Source: http://271patent.blogspot.com/2007/08/
Timestamp: 2019-04-18 18:40:19+00:00

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Marge: Homer, the plant called. They said if you don't show up tomorrow, don't bother showing up on Monday.
Homer: Woo-hoo! A four-day weekend!
After an exhausting August, all eyes cautiously looked towards September, where the next installment of "Who Wants to Reform the Patent System?" was being prepared in Congress.
For those that have followed this saga, it was clear that the way in which Congress dealt with wholesale reform wasn't working. Worse yet, there was no coordination between the different branches - In Re Seagate provides one standard for willfulness; Patent Reform Act provides another. The PTO wants Examination Support Documents (ESD) under the 5/25 regime; the 2nd manager's amendment to the Reform Act wants ESD's for all applications.
While our patent system is in need of reform, we are very concerned that the bill in its present form picks winners and losers among industries with different business models in a way that has never before been attempted in patent law or practice.
Unquestionably, improving our patent system and the quality of patents is of paramount importance. However, those improvements cannot come at the cost of some domestic industries over others. There is no doubt that the bill's sponsors have worked hard on the legislation, but a bill of this importance and impact should not be rushed to the floor for quick passage. In our current political climate it is rare to find an issue that unites groups from the AFL-ClO to Eagle Forum in opposition to a bill they view as undermining the patent system that created quality jobs and American innovation. With manufacturers, labor unions, universities, biotech companies, high tech innovators, independent inventors, and others all expressing concerns about the patent bill in its present form, it is a strong and clear signal that more work needs to be done to reach consensus on patent reform.
Sources from the PTO have said that the initial phase of KSR training is nearly complete. The final guidelines have apparently been approved by OMB, and it is likely that the training material will be published in the next Official Gazette. Stay tuned.
The applicants appealed a decision by the BPAI, finding their application obvious. The subject matter of the appeal relates to an antivenom composition used to treat venomous bites from a rattlesnake.
The PTO reasoned that two prior art references rendered the claims obvious, and added that limitations recited towards snakebite victims were for an "intended use", and that functional language related to the composition "would have been expected by a person of ordinary skill in the art at the time the invention was made to neutralize the lethality of the venom of a rattlesnake."
Interestingly, the applicant submitted three declarations which argued non-obviousness, but the PTO "gave them no weight because they only relate to the use of the claimed composition."
The Board failed to consider each of these declarations. The Board stated in a footnote that the declarations of record relate only to the use of the claimed composition as an antivenom, and thus the Board expressly declined to give any meaningful consideration to them. Sullivan, No. 2006-0220, slip op. at 13 n.7. As stated above, when an applicant puts forth relevant rebuttal evidence, as it did here, the Board must consider such evidence. The claimed composition cannot be held to have been obvious if competent evidence rebuts the prima facie case of obviousness. By failing to consider the submitted evidence, the Board thus committed error. That is not to suggest that the Board’s finding of obviousness must be overturned in light of the evidence; rather, the Board must give the declarations meaningful consideration before arriving at its conclusion.
Moreover, the Board was mistaken to assert that the declarations only relate to the use of the claimed composition. The declarations do more than that; they purport to show an unexpected result from use of the claimed composition, how the prior art taught away from the composition, and how a long-felt need existed for a new antivenom composition. While a statement of intended use may not render a known composition patentable, the claimed composition was not known, and whether it would have been obvious depends upon consideration of the rebuttal evidence. Had the Board considered or reviewed the declarations in any meaningful way, it might have arrived at a different conclusion than it did.
The issue here is not whether a claim recites a new use, but whether the subject matter of the claim possesses an unexpected use. That unexpected property is relevant, and thus the declarations describing it should have been considered by the Board.
Over the last few months, the USPTO has had to deny a significant percentage of the requests coming from the Japan Patent Office and the European Patent Office due to the lack of authorization from the applicant to release a copy of the unpublished US application (e.g., Form SB-39). These Offices have strict deadlines for submission of priority documents, and failure to supply the documents on a timely basis can have unfortunate consequences. To ensure successful transmission of your priority document(s) to an Office of Second Filing, please submit such authorization as early as possible during the prosecution of your US application.
The USPTO is hosting a pilot program for customers to evaluate and comment on the usability and functionality of the e-Office Action program. As an alternative to receiving new outgoing correspondence related to a patent application in paper via postal mail, this program sends the pilot participant an e-mail notification to directly access outgoing documents in Private PAIR. The pilot will be entering Phase IV on August 31, 2007, and USPTO will open registration in the pilot to a limited number of new participants at this time. If you are interested in participating in the e-Office Action pilot, please e-mail the PAIR team with your Customer Numbers at pair@uspto.gov .
kar·ma (noun) - the cosmic principle according to which each person is rewarded or punished in one incarnation according to that person's deeds in the previous incarnation.
T.R. Systems says its workers were moving the server from a freight truck into its warehouse in Alexandria, Va., when the mishap occurred. "The rear wheels of their forklift hit the raised surface at the entry door of the warehouse, causing the forklift to rock, and subsequently causing the server to rock," T.R. Systems says in court papers filed last month. "As a result of the rocking motion, the base of the pallet and the crate broke and the crate fell onto the curb, damaging the server packed inside," the contractor states in papers filed in U.S. District Court in Alexandria, Va.
One of the most controversial aspects of the continuation rule changes is the "5/25 Rule", which essentially limits applications to 5 independent claims, and 25 claims total for each application. If an applicant exceeds this amount, an Examination Support Document (ESD) must be filed. There is unanimous consensus over the view that ESD's are too burdensome and costly to be used under most circumstances.
What is interesting is that the 5/25 Rule appears to be worse than the "Representative Claims" approach previously proposed by the USPTO. Ironically, the 5/25 Rule was enacted by the PTO to replace Representative Claims "in response to public comments" (click here). One wonders what comments were being considered when the 5/25 Rule was enacted.
The Representative Claims approach was proposed in the original changes (link), and was rationalized this way: since PTO examination is usually centered around the independent claims and broader dependent claims, there is little benefit in having examiners analyze, search, and cite prior art on narrow dependent claims that the applicants weren't going to respond to anyways.
The Office’s PALM records show that only 2,522 (866 small entity), or about 1.2 percent of all nonprovisional applications, included more than ten independent claims. Thus, this proposal will allow for the examination of every independent claim in 98.8 percent of the applications filed since January 1, 2005, without any additional effort by the applicant.
Under the changes being adopted in this final rule, less than eight percent of the applications filed in fiscal year 2006 would have required either the cancellation of one or more independent claims or an examination support document. In addition, less than twenty-five percent of the applications filed in fiscal year 2006 would have required either the cancellation of one or more dependent claims or an examination support document.
This begs the question: why were the rules amended to encompass more applications and have less flexibility for the applicants? And, is the number of affected applications being underreported?
While being a tiny snapshot, this initial finding confirms (more or less) the PTO's numbers, but nonetheless reflects almost a twenty-fold increase in the number of affected applications.
In a patent searchers online forum (forwarded by Greg Aharonian), Roy Zimmerman of Medtronic did some digging via IFIPAT on STN, where number of claims are range searchable, and published applications are a defined file segment. He found that, between 2002-06, 1,288,664 patent applications were published by the PTO.
Of those, 372,879 patent applications across all technological areas had more than 25 claims, or 29%.
Presuming that only 100k of the affected applications require ESD's, filed at a cost of $10k each, this results in one billion dollars of added costs to patent applicants to comply with the 5/25 rule alone.
As a side note, the PTO's proposed annual budget for FY2008 (link) is $1.9 billion dollars . . .
For the many that participated in the USPTO's webinar, the 271 Patent Blog will be providing free ibuprofen (or an analgesic of your choice) for all attendees - email me for a free dose.
(Voice 1): "Could you explain to the practitioners listening out there, if applicants have to show original support for claims in a CIP application?"
(Voice 2): "Yes they do! Under the rules, applicants must identify the claims in a CIP application that are supported by the prior-filed application . . ."
There was some useful information during the Q&A, but it is clear that there is a lot of material to digest before anyone is minimally comfortable with the rule changes. It would have helped if the presentation didn't sugar-coat some of the more serious ramifications of the rule changes (raise your hand if you noticed that some questions weren't actually answered when asked).
For example, regarding the continuation "limit", it was repeatedly stated that, if a continuation was found to be improper, "priority would not be granted, and prior art documents could be considered up to the filing date of the original filing date of the continuation."
It sounds rather innocuous, but the reality is that the application is dead in the water: unless your continuation filing date is less than one year after original publication, your own application will become a 102(b) reference.
One question I wanted to ask was about the petition and showing - "could you provide one or two examples of a proper 'showing' that would justify the filing of an additional continuation?" To be honest, I can't imagine what an applicant could say that would be convincing. The PTO's been eerily quiet on this topic, and apparently has no interest in giving guidance on this.
The other problem was with the Examination Support Documents and their effect on the PTO. Presumably, examiners will be charged with referencing/cross-referencing claims from different applications. If there are families of applications, Examiners will now have to spend time slogging through multiple applications, looking for "substantial overlap", patentably indistinct claims, divisional rejoinders, and potential "15/75" violations before they can even begin to search for prior art. If examiners are already pressed for time in examining applications, I have no idea how they will deal with these changes.
It also appears that cross-referencing applications is now considered a "material" part of USPTO examination. I wonder how McKesson v. Bridge Medical will view the applicant that failed to properly cross-reference all related filings on an issued patent?
We heard about the threats, and it didn't take long for someone to follow through. Yesterday, Dr. Triantafyllos Tafas filed a declaratory judgment action in the E.D. Va., arguing that the new continuation rules are null and void, and is also seeking a preliminary and permanent injunction prohibiting the USPTO from putting the new rules changes into effect.
The complaint alleges that the USPTO exceeded its Congressionally-delegated rulemaking authority and that the new rule changes specifically violate Section 120, 132, and 365 of the Patent Act. It is further asserted that USPTO failed to comply with the Administrative Procedure Act in promulgating the new rule changes. The suit also alleges that the USPTO has engaged in retroactive rulemaking and has failed to consider USPTO-induced reasons for multiple continuation filings.
The Revised Rules should be preliminarily and permanently enjoyed and declared null and void because, among other things, they violate: (1) Sections 2, 120, 13 1, 132 and 365 of the Patent Act (35 U.S.C. §§ 1 et seq.) by exceeding the rule making authority delegated to the Defendants by Congress; (2) Sections 553(c) and 706(2) of the APA (5 U.S.C. §§ 553(c) and 706(2)) by, among other things, purporting to enact rules with retroactive effect; failing to consider all the relevant matter presented as required by 5 U.S.C. §553(c); and, by promulgating rules that are arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, contrary to Plaintiffs constitutional rights and in excess of the USPTO's statutory jurisdiction and authority; and (3) Article I, Section 8, C1. 8 and the Takings Clause of the Fifth Amendment of the United States Constitution.
§ 1.16 National application filing, search and examination fees.
The Office is revising the rules of practice to require that any third or subsequent continuing application that is a continuation application or a continuation-in-part application, and any second or subsequent request for continued examination in an application family, be filed to obtain consideration of an amendment, argument, or evidence, and be supported by a showing as to why the amendment, argument, or evidence sought to be entered could not have been previously submitted.
The Office is also revising the rules of practice to provide that an applicant must provide an examination support document that covers all of the claims in an application if the application contains more than five independent claims or more than twenty-five total claims.
The Office is also revising the rules of practice with respect to multiple applications that have the same claimed filing or priority date, substantial overlapping disclosure, a common inventor, and common ownership.
In Re Seagate - CAFC Clarifies Attorney-Client Waiver, and then Some . . .
Seagate was sued by Convolve in the SDNY for patent infringement. After the lawsuit was filed, Seagate obtained outside counsel opinions on the patents, and relied on the advice of counsel defense to rebut charges of willful infringement. As a result, the district court held that Seagate waived the attorney-client privilege for all communications between it and any counsel, including its trial attorneys and in-house counsel. It further determined that the waiver began when Seagate first gained knowledge of the patents and would last until the alleged infringement ceased. The court also determined that protection of work product communicated to Seagate was waived.
QUESTION #1: Should a party’s assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege to communications with that party’s trial counsel? See In re EchoStar Commc’n Corp., 448 F.3d 1294 (Fed. Cir. 2006).
[W]e conclude that the significantly different functions of trial counsel and opinion counsel advise against extending waiver to trial counsel. Whereas opinion counsel serves to provide an objective assessment for making informed business decisions, trial counsel focuses on litigation strategy and evaluates the most successful manner of presenting a case to a judicial decision maker . . . fairness counsels against disclosing trial counsel’s communications on an entire subject matter in response to an accused infringer’s reliance on opinion counsel’s opinion to refute a willfulness allegation.
[W]e hold, as a general proposition, that asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel. We do not purport to set out an absolute rule. Instead, trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery.
QUESTION #2: What is the effect of any such waiver on work-product immunity?
[W]e hold that, as a general proposition, relying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel. Again, we leave open the possibility that situations may arise in which waiver may be extended to trial counsel, such as if a patentee or his counsel engages in chicanery. And, of course, the general principles of work product protection remain in force, so that a party may obtain discovery of work product absent waiver upon a sufficient showing of need and hardship, bearing in mind that a higher burden must be met to obtain that pertaining to mental processes.
QUESTION #3: Given the impact of the statutory duty of care standard announced in Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983), on the issue of waiver of attorney-client privilege, should this court reconsider the decision in Underwater Devices and the duty of care standard itself?
"Where . . . a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity."
Underwater Devices sets a lower threshold for willful infringement that is more akin to negligence. This standard fails to comport with the general understanding of willfulness in the civil context . . . and it allows for punitive damages in a manner inconsistent with Supreme Court precedent . . . Accordingly, we overrule the standard set out in Underwater Devices and hold that proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel.
[T]o establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent . . . The state of mind of the accused infringer is not relevant to this objective inquiry. If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer. We leave it to future cases to further develop the application of this standard.
I write separately to express my belief that the court should take the opportunity to eliminate the grafting of willfulness onto section 284. As the court’s opinion points out, although the enhanced damages clause of that section "is devoid of any standard for awarding [such damages]," this court has nevertheless read a willfulness standard into the statute . . . Because the language of the statute unambiguously omits any such requirement, see 35 U.S.C. § 284 ("[T]he court may increase the damages up to three times the amount found or assessed."), and because there is no principled reason for continuing to engraft a willfulness requirement onto section 284, I believe we should adhere to the plain meaning of the statute and leave the discretion to enhance damages in the capable hands of the district courts.
[W]hen an accused infringer’s post-filing conduct is reckless, a patentee can move for a preliminary injunction, which generally provides an adequate remedy for combating post-filing willful infringement . . . A patentee who does not attempt to stop an accused infringer’s activities in this manner should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct. Similarly, if a patentee attempts to secure injunctive relief but fails, it is likely the infringement did not rise to the level of recklessness.
We fully recognize that an accused infringer may avoid a preliminary injunction by showing only a substantial question as to invalidity, as opposed to the higher clear and convincing standard required to prevail on the merits . . . However, this lessened showing simply accords with the requirement that recklessness must be shown to recover enhanced damages. A substantial question about invalidity or infringement is likely sufficient not only to avoid a preliminary injunction, but also a charge of willfulness based on post-filing conduct.
The Department of Commerce’s United States Patent and Trademark Office (USPTO) will publish tomorrow in the Federal Register new rules that will allow the agency to continue to make the patent examination process more effective and efficient by encouraging applicants to use greater precision in describing the scope of their inventions. The new rules will be effective on November 1, 2007.
The new rules are available today to anyone who visits the Federal Register office and will be available tomorrow, August 21, 2007, no later than noon, in the Federal Register column on our News & Notices page . In the coming weeks, the USPTO will be conducting outreach on these new rules to better inform external stakeholders of their content and to answer questions. A webinar on the new rules is scheduled for Thursday, August 23, 2007. More information on this webinar and other upcoming information sessions will be published on Rule Changes to Focus the Patent Process in the 21st Century.
1. Each initial application is limited to 2 continuing applications and 1 RCE. Additional continuing applications/RCEs may be filed upon petition. This was changed from the proposed rule in which each application was limited to one continuing application.
2. Divisional applications may be filed only in response to a restriction requirement having been made by the Office. Divisional applications may be filed during the pendency of the initial application or any of its continuing applications. In the proposed rule, divisional applications were limited to being filed only during the pendency of the initial application. Each divisional application is also limited to 2 continuing applications and 1 RCE. Additional continuing applications/RCEs of a divisional application may also be filed upon petition.
3. The claims in each application may not exceed 5 independent claims or 25 total claims absent the applicant assisting the examination process through the filing of an Examination Support Document (ESD). This is a change from the proposed rule where an application could be filed with any number of claims but the applicant must elect 10 representative claims for examination absent the filing of an ESD.
4. The applicant must submit the serial numbers of all other applications filed within two months having the same assignee and at least one inventor in common. For those applications that additionally have a common effective filing date and substantially overlapping disclosures, the rule creates a rebuttable presumption of obviousness-type double patenting between them. This will enhance the examination process by saving examiner resources since the examiner will not have to research information that the applicant is in the best position to easily provide prior to examination.
In terms of who is in charge, Justice Kennedy is in charge. Don't have any doubts about this. If Justice Kennedy ever tells you you must do something, you must comply. In the 24 5-4 decisions, he was in the majority in all of them, every single one. In the 72 cases decided this term, he was in the majority in 70. Two times, I don't know, he just felt like dissenting. You know, just to mix it up a little bit.
It is his world, and you just live in it. And that is a dominant, dominant theme. We were unable to identify in modern historical terms any sort of parallel. If you look to Justice O'Connor, for example, and we used to think of her as holding sway in the Court, she would be in the majority in roughly two-thirds of the 5-4 decisions over the last 10 years. Justice Kennedy, for his part, by the way, was in the majority one-half to two-thirds of the 5-4 decisions over the last 10 years. Suddenly, it is all of them.
There has not been a term since the mid-1960s that a justice dissented two or fewer times, and so that really gives you a sense that Justice Kennedy's vote is more centrally important than any other justice in the history, the modern history, of the Supreme Court.
The World Intellectual Property Organization (WIPO) released its 2007 report this week, summarizing the state of patent filings around the world. Overall, there was a 4.7 percent average annual increase in patent filings worldwide from 1995 to 2005, mostly due to the “explosive growth” of patent filings in Northeast Asia.
"Explosive growth" indeed: China launched itself into third place, leaving it behind only the United States and Japan, and closely followed by Korea. Between 1995 and 2005, China’s patent filings have increased by 834% percent, and Korea's filings have increased by 101%.
Between 2004 and 2005, the biggest increases in patent filings occurred in China (+32.9%), Thailand (+18%), Korea (+14.8%), Hong Kong (+14.6%), and the U.S. (+9.5%). Interestingly, the UK and France were the few countries that experienced a drop in patent filings of 6.5% and 2.1%, respectively.
These changes do not come without a cost. The workload at certain patent offices has increased faster than the capacity to examine patent applications. The United States of America had more than 900,000 patents pending in 2005. The Japanese Patent Office also had more than 800,000 patents pending in 2005, although it must be noted that this is largely due to changes in the time limit for request for examination, which has created a temporary increase in the examination workload in Japan.
Among the questions raised by this increase in workload is the extent of duplication of effort within the system. Worldwide, 38% of patent applications are by non-resident applicants. These applications are usually preceded by prior applications in the country of residence of the applicant and, often, by parallel applications in other countries. Each of these applications may be subject to a separate search and examination in each patent office.
Two economic reports were recently published, analyzing the effects of IP on innovation, productivity and competitiveness. Not surprisingly, each report concludes that strong IP regimes are a prerequisite for robust innovation and growth.
The first report, entitled "Economic Effects of Intellectual Property-Intensive Manufacturing" was written by Robert Shapiro and Nam Pham under the auspices of the non-profit, non-governmental organization World Growth. Shapiro was formerly a principal economic advisor to Bill Clinton, and senior economic advisor to Al Gore and John Kerry. Pham was formerly a vice president at Kemper Investments, economist for the World Bank, and consultant to the Department of Commerce and FTC. Both are currently lead economic advisers in their own respective consulting firms.
Economists trace 30 percent to 40 percent of all U.S. gains in productivity and growth over the course of the 20th century to economic innovation in its various forms. Today, some two-thirds of the value of America’s large businesses can be traced to the intangible assets that embody ideas, especially the intellectual property (IP) of patents and trademarks. Needless to say, the report concludes that "promoting and protecting new intellectual property should be a high priority for U.S. policymakers."
• From 2000 to 2004, IP-intensive manufacturing produced much more value per employee than non-IP intensive manufacturing — some $181,000 per worker, per year, compared to less than $106,000 — and in the most IP-intensive industry, pharmaceuticals, an average worker produced more than $425,000 in value every year.
• From 2000 to 2004, IP-intensive manufacturing paid much higher wages, on average, than non-IP intensive manufacturing — nearly $51,000 per worker compared to just over $35,000 — and in the most IP-intensive industry, an average worker earned almost $66,000 a year.
• Manufacturing employment contracted sharply from 2000 to 2004, with both IP-intensive and non-IP intensive industries shrinking their workforce, on average, by 15 percent to 16 percent. The one manufacturing area that expanded its workforce was the most IP-intensive: Jobs in pharmaceutical companies increased by more than 8 percent over this period.
A second report, titled "The means to compete: Benchmarking IT industry competitiveness", was issued by the Economist Intelligence Unit under the sponsorship of the Business Software Alliance. The index and report are the first attempt to compare countries' performance in building an environment for IT industry competitiveness; 64 countries are covered across seven regions.
(1) Japan - 1,213 patents/mil.
(2) Switzerland - 500 patents/mil.
(3) United States - 350 patents/mil.
(4) Sweden - 330 patents/mil.
(5) Finland - 310 patents/mil.
(6) Germany - 300 patents/mil.
(8) Taiwan - 275 patents/mil.
(10) Israel - 190 patents/mil.
(15) South Korea - 110 patents/mil.
(18) Britain - 100 patents/mil.
at the computerized payment receiver, receiving the portion of the payment forwarded by the computerized merchant processor and applying that portion to the outstanding obligation made by the merchant to reduce such obligation.
new way, and marketed it aggressively.
patent, that render the patent invalid, especially in light of the Supreme Court’s recent ruling in KSR Int’l Co. v. Teleflex, Inc. In KSR, the Supreme Court opined “[w]hen a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability.” 127 S. Ct. 1727, 1740 (2007). The [prior art was] available in the field at the time of the purported invention. Johnson merely implemented a predictable variation of these existing methods in establishing her invention. While Johnson’s work exhibits excellent entrepreneurship, it does not entitle AdvanceMe to a legal monopoly on this method of providing financing to small businesses. Rather AdvanceMe must continue to compete in the marketplace for its share of the market, which will benefit the economy and consumers as a whole.
through a contractual relationship between the defendant and the third party or parties performing the steps of the patented method.
Both Reach and MMT [co-defendants] directly infringe the asserted claims of the ‘281 patent. Under Reach and MMT’s programs, all of the elements of the patent claims are performed either by Reach or MMT, the merchants that enter into contracts with Reach or MMT, the merchant processors that enter into contracts with Reach or MMT, or agents or instrumentalities of these entities.
• Michael Smith just tracked this case for his "Recent Rulings for Defendants" list, and notes: "For those of you keeping score, that drops the 2007 win rate for plaintiffs to 33% and the two-year win rate to 57%."
• David Goldin is the President & CEO of AmeriMerchant, who was one of the defendants in this case. David is a blogger as well, and used the blog to solicit prior art against the '281 patent(link), which apparently was a big help in the case (link).
Not long after NTP obtained a $612.5 million settlement against RIM, Tavory filed suit in the E.D. Va., asking to be joined as an inventor with respect to NTP's "BlackBerry" patents, and also alleged copyright infringement and unjust enrichment.
There are few coincidences in life, and the timing of Tavory’s assertions is far too convenient to avoid suspicion. Not only did the Plaintiff wait until after the death of Mr. Campana, who would surely have been a material witness, to stake his claim, the copyright registration was not filed until after NTP had entered into a nine-figure settlement with respect to the patents Tavory says infringe his rights. Despite these serious infirmities, the most damning evidence has been rendered by the Plaintiff himself. He has been deposed twice. On the first occasion, in 2002, Tavory testified that he could not remember whether he wrote the Push Software at Mr. Campana’s direction, or to what extent he was involved in the authorship of the source code. (Pl.’s 2002 Dep. passim.) Four years later, the Plaintiff sat for another deposition, this time in connection with the present matter. In spite of the fact that it was then 2006, and that he was testifying about events that had happened 16 years previously, Tavory’s memory was much clearer.
Monolithic (MPS) and O2 have had a long history of suing each other for patent infringement. In an earlier litigation, where O2 sued MPS for patent infringement, the Court dismissed with prejudice O2 Micro's claim against MPS, pursuant to a stipulated dismissal signed by the parties.
O2 Micro covenants not to assert or reassert its ‘129 patent against named defendants for infringement by MPS full bridge inverter controllers (and products incorporating said controllers) made, used, imported, offered for sale or sold previously or currently having product designations [list of products accused of infringing O2's patents].
After the Court signed this stipulation, however, MPS designed and marketed new power inverter controller products, not previously accused of infringing the '129 patent. MPS did not believe that these products infringe. But, it believed that, because O2 takes a narrow view of the stipulated dismissal, the covenant not to sue does not cover these new products and, therefore, it is laboring under the shadow of threatened infringement litigation.
O2 argued that it had not even accused MPS's new products of infringing the '129 patent and that, therefore, MPS has no basis for filing the declaratory judgment action and the Court does not have subject matter jurisdiction over it.
The Court disagreed, noting that "[w]hether O2 Micro has publicly accused MPS's new products, which are not covered by the Stipulated Dismissal, is not dispositive to determining whether an actual controversy exists."
In Bridgelux, Inc. v. Cree, Inc., 2007 WL 2022024, at *9 (N.D. Cal.), the court did not, as O2 Micro suggests, find that there was no actual controversy merely because the defendants had never accused the plaintiff of infringing their patents. Rather, in concluding that, under all of the circumstances, there was no actual controversy, the court pointed out that the plaintiff provided no evidence that the defendants "had ever sued anyone" on their patents. Further, in SanDisk Corp., the Federal Circuit declined to hold that the patentee's statement that it had "absolutely no plan whatsoever to sue" the plaintiff eliminated the justiciable controversy created by patentee's actions; rather, the court concluded that the patentee "engaged in a course of conduct that shows a preparedness and willingness to enforce its patent rights" despite that statement. 480 F.3d at 1383.
O2 Micro has sued numerous parties, including MPS, accusing them of infringing the '129 patent. O2 Micro has accused MPS of infringing its '722 and '615 patents as well. Such suits indicate "an assertion of rights and a willingness to pursue litigation" regarding the patent-in-suit. Cingular Wireless v. Freedom Wireless, Inc., 2007 WL 1876377, at *3 (D. Ariz.). The Federal Circuit explains that "related litigation involving the same technology and the same parties is relevant in determining whether a justiciable declaratory judgment controversy exists on other related patents." Teva Pharms., 482 F.3d at 1344-45. And, in Cingular Wireless, the court concluded that "the assertion of rights, evidenced through a prior lawsuit between the same parties regarding the same technology, coupled with Defendant's knowledge of the relationship between Plaintiffs, and solidified through the express press release statement indicating an intent to sue alleged patent infringers, presents enough evidence to establish the case or controversy required for declaratory judgment jurisdiction." 2007 WL 1876377 at *9.
Next Stop - Chip Away the Presumption of Validity?
[A]s many have noted, the PTO is underfunded, and PTO patent examiners all too often do not have sufficient time to evaluate patent applications fully. These circumstances suggest that an overly strong presumption of a patent’s validity is inappropriate. Rather, courts should require only a “preponderance of the evidence” to rebut the presumption of validity.
"Assuming that we sweep [the TSM test] aside and say it's been incorrect, what happens to the presumption of validity of, of patents which the courts have been, have been traditionally applying? Does it make any sense to presume that patents are valid which have been issued under an erroneous test for the last 20 years?"
"We need not reach the question whether the failure to disclose [prior art] during the prosecution of [the patent in suit] voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption - that the PTO, in its expertise, has approved the claim - seems much diminished here."
Now, Doug Lichtman and Mark Lemley have released a draft paper titled "Rethinking Patent Law's Presumption of Validity" where they advocate the abolition of the "clear and convincing" standard for all patents. Instead, they propose the introduction of a 2-tiered patent system, where only the applicants that apply for "gold-plated" patents would get this presumption.
[B]ecause legitimate inventors need as much certainty as the law can give them, we would give applicants the option of earning a presumption of validity by paying for a thorough examination of their inventions. Put differently, applicants should be allowed to “gold-plate” their patents by paying for the kind of searching review that would merit a presumption of validity. An applicant who chooses not to pay could still get a patent. That patent, however, would be subject to serious - maybe even de novo - review in the event of litigation. Most likely, applicants would pay for serious review with respect to their most important patents but conserve resources on their more speculative entries. That would allow the Patent Office to focus its resources, thus benefiting from the signal given by the applicant’s own self-interested choice.
The draft paper explores these options and provides some interesting responses to many of the criticisms of this regime.
Abstract: The U.S. Patent and Trademark Office (Office) amends its regulations on information disclosure statement (IDS) requirements and other related matters to improve the quality and efficiency of the examination process. These changes would enable the examiner to focus in on the relevant portions of submitted prior art at the very beginning of the examination process, give higher quality first actions, and minimize wasted steps. This action would make the following changes relating to submissions of IDSs by applicants: Impose a requirement for the personal review of, and to provide information about, certain citations; eliminate the fees for, but permit only timely, IDS submissions; and only permit the filing of an IDS after the mailing of a notice of allowance if a claim is admitted to be unpatentable and a narrowing amendment is also submitted. The Office would also: permit third parties to submit prior art up until the mailing of a notice of allowance after application publication; no longer permit an IDS to meet the submission requirement for a request for continued examination (RCE); permit, after payment of the issue fee, certain amendments and petitions so applicants will not have to file a continuation application or an RCE for such items; and revise the protest rule to better set forth options that applicants have for dealing with unsolicited information received from third parties.
"Okay, so what am I doing? I'm chasing this guy... No, he's chasing me."
LegalMetric has released a study analyzing the fastest districts, along with percentage of cases filed by division, case win rates by division, appeal affirmance rates by division, and average time to termination on the merits by division.
This year, a number of surprises appear in the study.
• The Western District of Washington.
Courts with fewer than 30 cases terminated by judgments (either in favor of the patentee or the accused infringer) were not considered.
One of the biggest shocks is that the Eastern District of Texas does not come close to making the top five (it ranks 18th).
What's even more interesting is that LegalMetric reportedly told Michael Smith from the EDTexweblog that the win rate in favor of patentees in the Eastern District of Texas is 44%. Unfortunately, the methodologies used in developing this number aren't known, so there's no way to currently verify the accuracy of this number.
View the the LegalMetric press release here (link).
An interesting story surfaced yesterday over the patent portfolio of Redwood City-based Ampex Corporation, and its relationship with investment fund ValueVest.
For those that may not be familiar with Ampex, the company was responsible for releasing the first commercial tape recorders in 1944. After failing to transition into the digital arena, the company was bought out in 1987. As far as products go, the company's output didn't improve - today, the company's sole product is a data storage device used in defense systems and manufactured in Colorado.
But in the patent world, Ampex sat on a lucrative portfolio that included one patent that claimed to cover basic digital imaging. Three years ago, Ampex went on the offensive with their patents, and reported profits of $47.1 million in 2004 on revenues of $101.5 million. In 2004, Ampex posted the single largest gain of any Silicon Valley stock, rising from 68 cents to $39.50.
Seeing an opportunity, ValueVest began buying stock in Ampex in April 2005, just a few months after its spectacular stock run. Today, the investment fund claims to hold 13.7% of Ampex's stock. Shortly after its buying binge, ValueVest partnered with M-CAM, Inc., a company "specializing in intellectual property finance, monetization and enforcement", to evalute Ampex's portfolio.
M-CAM controls a proprietary database and search engine to analyze patents and their strength or weakness regarding commercial validity and potential value. It is rumored that M-CAM has partnered with PUBPAT, and used their software to target Forgent’s JPEG patents, Pfizer’s Lipitor patent, Microsoft’s FAT patent, WARF’s stem cell patents and others. Supposedly, after analyzing the Ampex patent portfolio, M-Cam has decided to join with Ampex to enforce their patents (see press release here).
Recently, ValueVest has become impatient with Ampex, claiming that not enough "value" is being extracted from the portfolio. In a recent 13D/A filing, ValueVest stated that "the market price of the Company's Shares does not fully reflect the underlying value of the Issuer's assets and businesses."
ValueVest has considered buying Ampex, but the negotiations didn't pan out. Now, what appears to be a first move of its kind, ValueVest has made a hostile bid for Ampex - not for the entire company, but just for its portfolio of 450 patents (which is technically considered an unsolicited term sheet).
ValueVest wants to buy the patents, create a new company, and invest fresh money to research which patents could form the basis of new products or a potential litigation strategy. On July 20, ValueVest disclosed in a filing with the SEC that it had offered to buy Ampex's patent portfolio for $7 million. Based on its current market capitalization, Ampex is worth about $32.6 million.
The United States Patent and Trademark Office (USPTO) is seeking participants for a Complex Work Units (CWUs) Pilot Program scheduled for late 2007. CWUs are chemical structure drawings, mathematical formulae, protein crystal data, and table data, which often add significant complexity and cost to the examination and publication of patent applications in which they are contained.
The pilot will allow applicants to submit original source files for CWUs through EFS-Web or on a CD, supplementing the traditionally-filed application parts. The CWU source file submissions will not be considered when calculating the application size fee, which will reduce the cost of filing for pilot participants.
The USPTO is requesting participants in an effort to gather more information about CWUs from the intellectual property community.
If you have any questions or would like to participate in CWU Pilot activities, please send an e-mail to cwupilotsupport@uspto.gov.
Since the release of the post-KSR memo from the USPTO, the Office has started training examiners on post-KSR obviousness, and has submitted a final draft to the OMB for final review (link).
While the final draft has not been release yet, a draft summary has been working its way through the blogosphere. While the draft copy has not been 100% verified, internal USPTO contacts note that the alleged Summary is "consistent" with information being provided during the current training of PTO personnel.
(4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.
The rationale to support a conclusion that the claim would have been obvious is that all the claimed elements were known in the prior art and one skilled in the art could have combined the elements as claimed by known methods with no change in their respective functions, and the combination would have yielded nothing more than predictable results to one of ordinary skill in the art at the time of the invention. [I]t can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does." If any of these findings cannot be made, then this rationale cannot be used to support a conclusion that the claim would have been obvious to one of ordinary skill in the art.
(1) a finding that the prior art contained a "base" device (method, or product) upon which the claimed invention can be seen as an "improvement;"
been predictable to one of ordinary skill in the art. The Supreme Court in KSR noted that "if the actual application of the technique would have been beyond the skill of one of ordinary skill in the art, then using the technique would not have been obvious." If any of these findings cannot be made, then this rationale cannot be used to support a conclusion that the claim would have been obvious to one of ordinary skill in the art.
(3) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.
The most problematic portion of the guidelines involves the statement that the claim may be "seen" by the examiner as an "improvement" over existing devices or methods - which arguably applies to most patent applications. Examiners have apparently been availing themselves of this technique in recent rejections.
Download the document here (link).
For additional comments on the PTO document, see the Patent Prospector's post here (link).

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