Eyes Wide Open: Lost Profits Are Available in the Absence of Acceptable Non-Infringing Substitutes

Lost profit damages are notoriously difficult to recover in patent infringement cases. Lost profits damages are recovered in only a small percentage of cases that go to trial. Among the challenges in recovering lost profits under the Panduit test are that the patent owner must prove the absence of acceptable non-infringing alternatives (Panduit factor 2) and proving a negative in life is never easy. But the law is sometimes more flexible than meets the naked eye.

In Bausch & Lomb vs. SBH Holdings LLC, over which U.S. District Judge Burke of Delaware presides, the accused infringer, SBH, learned this principle the hard way. SBH was accused of infringing B&L patents covering nutritional supplements for treating age-related macular degeneration, or AMD. B&L sought lost profits damages caused by SBH’s sale of the accused product that competed with B&L’s supplement. In pre-trial disclosures, B&L supported its claim for lost profits damages by relying on expert opinions of a damages expert and a technical expert. In his report, the damages expert relied in part on the technical expert in opining that there was an absence of acceptable non-infringing substitutes in the marketplace. In addition, the damages expert relied on an alternative theory of lost profits, namely that B&L should recover its share of the “eye vitamin” market.

Clock is Ticking for Responses to UK Government Consultation on Copyright and Artificial Intelligence

By Carlton Daniel, Mike Llewellyn, Paul Jinks and Richard Armitage on February 14, 2025 Posted in Artificial Intelligence, Copyright, Data Protection, Europe, Intellectual Property, Internet, Judiciary, Technology, UK, Uncategorized, US

The authors wish to thank Sumaiyah Razzaq for her contributions to this post.

Ever since the emergence of generative AI, a major concern for all participants has been the extent to which copyright works can and should be used in training AI models.

The application of UK copyright law for this purpose is disputed, leading to inevitable high-profile tension between, on one hand, rights holders keen to control and be paid for use of their work and, on the other, developers who argue that this legal uncertainty is undermining investment in, and the development of, AI in the UK.

Whilst cases are making their way through the courts in the UK and further afield (such as in Germany[1] and the US[2]) on this issue, there have been frequent calls for specific legislation (including by the UK government itself, which has publicly stated that the status quo cannot continue).

Court: Training AI Model Based on Copyrighted Data Is Not Fair Use as a Matter of Law

By Joe Meckes and Joseph Grasser on February 11, 2025 Posted in Artificial Intelligence, Copyright, Cybersecurity, Data Protection, Intellectual Property, IP Litigation, Judiciary, US

In what may turn out to be an influential decision, Judge Stephanos Bibas ruled as a matter of law in Thomson Reuters v. Ross Intelligence that creating short summaries of law to train Ross Intelligence’s artificial intelligence legal research application not only infringes Thomson Reuters’ copyrights as a matter of law but that the copying is not fair use. Judge Bibas had previously ruled that infringement and fair use were issues for the jury but changed his mind: “A smart man knows when he is right; a wise man knows when he is wrong.”

At issue in the case was whether Ross Intelligence directly infringed Thomson Reuters’ copyrights in its case law headnotes that are organized by Westlaw’s proprietary Key Number system. Thomson Reuters contended that Ross Intelligence’s contractor copied those headnotes to create “Bulk Memos.” Ross Intelligence used the Bulk Memos to train its competitive AI-powered legal research tool. Judge Bibas ruled that (i) the West headnotes were sufficiently original and creative to be copyrightable, and (ii) some of the Bulk Memos used by Ross were so similar that they infringed as a matter of law.

Copyright Office: Copyrighting AI-Generated Works Requires “Sufficient Human Control Over the Expressive Elements” – Prompts Are Not Enough

By Joseph Grasser and Anna Fraser on February 4, 2025 Posted in Artificial Intelligence, Copyright, Cybersecurity, Intellectual Property, IP Litigation, US

In January 2025, the Copyright Office released Part 2 of its anticipated three-part series on copyright and artificial intelligence (AI). The report discusses copyrighting works that include AI-generated content and provides guidance for applicants seeking protection of such work.

Part 2 emphasizes the importance of “human authorship,” as works purely generated by AI or works lacking sufficient human control over the work’s expressive elements are not copyrightable. Notably, in the eyes of the Copyright Office, entering prompts alone—no matter how detailed—will not be considered sufficient control over the AI-output for the ultimate work to be entitled to copyright protection. Still, original human expression is protectible even if the final work product also includes AI-generated content—for example, a film incorporating an AI-generated special effects sequence is still copyrightable even though the AI-generated portions are not. Part 2 seemingly carves out protection for human-authored work that is perceptible in an AI-output, work that used AI only to “assist” with its creation, and human modifications to or creative selection, coordination, or arrangement of AI-generated outputs. Of course, the ultimate authority on what is copyrightable lies with the courts, which have only begun to explore the issue.

The EU’s New Packaging Regulation – What’s your IP got to do with it

By Dr. Sandra Mueller on January 30, 2025 Posted in Brand Protection, Consumer Law, Designs, Europe, Germany, Intellectual Property, Trade Mark, Trademarks

The European Union’s Packaging and Packaging Waste Regulation (PPWR) was published on 22 January 2025 in the EU official journal. It will enter into force on 9 February 2025 and apply with immediate effect in the EU Member States from 12 August 2026.

The PPWR applies to all packaging placed on the EU market and to all packaging waste, regardless of the type of packaging or the material used[1]. It establishes requirements for the packaging’s entire life cycle imposing obligations on manufacturers and importers of products in the EU to reduce unnecessary packaging and packaging waste and promote reusable and refillable packaging and recycling[2]. An overview of the key changes can be accessed on our cross-practice ESG and Sustainability blog here.

ITC Confirms that a Disclaimer from a Later Patent Applies to the Same Term in an Earlier Related Patent

By Adam Hess, Ronald Lemieux and Woli Urbe on December 20, 2024 Posted in International Trade Commission, IP Litigation, ITC Section 337, Patent Litigation, Patents, Unified Patent Court, US, USPTO

In a November 6, 2024 opinion in Certain Computing Devices Utilizing Indexed Search Systems and Components Thereof, the U.S. International Trade Commission (“ITC”) held that statements, disclaimers, and positions taken during the prosecution of a later patent apply to the construction and interpretation of the same term in an earlier related patent. Using this standard, the Commission found no violation of Section 337 of the Tariff Act of 1930, because a disputed claim term’s scope in an earlier asserted patent was narrowed by the applicant’s disclaimer in a later related patent.

The Asserted Patents and Claims

X1 Discovery, Inc. initiated the ITC investigation by filing a complaint against seven respondents, alleging violations of Section 337 based on infringement of U.S. Patent Nos. 8,498,977 (“the ’977 Patent”) and 8,856,093 (“the ’093 Patent”). These patents relate to systems and methods for efficient search indexing. The patents share a common specification and claim priority to the same parent application shown below. In addition, the ’093 Patent had a child patent, U.S. Patent No. 9,633,139 (“the ’139 Patent).

US PATENT FEE INCREASES FOR 2025: Not (Nearly) as Bad as They Could Have Been

By Raj Pai, Ph.D. and Frank Bernstein on December 18, 2024 Posted in Patent Litigation, Patents, US, USPTO

Earlier this year, as we discussed here, here, and here, the United States Patent and Trademark Office (USPTO or Office) proposed a number of sweeping changes to the Office’s patent fees, including a very steep set of fees for filing terminal disclaimers, later continuation applications, and three or more requests for continued examination (RCEs). The USPTO also proposed a 25 percent hike in America Invents Act (AIA) trial fees.

The new fees, announced last month and going into effect January 19, 2025, include some, but not all of these fee hikes. The ones that remain still may well affect patent prosecution strategies. We discuss some of the most prominent fee increases here.

Background

As we discussed in our prior blogs, in an April 3, 2024 Notice of Proposed Rulemaking (NPRM), the USPTO proposed a number of fee increases, ostensibly to help the Office recover its costs. The proposal would have increased terminal disclaimer fees by as much as 700 percent and received tremendous pushback, so the USPTO backed down. Likewise, because of strong objections, the USPTO withdrew its proposal for a very substantial fee for a third RCE.

Theft and Conversion as the Basis for a Violation of Section 337

By Adam Hess and Woli Urbe on November 19, 2024 Posted in Biotech, FDA, Food and Drug Administration, Intellectual Property, International Trade Commission, ITC Section 337, Life Sciences, Life Sciences Biotech Pharma, US

For the first time, the U.S. International Trade Commission (“ITC”) has set forth and applied its legal standard for a theft or conversion claim in a Section 337 of the Tariff Act of 1930 investigation. Section 337 gives the ITC broad powers to investigate and address unfair acts in the importation of articles into the United States. Most Section 337 investigations are based on infringement of statutory intellectual property such as patents, trademarks, and copyrights. But Section 337 investigations can also be based on non-statutory unfair acts, such as trade secret misappropriation, unregistered trade dress infringement, and anti-trust violations. In a November 1, 2024 opinion in Certain Botulinum Toxin Products and Processes for Manufacturing or Relating to Same, the Commission articulated the legal standard for establishing a violation of Section 337 based on theft or conversion. Applying that standard, and as discussed in this article, the Commission found no showing that the respondents converted complainant’s property, and hence no violation.

SaaS Resellers: High Court rules on protection for SaaS resellers under Commercial Agents Regulations

By Paul Jinks on October 28, 2024 Posted in Contract, Technology, UK

For 30 years many third-party agents who buy or sell goods in Great Britain on the behalf of another (their principal) as opposed to in the agent’s own name have qualified for protection under the Commercial Agents (Council Directive) Regulations 1993 [The Commercial Agents (Council Directive) Regulations 1993] (the Regulations). If the criteria for the Regulations to apply is met, then they protect both individual self-employed agents and companies who act as agents.

The Regulations stem from a 1986 EEC Council Directive [Directive – 86/653 – EN – EUR-Lex]. Equivalent protection for agents is in place in Northern Ireland [Commercial Agents (Council Directive) Regulations (Northern Ireland) 1993] with similar, but not always identical, protection across EU member states.