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The U.S. Court of Appeals for the Federal Circuit has been busy over the last few months ruling that: (1) a patentee cannot satisfy its burden to show infringement without support of expert testimony where the accused offers such testimony to negate infringement; (2) the location of an infringing product’s customers and their purchase of the product establishes the necessary control and beneficial use of the product within the United States for purposes of infringement, regardless of whether a necessary component of the infringing product is physically located coutside the United States; and (3) the Patent Office may seek information from an applicant beyond that which is material to patentability and the applicant may challenge that request not in district court, but in the board of appeals. The U.S. Supreme Court also ruled that an alleged trademark infringer does not bear the burden of negating likelihood of confusion. These cases are discussed in detail below. EXPERT TESTIMONY � Expert Testimony and Patent Infringement Cases involving Complex Technologies.In Centricut LLC v. Esab Group, Inc. [FOOTNOTE 1], the Federal Circuit held that in a patent infringement case involving complex technology, the patentee cannot satisfy its burden of proof without the support of expert testimony where the defendant has used expert testimony to negate the allegations of infringement. In general, a patentee has the burden of proving infringement by a preponderance of the evidence. Although the Federal Circuit did not hold per se that expert testimony is required to prove infringement when the art is complex, it made clear that a patentee would have a difficult time prevailing on an infringement claim without the use of expert testimony to support its arguments of infringement. In Centricut,the patentee argued three theories of infringement but failed to use experts in the field to support any of those theories. In fact, the patentee’s only witnesses admitted to not being experts in the relevant field. The defendant, on the other hand, did use expert testimony to negate the allegations of infringement and therefore prevailed. Accordingly, in cases involving complex technology, a patentee would be wise to bolster its theories of infringement with the use of testimony by a qualified expert in the field at issue. TERRITORIAL REACHTerritorial Reach of United States Patent Law � Beyond the Border?In NTP, Inc. v. Research in Motion, LTD [FOOTNOTE 2]the Federal Circuit held that infringement under 35 USC �271(a) may be found where the location of the infringing product’s customers and their purchase of the product establishes control and beneficial use of the product in the United States, regardless of whether a necessary component of the infringing product is physically located outside the United States. Section �271(a) states, in pertinent part, “whoever without authority makes, uses, offers to sell, or sells any patented invention within the United States or imports into the United States any patented invention during the term of the patent thereof, infringes the patent.” The Federal Circuit found the above circumstances enough to establish territoriality under this section. NTPinvolved Research in Motion’s (RIM) BlackBerry system which NTP claims infringes a family of its U.S. patents. RIM argued that the entire accused system and method must be contained or conducted within the territorial bounds of the United States in order for �271 to apply. More specifically, because RIM’s BlackBerry relay component of its system was located in Canada, the relay component required by the patents’ claims could not be met, and therefore its entire system was beyond the reach of �271 (a). The Federal Circuit, however, found that because all of the other components of RIM’s accused system were located in the United States, and the control and beneficial use of RIM’s system occur in the United States, the situs of the “use” of RIM’s system for purposes of �271(a) was in the United States. Thus, the mere physical locality of an integral system component outside the United States, where the ultimate use of a system is in the United States, will not allow the system to escape the reaches of United States patent law. This dispute, however, is not over. The Canadian government has just this week submitted a brief (in support of rehearing en banc) objecting to the Federal Circuit’s ruling. In its brief, Canada contends that the “control and beneficial use” rule leaves much uncertainty as to the actual reach of 35 USC �271(a) concerning activities conducted outside the United States. The Canadian government worries the rule may be applied inappropriately or discriminatorily which could have a chilling effect on Canadian innovation. Ultimately, the concern is that the rule may be applied in a way “contrary to basic principles of comity affecting Canada and the United States.” The Canadian government urged the court to grant a rehearing in order for the court “to be assured that its interpretation of Section 271(a) will not lead to inappropriate, differential application of the statute or to inappropriate, extraterritorial, application of United States patent laws.” It remains to be seen if the Federal Circuit or ultimately the U.S. Supreme Court will see things differently. CHALLENGING PTO PRACTICES In Star Fruits S.N.C. v. United States, [FOOTNOTE 3]the Federal Circuit, in a 2-1 decision, not only confirmed the U.S. Patent and Trademark Office’s (PTO) right to seek information from an applicant beyond that which is material to patentability but also ruled that any challenge to this practice must first be taken through the patent application practice to the Board of Patent Appeals. Star Fruits, the applicant for a plant patent, appealed a decision of the district court to the Federal Circuit. Star Fruits claimed that the PTO abused its discretion when it denied Star Fruits’ petition challenging a requirement for information, arguing that as a matter of law, the information could not be used to reject its patent application. The district court concluded that the requirement for information under 37 CFR �1.105(a)(1), which authorizes the examiner to require information “as may be reasonably necessary to properly examine or treat the matter,” encompasses information that may not be directly used to reject an assertion of patentability. The Federal Circuit agreed with the district court and held that 37 CFR �1.105(a)(1) “includes a zone of information beyond that defined by section 1.56 as material to patentability, and beyond that which is directly useful to support a rejection or conclusively decide the issue of patentability.” This holding, taken in isolation, does not reflect a significant underlying issue in Star Fruits. The main point of Star Fruits’ case was to challenge the PTO’s new practice (since 2001) of holding, as a possible bar to the U.S. patentability of a plant under 35 USC �102(b), foreign sales of a plant that has foreign breeder’s rights registration. The examiner, in requiring Star Fruits under 37 CFR �1.105 to provide “any information available regarding the sale or other public distribution of the claimed plant variety anywhere in the world” and “copies of the … published Breeder’s Right grant,” informed Star Fruits that its application was subject to rejection under �102(b). Star Fruits, in turn, declined to provide the required information on the grounds that it was “not material to patentability of the new variety.” The examiner then deemed the application abandoned due to Star Fruits’ “deliberate omission” and lack of a “bona fide attempt at a complete response.” Star Fruits went on to petition the director to require the examiner to accept its response as complete, to which the director declined, leading to the district court action. Thus, Star Fruits was attempting to preemptively challenge the PTO’s new practice with regard to holding foreign sales or use of a plant as a ground for rejecting a U.S. patent application on that plant. The Federal Circuit addressed the procedural aspects of challenging PTO practice, concluding that such a challenge is not properly made by withholding information from the PTO. Instead, the applicant must await a rejection and then challenge the propriety of that rejection in the proper forum, namely the Board of Patent Appeals and Interferences, not the district court. The dissent disagreed arguing “when an agency unilaterally makes a major and far-reaching change in law, the entire administrative process need not be forced to proceed on the incorrect law, a process that may consume years, in order to challenge the change in law.” NEGATING CONFUSION � Defendants Asserting Trademark Law’s Fair Use Defense Do Not Bear the Burden of Negating Any Likelihood of Confusion.In K.P. Permanent Make-Up, Inc. v. Lasting Impression I, Inc., [FOOTNOTE 4]a unanimous Supreme Court held that an alleged trademark infringer does not bear the burden to negate any likelihood of confusion that its alleged infringing practice will confuse consumers as to the origin of the affected goods or services. In this case, both parties used a version of the term “micro-color”, the mark at issue, in selling its permanent makeup. Lasting Impression I (Lasting)applied for registration of the term “Micro Colors” in a specified style in 1992. In 1993 the PTO registered the mark to Lasting, and the registration became incontestable in 1999. Also in 1999, K.P. Permanent Make-Up (K.P.) produced an advertising brochure using the term “microcolor” in a large stylized typeface resulting in Lasting demanding that K.P. stop using the term. K.P. sued Lasting seeking a declaratory judgment that its use of “microcolor” did not infringe Lasting’s rights, and Lasting counterclaimed alleging K.P. had infringed its “Micro Colors” trademark. K.P. put forth the affirmative defense of fair use. The district court granted K.P.’s motion for summary judgment, finding K.P. had made out its fair use defense without taking into account whether or not its practice was likely to cause consumer confusion. The 9th U.S. Circuit Court of Appeals subsequently reversed the grant of summary judgment and remanded, finding the district court had erred by failing to consider the likelihood of confusion when evaluating the fair use defense. The Supreme Court took the case to address the conflicting views taken by the 2nd and 9th circuits on this issue. The Supreme Court, in reaching its holding, found that because the Lanham Act �1115(b) places the burden of proving likelihood of confusion on the party charging infringement, it would be nonsensical to place a burden on the defendant asserting the fair use defense to negate any likelihood of confusion. The Court explained “it is only when a plaintiff has shown likely confusion by a preponderance of the evidence that a defendant could have any need of an affirmative defense,” and further noted “it defies logic to argue that a defense may not be asserted in the only situation where it even becomes relevant.” Trademark plaintiffs should therefore understand that fair use and the likelihood of confusion are not mutually exclusive; a defendant may prevail by showing fair use even where there exists a likelihood of confusion. Robert C. Scheinfeld is the head of the intellectual property group in the New York office of Baker Botts . Parker H. Bagley is a partner in the intellectual property group of Milbank Tweed, Hadley & McCloy . Burns McNamee, a Baker Botts associate, assisted in the preparation of this article. If you are interested in submitting an article to Law.com, please click here for our submission guidelines. ::::FOOTNOTES:::: FN1390 F.3d 1361 (Fed. Cir. 2004). FN2No. 03-1615, 2004 WL 2861370 (Fed. Cir. Dec. 14, 2004). FN3No. 04-1160, 2005 WL 11560 (Fed. Cir. Jan. 3, 2005). FN4125 S.Ct. 542 (2004).

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