Welcome to Skilled in the Art. I'm Scott Graham, Law.com's lead IP reporter, and in this newsletter I'll be bursting balloons about the latest IP developments. Read on for seven things I'll be watching for next week at Oil States.

I hope you'll share your thoughts and feedback so this can be a two-way conversation. As always you can email me at [email protected] and find me on Twitter at @scottkgraham.

Bunch o' Infringement for Water Balloon Marketer

Boom! A $12.3 million verdict just exploded in what The Wall Street Journal has called ”the most expensive water balloon fight in history.” Tinnus Enterprises LLC and its licensee Zuru Ltd. scored the win Tuesday in a fight against Telebrands Corp. over water balloon patents in U.S. District Judge Robert Schroeder III's Tyler, Texas, courtroom.

The verdict in Tinnus v. Telebrands caps a cause celebre among some patent owners. It's partly due to conflicting rulings from the Patent Trial and Appeal Board, which found a Tinnus patent for simultaneously filling more than 100 water balloons invalid, and district and Federal Circuit judges, who've found the opposite. Plus there's the appealing narrative of a solo inventor who used a kickstarter campaign to develop Bunch O Balloons, one of the hottest-selling toys in the country, only to be encroached by a larger competitor.

In any event, jurors found that Telebrands, maker of the Balloon Bonanza, infringed two newer Tinnus patents and did so willfully, which could lead to trebling of the verdict. Jurors also awarded $67,000 against Walgreens, Sears, Kroger, Frye's and Bed, Bath & Beyond. That's chump change for them, but the jury also found their conduct willful, which could chill further marketing of the Telebrands product for now.

Thomas Dunlap of Dunlap Bennett & Ludwig led a victorious trial team that included Dunlap partner Cortland Putbrese and local counsel Eric Findlay of Findlay Craft. They overcame a defense led primarily by Boies Schiller Flexner. “It's been a long time coming and I'm glad to finally see Telebrands held to account for their actions,” Anna Mowbray, Zuru's chief operating officer, said from the courtroom.

The focus is now likely to shift to the PTAB, where Telebrands is already challenging the patents that gave rise to Tuesday's verdict. The PTAB previously invalidated the parent patent on grounds that the phrase “substantially filled” was indefinite. More recently the Federal Circuit suggested otherwise.

Of course, if the Supreme Court were to uphold the constitutional challenge to IPRs in Oil States v. Greene's Energy, any conflict would disappear.

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Seven Things I'll Be Watching for at Oil States

Have I mentioned that the future of patent litigation hangs in the balance at the Supreme Court? I'll be there Nov. 27 to cover the Oil States and SAS arguments, and you can join me for a day-after debrief by conference call. (More on that below). In the meantime, here are some of the tells I'll be watching for:

1. The individual justice scorecard: If the Oil States challenge is to succeed and knock out IPRs, it must start with the votes of Justices Neil Gorsuch(crusader against administrative state) and Samuel Alito (dissenting opinion in only Supreme Court IPR case, Cuozzo v. Lee). If they come out barking, that doesn't mean too much by itself.

Chief Justice John Roberts seems like the next most likely domino—he was hostile to the PTO during Cuozzo arguments, but signed the majority opinion. Then we have Justice Clarence Thomas—whose opinions White House counsel Don McGahn recently called the “driving intellectual force of the Trump administration” on the administrative state. But Thomas has also said very clearly that patents are public rights or at least quasi-private rights, which would cut against Article III protection. If this is one of the rare arguments where Thomas speaks—and it's too walk back some of those public rights comments—then put him in the petitioner column.

Assuming Oil States can reel in those four, who provides the decisive fifth vote? Justice Anthony Kennedy has signed on to most of the Supreme Court decisions of recent years cracking down on non-practicing entities—the group most likely to profit from the death of IPRs. But as Jan Wolfe points out at Reuters, conservative critiques of patent law are starting to tilt away from NPEs and more toward the tech industry. The most likely member of the court's liberal wing to cross over would be Justice Sonia Sotomayor. She signed Alito's dissent in Cuozzo, which warned about PTAB “shenanigans” being shielded from judicial scrutiny.

2. How many questions will there be about said shenanigans? Oil States and its amici have complained about PTAB practices such as stacking panels with extra judges—which the PTAB says it does only to secure uniformity—clashing with federal court decisions (like the water balloons case), and resisting motions to amend. These issues have little to do with the constitutional arguments, but the justices could point to them as pitfalls of non-Article III adjudication. It also could be a way for the court to encourage changes at the PTAB short of killing IPRs altogether. (If one of the justices does ask about stacked panels, I hope an attorney for Greene's Energy or the government will point out that we have that in federal appellate courts too. It's called en banc review.)

3. Will the government stand firm? So far the Trump administration has been staunchly supportive of the PTAB and IPRs. But if there's one thing we know about the president, he's prone to changing his mind. I doubt that would bleed down to the solicitor general's office in a patent case, but I'll be listening for any backtracking.

4. The more talk there is about 18th century England and the writ of scire facias, the better for Oil States. The more talk about Article I of the Constitution and Congress' power to secure patents for “limited times,” the better for Greene's Energy and IPRs.

5. The more talk there is favoring pharma patents, which are getting targeted more and more often in IPRs, the better for Oil States. The more talk about non-practicing entities, the better for Greene's Energy and IPRs. If Justice Gorsuch follows in his predecessor's footsteps and uses the pejorative “patent trolls,” it's game over for Oil States.

6. Will the justices ask what happens to previously invalidated patents if Oil States wins? This subject could take up the entire 60 minutes. If more than a couple of justices drill into it, then look out.

7. Lastly, how engaged are the justices in the next argument, SAS Institute v. Matal. If they're quiet and desultory, that too is good news for Oil States. If they seem genuinely interested in whether the PTAB must adjudicate IPRs claim by claim, then the PTAB apocalypse probably has been averted.

Let's Talk About the Arguments

At noon Eastern on Tuesday 11/28 I'll be sharing thoughts about the actual arguments on a conference call available to Skilled in the Art subscribers. Orrick partner Mark Davies, who knows a lot about the Supreme Court and about patent appeals, has agreed to join me on the call and share his far-more-expert impressions. For more info and to listen in, click here.

DLA Loses Its Last Marbury

I'm old enough to remember Piper Marbury before a series of mergers converted it to DLA Piper. Now I've learned from my ALM colleague Lizzy McClellan that DLA has said goodbye to the last of three generations of Marburys to practice at various iterations of the firm.

IP litigator Hugh Marbury has joined the D.C. office of Cozen O'Connor. Hugh Marbury's great-grandfather started his own law firm in the 1800s. His grandfather William Marbury Jr. joined him in the early 1900s, and the firm eventually became known as Baltimore-based Piper Marbury in the 1950s. The firm rolled up with Minnesota's Rudnick & Wolfe in 1999 and then DLA in 2005.

Cozen IP co-chair Kerry McTigue told McLellan that Hugh Marbury's experience with IP cases in Delaware made him especially attractive in the wake of the U.S. Supreme Court's May ruling in TC Heartland v. Kraft Foods Group Brands. That decision is expected to make Delaware the busiest jurisdiction for patent cases, supplanting the Eastern District of Texas.

Send Those Cases to Delaware. Then Send Them Somewhere Else

More patent holders may be filing in Delaware now, but accused infringers are now using the judicial vacancies there to get them transferred elsewhere, as my Delaware colleague Tom McParland reports. President Trump was said to be close in September to nominations for the two District of Delaware vacancies, but no word yet.

Whoops

I screwed up two names in last week's newsletter. David Dolkas—not “Kolkas”—is the McDermott Will & Emery partner who played a role in invalidating a Network-1 Technologies patent in the Eastern District of Texas. And Ed Reines does not have his name on the door yet; it's still Weil Gotshal & Manges, not Weil Gotshal & Reines as I had mistakenly typed. I regret both errors.

Judge Tigar Backs EFF

Speaking of correcting mistakes, U.S. District Judge Jon Tigar has overruled Magistrate Judge Maria-Elena James and entered default for the Electronic Frontier Foundation in its dispute stemming from a Stupid Patent of the Month column. In the process Tigar delivered a rousing affirmation of the SPEECH Act, which shields American interests from “libel tourism” abroad.

Global Equity Management (SA) Pty. has never defended the injunction it won in Australia requiring that EFF erase from the web Daniel Nazer's column making fun of—who else?—GEMSA and its patent on virtual cabinets. James concluded that GEMSA lacked sufficient contacts with California to allow the court to exercise personal jurisdiction over GEMSA

Tigar disagreed on that point. He then found that the Australian injunction, which prohibits EFF from writing about GEMSA's intellectual property, would be found overbroad in the U.S., an unconstitutional prior restraint on free speech, and a violation of California's anti-SLAPP law to boot. “It is thus clear that EFF would have been subject to law much more protective of its speech in California than it was in Australia,” Tigar ruled, rendering the Australian injunction unenforceable under the SPEECH Act.

Ashley Kissinger and Matthew Kelley of Ballard Spahr teamed with Duffy Carolan and Kevin Vick of Jassy Vick Carolan on behalf of EFF.

In closing, may your Thanksgiving be happy, your speech constitutional and your water balloons non-infringing.

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See you next week!