In this issue:
Note from the Editors
As economic signs point to a recovery from the severe global downturn, many companies are positioning themselves for growth. Chinese companies that protect and assert their intellectual property in China and abroad stand to benefit as they market their products globally. We hope the information in this issue will help keep you informed as you guide your own company’s business and legal strategies.
In this issue, we share good news for Chinese contract research organizations: a recent federal circuit decision places limits on patent infringement liability for method patents. In other IP legal news, we discuss the success of companies seeking to transfer cases out of the Eastern District of Texas -- and the challenges that remain. In addition, we summarize the important efforts to harmonize Chinese patent litigation among the Chinese courts.
We are also happy to report a recent victory by Morrison & Foerster for firm client, AMEC, as well as rankings listing the firm as among the most active in patent litigation cases in the U.S.
We hope that you find the Morrison & Foerster China IP Quarterly Newsletter informative, and we welcome your feedback on these issues. A list of the members of our editorial board and their contact information is included on the back page.
Federal Circuit Ruling Spells Good News for Chinese CROs
By Janet Xiao and Kun Wang
In an en banc decision, Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 2007-1296 (Fed. Cir. Aug. 19, 2009), the Court of Appeals for the Federal Circuit in the United States overruled a previous Federal Circuit panel decision and held that Section 271(f) of the U.S. Patent Law, which provides a form of offshore patent infringement liability against persons who supply “components” of a patented invention in the U.S. for assembly abroad, does not apply to method claims. This bright-line rule eliminates an uncertainty faced by U.S. companies outsourcing research, development, and manufacture activities overseas, and significantly reduces their risks of patent infringement liability. For Chinese contract research organizations (“CROs”), the Cardiac Pacemakers decision should be particularly welcome news, since U.S. companies may now be even more willing to outsource their research, development, and manufacturing processes to China.
To read the full article, please click here.
Supreme People’s Court Seeks to Harmonize Chinese Patent Litigation
By Michael Vella and Harris Gao
On June 18, 2009, the Supreme People’s Court released for public comment its draft Interpretation of Several Legal Issues Regarding the Handling of Patent Infringement Cases (the “Interpretation”). When finalized, the Interpretation (consisting of 25 articles) will be the first national-level judicial interpretation regarding the handling of the common issues arising in Chinese patent litigation. The intent of the Interpretation is to harmonize the application of patent law and procedure among the Chinese courts. This article briefly summarizes some of the more significant articles in the Interpretation.
To read the full article, please click here.
Can Chinese Companies Transfer Their Patent Cases Out of the Eastern District of Texas?
By Michael Vella and Wang Yan
If a successful Chinese high-tech company is doing business in the United States, that company may one day find itself a defendant in a patent case before the U.S. District Court for the Eastern District of Texas. In recent years, the Eastern District of Texas has become a popular destination for patent holders to file their complaints due to its quick time to trial and its reputation as a venue favorable to plaintiffs. Furthermore, plaintiffs who filed cases in the Eastern District felt confident their case would stay there because the court rarely granted defendants’ motions to transfer - even in cases where the only connection to the district was the sale of an accused product that was sold nationwide.
But two recent appellate decisions have changed the legal landscape regarding motions to transfer patent cases in the Eastern District of Texas. The Eastern District’s initial opinions following these two appellate decisions suggest that more cases will be transferred from the Eastern District. A Chinese company may be able to transfer the case out of the Eastern District if it can prove the case has more connection with anther district court.
To read the full article, please click here.
Intellectual Property Practice News
Morrison & Foerster Wins Summary Judgment for AMEC
Morrison & Foerster obtained a summary judgment for its client AMEC that the employment agreements at the center of a trade secrets dispute between AMEC and its rival, Applied Materials Inc. (“Applied”), are invalid and constitute unfair competition under California law.
Applied sued AMEC in October 2007 after several of Applied’s former employees went to work for AMEC. The suit claims the former employees filed patent applications in China, Japan and the U.S. that disclosed Applied’s trade secrets to the public and violated the employment agreements.
Under the Applied employment agreement, it was assumed that any patent application a former Applied employee filed within a year of leaving the company relates to an invention he or she created during his time with the company, and the application was deemed assigned to Applied.
AMEC argued that the agreements constituted unenforceable non-compete agreements under California law because they restricted employee mobility, requiring former Applied employees to sign over inventions even if they resulted from independent research. In his May 20 ruling, Judge Ware sided with AMEC, finding that the agreements were unenforceable and constituted unfair competition under California law.
Harold McElhinny, a partner with Morrison & Foerster and lead attorney for AMEC, said it was common for employers in California to attempt to circumvent the state’s restrictions on noncompete agreements by putting provisions in their employment agreements similar to Applied's IP restriction, and that “it is really important” for the courts to strike down these provisions. Gerald Yin, AMEC’s chief executive officer, said the decision marked a victory for innovators, entrepreneurs, and all high-tech workers in California.
To read the full story, please click here.