LJN Newsletters

In a hypothetical negotiation, what is the value of a relatively small piece of patented technology when it is integrated as a component of a much larger product? If the patented technology is part of Web browser software that is bundled with an all-encompassing operating system, the answer would appear to be — a lot — at least according to one of the largest patent infringement damage awards in recent years.

According to a recent academic overview, American patent holders pay their lawyers $5 billion per year for patent prosecution services and approximately another $2.4 billion for patent litigation (not counting payments of settlements or damages). Besides being good news for the patent bar, this level of investment in patent creation and protection suggests that patents are valuable.

The holder of a security interest in a patent is often faced with the question of where to record its security interest in order to "perfect" it. Yet the law on how to perfect a security interest in a patent remains uncertain even today. While it is generally accepted that patent lien creditors should record their security interest in accordance with Article 9 of the Uniform Commercial Code ("UCC") of the appropriate jurisdiction to perfect and obtain priority over subsequent lien creditors, it remains unclear as to whether UCC perfection alone, or even both UCC perfection and recordation with the Patent and Trademark Office ("PTO"), gives patent lien creditors priority over subsequent assignees of the patent itself.

Discussed below are the second five of the "Top 10 Patent Drafting Mistakes" that drafters often make that can impact the successful enforceability of patents. These mistakes, as with the first five discussed last month, are largely derived from the failure of prosecution counsel to recognize how a patent may be scrutinized and challenged in litigation. Spending the extra time and effort during drafting to avoid these 10 mistakes can drastically increase the odds of a successful outcome.

After they are administered, or taken by the patient, many drugs are converted into other chemical compounds or other physical forms, as the drugs are processed within the body of the patient. Often these compounds, known as metabolites, are the "active ingredient" that is responsible for the desired result, such as lowering blood pressure or cholesterol levels. The Court of Appeals for the Federal Circuit has also long recognized this effect and has held that the ingested form of a drug or its "metabolites" can be patented. Thus, an optimal patent strategy would require an inventor to patent both the pre-ingested form of the drug and its new physical forms or metabolites, as formed in the body ("in vivo"). However, the in vivo fate of the drug may not be learned until long after the "parent" drug has been tested and patented.

Highlights of the latest insurance cases from around the country.

A Policyholder/Debtor with Comprehensive General Liability ("CGL") insurance has a strategic decision to make: Should the Policyholder/ Debtor protect and preserve its insurance for post-bankruptcy claims, or seek to maximize the insurance proceeds available to satisfy third-party claims? Although the Policyholder/Debtor cannot dictate how its policies are treated during the bankruptcy proceeding, without determining a strategy the Policyholder/Debtor cannot hope to influence the outcome. This article addresses the situation where a Chapter 11 Policyholder/Debtor faces third-party environmental claims. Although this area of law is still developing and varies from one jurisdiction to another, the Policyholder/Debtor should consider certain key issues when determining its strategy for dealing with its CGL insurers.

Insurance companies have increasingly seized upon the argument that they are not liable, under occurrence-based general liability insurance policies ("CGL policies"), for defense costs incurred before a policyholder has notified the insurance company of a claim or suit. They contend that policyholders are not entitled to these "pre-tender" defense costs primarily for two reasons. First, insurance companies assume that their duty to defend does not arise until they are provided with notice, and therefore, they have no obligation to pay defense costs incurred prior to that notice. Second, insurance companies categorize pre-tender defense costs as voluntary payments for which they are not responsible since they did not consent to such costs. Based on the commercial purpose of CGL policies, the language in the policies and established case law on notice and prejudice, policyholders can successfully argue that insurance companies are responsible for reimbursement of pre-tender defense costs.