Source: http://271patent.blogspot.com/2007/01/
Timestamp: 2019-04-18 18:51:32+00:00

Document:
Klemens: Bring Back Freeman-Walter-Abele For Software Patents!
Ben Klemens, author of "Math You Can't Use," is a guest scholar at the Center on Social and Economic Dynamics at the Brookings Institution, where he writes programs to perform quantitative analyses and policy-oriented simulations. He also consults for the World Bank on intellectual property in the developing world and computer-based simulations of immigration policy.
Ben is also an aggressive critic of software patents (who has previously butted heads with the 271 blog on this topic), and has just published a working paper titled "Drawing the Line: The Rise of the Information Processing Patent." The paper highlights many of the points brought up in his book, and provides some updates on recent developments in software patents.
Ben's work is important because he is one of the few critics that does a decent job at times in dissecting many of the problems facing the software industry in light of patents (as opposed to IP anarchists Eben Moglen and Richard Stallman, who propose banning software patents and other IP entirely). While I do not agree with many of his conclusions (e.g., software is math and is therefore unpatentable), his papers are often thought-provoking and well-written.
The timing of Ben's most recent article is interesting, since the criticism of software patents has now served as a catalyst for other industry and business members to call for sweeping reforms that would limit patentable subject matter and restrict patent rights across the board. While people have reflexively equated patents with a "pro-business" outlook, this has started to change. As Professor Wegner stated in his recent post on Patently-O, in today's business climate, being "pro-business" means to some people that you are "anti-patent."
And this sentiment is showing support in the USPTO as well. Setting backlog issues aside, the PTO has always been resistant to expanding the scope of patentable subject matter, and continues to be vexed over the proper handling of software and business-method patents. Recently, the undeniable fact exists that the PTO has renewed efforts to find any way to limit patentable subject matter (sua sponte, I might add), and has demonstrated unusual eagerness in aggressively attacking software patents. After reading Ben's paper, I was surprised how much Ben's recommendations had in common with the PTO's Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility.
Critics contend that the primary problem with software patents is that they do not apply singularly to a specific "software" industry. While certain "centralized" technologies (such as biotech) have an inherently limited base of patents and patent owners, Klemens argues that the cost of R&D and compliance on account of patents is relatively straightforward, since most companies know who the developers are, and the technologies they normally develop in. However, since software is "decentralized," patents related to software have the potential to spill over to all industries, making patent compliance extremely difficult, if not impossible to accomplish.
While companies fabricating semiconductors or synthesizing drugs know where most of the patent threats lie, the same cannot be said of companies trying to assess a patent threat on software being used within the company, regardless of whether the software was developed there or not. As such, situations arise where a telephone company (e.g., Southwestern Bell Corp.) can send cease-and desist letters to a toy company (e.g., Museum Tour) on software patents related to a web-based structured document browser. As Klemens points out, "[i]t is unlikely that the owners of Museum Tour thought of themselves as a computer software firm, but by having a web site, they effectively were."
[i]t is wrong to think of software patents as only affecting companies that vend software. The majority of software designers and authors are at companies where software is simply necessary for daily operation. Whereas the set of people who have the know-how, equipment, and inclination to work on a mechanical device may be limited to a few hundred organizations, the set of people who work full-time on writing new and potentially innovative software is distributed among millions of organizations.
The size of the software and business method pseudo-industries derives directly from the elimination of the concept of insignificant postsolution activity. Information and the tools to manage information are truly ubiquitous, but the equipment needed to engage in significant postsolution activity, such as testing a chemical’s properties or verifying that a machine actually runs, are available to a more limited range of people. Therefore, when inventions with no significant postsolution activity are allowed, the number of potential innovators grows exponentially.
The problems with patents in a massively decentralized industry stem from the elimination of the “insignificant postsolution activity” stipulation on patentable subject matter. Virtually every company in the country has a computer on hand, and those of a certain scale have full-time employees actively writing code. Yet only a handful of companies have employees actively synthesizing new drugs. This is closely related to the fact that information processing is a general requirement for anyone with information, and that information processing tools are considered to be stock equipment.
Thus, the recommendation of this paper is not an innovation, but a regression. A great many of the problems with patents that fill the newspapers and vex businessmen can be solved by reinstating the distinction from Diehr and its predecessors that indicate a device is patentable only if it is based on steps that are simultaneously novel and non-trivially physical.
Of course, at this point, most of Ben's suggestions are purely academic, since CAFC caselaw has expressly overruled Freeman-Walter-Abele. However, in light of the current climate perceived at the USPTO and Supreme Court, these is the distinct possibility that these questions will be raised again sooner than we think.
Read the transcript from Brookings Institution symposium "Software and Law: Is Regulation Fostering or Inhibiting Innovation?"
Patent Trolls: The paper addresses "patent trolls" and also provides a revised definition of "patent troll," which, in my opinion, is more accurate: "a patent troll is one who unfairly takes advantage of informational asymmetries by suing independent inventors who are ignorant of the field of patents in which the troll works."
infringement sent out. For more info, see here and here.
Michael Kölling is credited as being one of the creators of BlueJ, an integrated development environment designed for teaching beginners how to program. It's based on an earlier language called Blue, which he, Bett Koch, and John Rosenberg came up with in 1994.
BlueJ was developed to support the learning and teaching of object-oriented programming, and its design differs from other development environments. A main screen graphically shows the class structure of an application under development (in a UML-like diagram), and objects can be interactively created and tested. One of the fundamental features of the system is an interactive way to instantiate and invoke objects called the "Object Bench".
In May 2005, Kölling noticed that Microsoft's Visual Studio had added a new feature they called "Object Test Bench" which looked very similar to what Kölling had developed earlier. This information came to Kölling's attention as a result of a blog entry by Dan Fernandez, Lead Product Manager of Visual Studio Express, which basically admitted that developers were "inspired" by BlueJ. While Kölling did not object to the use of the technology, he expressed in a separate blog entry that attribution should have been given to the creators of this software.
Lo and behold, word got out that, on October 20, 2005, Microsoft filed for a patent application titled "Object test bench" (US Publication 2006/0101406), which covered this same technology. Needless to say, the open-source community became enraged, and started mobilizing a campaign to stop the application.
One of the companies that was contacted was Sun Microsystems. BlueJ is a cross platform program, and uses Sun’s Java Programming Language. After reviewing the application, Simon Phipps, chief open source officer at Sun Microsystems, labeled the patent attempt as "disgusting" and created a blog entry of his own, disparaging the application.
Kölling's blog then began exploding - his blog entry made the front pages of digg, slashdot, reddit and del.icio.us. The article had more than 40,000 hits in just over 24 hours. It wasn't long before the word got back to Jason Matusow, Sr. Director of IP and Interoperability at Microsoft.
To Microsoft's credit, they acted quickly to diffuse the situation. Late yesterday, Microsoft announced that the patent application would officially be dropped, and that the filing of the application was the result of an error. According to Matusow, there was a miscommunication between the researchers and the lawyers, and as a result the application was submitted for Object Bench itself instead of the surrounding code that Microsoft created. As for the conspiracy theorists that claimed that the application was part of a larger "patent grab" by Microsoft, Matusow responded, saying "[t]hat doesn't make any sense . . . there's no logic to it. Why would you patent something in a space where you know there is prior art? There would be litigation, and you would know you couldn't be successful."
In the end, everyone seemed happy with the outcome, and this case provides a good example of how "community review" of patent applications can benefit patent applicants and the public-at-large. Another interesting aspect of all this is a newly-apparent appreciation by all parties of the power of blogs. According to Matusow, Microsoft has over 3000 bloggers, which helped improve the quickness of the response. In his mind, this incident only "strengthens the case for customer-facing blogs."
See Ed Burnett's excellent blog coverage of this issue here and here.
Pursuant to new policy, the CAFC is now posting merit briefs on the web site. In the order, the court indicated that briefs of amici curiae will be entertained in accordance with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29.
APLF (2001) publication "Discovery and Use of Opinions in Litigation"
Joseph R. Re, "Litigating the Issue of Willful Patent Infringement"
Unfortunately, since discovery orders are ordinarily not final, and therefore not appealable, rulings on privilege rarely reach the appellate level. We may have to wait quite a while for another case involving discovery sought outside the trial forum, facts so clearcut as to justify mandamus, or a respondent brave enough to risk contempt to get appellate review.
Hydril and Grant Prideco had cross-licensed various patents related to threaded connections for interlocking lengths of drill pipe used in drilling oil and gas wells. Under terms of the agreement, Grant Prideco was restricted to developing only large-diameter connections, while Hydril was restricted to developing only small-diameter connections.
While the agreement was in force, Grant Prideco obtained a patent that pertained to small-diameter connections and subsequently sent numerous letters to Hydril's customers suggesting that they take action to "ensure that [Grant Prideco's] patent rights are being respected." Feeling a "reasonable apprehension" that a lawsuit was forthcoming, Hydril filed for declaratory judgment relief, alleging that Grant Prideco (1) monopolized two product markets by enforcing a patent that had been obtained by fraud on the Patent and Trademark Office (i.e., a Walker Process claim), (2) infringed a different patent that Hydril owns, and (3) breached the agreement between the parties.
The district court dismissed the case under Rule 12(b)(6) for failure to state a valid claim for relief, concluding that Hydril could not objectively establish reasonable apprehension that Grant Prideco intended to enforce its patent against Hydril. Also, the district court dismissed the patent claim, claiming that the agreement provided only a breach of contract remedy, and refused to grant supplemental jurisdiction over the state law contract claim.
While the majority decision reversed and vacated the district court's decision, it was apparent that the CAFC did not want to make the first extensive post-Medimmune analysis on the facts of the case (and, notably, prior to the Medimmume remand itself). It's also worth noting that the oral arguments took place back in October of 2006, which was 3 months prior to Medimmune. As one reader commented, it seems as though this case, decided just over two weeks after Medimmune, came at the CAFC like Kato flying out of Inspector Clouseau's broom closet ("no Kato - now is not zee time!").
Under a Walker Process claim, enforcement of a patent procured by fraud on the Patent Office may be violative of § 2 of the Sherman Act. Walker Process fraud is a variant of common law fraud, which includes: (1) a representation of a material fact, (2) the falsity of that representation, and (3) the intent to deceive or, at least, a state of mind so reckless as to the consequences that it is held to be the equivalent of intent (scienter). Looking at the conduct alleged by Hydril, the court concluded that the conduct, if proven, would constitute Walker Process fraud.
The court decided narrowly that the district court improperly dismissed the case under 12(b)(6) as it pertained to the Walker Process claim, but the court carefully avoided any analysis on the standing issue ("this case does not present an occassion to address the Supreme Court's recent decision in Medimmune").
To avoid any possible misunderstanding of our narrow decision, we point out (perhaps unnecessarily) that in reversing and remanding we neither express nor intimate any view on the remaining issues in this case. We hold only that, in response to a motion to dismiss under Rule 12(b)(6), the district court should not have dismissed the Sherman Act and patent infringement claims.
Judge Mayer's dissent: The dissent chided the majority for not affirming the dismissal, since Hydril admitted that it only competes with Grant Prideco in the market outside the United States. "Thus, as a matter of both law and logic, a "reasonable apprehension" of patent enforcement cannot exist where neither the plaintiff nor any of its customers may be subject to the exclusionary power of a patent. "
This is a question of law that should be resolved without any further ado, especially since the instant appeal is from a Rule 12(b)(6) motion to dismiss for failure to state a claim. It should be decided on the sufficiency of the pleadings, and is not dependant on the factual record of the case. Accordingly, rather than punt this question of law back to the district court, we should hold that Hydril does not have standing to bring a Walker Process antitrust claim with respect to the finished drill pipe market because it admittedly only competes with Grant Prideco in that market "outside the United States."
in Technical Center 2600, which handles Internet-related inventions. Congratulations, John!
As deputy commissioner, Love will be responsible for changes in patent practice, rules of practice and procedures, examining priorities, and classification of technological arts. He leads the operations of the Patent Legal Administration, Patent Cooperation Treaty (PCT) Legal Administration, the Office of Petitions, and International Liaison.
Love joined the USPTO in 1969 and has served the agency in a variety of leadership positions, including director of the technology center with responsibility for examining business method patents and computer related inventions. He was appointed to the Senior Executive Service in 1988.
View John Love's bio here.
View USPTO organizational chart here.
Presentation "Steps Taken To Improve Patent Quality" (2002), presented at FTC/DOJ Hearings on the Implications of Competition and Patent Law and Policy. See summary of presentation here, starting on page 91.
John has been a supporter of 3rd-party involvement in the examination process, much like the "Community Patent Review" project set to be unveiled in April.
Co-Author: "Successfully Preparing and Prosecuting a Business Method Patent Application."
Discussion with CFO.com on business method patents.
Plaintiff MBO appealed a summary judgment of noninfringement of U.S. Patent No. RE 36,885 after a Markman construed the various disputed claim terms directed to a hypodermic safety syringe. MBO conceded that under the district court’s claim construction there was no infringement of the patent claims. The district court therefore granted summary judgment in favor of defendant Becton.
The term "immediately" appeared only in the preamble of certain claims. The district court found that the preamble limited these claims. The district court also read this term into other claims where the word "immediately" did not appear. In reviewing the specification, the CAFC noted that remarks pertaining to "the present invention" were instructive in establishing a definition for the term. Furthermore, prosecution arguments distinguishing the claims from the prior art further supported the lower court's definition and the CAFC affirmed this part of the construction.
Reissue claims 32 and 33 do not contain the word "immediately," but the district court nonetheless used its construction of that term to limit the claims. We sympathize with the district court’s choice, since we agree that safety at once upon removal from the patient is an essential element of the invention as described by MBO. However, we cannot endorse a construction analysis that does not identify "a textual reference in the actual language of the claim with which to associate a proffered claim construction."
The primary reason for the reissue application was that the original claims only covered "retraction" of the needle into a stationary guard. In the reissue, the term was changed to recite a "relative movement" to capture forward movement as well. The PTO allowed the reissue without objection, but the district court nonetheless limited the claims to "retraction," thus negating the expansion of claim scope permitted by the PTO under the recapture rule.
MBO clearly sought in reissue to broaden the scope of its patent coverage by rewriting its claims to cover all relative movement, not just retraction. That broadening was the explicitly stated purpose of the reissue application . . . In light of these clear statements in the prosecution history of the RE ’885 patent, we are compelled to give effect to MBO’s stated intent to broaden the coverage of its claims. Whether those broadened claims are invalidated by the recapture rule is an issue separate from construction. In the narrowly limited appellate posture of this case, only the question of infringement, not validity, is before us.
USPTO Deep-Sixes Top Ten List - the Office quietly announced yesterday that, beginning this year, the USPTO will no longer release an annual list of top 10 organizations receiving the most U.S. patents.
The 2006 data will be available in "raw data" form around April in the annual “Patenting by Organizations” report on the agency's web site (www.uspto.gov). The report will profile U.S. patents granted to U.S. and international organizations receiving 40 or more patents each year, but will not be published in a "top ten" format.
In some rather odd reasoning, the USPTO's position is that, by ceasing publication of the top 10 list, the USPTO will be able to focus the public's attention on quality over quantity by discouraging any perception that "more is better." Of course, it will be a simple matter for other parties to divine this information from the raw data and publish the findings.
USPTO Announces Priority Document Exchange Program - On January 16, 2007, the United States Patent and Trademark Office, along with the European Patent Office (EPO), implemented a new service to allow certified copies of patent application priority documents to be exchanged between the two offices electronically. The new service, which is free of charge to applicants, is the result of a 2005 agreement between the USPTO and the European Patent Office. Priority document exchange will get underway between the USPTO and the Japan Patent Office (JPO) later this year.
The CAFC considered a district court's SJ finding of non-infringment where a claim term of "about 1:5" was interpreted as meaning "approximately 1:5, encompassing a range of ratios no greater than 1:3:6 to 1:7.1."
In reaching this conclusion, the district court relied upon both intrinsic and extrinsic expert testimony. The district court also considered evidence related to Ortho’s reissue application to the same patent, which was pending while proceedings involving the original patent were ongoing in the district court.
The intrinsic evidence points to a meaning for the term "about 1:5" that is narrow because the 1:5 weight ratio, along with the 1:1 weight ratio, is distinctly claimed and distinguished from other broader weight ratio ranges in the patent. There are fifteen claims in the ’691 patent, all of which use the term "about" to modify the weight ratio or weight ratio ranges of tramadol to acetaminophen . . . There are two claims, claim 4 and disputed claim 6, that claim a single weight ratio; the other claims distinctly point out ranges of weight ratios . . . This leads to a conclusion that one of ordinary skill in the art would understand the inventors intended a range when they claimed one and something more precise when they did not.
Also relevant is the prosecution history of the ’691 patent and the ’221 reissue patent, described above. Ortho admitted that it claimed more than it was entitled to claim in the ’691 patent when, in its reissue application, it cancelled the broader "comprising" claims, except for claim 6. In sum, having so distinctly claimed the "about 1:5" ratio, Ortho cannot now argue that the parameter is broad enough to encompass, through the doctrine of equivalents, ratios outside of the confidence intervals expressly identified in the patent. We agree with the district court that to do so would eviscerate the limitation. The intrinsic evidence in this case points to the criticality of the "about 1:5" parameter, which necessitates a narrow claim construction and range of equivalents that does not encompass Caraco’s product.
Transclean successfully sued Bridgewood Services, Inc. for infringement on Transclean's patent. After obtaining the judgment, Transclean then filed a separate suit against Jiffy Lube and more than thirty other fast lube businesses that had purchased machines from Bridgewood.
When some of the defendants asserted non-infringement, Transclean filed a motion for summary judgment in which it argued that the defendants should be precluded from asserting a non-infringement defense because the Bridgewood litigation concluded with a judgment of infringement by the same machines. As part of its argument that issue preclusion applied, Transclean asserted that the defendants were in privity with Bridgewood.
Perhaps smelling blood, the defendants also filed motions for summary judgment, claiming that Transclean was itself subject to claim preclusion, and was aware of defendant’s use of the infringing machines during the earlier litigation, but chose not to pursue a cause of action. The district court granted the defendant's motion.
The term ‘privity’ is a label that expresses the conclusion that a particular nonparty in earlier litigation should be treated the same as a party to that litigation for claim preclusion purposes . . . In the Eighth Circuit, privity exists when the parties are "so closely related" and their interests are "so nearly identical" that "it is fair to treat them as the same parties for purposes of determining the preclusive effect" of the first judgment. Ruple v. City of Vermillion, 714 F.2d 860, 862 (8th Cir. 1983).
It is important to recognize that under this standard, a manufacturer or seller of a product who is sued for patent infringement typically is not in privity with a party, otherwise unrelated, who does no more than purchase and use the product . . . In other words, ordinarily such parties are not so closely related and their litigation interests are not so nearly identical that a patentee’s suit against one would bar a second action against the other under the doctrine of claim preclusion.
The question facing us, therefore, is how to treat Transclean’s representations that Bridgewood, the manufacturer and seller of the T-Tech machine, was in privity with its customers when the actual circumstances do not necessarily support that conclusion. Transclean made a tactical decision to admit that such a "special relationship" existed, first in connection with its issue preclusion argument and then for purposes of claim preclusion as well. Should Transclean be bound by its litigation strategy—its concession that Bridgewood and its customers were in privity?
While some circuits have limited application of judicial estoppel to inconsistent factual assertions, others have applied the doctrine to legal conclusions as well . . . The Eighth Circuit has not specifically addressed whether judicial estoppel extends to legal positions, but the majority of circuits that have spoken on the issue have either squarely held that the doctrine may be applied to inconsistent legal positions or indicated that the doctrine would apply to questions of law, or at least the application of law to fact . . . In the absence of Eighth Circuit law to the contrary, we conclude that judicial estoppel may be applied to the question of privity, whether considered a legal conclusion or a question of fact.
Although the general rule is that claim preclusion and issue preclusion must be pleaded, an exception exists where all relevant data and legal records are before the court and the demands of "comity, continuity in the law, and essential justice" mandate invocation of preclusion principles . . . The trial court found that these interests weighed in favor of applying issue preclusion to the Defaulting Defendants.
Last year, Lending Tree was found to have willfully infringed IMX's US Patent 5,995,947. After the verdict issued, IMX moved for a permanent injunction. Shortly thereafter, the Supreme Court's eBay decision issued, ruling that a plaintiff seeking an injunction must demonstrate: "(1) that it has suffered an irreparable injury;(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction."
The district court found that IMX put forward no evidence of irreparable harm resulting from defendant's infringement, for example, market or financial data, to support its assertion that LendingTree's infringement would go "unchecked" and would "[diminish] IMX's exclusive rights in its intellectual property."
There is no dispute that plaintiff licensed its `947 patent on two occasions, one which stemmed from a settlement with a previously-named defendant in this action, Priceline.com . . . There is no indication in the record that defendant's infringement affected plaintiff's ability to license the technology of the `947 patent . . . Plaintiff's willingness to forego its patent rights for compensation, though certainly not dispositive, is one factor to consider with respect to whether plaintiff will suffer irreparable harm.
The court further noted that the record evidence indicated that IMX's and Lending Tree's markets were potentially different - IMX's product is a communication forum for brokers and lenders, while LendingTree's product was directed at customers and lenders. Also, while LendingTree employs around 2000 employees, IMX employs less than a dozen employees.
On the other hand, the court found it significant that LendingTree's infringing use of the technology was not limited to a minor component, stating that the use "primarily, if not completely, mimics the patented system."
After careful consideration, the court concluded that more information was needed with regard to balance of hardships and public interest, but nevertheless suggested in a footnote that the court was leaning against the injunction ("[a]lthough it appears that the balance of hardships may weigh against enjoining defendant's use of the LendingTree Exchange, the court declines to make this determination without additional information").
Absent any specific information regarding the effect of defendant's infringing operation of the LendingTree Exchange on plaintiff's business, the court is reluctant to make a determination based solely on the considerations present in the current record. The '947 patent expires in 2017. The court declines to effectively impose a ten-year compulsory license on defendant absent more information, for example, the effects of defendant's infringement on plaintiff's business and of a potential permanent injunction on the public and the marketplace.
See Delaware IP Law Blog here.
Incremental Advantage will be holding this timely conference next week on the monetization of patents for corporations and patent holders, and includes an impressive lineup of speakers discussing various aspects of this important topic.
According to some experts, over 85% of the market valuation of the S&P 500 is represented by intangible assets. However not all patents are valuable and intellectual property is often ill-managed. For example, recent studies have shown that fewer than 3% of patents generate royalty income for the patent owner.
The Harvard Business Review reported that more than $1 trillion annually is wasted in patent assets. By harnessing the power of IP, significant revenue sources can be created by learning a few basics of "best practices" for IP, patents, and licensing strategies.
Ernst & Young reports that patent licensing alone should soar from the $110 billion it generated in revenue in 2000 to $500 billion by 2015. Qualcomm has already generated as much as $430 million in licensing revenue in recent quarters, while IBM earns more than $1 billion annually licensing its IP.
This should definitely be something of interest for any corporate or IP counsel seeking more information on increasing a company's value, and is always good for learning how other companies and industries approach this subject.
To view the 2-day agenda, click here and here.
For registration, call Neomi Barazani at 609-919-1895 x100, or email neomi@incrementaladvantage.com.
IFI Patent Intelligence announced yesterday its annual compilation of companies receiving the largest amounts of patents for 2006. According to IFI's analysis, 2006 was a banner year for corporate patents with 173,772 issued (an all-time USPTO record) and a significant 20.8 percent increase compared to 2005. This increase comes on the heels of two years in a row of patent-grant decreases and appears to negate the position that patenting activity is on a downswing.
Last month, the USPTO reported that Patent examiners completed 332,000 patent applications in 2006, which is also another record. The Office also boasted that the 54% allowance rate was also the lowest on record. The USPTO received in excess of 440,000 patent applications in 2006 (yes, also a record number), and hired 1,218 patent examiners, exceeding its goal by more than 200 people. The agency will continue to hire over 1,000 patent examiners each year for the next five years.
MedImmune makes and markets Synagis™, a drug that helps prevent a particular respiratory tract infection caused by virus. Prior to the time in which MedImmune first put the drug on the market, it agreed to license a group of patents from Genentech, Inc., in return for paying royalties on products covered by one of the patents.
Eventually, a dispute arose over payment of royalties, but, fearing that a possible lawsuit would expose MedImmune to significant damages and an injunction, MedImmune began paying royalties, but did so "under protest." While being a licensee in good standing, MedImmune decided it wanted to challenge the validity of the specific patent and brought a declaratory action in district court. The lawsuit was dismissed by the District Court, and that was upheld by the Federal Circuit Court, finding that no "actual controversy" existed under 28 U.S.C. §2201(a) of the Declaratory Judgment Act.
The Federal Circuit's decision to uphold the dismissal was largely based on the controlling Federal Circuit precedent in GenProbe Inc. v. Vysis, which held that a licensee in good standing cannot establish an Art. III case or controversy, since the license agreement "obliterate[s] any reasonable apprehension" that the licensee will be sued for infringement.
The Supreme Court repudiated GenProbe, noting that "[a] licensee who pays royalties under compulsion of an injunction has no more apprehension of imminent harm than a licensee who pays royalties for fear of treble damages and an injunction fatal to his [her] business." The court also found the GenProbe rationale in conflict with prior SCOTUS holdings, which included the case of Cardinal Chemical v. Mortin Int'l, where it was ruled that appellate affirmance of a judgment of noninfringement, which effectively eliminated any apprehension of suit, did not moot a declaratory judgment counterclaim of patent invalidity.
The Court carefully tailored its narrow ruling around the Lear doctrine by abstaining from any merits holdings as to whether a licensee should be permitted to challenge the validity of a patent where it continues to pay royalties. Instead, the Court left the "equitable prudential and policy arguments in favor of such a discretionary dismissal for the lower courts' consideration on remand."
Petitioner is not repudiating or impugning the contract while continuing to reap its benefits. Rather, it is asserting that the contract, properly interpreted, does not prevent it from challenging the patents, and does not require the payment of royalties because the patents do not cover its products and are invalid. Of course even if respondents were correct that the licensing agreement or the common-law rule precludes this suit, the consequence would be that respondents win this case on the merits - not that the very genuine contract dispute disappears, so that Article III jurisdiction is somehow defeated (emphasis added).
It appears from this statement that the problem with the case was the language chosen for the license agreement - had the agreement included a "no-challenge" clause that triggered repudiation, MedImmune would be placed squarely within Lear. Accordingly, Genentech would not necessarily be insulated from defending validity; however, it wouldn't be locked into a potentially disadvantageous license agreement either.
In light of this holding, expect that future licenses will, as a matter of course, contain "no-challenge" clauses (a.k.a "MedImmune clauses") to protect patentees from being savaged by licensees. However, it is unclear how the thousands of existing agreements, which do not contain such clauses, will be affected by the ruling.
Also, it appears that the Supreme Court is continuing the trend of reversing the Federal Circuit - the last affirmance of a CAFC decision was back in 2001 (J.E.M. Ag. Supply v. Pioneer Hi-Bred Int'l). The MedImmune ruling will certainly create additional anxiety leading up the KSR v. Teleflex decision.
Although the district court seemed to rely upon expert testimony, we note that its conclusion could have been reached without the aid of extrinsic evidence . . . We conclude that [the district court] erred in relying upon Professor Massengill's expert testimony. In doing so, the district court construed each disputed claim term by simply referring to various passages in the specification that corresponded to portions of Figures 2A and 2B, which depict the preferred embodiment. Expert testimony in conflict with the intrinsic evidence, however, should have been accorded no weight.
[N]ot only does the specification of the '066 patent repeatedly refer to the passive infrared sensors Q1 and Q2 as the "sensors," it even explicitly states that "[t]he sensors Q1 and Q2 are each coupled to a detector portion 43 of the circuit," and then goes on to describe the additional functions of the circuit - i.e., selecting and amplifying the "signals most likely to correspond to infrared signals from a human body." Col.3 ll.34-35, 38-39. Because the intrinsic evidence clearly sets forth the corresponding structure for "sensor means," it was improper to rely upon contrary extrinsic evidence to construe this term.
In any event, we reject with Professor Massengill's testimony that the "selection circuitry" is part of the "sensor means." Rather, the passive infrared sensors Q1 and Q2 detect motion, while the pulse-counting feature and other parts of the circuit are used to decide whether the lamp switches to the brighter level of illumination in response or whether the detected motion is ignored.
In another "patent standing" case, plaintiff Propat agreed with patent owner Authentix to license, enforce and sue infringers of Authentix's patent. In exchange, Propat would receive a percentage share of any proceeds. The lower court found that Propat lacked standing to sue, since "all substantial rights" were not transferred under the agreement.
The CAFC affirmed, finding that the agreement expressly provided that Authentix is the owner of the patent. Moreover, the agreement provided that Authentix was responsible to maintain any patents it owns or controls, which included the patent at issue. In addition, Authentix retained an economic interest in the patent and a substantial measure of control over decisions affecting the patent rights, including a right to notice of licensing and litigation decisions and the right to veto such decisions, as well as the unrestricted power to bar Propat from transferring its interest in the patent to a third party.
In this case, Propat lacks important indicia of a true ownership interest in the patent, such as the right to transfer its interest. Under the May 2002 agreement, Propat is not allowed to assign its interests under the agreement without Authentix's consent, which can be withheld on any ground. Moreover, as noted, Propat must provide Authentix with notice and obtain Authentix's consent to its selection of targets for licensing and suit. And the agreement requires Propat to "use reasonable efforts consistent with prudent business practices" in its licensing and enforcement efforts, a provision that is more consistent with the status of an agent than a co-owner. We therefore agree with the district court that Propat's rights created by the May 2002 agreement did not accord it rights in the patent sufficient to give it standing to sue, even with Authentix named as a co-plaintiff. Accordingly, we uphold the district court's decision dismissing Propat's action without prejudice for lack of jurisdiction.
On December 20th, Washington Research Foundation (WRF) filed a complaint in the Western District of Washington (case 2:06-cv-01813-TSZ) alleging that numerous customers of British-based CSR, such as Panasonic and Samsung, were infringing at least one of a number of patents held by WRF. The lawsuit did not name CSR as a defendant in the current action since it was claimed that CSR might not necessarily know which chips where shipped to the U.S. by its handset customers.
• US Patent 7,116,963, filed August 25, 2003 as a continuation of the '256 patent (the "asserted patent").
The '963 patent has 71 claims, the '256 patent has 17 claims, the '068 patent has 84 claims, and the '341 patent has 42 claims, making a total of 214 claims that could potentially be an issue.
If this type of "claim piling" seems familiar, it is because this technique was originally one of the signature strategies of Lemelson, who was notorious for asserting hundreds of claims at a time. Coincidentally, WRF is being represented by members of Lemelson's legal team, including Gerald Hosier.
The telecom industry will be undoubtedly watching this case very closely. Ericsson is credited with developing the Bluetooth specification (IEEE 802.15.1) in 1994. The spec was then further developed by other industry members and was formalized by the Bluetooth Special Interest Group (SIG) upon the group’s formation 1998. It was through Ericsson and SIG that Bluetooth became a free wireless technology, like WiFi. Today SIG includes more than 6,000 companies worldwide – and Bluetooth is used in millions of electronic devices, from laptops to mobile phones to wireless headsets to remote controls.
Washington Research Foundation therefore does not assert infringement herein with regard to any of Defendant's products that use only Broadcom's licensed chipsets to enable Bluetooth technology. Thus, as a result of the Broadcom license, each of the Defendants has an option to avoid infringement of the Subject Patents and Applications by purchasing Bluetooth chipsets from Broadcom, an approved licensee of the Washington Research Foundation.
Portfolio Media Inc. released its annual IP litigation survey, finding that IP disputes during 2006 resulted in judgments and settlements worth $3.4B - which is about half the amount awarded in 2005 (almost $7B). Only two judgments or settlements exceeded $300M in 2006, compared to nine in 2005.
UPDATE: Bloomberg just posted a report earlier today that seems to contradict the Portfolio Media Study in some respects. The Bloomberg study looked at jury awards in 2006 and found that the number of patent verdicts ranking in the "top 50" jury awards went from three in 2005 to ten in 2006. Total awards, counting just those of more than $1 million each, rose from $379 million in 2005 to $1 billion in 2006.
Patent infringement lawsuits have more than doubled since 1990, when 1,236 were initiated. The number peaked at 3,075 filings in 2004 before dropping back to 2,720 in 2005, according to the Administrative Office of the U.S. Courts in Washington. Filings for 2006 are not yet available.
The good people from Rethink(IP) (namely Matt Buchanan, Doug Sorocco and Stephen Nipper) have announced the launch of their new website, cheekily named FedCirc.us which provides information on the latest Federal Circuit and Supreme Court decisions.
• GimmeTen!(tm) - Get concise summaries of the last ten case reviews written...all on one page. Bookmark it at http://10.fedcirc.us.
• Read the Latest Review - Hit this button in the left menu to immediately get the full monty on the last case review written.
• Case Data - Check out the Case Data box that appears in every case review. There's a bunch of goodness in that box, including citation information and a link to download a .pdf of the opinion.
• Case Flags - Red flags. Big red flags. Believe us, you'll known 'em when you see 'em.
• Tags - Navigate the site by keywords.
• Conduct legal research with your head in the tag cloud.
• Practice Alerts - We issue specific practice alerts when we detect something important. Sign up to receive these alerts, free!
• Feature article - We're working to put together a team of authors that will publish timely and insightful analyses of the latest developments. We'll provide more details on this soon.
is available without even visiting the website. Go ahead and subscribe.
Very impressive work. Keep it up guys!

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