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On April 4, 2011, the District Court for the Eastern District of Texas set aside a jury verdict of $625 million in favor of Mirror Worlds and against Apple, Inc. Mirror Worlds, LLC v. Apple, Inc., Case No. 6-08-CV-88 (E.D. Tex. April 4, 2011) (Judge Davis). The Court set aside the jury’s finding of infringement because Mirror Worlds failed to prove that Apple directly infringed Mirror Worlds’ patents because Mirror Worlds did not present evidence that Apple performed the steps detailed in the method claims.

The Court found that it was insufficient to show that Apple sold software that could perform the steps; rather, the Court held that Mirror Worlds needed to prove through appropriate evidence that Apple performed each and every step of the method claimed in the patent, i.e., that Apple itself used the methods claimed in the patent. As Mirror Worlds failed to proceed on that theory–and relied instead on mere sales of software–there was not sufficient evidence to support the jury verdict.

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On April 1, 2011, the Federal Circuit issued another decision regarding the written description requirement. In Crown Packaging v. Ball Metal, No. 2010-1020 (Fed. Cir. April 1, 2011), the Federal Circuit analyzed a district court’s decision holding that certain claims of the Crown patent were invalid for violating the written

description requirement.

The patent at issue pertained to an invention for seaming metal cans. The district court held that the asserted claims covered driving a chuck either inside or outside of the reinforcing bead for seaming the can, but the specification only supported driving a chunk outside of the can end’s reinforcement bead. Thus, according to the district court, the specification did not support the claims in the patent because the specification only taught “outside,” while the claim covered both “outside” and “inside.” The patent therefore was invalid.

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Many considerations go into licensing and settling disputes over intellectual property. But one often overlooked consideration is the impact of taxes on decisions to license or settle. Because there are complex tax issues that stem from either the licensing of intellectual property or the settlement of lawsuits concerning intellectual property, it is important to analyze the tax issues impacting a particular transaction at the early stage of the transaction and certainly long before the particular transaction is finalized. In addition, there are tax advantages for inventors of patents in transactions involving the transfer of patent rights, as inventors may be able to achieve favorable tax treatment for the sale of their patents, provided that certain guidelines are followed.

For a more detailed discussion, see my article on Taxes — An Overlooked But Important Consideration for Inventors and Patent Owners.

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