Protect Your Innovation and Maximize Your Investment Return in Automotive Electronics

Transcription

1 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Protect Your Innovation and Maximize Your Investment Return in Automotive Electronics Presented by Shaobin Zhu SEMICON (Shanghai) March 20, 2013 SEMICON ( ) Automotive Electronics A modern car comprises dozens of computers, including thousands of sensors/mems and millions of lines of code Vehicle-computer network / 2 1

2 Automotive Electronics Conventional Parts 60% Automotive Electronics 40% 3 Automotive Patent Litigation Arises in U.S. PwC 2012 Patent Litigation Study,

3 Reasons for Automotive Patent Litigation Rise Now, suppliers are performing more than 40% of all R&D, more willing to protect their investment 20 years ago, suppliers conducted less than 10% of all R&D, with most done by OEM automakers OEM automakers often rely on single-source suppliers and cannot control them like they used to Suppliers (including those investing in automotive electronics) use litigation as a tool to protect their market shares ==> New technologies inspire more litigation 40% 20 10% ==> 5 Recent Patent Litigation in Automotive Electronics Body electronics Magna Electronics Inc. v. TRW Automotive Holdings Corp. et. al. (2012 W.D. Michigan) (asserted 8 patents relate to headlight control using image sensing or vision system) Tire pressure monitoring system (TPMS) Schrader-Bridgeport International, Inc. v. Continental Automotive Systems US, Inc. (2012 W.D. Virginia) MHL TEK, LLC v. Nissan Motor Co. (2011 Fed. Cir) (lacking standing to assert patents b/c inventors failed to assign them to plaintiff) Safety and security system Delphi Automotive Systems, LLC v. Automotive Technologies International, Inc. (2011 E.D., Michigan) (DJ action: invalidated 4 patents, relating to occupant sensors for airbag control, which were asserted against Delphis customers in Texas Methode Electronics, Inc. v. Delphi Automotive Systems LLC et. al. (2009 N.D. Illinois) (a weightsensing pad used in a seat-occupant sensing system) Automotive Technologies International, Inc. v. BMW et. al. (2007 Fed. Cir.) (Sued more than 20 automakers; Fed. Cir. confirmed district courts SJ of invalidity of ATIs patent relating to crash sensing devices for an occupant protection apparatus) Telematics Vehicle IP, LLC v. General Motors Corp. (2008 W.D. Wisconsin) (asserted patents relate to a navigation device) 6 3

4 Recent Patent Litigation in Automotive Electronics Magna Electronics Inc.. TRW Automotive Holdings Corp. et. al. (2012 ) ( 8 ) ( TPMS ) Schrader-Bridgeport International, Inc.. Continental Automotive Systems US, Inc. (2012 ) MHL TEK, LLC. Nissan Motor Co. (2011 ) ( ) Delphi Automotive Systems, LLC. Automotive Technologies International, Inc. (2011 ) ( 4, Delphi Methode Electronics, Inc.. Delphi Automotive Systems LLC et. al. (2009 ) ( ) Automotive Technologies International, Inc.. BMW et. al. (2007 Fed. Cir.) ( 20 ; ATI ) Vehicle IP, LLC. General Motors Corp. (2008 W.D. Wisconsin) 7 Protect Your Innovation & Maximize Your Investment Return 1. Build effective IP portfolio 2. Allocating IP risks via contracts 3. Administrative validity challenges under AIA 4. Licensing 5. Due diligence & opinion

5 The Golden Rule He who owns the gold (strong patents) wins the market Data Source: PatentCafe, Automaker Patent Assets Intelligence Report (2009), 23 9 More Patents on Automotive Electronics Automakers (e.g., GM) and suppliers (e.g., Google, ATI) are filing more patents on automotive electronics GM Google, ATI PatentCafe, Automaker Patent Assets Intelligence Report (2009),

6 Build Effective Patent Portfolio Why get patents - MARKETING tools: protect & grow your market share Stop others (exclude) Prevent copying Stop others from stopping you (freedom of action) Promote cross licensing or otherwise prevent injunction or large charges from competitors Neutralize others patents - 11 Build Effective Patent Portfolio Acquisition of Patents: utility and design patents A. Prosecution of Patents B. Acquisition of Patents by Purchases C. Acquisition of Patents by Mergers and Acquisitions A. B. C. 12 6

7 Build Effective Patent Portfolio Repackage your patent portfolios to maximize their values: Body electronics: e.g., seat positioning, door/window controls Telematics: e.g., infotainment, navigation, communication Power train control: e.g., engine and transmission monitoring, diagnostics and control, drive-by-wire systems Safety and security system: e.g., ABS, suspension system, steering, tire pressure monitoring, air-bags, collision avoidance Central command: e.g., interconnection of different systems / ABS,, 13 Protect Your Innovation & Maximize Your Investment Return 1. Build effective IP portfolio 2. Allocating IP risks via contracts 3. Administrative Validity Challenges under AIA 4. Licensing 5. Due diligence & Opinion

8 Allocating IP risks through contracts Automotive electronics suppliers to an OEM automaker or parts supplier: Exemption Known liability Unknown liability Good faith standard Ensure no infringement Good faith standard Indemnification Covenant not to sue OEM 15 Protect Your Innovation & Maximize Your Investment Return 1. Build effective IP portfolio 2. Allocating IP risks via contracts 3. Administrative Validity Challenges under AIA 4. Licensing 5. Due diligence & Opinion

9 AIA: First-to-Invent First-Inventor-to-File Old: First-To-Invent Conception Jan. 1, RTP Jan. 10, File app. July 1, Conception Feb. 1, 2013 RTP Feb. 10, 2013 File app. May 1, New: First-Inventor-to-File (Mar. 16, 2013) Validity Challenges in USPTO under AIA: ª Œª ª Preissuance Submissions (can provide details) (Eff: 9/16/2012) Ex Parte Reexam (post-grant) Post-Grant Review (PGR) (within 9 months of grant) (Eff: 9/16/2012) 9 Inter Partes Review (IPR) (after 9 months of grant) (Eff: 9/16/2012) (Pre-AIA patents: no 9-month waiting period)

10 Preissuance Submissions Any patent application filed before, on, or after Sept. 16, 2012 Advantages Cost Comments allowed No limit to number of documents No estoppel Strawman permitted Preissuance Submissions Disadvantages Patent examiner/not reexam examiner Cannot propose rejection No participation Best art overcome / 20 10

11 Nuts and Bolts Who can file 3 rd party (no Rule 56 duty) Strawman allowed Timing Earlier of: Notice of Allowance or Later of six months after publication (by PTO, not WIPO) or first action rejecting claims (RR not counted) 56 RR 21 Post-Grant Challenges to Patents Ex Parte Reexam Post-Grant Review Inter Partes Review When? After grant No more than 9 months after grant (Sept. 16, 2012, but of a patent with an effective filing date of the claimed invention on or after March 16, 2013) 9 Threshold Showing SNQP more likely than not that at least 1 of the claims challenged in the petition is unpatentable or important novel/unsettled legal question After 9 months from grant 9 Reasonable likelihood of success / Anonymity Yes No No Estoppel None Issues raised or reasonably could have been raised by the petitioner: PTO, district court, and ITC Issues raised or reasonably could have been raised by the petitioner: PTO, district court, and ITC 22 11

12 Post-Grant Challenges to Patents Ex Parte Reexam Post-Grant Review Inter Partes Review Grounds 102, , 102, 103, , 103 Before Whom? Discovery/ Evidence? CRU PTAB PTAB Declaration Declaration and discovery Declaration and discovery Speed Many Years 1 to 1½ years 1 to 1½ years Appeal Only patentee can appeal to Board and then Federal Circuit Both parties can appeal to Federal Circuit Both parties can appeal to Federal Circuit 23 Post-Grant Challenges To Patents Post-grant challenges should be part of your patent strategy when: You learn of an important patent You receive a threatening letter Litigation is filed You are in a larger business dispute You own the patent 24 12

13 Post-Grant Challenges To Patents Less expensive than litigation Could be a total win with no patent left Forces patentee to fight on multiple fronts 25 Post-Grant Challenges To Patents Additional prosecution history claim construction ammunition exploit inconsistent arguments Cloud of uncertainty over patent validity Preclusion of royalty payments after settlement 26 13

14 Post-Grant Challenges To Patents Stay of parallel litigation Ability to use the grant of a post-grant challenge as a basis for seeking a litigation stay Gain time/leverage to build/settle case 27 Post-Grant Challenges To Patents Challenge patent validity at USPTO outside of litigation (as Congress intended) Delay and could eliminate enforcement Delay could simply result in change in circumstances advantageous to accused infringer (e.g., design around) 28 14

15 Post-Grant Challenges To Patents To assist in redesign Patent owner focused on narrowing claims for existing product Use post-grant challenges to help find design alternatives 29 Post-Grant Challenges To Patents Problems Result could be a strengthened patent Time consuming: but new PGR and IPR procedures take only <1.5 years May not know of all patents 30 15

16 Protect Your Innovation & Maximize Your Investment Return 1. Build effective IP portfolio 2. Allocating IP risks via contracts 3. Administrative Validity Challenges under AIA 4. Licensing 5. Due diligence & Opinion Licensing Be proactive -seek licenses before they are needed Establish good will Have better understanding of business options Have new designs available to show patent owner options for noninfringement 32 16

17 Licensing License Out: Royalties Cross-license opportunities Opportunity to exploit in other geographic markets Opportunity to exploit in non-competitive fields Opportunity to obtain improvements by others Opportunity for broader business arrangements Strategic collaboration: development, manufacturing, joint supply, marketing Joint venture: collaboration through another legal entity Standard & patent pool Vehicle for settling future disputes Your IP assets are swords but also shields 33 Licensing Problems May create visibility May force licensor to act May create willfulness problem 34 17

18 Protect Your Innovation & Maximize Your Investment Return 1. Build effective IP portfolio 2. Allocating IP risks via contracts 3. Administrative Validity Challenges under AIA 4. Licensing 5. Due diligence & Opinion IP Due Diligence IP Due Diligence is a legal exercise Define, examine, and analyze an IP portfolio To reveal the value/potential problems of the IP assets Ownership rights surrounding the IP Strength, scope, and enforceability of the IP Future potential to be derived from the IP / 36 18

19 Opinions of Counsel Opinion (typically a detailed letter or report) from attorney providing his professional assessment Explains case law, relevant facts, and basis for conclusions 37 Opinions of Counsel Types of opinions in patent law Non-infringement Invalidity Freedom to operate Patentability Pre-litigation Etc

20 Opinions of Counsel A useful business tool for automakers and suppliers to determine whether to: Adopt designs Enter markets Negotiate contracts with suppliers (warranties & indemnities) Design around Challenge the validity at the USPTO License & 39 Freedom to Operate Opinion No valid patents/applications infringed Provides legal protection Fulfills duty to avoid infringement Courts or juries may still find infringement, but minimizes risk of a finding of willful infringement Shows good-faith attempt and reliance upon counsel to avoid infringement / 40 20

21 The Opinion Must Be Competent To determine competency, the Federal Circuit assesses both the qualification of the author and the content of the opinion. The author must have appropriate technical and legal knowledge and experience The opinion must evidence an adequate foundation based on areview of all necessary facts and the relevant case law A competent opinion is not conclusory A competent opinion is based on the best information known to the client,, 41 The Opinion Should Be Prepared By Qualified and Objective Counsel Options for opinion counsel Patent Attorney Non-patent Attorney In-house Counsel (general or patent) Outside Patent Counsel (partner or associate) Opinions givenby non-patentattorneys or in-housecounsel maybehighly suspect and found to be incompetent Non-U.S. attorneys: unauthorized practice of law 42 21

22 Comments? Questions? Õ ø±æ (shaobin.zhu ª ø Ú ± ÒÔÚÍÎ ÚËÏÁÚÍÈÍÌ Practice includes litigation, patent prosecution, and client counseling, with an emphasis on computer software, Internet technologies, telecommunications, video processing, LEDs, and electronic technology. Participated in many aspects of patent litigation such as patent validity and infringement, technical discovery and production, deposition, Markman hearing, motion hearing, and jury trial. He has handled all stages of patent prosecution, reissue, and reexamination of disputed patents, and has rendered opinions regarding patent infringement and validity of patents. (shaobin.zhu ª ø Ú ± ÒÔÚÍÎ ÚËÏÁÚÍÈÍÌ 43 22