How will your IP issues be resolved?

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Joseph E. Gortych

Intellectual property (IP) is the somewhat pretentious name used to describe various forms of creative works, the rights to which can be protected using legal devices such as copyrights, trade secrets, trademarks, patents, and others. Not too long ago, the rarified field of IP was occupied almost entirely by lawyers. However, today's high-tech business "isn't your father's high-tech business" when it comes to IP.

These days, everyone has a key role to play in the IP dealings, both within and without a high-tech company—whether they like it or not. The court case that follows in this article is an example of the important role IP plays in the telecommunications marketplace. But first it is important to understand some fundamentals of how IP issues arise and relate to a high-tech business.

Intellectual-property issues arise in a number of different ways. For instance, many IP issues evolve because of "external" interactions—the interactions a company has with outside entities. Nine of the most important external IP interactions are discussed here, with respect to a typical high-tech Company X (see figure).

First, there is a licensing interaction, whereby Company X seeks a license on one or more patents and/or trade secrets (technology) from another company (Company A). Alternatively, Company X may wish to grant a license on one or more patents and/or technology to another company (Company B).

There are also government interactions with Company X. These include antitrust issues brought by the US Department of Justice (DOJ), such as the ongoing Microsoft antitrust case, or, earlier in the last century, the Xerox and IBM cases. Fortunately, these interactions are somewhat infrequent, though they cannot be entirely neglected.

Other government-based IP interactions with Company X involve patenting inventions, trademarking names of products, and servicemarking the names of services. In this case, a company interacts with the US Patent and Trademark Office (USPTO). Copyrights are registered through the US Copyright Office.

Further, there are vendor interactions and customer interactions in which Company X exchanges confidential and/or trade-secret information with its vendors (Company C) and its customers (Company D) to respectively obtain and provide the best products and services. Confidential disclosure (CDAs) and/or nondisclosure agreements (NDAs) serve to protect information that is exchanged during these interactions.

There are also patent-based interactions, in which Company X accuses another company of infringing its patent (Company E), or is accused of infringing the patent of another company (Company F). Patents are landmines in the IP landscape that can wreak havoc with a company's plans to make, use, sell, or import products. As a general rule, whenever and wherever large sums of money are at stake, corporate camaraderie can evaporate and legal battles ensue. This happens with patents right in our own technological backyard, as witnessed through the infringement case involving the first low-loss optical fiber.

In the mid-1980s, Corning Glass Works (Corning) sued Sumitomo Electric USA (Sumitomo) for infringement of its patented inventions on low-loss optical fiber.1, 2 The dispute began in April 1984 when Corning complained to the International Trade Commission that optical fiber imported into the United States by Sumitomo infringed its optical-fiber patents. During this time, Sumitomo was constructing a major optical-fiber manufacturing facility in Greensboro, NC, with big plans to start producing optical fiber used in LAN construction, directly in competition with Corning.

The key claim in one of the Corning patents covered an optical fiber having a pure silica cladding and a "positively" doped silica core. Positively doping the core provided the necessary increase in refractive index to form the waveguiding structure. Sumitomo's optical fiber, on the other hand, was formed by "negatively" doping the cladding with fluorine, while leaving the core undoped, thereby reducing the cladding refractive index.

Sumitomo believed its optical fiber was different enough from Corning's fiber to avoid infringing Corning's patents. Specifically, Sumitomo believed that it did not infringe the patent under what is called the doctrine of equivalents.

The doctrine of equivalents allows for patent infringement to be found even if an accused product (in this case, Sumitomo's optical fiber) does not "literally infringe" a patent claim (Sumitomo did not use a positive dopant, as required in the literal language of the claim). Doctrine of equivalents infringement can occur if there is an equivalent structure that "performs substantially the same function in substantially the same way to achieve substantially the same result" as the patented invention.3

Sumitomo asserted in court that the positive doping requirement of the claim was not present in their invention, so that there was no equivalent element in their fiber—and thus no doctrine-of-equivalents infringement. However, both the district court and the Court of Appeals for the Federal Circuit ruled against Sumitomo.

The courts found that the equivalent of a positive dopant of Corning's waveguide structure was indeed present in Sumitomo's fiber structure, formed using negative dopant in the cladding. Basically, the court believed that Sumitomo's negatively doped structure performed essentially the same function in the same way to achieve the same result as the Corning fiber.

Sumitomo was thus found liable for infringing Corning's patent, and ultimately it was forced to strike a deal with Corning that resulted in a $250 million settlement payment. Needless to say, the court ruling and subsequent settlement dealt a major blow to Sumitomo's strategy of producing optical fiber in the United States.

The Corning case is an example of a patent-based interaction between companies that reached the ultimate conclusion. In the vast majority of intellectual-property infringement situations, an agreement is reached (for example, a licensing deal is struck) long before lawyers start heading up the courthouse steps. There will always be instances in which both sides want to have their day in court because they believe they have a stronger position and because the stakes are too great to settle for less than outright victory.

Regardless of how a given IP situation arises and concludes, the likelihood of obtaining a favorable outcome is greatly enhanced if a company takes a sophisticated approach to its IP. This is, in large part, dictated by how a company deals with the key internal IP issues.

Joseph E. Gortych is an optical engineer and an intellectual property attorney specializing in optics and photonics technologies. He is Of Counsel to the law firm of Schwegman, Lundberg, Woessner & Kluth, P.A., Minneapolis, MN, and can be reached at jgortych@aol.com. (The opinions expressed herein are those of the author alone.)

  1. US Patents 3,659,915 and 3,884,550.
  2. Corning Glass Works v. Sumitomo Electric USA, 868 F.2d 1251, 9 USPQ2d 1962 (Fed. Cir. 1989).
  3. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 US 605 (1950).
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