Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. Five years ago, when I was still getting my feet wet on IP issues, my ALM colleague Lisa Shuchman wrote about a cutting-edge case involving International Trade Commission jurisdiction over data passed through the internet. Lisa and I were both surprised to find out this week that the underlying patent dispute was still kicking around the courts until settling last Thursday. Today a Paul Hastings partner reflects on a 14-year litigation journey that took him halfway around the world. Also, Unified Patents is reporting that patent filings dipped most everywhere in Q1 with the exception of a couple of hot spots. And a Fisch Sigler attorney has run the numbers on the post-Berkheimer landscape. As always you can email me your own thoughts and follow me on Twitter.

Paul Hastings partner Tom Counts.

A Long and Winding Road for Patents on Straightening Teeth

Even in the world of competitor patent infringement, 14 years is a long time to litigate a case.

Align Technology has fought ClearCorrect over the rights to teeth-straightening technology in Houston district courts, the International Trade Commission, the U.S. Patent and Trademark Office and the Federal Circuit, plus courts in the U.K. and Brazil.

“Despite the ups and downs of this exercise, Align has stayed committed to its intellectual property, and that finally ended in this strong result,” Paul Hastings partner Tom Counts said this week.

He was describing Thursday's settlement, struck as the parties were finally on the verge of going to trial in the Southern District of Texas. ClearCorrect, now owned by Switzerland's Straumann Group, is paying $35 million to San Jose-based Align and has agreed to integrate 5,000 of Align's intra-oral scanners into Straumann's CARES and Digital Wings workflows over the next five years.

Align's stock price climbed 5 percent on the news Friday as financial analysts reacted positively. “This is an immediate win for the company to tap into Straumann's significant distribution in Europe,” Piper Jaffray analysts said in a research note.

Counts said the litigation actually began in 2005 as a debt collection action. ClearCorrect responded with a suit for declaratory judgment. Align filed the Southern District patent suit in 2011. It went to the ITC the following year, seeking to block ClearCorrect from importing electronic blueprints of orthodontic appliances. ClearCorrect had been processing the molds of patient bites in Pakistan, then transmitting back the images to the United States to avoid infringing.

The ITC ruled for Align but the Federal Circuit ultimately ruled that electronic data transmitted over the internet is not an “article” of commerce subject to ITC jurisdiction.

In the meantime, ClearCorrect sought so many reexaminations of Align patents that Counts couldn't remember the number—“at least in the high teens,” he said. Align beat those back. ClearCorrect won an IPR in 2017, but the Federal Circuit reversed last year.

Straumann's 2017 acquisition of ClearCorrect helped change the game. That put “a legitimate, well-respected company on the other side,” Counts said. Plus, the Align patents at issue in Houston have expired, and Align won summary judgment of infringement a few weeks ago. That left only damages and validity for trial, paving the way for the companies to get creative and work out a deal.

“That's how you pass 14 years in the blink of an eye,” Counts said Monday. He sounded both relieved and a little wistful about a case that once led his team all the way to Dubai, where they took depositions of ClearCorrect's Pakistani employees. “There are many, many stories to be told,” he said. “So it's really gratifying to end on a positive for both parties.”

From Unified Patents' Q1 report

District of Delaware Continues to Dominate

Patent litigation is going gangbusters in the District of Delaware, but appears to be cooling just about everywhere else—especially at the Patent Trial and Appeal Board.

That's what I gather from Unified Patents' report on first quarter patent filings. Unified also reports that even though overall patent litigation is trending down, non-practicing entity litigation is warming back up.

Some 829 cases were filed in district court during Q1, with 33.5 percent in the District of Delaware. That's an uptick from 2018's 24 percent. While not quite at the level of the Eastern District of Texas in its heyday, it's not far behind. With Delaware having just added two experienced civil litigators last summer and a tech-savvy magistrate judge last month, the trend seems likely to continue.

The Eastern District of Texas' share dropped to 9.9 percent, from 13.7 percent last year, according to Unified's statistics. Some of the Texas patent litigation appears to have shifted to the Western District and new Judge Alan Albright, whose share grew from 2.4 percent last year to 4.3 percent during Q1. Filings were down in both of California's primary dockets, from 9.2 percent last year in the Northern District to 5.8 percent, and from 8.2 percent to 6.3 in the Central District.

Unified reports that the PTAB received only 325 new petitions in Q1 this year, the lowest in a quarter since 2014. It wasn't for lack of effort on Unified's part. The organization notes that it was the fourth most frequent filer behind only Samsung; Associated British Foods and its affiliates; and Microsoft.

Avi Toltzis of Fisch Sigler.

Berkheimer's Modest Effect on 101 Motions

As long as we're on the subject of statistics, Fisch Sigler's Avi Toltzis has crunched some numbers on Section 101 motions pre- and post-Berkheimer v. HP. That's the Federal Circuit decision which held that “step two” of the Alice test—whether claim elements were well-understood, routine and conventional to a skilled artisan at the time of the patent—will sometimes require fact determinations.

Toltzis finds that it's getting a little harder to defeat a Section 101 motion on the pleadings at step two, but still do-able:

By way of comparison, this is how the numbers looked one year before :

Toltzis is working up an academic article on the subject. His takeaway: “Berkheimer has impacted Alice decisions, but only on the edges. Although not the revolutionary decision some predicted, patentees now stand at least a puncher's chance when they point to issues of fact bearing on Alice step two.”

Covington Slams Brakes on Toyota IPR

I don't often write about individual PTAB decisions, but when Toyota Motorcan't get the PTAB to institute proceedings on the hybrid engine technology for which it's famous, it seems worth a mention.

Toyota brought a series of eight IPRs against General Electric and GE Hybrid Technologies last fall. On March 28 the PTAB decided the first, ruling at the institution stage that all 16 claims of GE's 8,409,052 patent are more likely than not patentable, ending the IPR. The '052 relates to techniques for using a combustion engine to heat a battery before drawing on it in sub-freezing temperatures.

It's a win for a Covington & Burling team led by of counsel Scott Kamholzand special counsel Jennifer Robbins.

Toyota and Finnegan Henderson Farabow Garrett & Dunner still have seven more chances to inflict some PTAB pain on GE.

That's all for Skilled in the Art today. I'll be on hiatus on Friday, but will see you all again on Tuesday.