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Highlights of the latest intellectual property news and cases from around the country.

On Oct. 4, 2004, the Federal Circuit rendered its opinion in <i>Insituform Techs., Inc. v. Cat Contracting, Inc.</i> ("<i>Insituform IV</i>"), 385 F.3d 1360 (Fed. Cir. 2004). This opinion is the first post-<i>Festo</i> Federal Circuit opinion that finds a successful rebuttal of the <i>Festo</i> presumption (<i>eg</i>, the presumption of the surrender of infringement under the doctrine of equivalents due to prosecution history estoppel) based on the "tangential relationship" prong of <i>Festo</i>. This case seems to set a fairly low bar for the rebuttal of the presumption. This is a significant development given the Federal Circuit's apparent desire to restrict the doctrine of equivalents (as reflected in its initial <i>Festo</i> ruling that was reversed by the Supreme Court, as well as by the tenor of the post-reversal <i>Festo</i> opinion).

This past October, Rep. Howard Berman (D. Calif.) introduced the Patent Quality Assistance Act of 2004 (H.R. 5299, the "PQA Act"). The PQA Act seeks to implement many of the recommendations of the much-publicized FTC (October 2003) and National Research Council (April 2004) reports. The bill has been referred to the Judiciary Committee, which is not expected to act on it before the end of the 108th Congress. Rep. Berman introduced the bill at the end of this Congress, however, "with the intent of framing the debate going into the 109th Congress." 150 Cong. Rec. 1935.

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Highlights of the latest intellectual property news from around the country.

Attorneys have rushed to the border in 2004 to enforce patent rights. In the first 6 months of 2004, the International Trade Commission ("ITC" or "Commission") has received more complaints to uphold patent rights than in any previous year except for 2001. It is anticipated that by the end of the year, the ITC will have experienced its most active year for patent litigation ever. Two key factors are helping to fuel an expansion of patent litigation at the ITC: the ability to pursue parallel actions before both the ITC and Federal District Court, and the fast track investigation of the ITC with final decisions typically issuing within 12 to 18 months. Moreover, the in rem nature of the remedies available at the ITC, particularly the general exclusion order, allows domestic patent holders to obtain substantial prospective relief without filing a series of actions against numerous foreign infringers. Consequently, as technology increasingly becomes a global enterprise, the pace of patent infringement complaints filed with the ITC will only continue to surge.

In 2002, Duke University attempted to avoid liability for patent infringement by invoking the common law experimental research exception to patent infringement. In a landmark decision, the U.S. Court of Appeals for the Federal Circuit rejected Duke University's argument that its infringing research activities should be exempt from liability under this exception. <i>Madey v. Duke Univ.,</i> 307 F.3d 1351 (Fed. Cir. 2002).

It has long been held that a good faith reliance on timely and competent advice of counsel can negate a charge of willful patent infringement. Such advice of counsel can be used to potentially shield an infringer from having to pay enhanced damages of up to three times the damages under 35 U.S.C. &sect;284 and/or the patentee's attorneys' fees under 35 U.S.C. &sect;285. Similarly, a defendant's failure to obtain advice of counsel until after the company commenced its infringing activities would be evidence of willful infringement. <i>Underwater Devices Incorporated v. Morrison-Knudsen Company,</i> 717 F.2d 1380, 1390 (Fed. Cir. 1983). The practical application of this rule has been fraught with difficulty, however, since assertion of an opinion of counsel as a defense to a charge of willfulness typically involves a waiver of attorney-client privilege as to communications surrounding the opinion. The tension created by this dynamic was exacerbated by an adverse inference that an opinion of counsel was unfavorable if an accused infringer refused to waive privilege and disclose an opinion of counsel in defense of a willfulness charge. <i>Kloster Speedsteel AB v. Crucible, Inc.,</i> 793 F.2d 1565, 1580 (Fed. Cir. 1986). The Court of Appeals for the Federal Circuit in <i>Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp.,</i> 2004 U.S. App. LEXIS 19185 (Fed. Cir. 2004) (<i>en banc</i>) abolished the adverse inference rule, but also reaffirmed that one is under a duty of care to avoid infringement.

The distinction between recourse to Chapter 11 protection as a legitimate means to maximize the value of a company's assets and/or to restructure its financially troubled yet otherwise viable operations, on the one hand, and clear bankruptcy abuse, on the other, is sometimes murky. A court called upon to make such a distinction is obliged to "get into the debtor's head" and investigate the board's motives for commencing a bankruptcy case and, in some cases, to decide whether the debtor's otherwise permissible use of the powerful provisions of federal bankruptcy law is impermissible because the debtor's motives are antithetical to the basic purposes of bankruptcy.

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