will CEOs react? Certainly, some will force their patent departments to move away from the “spray and pray” model of getting patents. Some will insist their patent portfolios be built with articulated value in mind, a seismic shift for the patenting process in most big companies today. Some CEOs may even ask their patent counsel to justify each patent property.

While CEOs and corporate boards are looking inward at patent portfolio management, they will simultaneously have to watch out carefully for activist shareholders. Some of the most recent patent property sales came after activist shareholders put pressure on company boards. As Intellectual Asset Management magazine’s blog has observed, ‘[T]his is an invitation for other investors in other companies to get interested in patents and how they are being used.’2 How much activist shareholder activity are we going to see in the patent field? Very likely a lot. This must become a major concern for C-level executives. They are the ones who will face the question “How much are my patents actually worth?” and they will have to deal with the fallout if a patent portfolio, long touted as being important, turns out to be worth very little. RISKY SITUATION

Disturbingly, few companies with large patent portfolios know the actual value of their assets – a risky situation indeed in this day and age. If your company owns an unvalued portfolio, it is time to stand up and take action.

Craig P. Opperman is a partner in DLA Piper’s Silicon Valley Office who focuses on designing, building and monetizing valuable patent assets. You may reach him at [email protected].

1. James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk 112 (2008). 2. See this post at http://bit.ly/HBjLWp.

www.dlapiper.com/ip_global | 07

UNCERTAIN FUTURE:

PATENTABILITY OF GENE-BASED INVENTIONS IN THE US Two recent US Supreme Court rulings have led to speculation that the patentability of gene-based inventions may become uncertain. By Siegmund Gutman and Jordan Kushner

First, in Mayo Collaborative Services v. Prometheus Laboratories,1 the Court held that certain medical inventions are non-patentable, calling into question the USPTO’s long-standing practice of recognizing the patentability of isolated gene and amino acid sequences and methods of their use. In light of Prometheus, the Court vacated the Federal Circuit’s judgment in Association for Molecular Pathology v. Myriad Genetics that had confirmed the patentability of Myriad’s isolated gene sequences and methods, remanding the case for further consideration. The Federal Circuit’s disposition of Myriad (and any subsequent Supreme Court appeal) could have a momentous impact on biotechnology patent rights and on the biotechnology industry. Myriad’s composition claims cover isolated genes associated with breast cancer (BRCA genes). The Association for Molecular Pathology (AMP) challenged these claims on the grounds that they cover products of nature. The Federal Circuit disagreed, confirming the patentability of the composition claims and, applying the “markedly different” test set forth in Diamond v. Chakrabarty, found isolated DNA is “markedly different” from DNA found in nature.

Myriad’s drug screening claim involves transforming cells with a cancer-causing BRCA gene and measuring the cells’ growth in the presence and absence of potential therapeutics. AMP challenged Myriad’s claims as being drawn to an abstract idea – the comparison of cellular growth rates; and preempts a law of nature – the correlation between a slower rate and the efficacy of a potential therapeutic. For this claim, the Federal Circuit applied the “machine or transformation” test set forth in Bilski, concluding Myriad’s drug screening method was patentable. The court found the claimed steps were sufficiently transformative, while holding that other claims relating to diagnosing predisposition to breast cancer failed the “machine or transformation” test and thus were non-patentable. Prometheus involves the patentability of claims drawn to methods of evaluating the dosing regimen of thiopurine by administering the drug, determining its metabolite levels in a patient’s bloodstream and comparing those to levels identified in the claims as too high and too low. The Supreme Court held that the claims are non-patentable, finding they were drawn to a law of nature – the naturally occurring correlation between metabolite levels and therapeutic efficacy. The Court concluded that any transformative steps in the claims

were insufficient to constitute a patentable application of that natural law, finding the “administration” step simply refers to the “relevant audience.” The “determining” step, the Court said, involves nothing more than “well-understood, routine, conventional” activities. The Court also reasoned that public policy weighed against granting patents for such subject matter, because laws of nature are “the basic tools of scientific and technological work” and patents for such laws would “inhibit future innovation.” On remand, the parties in Myriad will have diametric views regarding the applicability of Prometheus. AMP will interpret Prometheus broadly to mean all biotechnology claims are patentable only if there are differences between the claimed subject matter and underlying natural laws or phenomena that are not “well-understood, routine, or conventional.” Regarding Myriad’s composition claims, AMP will likely argue that even if the claimed isolated genes are “markedly different” from naturally occurring genes, the act of isolating those genes is routine. Myriad, in contrast, will likely argue that Prometheus is inapplicable to its product claims because Prometheus involved only method claims, and that application of the “markedly different” test confirms the patentability of those claims. Myriad will also likely argue that, even if Prometheus governs the patentability of its product claims, isolation of the BRCA gene would have been impossible without the work that led to the identification of the gene sequence and its association with breast cancer – work which was not routine or conventional. Regarding Myriad’s drug screening method claim, AMP will likely argue that the claim is analogous to the therapeutic claims at issue in Prometheus, because the steps the Federal Circuit found to be transformative are well-established lab techniques. Myriad will likely argue that those steps are not routine because the growth of cells transformed with a BRCA gene required the unconventional work that led to the first identification of the gene sequence. To inoculate its claims from the policy

considerations in Prometheus, Myriad will likely argue that its patent claims have not been obstacles to further research on the claimed genes. The Federal Circuit’s decision in Myriad (and any subsequent Supreme Court decision) will have a significant impact on patents covering biologic inventions. Parties seeking to invalidate patent claims to such inventions may be able to argue they are non-patentable under the standards set forth in Prometheus and Myriad. These challenges will have an even greater impact in light of the Biologics Price Competition and Innovation Act of 2009, which is likely to dramatically increase patent litigation involving biosimilars and bioidenticals and may facilitate regulatory approval and market entry of competitive products and methods. Companies seeking to protect the markets for their biologic inventions may be forced to explore new strategies – most likely emphasizing in their patent claims the human manipulation and intervention that led to the inventions, to adequately distinguish those inventions from products and laws of nature.

THE WORLD’S DATA PROTECTION LAWS: NEW DLA PIPER HANDBOOK The first edition of Data Protection Laws of the World, DLA Piper’s 2011/2012 Handbook, is now available. The Handbook offers a high-level snapshot of national data protection laws as they currently stand in 58 jurisdictions across the world. It provides a quick overview of data protection law often of great practical significance to businesses. International data transfer restrictions, security obligations and breach notification requirements are among the topics covered. The Handbook also features a section on enforcement – always an important consideration in assessing regulatory risk in any jurisdiction. Access your complimentary digital copy at www.dlapiper.com/worlddataprotection.

The best strategies for protecting biologic inventions will depend greatly on a series of events: the Federal Circuit’s Myriad remand decision, 2 any subsequent Supreme Court opinion and the way the Federal Circuit and district courts apply those decisions in the next few years.

Siegmund Gutman, a patent litigation partner based in Los Angeles, has an advanced technical background in biology and chemistry and has been trial counsel in several noteworthy biologics patent litigations, as well as in numerous Hatch-Waxman litigations. Reach him at [email protected]. March 2012

Based in Los Angeles, associate Jordan Kushner focuses on patent litigation. You may reach him at [email protected].

Data Protection Laws of the worLD

1. Mayo Collab. Svcs. v. Prometheus Labs., Inc., Case No. 1150, 566 U.S. ___ (2012), slip op. (Mar. 20, 2012). 2. At the time this article was sent for publication, briefs had not yet been filed in the Myriad remand. Oral argument before the Federal Circuit is currently scheduled for July 20, 2012. To follow the case, go to the Federal Circuit website (www.cafc.uscourts.gov) and search using the appeal number 2010-1406.


AN INTERVIEW WITH THE HONORABLE

ARTHUR J. GAJARSA SENIOR JUDGE OF THE US COURT OF APPEALS FOR THE FEDERAL CIRCUIT

As the Federal Circuit heads into an era of transition marked by many new court members, Judge Arthur J. Gajarsa sat down with his former clerk, DLA Piper associate Aaron Fountain, to share his observations on the court and its interaction with Congress, the Supreme Court and its practitioners. Their wide-ranging conversation touched on topics from the court’s role in a uniform patent law and pro bono work to fine Italian spirits. IPT: What are some of the most important lessons you learned when you began your career as a judge? Gajarsa: When I first came to the Federal Circuit, I tried to resolve some of the issues I had identified in private practice as correctable by the court. But I quickly determined that I could not correct every particular issue that I had thought was incorrect. It takes time. We have to decide the cases presented to us based on the facts and the law. That’s how the common law is built – one case at a time. If we try to move too quickly on particular issues, we tend to create an imbalance that will probably need to be recalibrated later.

IPT: What are some of the most important lessons you have learned during your time on the bench? Gajarsa: The lessons I’ve learned from the bench are a continuation of lessons I learned as a practicing lawyer. As an advocate you must be a strong representative of your client’s position, but you also have to be civil. As a judge, you have to be civil to the attorneys who appear before you, and you have to respect that they are representing their clients to the best of their abilities. Wearing a black robe does not make a person any different from a person who appears before the court. We’re all officers of the court and we should act as such.

IPT: How have practitioners’ views of the Federal Circuit changed over the years? Gajarsa: I believe they see a court more willing to systematize and rationalize the decisions that have been made in the past. I believe they also see a court that will author decisions that will at least establish issues for the Supreme Court to review, even if the Supreme Court might not particularly like or particularly agree with those decisions.

STRATEGIC FACT IPT: Do you have any advice for identifying and presenting issues the court might be willing to rationalize en banc? Gajarsa: Well, there are a number of things to consider. Conflicting panel opinions are published over a number of years. The resolutions of conflicts are issues I think the court addresses once it’s confronted with the right case. For instance, Cybor,1 issued back in 1998, deals with the matter of having the district court’s judgment reviewed de novo for matters of claim interpretation. Some people consider those matters to be factual determinations. If in fact they’re factual determinations, then they should be decided by a jury and the district court and not by the court of appeals. But we have taken the position that claim construction is a legal determination to be reviewed de novo. Is that the correct approach? I think eventually this court will revisit Cybor, but in order to do it, you need the right vehicle.

IPT: Have you observed any impact on the work of the court due to members retiring or taking senior status and new members being appointed? Gajarsa: A number of us have taken the option of senior status because we believe the court should have some new blood. We have four new judges, which is the most change this court has had in years. We now have a different court because the judges’ backgrounds are different. The practice before the court has changed as well. More lawyers are arguing patent cases who are not considered patent lawyers as such, and they do a thoughtful and masterful job in presenting those cases. So the specialization that was observed before is no longer present to the same degree.

IPT: Do you think it’s beneficial to have this moving away from a specialized focus on the subject matter of patent law? Gajarsa: Personally, I think it’s beneficial because you bring different perspectives on the issues. I believe that once you’ve tried several cases, whether they’re criminal law cases, civil law cases, water rights cases or even patent cases, there is a certain degree of commonality in trying a case that runs throughout the presentation. The appellate work, even in the patent law, shares this commonality.

IPT: Do you think the Federal Circuit’s limited subject matter jurisdiction affects its cognizance of those issues needing to be addressed en banc? Gajarsa: Actually, I think the Federal Circuit has a very broad jurisdiction. Many people don’t understand that we’re not just a patent court. Right now, patent cases are about thirty-five to forty percent of our total. The balance consists of claims against the federal government, appeals from the Merit Systems Protection Board and the Court of Appeals for Veterans Claims.

IPT: What would you like to say to an audience of intellectual property and technology practitioners on the subject of veterans cases? Gajarsa: As lawyers, you are officers of the court and you have an obligation to represent anyone who has a valid and reasonable appeal to be heard before the Federal Circuit. I’ve always advocated that individual lawyers who appear before this court should take the opportunity to represent veterans before this court pro bono, giving them the experience of appearing before the Federal Circuit. The attorneys should also take the opportunity to prepare and appear in cases before the CAVC, because that’s where the record is made.

The 20-year average contested win rate for patentees nationwide is 25.3 percent.* However, the rates vary widely by court. Below are the average patentee win rates in last year’s most popular US districts for patent cases.

20-YEAR AVERAGE PATENTEE WIN RATES

Eastern District of Texas

District of Delaware

District of New Jersey

District of Minnesota

District of Massachusetts

Northern District of Illinois IPT: One last question: do you have any tips for selecting a nice grappa?

42.3 40.2 37.2 27.6 25.6 22.3 21.7 21.4 18.6 15.6

Gajarsa: I think you need a grappa that is aged for a minimum of 10 to 12 years in oak or cherry barrels.

Southern District of New York

Please read our full interview with Judge Gajarsa at www.dlapiper.com/the-honorable-arthur-gajarsa.

Central District of California

1. Cyber Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc).

Northern District of California

Southern District of California

* Contested win rate does not include consent and default judgments. Rates are based on the period from 1991 – 2011. Source: LegalMetric (used with permission)


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