Judge Calls Anticancer Inc.’s Attempts to Enforce GFP Patents “Misguided,” Warns that Future Enforcement Activity Could Warrant an Award of Attorney’s Fees

On June 26, in the case of Anticancer, Inc. v. Leica Microsystems, Inc., a federal judge in the Southern District of California granted a motion for summary judgment against Anticancer Inc., finding that Anticancer had failed to raise a genuine issue of material fact with respect to the allegation that Leica Microsystems had induced the infringement of US patent numbers 6,649,159; 6,759,038; and 6,251,384.  (see the Court’s Order) The patents generally relate to the use of green fluorescent protein (GFP) as an indicator of promoter activity in research animals. The judge denied the defendants’ motion for attorneys fees, but just barely, characterizing Anticancer’s efforts to enforce its patent rights as “misguided.” Although the court did not find the level of “bad faith” necessary to award attorney’s fees, it suggested that if Anticancer continues to bring meritless lawsuits an award of attorney’s fees could be justified.

The defendant, Leica Microsystems, sells imaging equipment that presumably can be used in a manner thatAnticancer believes would infringe  its patents, but the mere act of selling an item that can be used to infringe a patent does not in and of itself constitute patent infringement. Under 35 USC 271(b) a party can be held liable for inducing its customers to infringe a patent, but in order to prevail under an inducement theory the patent owner must prove that the customers have directly infringed the patent, and that the customer's were induced to infringe by the defendant . In this case, the court found that Anticancer had failed to produce sufficient evidence to withstand summary judgment with respect to both elements, i.e., direct infringement by Leica's customers and inducement by Leica.

Anticancer’s purported evidence of direct infringement comprised numerous articles published by scientists at various universities and research institutes that reported the use of an instrument purchased from Leica. Anticancer attempted to establish infringement by means of an expert declaration, but the court found that the declaration did not raise a genuine issue of material fact with respect to direct infringement by the third-party researchers. The court pointed out that the expert declaration did not identify which of Anticancer's patent claims in particular were infringed by the methodologies described in the publications. Furthermore, the court noted that all of the allegedly infringe claims are method claims, and that the expert had not explained “how the papers cited reflect the performance of each step of the methods claimed, much less that they were performed in the required order.”

Anticancer’s purported evidence of inducement consisted largely of Leica promotional materials, such as press releases, articles and brochures used by the company to promote its products. The court found two critical problems with this evidence. First, and most importantly, Anticancer had failed to present any evidence that the third-parties who had allegedly infringe the patents had ever seen any of the promotional materials. Second, some of the evidence actually showed that the products could be put to noninfringing use.

The court denied Leica’s request for an award of attorney’s fees, essentially concluding that a determination of “bad faith” is required for an award of attorney’s fees, and finding insufficient evidence that Anticancer’s actions were sufficiently egregious to constitute bad faith. However, the court went on to note that this is the third case in which Anticancer’s claims of patent infringement have been resolved in the defendant’s favor on summary judgment, and that although “Plaintiff’s efforts to enforce its patent rights may, at this point, be misguided, a finding of bad faith may be warranted if Plaintiff continues to press claims that ultimately have no merit, especially if courts continue to rule against it on summary judgment based on failures similar to those in this case."

The judge’s comments regarding the potential for a finding of bad faith if Anticancer continues to attempt to enforce its patents in this manner brings to mind a recent New York Times op-ed authored by Chief Judge of the Federal Circuit Rader and law profs Colleen Chien and David Hricik.  These authors suggested that a way to deal with the problem of frivolous patent lawsuits (i.e., patent trolls) would be for the courts to make more use 35 USC 285 and Rule 11 of the Federal Rules of Civil Procedure to shift the cost of litigation from defendants to patent owners filing frivolous lawsuits. They reported that, according to their count, attorneys fees were shifted under Section 285 in only 20 out of nearly 3000 patent cases filed in 2011, a statistic they found to be “remarkable.” The district court judge in the Anticancer case seemed close to awarding attorneys fees to Leica, and perhaps with the encouragement of Chief Judge Rader the next district court judge considering an award of sanctions against Anticancer might actually pull the trigger.