Our weekly SoCal IP Institute meeting on Monday, January 28, 2013 will be a discussion of an obviousness case and the discharge of a patent covenant not to sue in bankruptcy.

Soverain Software LLC v. Newegg, Inc.. Case No. 11-1009 (Fed. Cir. Jan 22, 2013) (available here)

Soverain sued Newegg and several other online retailers under a group of patents directed to systems for online retailing.  The district court jury found that Newegg infringed one of the three asserted patents, but the court granted JMOL of infringement as to the third.  At trial, the district court withdrew an obviousness determination from consideration by the jury stating that it would “very confusing” for them to consider.  Newegg’s JMOL of obviousness was denied.  That denial was appealed to the Federal Circuit.

The court divided the claims into three groups, “shopping cart” claims, the “hypertext statement” claims, and the “session identifier” claims.  In each case, the claims were obvious, despite the lower court’s decision not to allow the jury to entertain the obviousness question.  The Federal Circuit questioned the basis of a decision not to hear that argument.  The Federal Circuit took special interest in refuting the argument regarding “secondary considerations” of nonobviousness based upon commercial success such as the product embodying the patents and licensing of the patents.  In particular, the Federal Circuit pointed out that “commercial success” of the product embodying the patents was non-existent and all licenses of the patents only took place after the claims were asserted in order to avoid the costs associated with litigation.

In Re Spansion, Case Nos. 11-3323 & 11-3324 (3d. Cir. December 21, 2012) (available here)

This case involves is a determination whether Spansion, who had previously agreed to terminate an ITC proceeding against Apple and further agreed not to bring further actions against Apple under Spansion patents, could rescind that agreement in bankruptcy.  Spansion sought to rescind the agreement and Apple objected to the rescission.  The Delaware bankruptcy court denied Apple’s request to retain the agreement and rescinded the contract.

The Delaware District court, upon Apple’s appeal, determined that Spansion’s covenant not to sue was a patent license.  Under 11 U.S.C.  365(n)(1)(B), Apple was able to “retain its rights . . . as such rights existed immediately before the [bankruptcy] case commenced.” As a result, Spansion’s attempt to discharge its license triggered Apple’s right to retain the license.  Because Apple filed an appropriate notice seeking to retain that right, the license properly remains in force and was not discharged by Spansion in bankruptcy.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, January 28, 2013 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.