Source: http://www.patentlyo.com/patent/2009/03/index.html
Timestamp: 2013-06-20 08:30:39
Document Index: 255570634

Matched Legal Cases: ['§ 285', '§ 287', '§ 287', '§ 287', '§ 287', '§ 112', '§ 112', '§ 101', '§ 271', '§ 271', '§ 101', '§ 101', '§284', '§ 101']

Bits and Bytes No. 101: Patent Bill & the Patent Lobby
Reform: Today, the Senate Judiciary Committee met shortly and announced that an agreement is "close" on all of the controversial issues and that the compromise will result in a major overhaul of S. 515. Gene Quinn has instant-comments. Potential changes include: (1) codifying the existing law of damages rather than changing it – except that a judicial check on jury-awarded damages would be added; (2) eliminate "best mode" as a ground for invalidating a patent; (3) lowering the standard for post grant review to an "interesting question" rather than a "substantial new question of patentability." We should see some language this week.
Reform: A reader sent me the following points on the potential agreed-to compromise Bill in the Senate:
Damages. The amendment will strike the contentious calculation of reasonable royalty damages provision and will replace it with the gatekeeper language developed by Senators Feinstein and Specter, which will provide more of a role for the judge to identify the appropriate legal standards and relevant factual contentions for the jury.
Inter partes reexamination. The amendment will strike the controversial "in public use or on sale" additions on inter partes reexamination.
Best mode. The amendment will retain the requirement that a specification contain the best mode of carrying out the invention as part of the patent application, but not allow best mode to be used as means to invalidate a patent.
Interlocutory appeals. The amendment will tighten the interlocutory appeals provision. The bill as introduced would have given the district court complete discretion whether to approve an application for interlocutory appeal of a claims construction hearing. This amendment will provide district court with specific standards that it must certify have been met.
Willfulness. The amendment tightens the willfulness provision to ensure is in line with the Federal Circuit's decision in Seagate.
Venue. The amendment will strike the current subsection on venue, and replace it with a codification of the Federal Circuit's recent decision in TS Tech.
Lobby Lobby: The IPO reports that "by early afternoon yesterday, 16 paid 'line sitters' were already in line in the corridor outside the [committee] room, holding places for lobbyists to be admitted to the room this morning."
Patent Jobs: The Patently-O Job board has picked-up some steam over the past week. Here are some recent job postings.
Patent Attorney - Law Firm - Chicago, Ill. (Amin Hallihan looking for someone in Chem/Pharma)
Patent Attorney/Agent - Small Corporation - Gaithersburg, Md. (Wellstat Management looking for in house patent counsel)
Patent Attorneys - Law Firm - Detroit, Mich. (Warner Norcross looking for new patent attorneys in their Michigan offices)
Patent Attorney/Agent - Small Corporation - Yoqneam, Israel (Given Imaging needs in-house patent counsel now)
Patent Attorney - Law Firm - Rockville, Md. (Edell Shapiro needs EE/Physics patent prosecutor)
Patent Agent - Law Firm - Alexandria, Va. (Buchanan Ingersoll is looking for a Materials Science / ChemE patent agent)
Posted on Mar 31, 2009 at 11:03 AM | Permalink
Innovation in the 21st Century: Harnessing the Power of Intellectual Property and Antitrust Law
This week, I am taking part in a “blog symposium” hosted by Prof. Josh Wright (U. Texas Law) on his blog (Truth on the Market). The symposium focuses on a new book by Prof. Michael Carrier titled Innovation in the 21st Century: Harnessing the Power of Intellectual Property and Antitrust Law (Oxford 2009). In the book, Carrier identifies a number of problems with the antitrust and IP laws – and then proposes solutions. Carrier’s book moves in the same vein as other recent law professor books critiquing IP Policy such as the Meurer and Bessen book Patent Failure. Here, however, Carrier spends less time proving that a problem exists and somewhat more time identifying solutions. <?xml:namespace prefix ="" o ns ="" "urn:schemas-microsoft-com:office:office" />
Early posts include: · Reverse Payment Settlements: Carrier suggests that reverse payments patent settlements should be made presumptively illegal or even per se illegal. These payments have become somewhat common where a patent holder will pay a generic to stay off the market and not further challenge the patent rights. Prof. Dan Crane (Cardozo) argues that rule does not make sense because there is no direct link between the direction of the settlement payment and the potential anticompetitive social harm of the settlement. [LINK]
· Patents Blocking Antitrust Action: Carrier suggests that the existence of IP rights should not grant a company a free-pass to take otherwise anticompetitive actions. In his post, Prof. Phil Weiser (Colorado) agrees “IPRs should not displace antitrust oversight.” Weiser argues that this is especially true in the area of software patents: “Given that software patents are controversial to begin with, awarding the recipient of a patent on an application programming interface or communications protocol a get-out-jail free card is hard to justify.” [LINK]
· Mergers in the Innovation Market: Carrier suggests stronger antitrust regulation of mergers in the “innovation market” – as opposed to more traditional merger analysis that focuses only on product lines. In his post, Geoff Manne (LECG) points to the biggest hole in Carrier’s book – that he chooses sides without enough evidence either way. In this case, Manne notes that “we don’t know about the relationship between market structure and effect, and error costs are high.” From Manne’s perspective, innovation markets are so dynamic that Government antitrust intervention will necessarily arrive at the wrong answer too late and do harm. [LINK]
· Standard Setting and Patent Holdups: Carrier identifies the “patent holdup” situation as having a particularly troublesome antitrust concern because it looks like attempted monopolization – especially where the patent holder pushes an SSO to adopt a standard that would infringe. Wright argues that such antitrust liability would be quite problematic. [LINK]
Posted on Mar 30, 2009 at 03:05 PM | Permalink
Fairchild originally licensed 3D's US and Chinese patents - agreeing to a royalty for all Fairchild products "covered by" a 3D patent. However, after analyzing the patents, Fairchild decided that it need not pay any royalties and then sued for a declaratory judgment that it owed no royalties and that none of its products are covered by 3D's patents.
Dennis Crouch, Enforcing Foreign Patents in the US: Distinguishing Voda, Patently-O (Dec. 12, 2008) at http://www.patentlyo.com/patent/2008/12/enforcing-forei.html.
Posted on Mar 29, 2009 at 09:25 PM in Injunctions, License, Patent Cases 2009, Transnational | Permalink
12:01 am on Tuesday morning is a special time for patent attorneys. That is when the USPTO releases the newest batch of issued patents. Usually, over 3,000 issue each week.
Patent Attorney Aaron Feigelson (Leydig Voit firm) has started a great new blog: 1201tuesday.com covering PTO events. Aaron writes with an eye toward patent prosecution and does a good job of finding examples from recently issued patents that raise important practice issues. He has also been closely following the aftermath of Bilski. Aaron describes his project as follows:
I started regular weekly monitoring of issued patents a few years ago for some particular client-related matters, but my intrigue grew after stumbling upon certain patents, unrelated to client matters, with stories that were too interesting to keep to myself. Like U.S. Patent No. 6,097,812 and its 67-year prosecution history (thanks to a very long lasting secrecy order). Or U.S. Patent No. 7,472,070 for a seemingly innocuous grain aeration system -- but granted to Microsoft, that well-known player in agricultural technology. Or trends, like the trickling-off of issuances to applications filed the first week of June 1995 (when there was a pre-GATT filing surge). Or Jerome Lemelson being granted U.S. Patent No. 7,343,660 more than a decade after his death, with priority going back over fifty years to 1954.
Lately, my attention has turned to the fallout from the Federal Circuit's recent decision of In re Bilski and its effect on patentable subject matter under Section 101. In particular, I was curious (to aid my own practice) to see what sorts of claims had been allowed pre- and post-Bilski, and what techniques applicants had used to address or circumvent the machine-or-transformation test. I began sending my weekly findings internally to a few attorneys in my firm. Then to a few more. Then to a few more..
After a few months of these "Bilski Watch" emails, this blog was created.
I enjoyed Aaron's recent post regarding patents issuing from applications filed in early June 1995 - just before the patent term reference was switched from the issue date to the filing date.
For those of you who don't know, the IP blogging community is rather inter-connected. For instance, Aaron Feigelson was a 2L at UChicago Law when I started there as a 1L. He was also a summer clerk at the MBHB firm. I started at MBHB soon after Aaron left and actually took over his desk and sat next door to his classmate Aaron Barkoff of the Orange Book Blog. Also at the MBHB firm are the PhD's who blog at Patent Docs (both Aarons hold PhD's as well). I interviewed at Matt Buchanan's (Promote The Progress) former Chicago firm, which is just across the Chicago River from Feigelson's office. Matt has participated in several business ventures with Steve Nipper (Invent Blog) and Doug Sorocco (PHOSITA). Matt and I are also working on a project for this fall. My old firm also paid for my patent bar review course with PLI partially taught by Gene Quinn (IPWatchdog). I could continue...
Posted on Mar 27, 2009 at 01:02 PM in Bits and Bytes, Blogroll, Patent Prosecution | Permalink
Patently-O Bits and Bytes No. 100
PTO Director: Commerce Secretary Locke has been confirmed as Commerce Secretary. Congratulations. With patent attorney blinders - the next step is to solidify the PTO leadership positions. Leading candidates include Todd Dickinson and David Kappos (IBM). Dickinson is an old-guard Clinton supporter. Kappos was an Obama donor.
Drop in Filing?: I recently relayed an apparent quote from the PTO General Counsel James Toupin reporting a 16% decrease in new patent filings. Toupin and the PTO have since rejected that number as a large overstatement and have indicated that they will provide better numbers shortly. The bottom line is still true - the PTO is experiencing a cash-shortfall and is cutting its own budget wherever it can.
Fee Increases: Dramatically shifting its position, the IPO has announced that it opposes "any significant increase in USPTO patent fees in the near term."
IP Primer: The Dickstein Shapiro firm has released a new version of its IP Primer (free, but you have to give a name).
Patent Reform 2009: The Senate Judiciary Committee holds the ball on patent reform and is set to meet again to discuss mark-ups on March 31, 2009. Lobbying will be heavy during the next week to define the center "consensus" ground. Quinn; IPWatch.
Posted on Mar 26, 2009 at 01:19 PM in Bits and Bytes, Fees, USPTO News | Permalink
Patent Attorney Mark Bergner provided the following five points that may help independent inventors control the cost of their patent application. Many small inventors contact me for preparing a patent application and asking that costs be kept to an absolute minimum. Recognizing that most such inventors do not have a great deal of money, I usually offer the following advice:
I tell clients that I am knowledgeable in patent prosecution, but generally not knowledgeable about the subject matter of the invention. It will cost considerably more if I am required to do extensive research in the field of the invention in order to fill in a sparse invention disclosure. I will often point inventors to a patent in their general field and suggest that the detailed description and figures shown in the patent provide roughly the level of detail needed for their patent application. While I am not expecting draftsman-quality drawings and use of the words "wherein" and "said" in their description, I am expecting something more than a 3-block single figure illustrating a complex client-server architecture.
Also, there are many inventors who are wonderful technical people, but simply cannot communicate well in writing (that's why they majored in physics and not journalism). It might be a good idea for such an inventor to work with someone (under a confidentiality agreement) who can write well to prepare an initial description. I had an inventor who enlisted the support of a graduate student at a significantly lower hourly rate than I charge. Although I can get all of the relevant information by talking with the inventor in person and over the telephone, if that is the sole means that I have of obtaining descriptive information, it is going to cost more. If the inventor has difficulty in communicating ideas and concepts both in writing and orally, it is going to be a very expensive patent application--no two ways about it.
Often I will prepare a draft application with a number of questions or comments, requesting clarification or additional detail. Some questions are intended to solicit lengthy responses, but only a bare minimum is provided or, worse, the information provided is completely non-responsive. Example: "You indicated that a series of messages flow between the client and server in order to implement the invention, but you have not provided any description as to what these messages are or what they contain. Can you please provide me with a detailed description of these, possibly with a table or diagram?" The entire reply received back: "The messages contain information that allows the server to act on client requests." Very often I have an inventor who promises to do most of the work themselves, only to put forth a minimal effort when asked to provide additional information.
I know I'm in trouble with an inventor if I throw out a fair cost estimate for preparing an application and the inventor breaks out in a cold sweat and starts suggesting a cost that is 50% of the estimate. It's one thing for an experienced business professional to haggle for lower costs, but in most situations involving the individual inventor, there is a significant lack of appreciation for what it will cost to do prototyping or pilot production runs, legal costs associated with non-disclosure agreements, trademarks, production and supply agreements, Underwriters Laboratories certification, FDA approval, etc. In the vast majority of cases, it is very expensive to bring an inventive idea to the marketplace, and the patent costs are typically a minimal part of those costs. If the inventor is not prepared for the entire undertaking, he is probably not going to willingly and cheerfully pay the bills, regardless of the quality and efficiency of the work done.
Posted on Mar 26, 2009 at 11:32 AM in Guest Post, Inventors, Patent Prosecution, TipCast | Permalink
I went to a large, well-respected, nationally-known firm to file a patent application for an invention. The invention is not that complicated. It's mechanical rather than electrical or chemical; in fact, I can make prototypes in my kitchen fairly quickly. The invention mostly relies on a new combination of existing devices/technology.
To give you a comparison, based on a word count, my patent application was literally twice as long as Dean Kamen's patent for an early Segway device in 1994. My fees were three times as high as another firm (Cooley Godward) says to expect for fees for most routine patents (other than for complex patents such as biologics, pharmaceuticals, etc.).
Is this the right way to go about this? Are there any precedents for recovering fees in this sort of situation in a way that won't tie me up in further legal fees?
____ ____ M.D. (anonymized at the author's request)
Posted on Mar 25, 2009 at 09:24 PM in Bits and Bytes, Inventors, Law Firm Practice | Permalink
Book Review: Patent Interferences as High Drama!
Patent interferences are intellectually stimulating and often a lot of fun--at least for the attorneys involved. However, I've seldom thought of them as "capable of producing a hell of a good story," which is the author's assessment of the story he tells in Taylor, LASER: The Inventor, The Nobel Laureate, and The Thirty-Year Patent War. Of course, the laser was unquestionably one of the great inventions of the Twentieth Century, and the fact that the issue of who invented it (Prof. Charles Townes or his grad student, Gordon Gould) provided gainful employment for patent attorneys for thirty years certainly commends this book to the readership of this publication.
Actually, "gainful employment for patent attorneys" better describes the situation of those who supported Prof. Townes's claims than the situation of those who supported Mr. Gould's claims. (Tellingly, Gordon Gould never did get his doctorate.) However, the fact that those who worked for Mr. Gould "on the cuff" for many years were ultimately amply rewarded makes it a heart-warming story for most of us.
Moreover, the professor/grad student controversy is a familiar one--and one that is usually difficult for even the best intentioned objective observers (including members of the interference bar) to sort out. Just as "mistakes were made" during the Reagan administration, an "invention was made" while Gordon Gould was working for Prof. Townes. But who made it? According to this book (and according to the final judicial determination), Gordon Gould made at least part of the overall invention of the laser—a part which was essential to the commercialization of lasers. However, I've been involved in enough of these disputes to suspect both that the final judicial determination could have gone the other way and that, if that had happened, an equally plausible (and interesting) book could have been written about Prof. Townes.
What made this book particularly entertaining for me was the fact that many of the principal players in the drama (judges, Patent Office officials, and lawyers) are still alive or have been within recent memory. It's always fun to read about folks you know and to realize that they were involved in a truly historic controversy.
In addition, the parts of the story concerning Gordon Gould as a prickly, overly suspicious "basement inventor" rang true for me. Most of us have dealt with some of those in our time at the bar, and it's never easy.
On the negative side, however, I should warn prospective readers that the manuscript was apparently not read by a patent lawyer—let alone by an interference specialist. It is replete with legal howlers! However, if one reads it with the proper attitude, noting those howlers is part of the fun.
Posted on Mar 25, 2009 at 05:54 AM in Book Review, Guest Post | Permalink
Patently-O Bits and Bytes No. 98: Economic Downturn and the PTO
Marketers see an economic downturn as a time to emerge with a new business paradigm. Better start working.
Hearsay: A Patently-O reader paraphrased the PTO's James Toupin who spoke at a recent USC conference: "New patent filings are down 16% so far in 2009." Patents were previously thought to be rather inelastic to price. There is a confluence of issues: (1) downturn in the US economy reducing cash-on-hand and a strong dollar discouraging foreign investment; (2) Increased PTO bureaucracy making it more difficult to obtain a patent with a valuable scope; (3) increased in patentability standards making it more difficult to obtain patent protection; and (4) decreased potential returns in litigation.
PTO Budget: The falling numbers has the PTO worried about its budget. I would say that the falling numbers are signs of much larger worries than just the PTO budget.
PTO Cuts: PTO Director Doll was previously reported as saying that the PTO has stopped hiring.
PTO Cuts: Now, the PTO has announced that all legal and technical studies programs have been suspended because of "budget constraints." One PTO reader noted that the Examiner's Union (POPA) knew about the cuts to this cherished development program for the past week, but remained silent.
Superduperextraordinary: CCIA calls for further tightening the standard for patentability. (Via Greg Aharonian)
Posted on Mar 24, 2009 at 11:26 AM in Bits and Bytes, Fees, Obviousness, USPTO News | Permalink
Federal Circuit Awards Sanctions for Frivolous Appeal
E-Pass v. 3Com, Palm, Visa, et al. (Fed. Cir. 2009)
This litigation began in 2000 when E-Pass sued for infringement of its electronic credit card patent. Patent No. 5,276,311. The district court granted summary judgment of non-infringement, which was affirmed on appeal. The district court then found the case exceptional under 35 U.S.C. § 285 and awarded attorneys' fees to the defendants. E-Pass appealed that judgment. In a counter-motion, PalmSource also asked for attorneys fees for the appeal – arguing that the appeal was frivolous as well. The Federal Circuit affirmed the trial court without opinion, but wrote an extensive opinion finding a frivolous appeal.
Frivolous Appeal: An appeal is frivolous if the appellant fails "to present cogent or clear arguments for reversal." In addition, the court may award sanctions based on misconduct or misrepresentations to the appellate court.
Here, the court found that E-Pass did not present any specific argument relating to the attorney fees for one of the defendants – PalmSource. Instead, the plaintiff-appellant focused on its case against the other defendants. E-Pass did not "challenge any finding of the district court relating to litigation misconduct in the case against PalmSource." Furthermore, E-Pass did not change its strategy even after being notified of PalmSource's frivolous appeal argument. Adding to E-Pass's problems are "multiple misrepresentations" to the Federal Circuit – primarily in referring to the defendants collectively when each stood in different situations. Perhaps the straw-that-broke-the-camel's-back was E-Pass's use of the quote that "a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless." With the help of PalmSource and the CAFC clerks, the court easily found that a critical exception to the sanctions rule had been left off. Notably, the full quote reads: "Absent misconduct in the litigation or in securing the patent, a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless."
Sanctions and attorney fees granted against E-Past and its counsel, jointly and severally.
In dissent, Judge Bryson saw serious misconduct, but would not have imposed sanctions.
Accepting that in those regards E-Pass’s briefs on appeal fell short of the standards we expect of counsel in this court, I nonetheless conclude that the shortfall is not so egregious as to call for the imposition of sanctions.
Posted on Mar 24, 2009 at 08:46 AM in Attorney Fees, CAFC, Patent Cases 2009, Software | Permalink
Law of Inequitable Conduct: Inequitable Conduct requires clear and convincing evidence of at least a threshold level of evidence that the applicant both (1) "made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information" and (2) by that act "intended to deceive the PTO." The materiality of the action is determined based on a reasonable examiner standard - what would a reasonable examiner "consider important in deciding whether to allow the application to issue as a patent?" If an unsubmitted reference is cumulative to information already on hand, then it will not be seen as material. Proof of intent to withhold a reference is not sufficient. Rather, the evidence must show intent to deceive the PTO. That said, intent may be proven by circumstantial evidence. After finding both threshold materiality and intent, the court must determine if the proof is sufficient to find inequitable conduct and consequently hold the patent unenforceable.
In Dayco Products, the patentee failed to disclose rejections in a copending application of claims “that were substantially similar in content and scope to claims pending in the applications that issued as the patents-in-suit.” 329 F.3d at 1367. We held “that a contrary decision of another examiner reviewing a substantially similar claim” was material. Id. at 1368. We further explained that, because a “rejection of a substantially similar claim refutes, or is inconsistent with the position that those claims are patentable, [the] adverse decision by another examiner . . . meets the materiality standard.” Id. Thus, on remand, the district court must determine whether the patentee failure to submit the two office actions was done with sufficient intent to deceive the PTO. Although seemingly dicta, the Federal Circuit provided four points of explicit guidance to the lower court. First, the district court need not accept any additional evidence; Second, the court should remember that "material does not presume intent, and nondisclosure, by itself, cannot satisfy the deceptive intent element." Rather, if intent is inferred, it must be "the single most reasonable inference able to be drawn from the evidence." Further, intent cannot be inferred based on a decision to withhold if the patentee has plausible legitimate reasons for withholding. Third, good faith on behalf of the applicant must be considered as it "militates against a finding of deceptive intent." One element of good faith here, may be that the patentee notified the examiners of the co-pending application. Finally, although the Federal Circuit agreed that the office actions were material, the court did not opine on how material. Thus, if the lower court does find clear and convincing evidence of a threshold intent to deceive, the court must again determine whether the combined intent and materiality are sufficient to warrant a holding of inequitable conduct.
Posted on Mar 23, 2009 at 06:32 AM in Inequitable Conduct, Patent Cases 2009 | Permalink
Posted on Mar 22, 2009 at 02:49 PM in Guest Post, Interference, Patent Legislation, Post Grant Review | Permalink
Patent Reform: Senator Kyl Introduces the alternative Patent Reform Act of 2009; This bill is more patent-holder friendly than the Leahy bill. The Leahy bill may see some action in Committee on March 26, 2009.
Posted on Mar 20, 2009 at 11:33 AM in Bits and Bytes, ITC, Patent Legislation, USPTO News | Permalink
Posted on Mar 20, 2009 at 11:17 AM in CAFC, Patent Prosecution, USPTO News | Permalink
Patently-O Bits and Bytes No. 96
Upcoming Event: ACI's 3rd Annual Paragraph IV Disputes on April 27-28, 2009 in New York City (Downtown Marriott). http://www.americanconference.com/ParagraphIV.htm . This is a good event because it is well attended by both the innovators (brands) and the generics. On the wednesday following the class, several speakers will walk through a brand-generic settlement agreement and work on mechanisms to avoid FTC & antitrust problems. PCT Search Offices: The PTO is warning PCT applicants to make sure that the selected International Search Authority (ISA) is certified for your particular type of claims. One problem, the EPO is not ready to handle business method claims. [Notice]
Court Report: 2,875 patent lawsuits were terminated in the year ending Sept 30, 2008. Of those, only 3.8% (109) reached trial. Although 3.8% appears low, patent cases reach trial more often than many other claims brought in Federal Court. The same statistic for Copyright and Trademark cases shows 1.3% and 1.7% reaching trial respectively. During the past year, only six patent cases were filed in the Court of Federal Claims alleging infringement by the US Government. Read the Report.
Posted on Mar 19, 2009 at 02:21 PM in Bits and Bytes, USPTO News | Permalink
Posted on Mar 19, 2009 at 05:59 AM in En Banc, Inequitable Conduct, Patent Cases 2009 | Permalink
On summary judgment, the district court held that Rexam did not infringe Crown's patent beverage can-top patent. The lower court also found that that Crown did not infringe Rexam's beverage can "necking" patent. On appeal, the Federal Circuit reversed both rulings.
The Doctrine of Equivalents: Over the past two decades, the doctrine of equivalents been pushed out of the usual infringement discussion. Part of the doctrine's downgrade is due to restricted application due to prosecution history estoppel (Festo) and tighter doctrine (Warner-Jenkinson). Perhaps equally important in the decline of the DOE has been the rise of claim construction as the primary variable of patent litigation. Rather than arguing for infringement as an equivalent, applicants are instead arguing for broad construction of the claim terms. Finally, patent drafters are – on average – better today than they were twenty years ago and spend more energy on considering how to draft claims that capture literal infringement. In a 2007 paper, Professors Lemley and Allison found something similar – that since the late 1990's (even before Festo), that "equivalents claims usually failed, most often on summary judgment." Their paper title - "Demise of the Doctrine of Equivalents" – overstates its case. The DOE is sometimes valuable.
Function-Way-Result Test: There are at least two alternate tests for infringement under the doctrine of equivalents. The function-way-result test considers "on a limitation by limitation basis" whether "the accused product performs substantially the same function in substantially the same way with substantially the same result as each claim limitation of the patented product."
Summary Judgment on DOE: Here, the issue was not so much the law of the DOE, but rather the requirement for summary judgment that there be no remaining material issue of fact. Crown's patent claims an "annular reinforcing bead," while Rexam's product uses a reinforcing fold. The lower court found those different enough to avoid infringement under the DOE. On appeal, however, the Federal Circuit reversed – finding at least one unresolved material issue of fact that precluded summary judgment. DOE requires expert testimony to step through the function-way-result test. And, here, the patentee's expert stepped through each element and his testimony had not been completely indicted or even refuted.
Because Crown provided evidence in support of its position that the annular reinforcing bead of claim 14 of the '826 patent had only one function, and because we must resolve any reasonable factual inferences in favor of the nonmoving party, we conclude that there is a material issue of fact regarding the function of the claimed bead. Accordingly, we reverse and remand the district court's grant of summary judgment of noninfringement.
This decision by Judge Moore is in line with the court's 2008 Voda case which was affirmed after parsing expert testimony to ensure that the elements had been properly proven. (In Voda, the court used the alternative "insubstantial difference" test.)
Unmarked Sales by Licensee: In a scenario reminiscent of the recent Quanta v. LG case, Rexam licensed its patents to Belvac to make "neckers" used to stretch out the top of the can bodies. Under the license, Belvac was required "to notify its customers that they would require a separate license from Rexam to perform the smooth die necking method" that is claimed in Rexam's patents. The license did not require Belvac to mark the machines that it sold. And, in fact, Belvac did not mark them with the Rexam patent number. Crown then used the machine to make over one hundred billion cans.
Marking under 35 U.S.C. § 287(a): The district court found that this past infringement was not actionable because Crown was not on notice of the patent. That decision seemingly follows from 35 U.S.C. § 287(a). Under that provision, a patentee who does not properly mark a patented article "is not entitled to damages for infringement prior to actual notice." (quoting CAFC decision).
Marking of Method Claims: Rexam's trick here was to assert only method claims. On its face, Section 287 applies to "any patented article," and Federal Circuit precedent has clearly stated that the marking requirement does not apply when only method claims are asserted. With palpable regret, Judge Moore writes:
"The law is clear that the notice provisions of § 287 do not apply where the patent is directed to a process or method. Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. Cir. 1983). In Hanson, 718 F.2d 1075 (Fed. Cir. 1983)—we held that 35 U.S.C. § 287(a) did not apply where the patentee only asserted the method claims of a patent which included both method and apparatus claims. Hanson is factually identical to this case, and we are therefore bound by the rule of Hanson."
Thus the patentee is free to claim damages back six years under Section 286 even without marking or providing actual notice. This decision thus provides an additional reason to include method claims in a patent application. Now, it would be improper to conclude that there is no reason to mark products that perform method claims. In the 1993 American Medical Systems case, the Federal Circuit ruled that marking would be required if "both apparatus and method claims" were asserted and there is a "tangible item to mark." In this case, the patent claimed both a method and apparatus, but Rexam sued only on the method claims.
Posted on Mar 18, 2009 at 01:56 PM in Damages, Doctrine of Equivalents, Method Claims, Patent Cases 2009, Summary Judgment | Permalink
In discussing the recent ICU Medical case, I noted that Judge Moore's decision did not rely on the "essential element" test or even cite Gentry Gallery. In Gentry Gallery, the patent covered a sectional recliner. During prosecution, the patentee had amended its claims to drop any reference to the location of the recliner controls. The Federal Circuit held those later-drafted claims invalid because the location of the controls was an "essential element" of the invention that must be included in the claims – otherwise, the claim scope would be unduly broad. Following Gentry Gallery, however, the Federal Circuit stepped-back from the essential element language– instead narrowing the case holding to the well trod notion that claims should be limited to the supporting disclosure. In both Johnson Worldwide, and Cooper Cameron, for instance, the Federal Circuit explicitly denied that Gentry Gallery created any new requirement.
"[W]e did not announce a new 'essential element' test mandating an inquiry into what an inventor considers to be essential to his invention and requiring that the claims incorporate those elements." Cooper Cameron, 291 F.3d 1317 (Fed. Cir. 2002)
In parallel fashion to Gentry Gallery, ICU had included a "spike" in every embodiment and each original claim. During prosecution, and apparently after seeing competing products, ICU amended its claims to drop the "spike" limitation. This was important because the market had moved to a spikeless version of IV valves. This district court in ICU discussed Gentry Gallery and the essential element test, but found no need to base its ruling on that "disfavored" theory. Rather, the court based its analysis on the traditional notion that claims must be described in the specification.
"[T]he Court's analysis employs the accepted rule that the claims may be no broader than the supporting disclosure, or, conversely, that claims are invalid when the entirety of the specification clearly indicates that the invention is of a much narrower scope. By focusing on the language of the Common Specification in a manner that highlights the function of the "spike" element, and the frequency and ubiquity with which it is referenced, the Court is only attempting to discern the breadth and substance of the invention ICU actually disclosed in the original 1992 Application."
Although the district court denied its application of any "essential element" test, it went on to hold that any valid claims must include a spike:
"The pervasiveness of the "spike" element in the invention description clearly informs the Court, and would inform any reasonable juror, that what was disclosed and claimed as the invention in the 1992 Application was a needleless medical valve with at a minimum, a "body," a "seal" and a "spike.""
Likewise, the Federal Circuit's version denies an omitted element test, but held that any valid claim must include a spike limitation because "a person of skill in the art would not understand the inventor ... to have invented a spikeless medical valve." Notes:
Posted on Mar 18, 2009 at 11:18 AM in Enablement, Patent Cases 2009 | Permalink
Written Description: Federal Circuit Again Invalidates Broadened Claims
ICU Medical v. Alaris Medical System (Fed. Cir. 2009)
This is the second post on the ICU case. Part I discusses the $4.6 million award of attorney fees to the accused infringer based on the patentee's litigation misconduct.
The district court found several of ICU's claims invalid for lack of written description under 35 U.S.C. § 112, ¶ 1. On appeal, the Federal Circuit affirmed. (Judges Michel (CJ), Prost, and Moore; Opinion by Moore). Although similar to enablement, the written description requirement pushes an applicant to "convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the invention." Most often, written description arises in cases where new matter is added to the claims during prosecution. That is also the case here - during prosecution ICU amended its claims to include "spikeless" claims -- directed to a valve mechanism for adding drugs to an IV without using needles.
To be clear - the original claims included the "spike." That element was removed during prosecution - seemingly broadening the claims. As the court stated "we refer to these claims as spikeless not because they exclude the preferred embodiment of a valve with a spike but rather because these claims do not include a spike limitation—i.e., they do not require a spike." It is that failure to include any discussion of a spike in the claim that lead to the claim being held invalid for lack of written description.
The Federal Circuit does not cite Gentry Gallery or the infamous "omitted element" or "essential element" theories. However, the court does rely heavily on LizardTech. In that case, the court did not point to any claim limitation that was not sufficiently described. Rather, the court found the claim invalid because an embodiment arguably covered by the claim was not sufficiently disclosed.
We addressed a similar issue in LizardTech . . . We explained that "the specification provides only one method for creating a seamless DWT, which is to 'maintain updated sums' of DWT coefficients. That is the procedure recited by claim 1. Yet claim 21 is broader than claim 1 because it lacks the 'maintain updated sums' limitation." We determined, however, that "[a]fter reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by 'maintaining updat[ed] sums of DWT coefficients.'" We therefore concluded that claim 21 was invalid under the written description requirement of § 112, ¶ 1.
In LizardTech, the court explicitly rejected the argument that the written description requirement "requires only that each individual step in a claimed process be described adequately."
In this case, ICU's original disclosure focused on spiked embodiments, but the more generic claims are not so limited.
ICU's asserted spikeless claims are broader than its asserted spike claims because they do not include a spike limitation; these spikeless claims thus refer to medical valves generically—covering those valves that operate with a spike and those that operate without a spike. But the specification describes only medical valves with spikes.
Since all the embodiments included the "spike," the court concluded that "Based on this disclosure, a person of skill in the art would not understand the inventor ... to have invented a spikeless medical valve."
Invalidity affirmed
This case also includes an important discussion of claim differentiation that will be dissected in a later post. Of course, this case suggests the best patent drafting practice of providing multiple embodiments of each claim element, and considering whether each and every limitation in the broadest original claims are necessary.
ICU broadened its claim by dropping a limitation -- did ICU introduce new matter?
In a powerful rhetorical approach, Judge Moore chose to refer to the broad claims as "spikeless claims." As mentioned, those claims do not include a "spikeless" limitation. Rather, they simply omit a "spike" element. As it turns out more than 99.9% all patent claims issued in 2008 are silent about "spikes," and under the traditional interpretation of the "comprising" transition - all those claims would literally cover embodiments without spikes. The holding here cannot be that all those claims are invalid. I believe that the holding here is largely a result of the fact that the accused device was in-fact spikeless. Unfortunately, this decision does not provide helpful guidance as to when it will apply. Rather, it appears to simply be an additional vague tool available to defense attorneys.
The court did not mention enablement - since it was easy to remove the needle from a syringe and the disclosure includes a preslit seal that could arguably work with a spikeless syringe. That modification would have been enabled based on the original disclosure.
Posted on Mar 17, 2009 at 08:58 AM in Enablement, Patent Cases 2009 | Permalink
Query on Elements and Limitations
A Patently-O commenter recently made a distinction between claim elements, claim steps, and claim limitations.
"[B]asically, the distinction can be discerned grammatically. Elements are nouns. Steps are verbs or gerunds. Limitations are almost always adjectives, adverbs or modifying phrases, usually beginning with "wherein"."
Is this distinction correct? Is there any legal basis for these distinctions?
Posted on Mar 17, 2009 at 08:08 AM in Bits and Bytes | Permalink
Federal Circuit Affirms $4.6 million award for litigation misconduct
ICU's patents covers technology for using syringes to add drugs to an IV. The district court granted summary judgment of invalidity and also awarded attorney fees and found a violation of Rule 11 of the Federal Rules of Civil Procedure. Alaris was awarded $4.6 million in attorney fees and sanctions. On appeal, the Federal Circuit affirmed.
Section 285 of the Patent Act provides for the award of attorney fees to the winning party in "exceptional cases." In Brooks Furniture, the Federal Circuit discussed a two-part test for whether attorneys fees may be awarded due to litigation conduct. The test requires that "both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” A district court fee award will be affirmed absent clear error.
The problem - ICU argued that the claim term "spike" could be a non-pointed structure such as a tube even though the specification "repeatedly and uniformly describes the spike as a pointed instrument." The claim construction was not ICU's only problem:
For example, the district court found that ICU made “multiple, repeated misrepresentations . . . to the Court regarding its own patents in an effort to conceal what are now characterized as errors in order to rescue the TRO/PI from denial.” These misrepresentations related to (1) ICU’s assertion of claims in the ’509 patent that were identical to claims in the ’592 patent (i.e., assertion of double-patented claims); (2) ICU’s assertion of more double-patented claims from the ’509 patent even after Alaris and the district court warned ICU of the double-patenting issue; (3) ICU’s misrepresentation of Federal Circuit authority; (4) ICU’s representation that figures 13 and 20–22 of the common specification “clearly” disclosed a spikeless embodiment, only to later acknowledge that these figures do not disclose such an embodiment and state that its representation was an “honest mistake.”
Although the Brooks Furniture rule discusses objectively baseless "litigation," that rule is not construed to focus on the litigation as a whole. Rather, attorney fees may be assessed if any portion of the litigation is brought in bad faith and in an objectively baseless manner. Here, the Federal Circuit found that the lower court had "appropriately exercised its discretion in awarding attorney fees only for [a] portion of the litigation."
Federal Circuit Decision 08-1077.pdf
District Court award of Fees: 232495.pdf. Bottom line: "The Court finds that Alaris is due $4,587,622.44 in attorney fees and $164,721.19 in costs for the reasons set forth below. . . . This represents a reasonable lodestar calculation for Alaris’ work . . . , and it constitutes a reasonable pro rata amount of Alaris’ total expenditure of $11,000,000 in attorney fees and $2,000,000 in costs overall in this case."
District Court decision to find a Section 285 exceptional case and Rule 11 sanctions. 232494.pdf. Money Quote: "[The submitted declarations] do not substantively justify or excuse ICU’s litigation tactics or show its good faith. These declarations were prepared by ICU’s litigation counsel for the purpose ofopposing the Rule 11 and Fees Motions, and comprise mostly self-serving assertions of good faith by interested witnesses, such as ICU’s CEO (Dr. George Lopez), trial counsel (Fulwider, Patton, Lee & Utecht; Paul Hastings; or Pooley & Oliver), patent counsel (Knobbe Martens) and its paid experts (Dr. Maureen Reitman and Bob Rogers). These materials lack the indicia of credibility provided by declarations or opinions from outside, independent counsel or experts, particularly outside patent, as opposed to litigation, counsel. Most of the materials appear to have been “memorialized” in retrospect, providing marginal support compared to, for example, an ex ante documented and vetted analysis that preceded the litigation or that, al minimum, preceded the TRO/PI request and the inclusion of the “spike” claims in the amended complaint."
Although the district court decision appears to identify the Fulwider firm as "trial counsel," that appears to have been a mistake made by the court. A Fulwider attorney has indicated that their firm "was never one of ICU's trial counsel in that matter, and thus made no representations to the court on ICU's behalf." In fact, ICU appears to be somewhat of a toxic client. According to the court documents, Fulwider represented ICU in the 1990's. At some point ICU dropped the firm as a client and sued for malpractice based on Fulwider's representation of alleged ICU competitors. Fulwider did not admit wrongdoing, but a 2007 press release by ICU claims that ICU "will be paid $8 million in settlement of its claims against Fulwider."
Posted on Mar 16, 2009 at 01:04 PM in Attorney Fees, Damages, Patent Cases 2009 | Permalink
Spangenberg on Apportionment, Obviousness and Anonymous Comments
On Feb 12, 2009, I published "Orion and Taurus: NPE's at the Federal Circuit" in which I discussed Erich Spangenberg's cases now pending at the Federal Circuit. In the note, I referred to the $34 million verdict that his company won against Hyundai and noted that the patent may well serve as the "poster child for damages reform." Erich Spangenberg recently sent me a note regarding his appeals now pending at the Federal Circuit. He makes several important points:
On apportionment: As to being a "patent reformer's poster child for damage reform," I take it that this statement by you has two elements: (i) you put some credence in the musings of anonymous comment posters about the state of the art and (ii) the apportionment provisions set forth in the proposed patent reform legislation. In various ways, both of these were put to test at trial. . . . As to the apportionment point, I believe the problem with this point is that a similar non-infringing substitute system [did] not exist at the critical date and on the date of the hypothetical negotiation a similar system would be an enterprise system with a double digit million price tag.On Obviousness: Every major auto manufacturer produced mountains of prior art (including Mercedes) and not a one of them claimed to have a computerized sales system in operation on the critical date as described by your poster. The art relied on turned on a system known as the IDB 2000—which was developed by Bell+Howell in the late 1980's at the request of GM. The co-inventor of the IDB 2000 was Dr. Donald Frey. Dr. Frey was the CEO at Bell+Howell during the time the IDB 2000 was initially developed and implemented—a BA, MA and PhD in metallurgic engineering out of Michigan and a long-term employee of GM and Ford, whose credits include being one of the "fathers" of the Mustang while at Ford and a National Medal of Technology recipient. Dr. Frey was not paid for any of the information he provided. In an affidavit he provided that was discussed at trial (Dr. Frey did not testify)—he stated "I have reviewed United States Patent Number 5,283,865 entitled "Computer-Assisted Parts Sales System" (the '865 patent) and United States Patent Number 5,367,627 entitled "Computer-Assisted Parts Sales Method (the '627 patent) along with the file history for each of these patents." While there are several points in his affidavit that are important, the most critical is the concluding paragraph in his affidavit that states, "The'627 and the '865 patent differ from the IDB2000 in that, among other things, they describe novel parts systems that were not contemplated, designed or implemented as part of the IDB2000."
I am fascinated by the reverse prognosticators that claim it is "obvious to me" as they sit in their chairs today reflecting on the state of the art in 1989—most of whom posses even less experience at the critical date than the anonymous comment poster who had a summer job in a Mercedes parts bay. In this golden age of modern cynicism is it really so hard to believe that the examiner got it right?
On Anonymous Comments: I am not a fan of—and heavily discount views expressed in—anonymous commentaries. The discipline of providing your verified name gives one pause before you hit the "send" button. One idea you may wish to consider to raise the level of the discourse on your blog is to have an "anonymous" comment section (sometimes this is the only way to get valuable information) and a verified name comment section.
Erich's points on apportionment are well taken. Apportionment does not make sense when at the time of the infringement there were no suitable substitutes. As has been discussed on the blog, even if you believe that damages should be apportioned according to the incremental value of the claimed innovation, the apportionment method proposed in the Patent Reform Act of 2009 is clearly problematic based upon its proposed procedures.
Posted on Mar 15, 2009 at 01:41 PM | Permalink
Patent Reform 2009: More on Damages
Guest Post by Richard Cauley. Cauley is the author of the recent Oxford Press book titled Winning the Patent Damages Case: A Litigator's Guide to Economic Models and Other Damage Strategies. I asked him to provide some thoughts on the damages proposals in the Patent Reform Act of 2009. The damages provisions of the Patent Reform Act of 2009 are not new, nor, in an economic sense, are they particularly controversial. Although their introduction in this legislation may create a political firestorm among those who wish to artificially maximize the economic leverage of patentholders both in court and across the bargaining table, the solutions proposed in the latest attempt at patent reform merely reflect – and attempt to measure – the true economic worth of a patent and the reasonable return to which an inventor is entitled.
What these damages provisions (all of which were contained in the various versions of the failed Patent Reform Act of 2007) attempt to accomplish is to force the court to limit the patentholder’s recovery to the real economic worth of an invention – for example, to a company who might want to license that invention to use in another product or to a consumer who might purchase a product because of that very invention.
Thus, the section limiting the application of the entire market value rule to situations in which the actual invention – the advance over the prior art – forms the basis of consumer demand compensates the inventor only to the extent his invention produces something that people actually want to buy.
This section also ensures that patents on relatively minor components are not given a value in excess of their real economic worth. Where the patent does not cover something critically important to the consumer, the provision limits the patentholder’s recovery to the value of that component to the customer – and precludes a recovery based on the entire product, which may include many other patented components.
Likewise, the section requiring the court to determine whether there is already a “market price” for licensing the patent – in the form of pre-existing licenses for similar patent rights – simply measures how much a prospective licensee would be willing to pay on the open market for the right to use the patent. Of course, this is what the reasonable royalty remedy is supposed to measure.
The purpose of these provisions is obvious. First, they will limit the ability of patentholders, primarily patent trolls, to recover damages in patent litigation far in excess of the actual economic value of those patents. More importantly, however, they will reduce the threat of such inflated damages awards – a threat such plaintiffs use as leverage in licensing campaigns and settlement negotiations to secure recoveries far exceeding the worth these patents really have to the prospective licensees.
The problem with these proposed statutes, then is not their objective – to give patents the value they actually deserve – but the implementation. As written, these provisions are a judicial nightmare. They require the court to conduct a kind of “damages Markman” in which the court must decide, before giving the case to the jury, the economic value of the patent’s “specific contribution over the prior art,” the “basis” for the “market demand” for an infringing process, the “relevant market” for a claimed invention and whether that market has “similar noninfringing substitutes” for the claimed invention. Apparently, the court is also supposed to make the economic decision of which Georgia Pacific factors the jury is allowed to consider. The delay which will be caused in an ongoing trial will inevitably be substantial and the opportunities for reversible error in this process will be legion. Although the intent of the drafters of these provisions was certainly praiseworthy– to codify limits on jury’s overvaluing patents in awarding damages – the byzantine rules they set up to implement these objective shows that they certainly have never tried a patent case. Indeed, if the courts would simply follow the judicially- established guidelines already in place, this complex set of regulations would not be necessary.
Hopefully, calmer heads will prevail before these rules are actually imposed on the patent litigation bar and on the courts. There are better and more effective ways of reaching these objectives.
Indeed, it is not surprising that, in another section of the bill – limiting venue for patent cases to districts in which the defendant has a facility – there appears to be no appropriate venue for a patent case against an infringing foreign defendant with no facilities in the United States. Thus, a plaintiff might have jurisdiction over an infringer, but nowhere to sue the company – all dressed up and no place to go.
Posted on Mar 13, 2009 at 09:20 AM in Damages, Patent Legislation | Permalink
In re Nature's Remedies: Foreign Regulatory Submission Invalidates Patent Under 102(b)
In re Natures Remedies (Fed. Cir. 2009) (nonprecedential)
In October of 2005, a third party (Jemo-Pharm) submitted a request for ex parte re-examination of Natures Remedies patented claim covering an herbal composition of guarana, damiana, and yerbe-mate claimed to cause weight loss. More than one year before Remedies' filing date, an anticipating composition had been submitted to a Danish regulatory organization as part of a request for approval for clinical testing. (The decision is unclear, but implies that the submission was done by Remedies).
A Danish official provided testimony that the submission was a public record and was open for inspection since its date of submission. Remedies' expert, however, argued that a Danish trade-secrecy law would have prevented such inspection. The BPAI accepted the open-access line of argument and found the submission invalidating prior art under 35 USC 102(b). The patentee appealed - arguing that the official submission was not sufficiently publicly accessible to be considered 102(b) prior art.
On appeal, the Federal Circuit affirmed - finding that the regulatory submission was publicly available more than one year before Remedies filed its application. The court began by recognizing that the official's testimony created a prima facie case that the submission was publicly accessible - shifting the burden to the patentee. Of course, BPAI factual findings such as this will be affirmed with a finding of "substantial evidence."
Under the Danish trade-secrecy law, the regulatory submissions are kept secret when they are of "material importance" to a company's "economy." It appears that Remedies could have proven its case but failed to provide evidence to the Board.
102(b) looks at prior art that was "described in a printed publication" more than one year prior to the date of application for the US patent. Implicit within 'publication' is a notion that the material is publicly accessible. Notably, however, there is generally no need to prove that the material was actually accessed. Thus, in this case, there is no discussion of whether the regulatory submission was ever seen by anyone.
Posted on Mar 13, 2009 at 07:05 AM in Anticipation, Patent Cases 2009 | Permalink
In re Ferguson: Patentable Subject Matter
In re Ferguson (Fed. Cir. 2009)
Scott Harris has been discussed several times on Patently-O. Harris is a former Fish & Richardson partner. Fish handles the most patent litigation of any firm in the country. In addition to being a patent attorney, Harris is an inventor. He has contracted with the plaintiffs firm Niro Scavone in several actions to enforce patents against Google and other companies. Harris is one of the named inventors of the Ferguson application and he handled the [futile] appeal.
The claimed invention focuses on a "method of marketing a product" and a "paradigm for marketing software." These claims focus on methods and structures for operating a business.
Methods Under Bilski: Claim 1 reads as follows:
Under Bilski, this case is open and shut. The claim is not even arguably tied to a machine -- especially under the Nuijten construction of machine to be a "concrete thing, consisting of parts, or of certain devices and combination of devices [including] every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result." (Quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863)). Thus, the 1863 touchability definition of machine appears to hold weight. On the second Bilski prong, the claim does not require transformation of any article into a different state or thing. The only transformation is that of legal rights and organizational relationships that were explicitly excluded in the Bilski decision: "transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”
Harris asked the court to consider a different test of patentable subject matter: “Does the claimed subject matter require that the product or process has more than a scintilla of interaction with the real world in a specific way?” The CAFC panel rejected that proposal primarily based on the precedential value of Bilski: "In light of this court’s clear statements that the “sole,” “definitive,” “applicable,” “governing,” and “proper” test for a process claim under § 101 is the Supreme Court’s machine-or-transformation test, see Bilski, passim, we are reluctant to consider Applicants’ proposed test." The court went on to determine that the "scintilla" test would create too much ambiguity as well.
Non Method Claims: The application also included claims directed to a "paradigm for marketing software" made up of a marketing company that markets software in return for a contingent share of income. Although "instructive," the Federal Circuit did not directly follow Bilski. Rather, the court looked to determine whether the claimed paradigm fit within one of the four statutory classes listed in Section 101:
Inventions Patentable: "... any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof..."
In a gentle Koan, the Court stated that it "need not resolve the particular class of statutory subject matter into which Applicants' paradigm claims fall, [however], the claims must satisfy at least one category." In fact, the court did attempt to resolve the particular class, but was unable to fit the paradigm claim into any of the four.
Applicants’ paradigm claims are not directed to processes, as “no act or series of acts” is required. Nuijten, 500 F.3d at 1355. Applicants do not argue otherwise. Applicants’ marketing company paradigm is also not a manufacture, because although a marketing company may own or produce tangible articles or commodities, it clearly cannot itself be an “‘article[]’ resulting from the process of manufacture.” Nuijten, 500 F.3d at 1356. Again, Applicants do not argue otherwise. And Applicants’ marketing company paradigm is certainly not a composition of matter. Applicants do not argue otherwise. Again applying the touchability notion of machine, the Court also rejected the notion that the company paradigm could be a machine:
Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” Nuijtent, and as Applicants conceded during oral argument, “you cannot touch the company.”
Ending in a flourish, the court found that in fact, the Ferguson paradigm claims are "drawn quite literally to the paradigmatic abstract idea." (quoting Warmerdam).
Judge Newman offers a poignant concurring opinion. Posted on Mar 10, 2009 at 08:15 PM in BPAI, Patent Cases 2009, Patentable Subject Matter, Software | Permalink
Threading Comments on Patently-O
Typepad (the blog host) has new software for threading comments. I like the idea because it allows for better direct arguments and may make it easier to follow a line of reasoning. At times, the comments turn into a back-and-forth between two or three readers that goes wildly off topic. The threads could allow that comment chain to continue while non-parties could just skip over it. The new software also allows more of an "identity." You can create a user ID and picture - and then never again be forced to read numbers and letters in fuzzy images. Anonymous comments will still be available. The software also gives the commenter a few minutes to edit comments before they become 'permanent.'
Test it out here (http://www.patentlyo.com/test/2008/07/monop1.html) and let me know if we should make the switch.
Posted on Mar 10, 2009 at 01:56 PM | Permalink
The lateral market for patent law professors is alive and steaming ahead.
Scott Kieff has accepted a position at GW law school in DC and will be moving from Washington University in St. Louis. GW may well have the best patent focused program in the country. At any opportunity, Kieff promotes the notion that strong property rights almost always lead to the best outcome.
Tim Holbrook is off a recent stint at Stanford Law school and is taking a position at Emory in Atlanta. Emory's patent space has been vacant since Margo Bagley left for UVA several years ago. Holbrook is leaving his fulltime position at Chicago-Kent.
Also leaving Chicago is Katherine Strandburg (from Depaul). Strandburg is taking a position at NYU where she will join Richard Epstein and my undergraduate classmate Troy McKenzie. McKenzie is a chemical engineer, but does not do patent law. Instead he focuses on bankruptcy.
In a coup, Mark Janis is headed home to Indiana (Bloomington) - leaving his longtime post at Iowa. Janis largely focuses on the interplay between trademark and patent rights.
Dave Schwartz is moving from John Marshall to fill Holbrook's position at Kent. Before moving into academia, Dave was a partner at a firm handling patent litigation and prosecution.
Each of these individuals have been helpful to me at some point during the past few years. Thank you, and good luck in your new positions!
Posted on Mar 09, 2009 at 03:38 PM in Academic Studies, Bits and Bytes | Permalink
PriorSmart: Tracking Patent Documents
The creative guys at PriorSmart (www.priorsmart.com) have created a very interesting tool for those of you frustrated by the PTO's bans on automated PAIR access. For a relatively small fee, PriorSmart will monitor the docket of any application, reexamination, or issued patent and then e-mail reports. To stay within the PTO's no-automation requirements, PriorSmart hires people to check the PAIR site and report on activities. Daily monitoring of an application costs $16 per month, a monthly report costs $4 per month. That price beats your paralegal. PriorSmart sees itself as filling a gap by allowing companies to "Track documents affecting your litigation or freedom–to–operate opinion; Monitor competitors en masse; [and] Be alerted to new continuations or divisionals."
http://docs.priorsmart.com/
Also, check out their search functionality at http://www.priorsmart.com/.
Posted on Mar 09, 2009 at 11:04 AM in Bits and Bytes, USPTO News | Permalink
Patent law is ordinarily considered territorial. Infringement of a US patent normally requires practicing an entire patent claim within the US. 35 U.S.C. § 271(f) details an exception to the rule that creates a cause of action for patent infringement for the action of supplying components of a patented invention to be assembled abroad. The Court of Appeals for the Federal Circuit has announced that it will hear a 271(f) case en banc to determine whether "35 U.S.C. § 271(f) appl[ies] to method claims, as well as product claims."
The case is set for the Court to provide a resounding answer: "No, Section 271(f) does not apply to method claims."
In the 2005 Union Carbide decision, the Federal Circuit interpreted 271(f) to encompass method claims. Thus, in that case, Shell was properly held liable for exporting a catalyst to be used abroad to practice the method in a foreign facility Union Carbide is the specific precedent followed by the three member Cardiac Pacemaker panel. Then, in the 2007 Microsoft v. AT&T decision, the Supreme Court found that 271(f) does not extend to cover foreign duplicated software - i.e., that the software in the abstract is not a "component." Part of the Supreme Court’s justification for its narrow interpretation of 271(f) was based on the traditional presumption against extraterritorial application of US laws.
Posted on Mar 07, 2009 at 12:07 PM | Permalink
Injunctive Relief: I re-read Michelle Lee's (Google) statement about the need for patent reform. One issue that jumped-out this time: No mention of injunctions. Money is still at stake, but Google appears confident that it won't face a shut-down even if it loses a patent case. In that sense, Google is lucky that it is being sued by non-practicing entities who as a de facto rule don't get injunctive relief against infringers who have a major market share.
Benefit of Trade Secrets: Avoid Charges of Infringement. In some senses, google is very public. Yet, its actual operation is quite secretive. One benefit of that type of operation is that it helps avoid charges of patent infringement. If patentee's can't tell how you operate, it makes it much more difficult to assert charges of infringement.
Warranties and Copyright: My colleague Marc Roark has an interesting new paper: Limitation of Sales Warranties as an Alternative to Intellectual Property Rights: An Empirical Analysis of Iphone Warranties' Deterrent Impact on Consumers.
The BPAI Watchdog: http://bpaiwatchdog.blogspot.com/. So far, Leigh Martinson is focusing on the BPAI's application of Bilski.
Is it only proper to exclude patents covering computer programs as such when explicitly claimed as a "computer program"?
Posted on Mar 06, 2009 at 09:41 AM in Bits and Bytes, Injunctions, USPTO News | Permalink
What is a troll patent and why are they bad?
By TJ Chiang (Professor at George Mason Law School). Professor Chiang wrote the following squib after reading yet another article complaining about patent trolls. There is much debate and controversy over the term "patent troll." Let me suggest a fairly narrow definition, but one that identifies a category of patents with distinct problems. Moreover, let me suggest that we should talk about individual patents as "troll patents," rather than entire entities as patent trolls. A troll patent is one that:
Is owned by someone that does not practice the invention.
Is infringed by, and asserted against, non-copiers exclusively or almost exclusively. By copying I mean any kind of derivation, not just slavish replication.
Has no licensees practicing the particular patented invention except for defendants in (2) who took licenses as settlement.
Is asserted against a large industry that is, based on (2), composed of non-copiers.
The problem with a patent troll—or, more accurately, the particular troll patent—that fits all four conditions above is that the troll patent does only two things. First, it gathers dust in the patent office. Second, it inflates prices on products. The patent itself contributes nothing useful to society, in so far as the people who actually make anything useful would have done it equally in the absence of the patent.
These four conditions also rule out a few non-practicing entities; or, rather, many of the patents held by these entities. University-held patents are largely not troll patents, in so far as they are often on substantial advances where the infringers copy. Individual inventors are also not always trolls. An individual inventor that licenses others to commercialize the invention is not a troll; nor where the inventor actually has something significant that gets pirated. But a patent owner who sits in wait to ambush an industry later, with a patent that does nothing otherwise except gather dust, is a troll.
One hypothetical that will surely be thrown at me is the individual inventor who tries to commercialize the invention, but fails, and then sues the industry years later. This inventor is a visionary ahead of his time who was merely unlucky. On the other hand, this inventor still contributed nothing useful to society. It is worth emphasizing the fact that, by my hypothetical, the industry produced the same technology independently, without copying anything from the patent. In the absence of copying by someone else or the commercialization of the product through the patent, I do not see the inventor as having done society much of a favor.
Posted on Mar 06, 2009 at 08:11 AM in Academic Studies, Articles and Publications | Permalink
Bilski v. Doll: Round I of Amicus Briefs
Bilski v. Doll (on petition for writ of certiorari 2009)
In a 2008 en banc decision, the Federal Circuit affirmed a Patent Office ruling that Bernard Bilski’s claimed method of hedging the risk of bad weather through commodities trading was not patent eligible under Section 101 of the patent act. The Court applied a “machine-or-transformation test” as the only test to be used in determining whether a claimed process is eligible for patenting under § 101. The decision holds that a claimed process either (1) be tied to a particular machine or apparatus or (2) transform a particular article into a different state or thing. Although the Court identified the Bilski test as the only test, it added two corollaries: (1) the addition of a mere field-of-use limitation without other meaningful limits on claim scope will not render a method claim patent eligible; and (2) insignificant extra-solution limitations will not render a method claim patent eligible.
Bilski has petitioned the Supreme Court to hear its appeal and look at the question of patentable subject matter for the first time in a generation. Diamond v. Chakrabarty and Diamond v. Diehr together opened the door for broader patent eligible subject matter. Notably, Justice Stevens – author of the Diehr dissent – is the only justice still on the bench. Bilski’s petition asks two questions:
The first round of Amicus briefs – those supporting the petition – have now been filed. The PTO’s briefs and briefs in opposition to the petition are due in early April.
Amicus Briefs Supporting the Petition (I have not reviewed all of these, but wanted to post them for public consumption):
AIPLA: “There is no support in this Court’s precedent for the Federal Circuit majority’s conclusion that this Court enunciated a definitive ‘machine or transformation’ test for determining the patent eligibility of a claimed process under § 101.” The statute should be interpreted to promote new areas of technology. File Attachment: aiplaamicus.pdf (148 KB)
Boston IPLA: The “machine-or-transformation test” conflicts with Supreme Court precedent. File Attachment: bostonamicus.pdf (142 KB)
Borland Software: File Attachment: borlandamicus.pdf (158 KB)
Koninklijke Philips Electronics: File Attachment: philipsamicus.pdf (162 KB)
Anne Barschall: The Supreme Court appears to have some “prejudice against electronic devices [as evidenced by] both Benson and Morse.” Its not magic, it is engineering. You can’t see electricity or quantum particles but that does not make them abstract ideas. File Attachment: barschallamicus.pdf (217 KB)
Medistem: Bilski has considerable bleed-through to non-business method patents. File Attachment: medistemamicus.pdf (109 KB)
Accenture and Pitney Bowes: The Federal Circuit's "only one test" rule is too rigid and goes against the Supreme Court's precedent that demonstrated flexibility in the Section 101 inquiry. [DDC Comment: The flexibility theme is strongly present in the past several years of Supreme Court patent cases. In eBay, MedImmune, and KSR, the Supreme Court saw a rigid Federal Circuit rule and made it more flexible.] File Attachment: accentureamicus.pdf (122 KB)
Franklin Pierce Law Center: File Attachment: fplcamicus.pdf (128 KB)
John Sutton: File Attachment: suttonamicus.pdf (120 KB)
Posted on Mar 05, 2009 at 10:00 AM in Amicus Brief, Patent Cases 2009, Patentable Subject Matter, Supreme Court | Permalink
Guest Post: Monsanto Company’s View on Patent Reform – Protect Innovation:
Dr. Alan Greenpan's keynote speech on "Markets and the Judiciary" noted that "critical to economic growth is a rule of law, particularly protection of the rights of individuals and property". His remark that for IP law, the constancy of the protection afforded under the Constitution of the United States and our fully-functioning legal system is the basis for the U.S. economy's sustaining lead – even in difficult economic times with broken markets. Our patent system is the envy of the globe and while capable of thoughtful adjustment should not be hijacked by international pirates or corporations seeking to dilute legitimate protection that breeds investment and jobs. This is why Monsanto Company, as a global leader for innovation and technology in agriculture, is joined by trade unions and countless other groups who strive to assure Greenspan's voice is not lost in the din from hedge funds, offshore interests or others seeking short term gain by weakening our great patent system.
I respectfully disagree with the recent blog post by Google's Head of Patents and General Counsel, commenting on the perceived risks from damage awards in patent cases. Monsanto has faced billion dollar damage claims as a wrongly sued patent defendant and also knows the true benefits from avoiding the encouragement of willful infringement based on a smaller party's calculated gain in the face of limited risk of a meaningful award of damages if infringement is established. With full knowledge of all these issues and our substantial alignment with Google and the information technology industry over the legitimate need to curtail patent trolls and a myriad of other concerns - we encourage thoughtful reform. Last year Congress passed without public objection Public Law 110-403 the "Prioritizing Resources and Organization for Intellectual Property Act of 2008" which was designed to significantly enhance government law enforcement resources for combating certain kinds of intellectual property (IP) theft, e.g. criminal counterfeiting and infringement of computer software. The law helps protect investments in the research, development and marketing of certain kinds of innovative American products and services. The information technology industry was rightly bothered that its intellectual property rights were being trampled on by "pirates".
But, according to the financial sector and the information technology industry it seems that too many other people have too many patents that get in the way of too much "innovation" that is being marketed by an industry that doesn't own the rights to the "innovation". Some say that innovation can't stand still while somebody does a patent search to make sure that the "innovation" that is being marketed won't infringe any of those too many patents. So the complaint is "we are getting sued too much by these innovators who are stifling our innovation". Unlike the solution for rampant copyright infringement the perverse solution for rampant patent infringement is to propose "reforms" that would both reduce incentive to invest in research, development and marketing of innovative American products and services and provided impediments for improving patent quality. Dr. Greenspan's Georgetown keynote aptly recalled the copyright situation when he quoted Stephen Breyer from the Harvard Law Review decades prior to becoming a Justice "the case for copyright…rests not upon the proven need, but rather upon the uncertainty as to what would happen if protection were removed. One may suspect the risk of harm is small, but the world without copyright is nonetheless [in the words of Hamlet] 'undiscover'd country' which 'puzzles the will,/And makes us rather bear those ills we have/Than fly to others that we know not of.'
It would change the calculation of damages that an infringer (pirate) would pay as compensation for trampling on patent rights, encouraging only more callous disregard of patent rights and piracy.
It would change the venue provisions in a way that would impose a substantial burden and inconvenience on patent owners by limiting access to the judicial system, encouraging only more callous disregard of patent rights and piracy.
"Technical" changes would weaken protection and encourage piracy via removing the estoppels provisions and expanding the prior art basis for engaging in inter partes re-examination, in effect providing a system of post grant review that will serve only to harass patent owners by effectively taking patents out or service for the duration of unlimited re-examinations, encouraging only more callous disregard of patent rights and piracy.
Posted on Mar 04, 2009 at 03:07 PM in Articles and Publications, Guest Post, Patent Legislation | Permalink
The most contentious portion of the Patent Reform Act of 2009 is the damages provision. The current damages statute gives little guidance to a court. Damages must be "adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. §284. The Court may "increase the damages up to three times the amount found or assessed." Id. The courts have given some flesh to the rough skeleton created by these statutes. One construct is the hypothetical negotiation – asking the counterfactual question of what licensing scheme would these dueling foes have agreed to if they had actually come to a licensing agreement. The Georgia Pacific factors guide the process of deternining a reasonable royalty. In some cases, courts allow a patentee to recover lost profits.
As it turns out, the damages actually awarded in patent cases are generally thought to be much higher than negotiated license agreements. Part of the difference stems from the reality that patent damages are awarded only on patents that are known to be valid, infringed, and enforceable, and after the risk and expense of litigation have already been taken. In ordinary license negotiations, these risks lower the potential royalty rate and – in contrast – should increased the level of compensation in post-trial damages. There is some evidence that juries simply tend toward large damage awards.
Stacking Problem: In some technology areas – such as electronics – this creates a potential problem known as royalty stacking. Most electronics products are covered by multiple patents – often dozens of patents. CDMA2000 communication standard, for instance, reportedly invringes at least 924 patents. [LINK] When each patentee is awarded a 5% royalty, it does not take long before the entire revenue is taken just to pay for intellectual property rights. If everyone has blocking rights then no business can get done, and we see the tragedy of the anti-commons. Of course, stacking is only a problem in theory. CDMA2000 is a standard actually used around the world. Producers are making (some) money. Multiple patents covering products have causes prices to be raised, but it is not clear than any market has been destroyed or even that the royalty payments outway the benefit of the innovation.
Uncertainty Problem: Jury verdicts are quite unpredictable, and because the royalty rules are so loose, damages appeals are rarely successful.
The proposed text reads as follows:
35 USC 284(c)(1) IN GENERAL.-The court shall determine, based on the facts of the case and after adducing any further evidence the court deems necessary, which of the following methods shall be used by the court or the jury in calculating a reasonable royalty pursuant to subsection (a). The court shall also identify the factors that are relevant to the determination of a reasonable royalty, and the court or jury, as the case may be, shall consider only those factors in making such determination.
''(A) ENTIRE MARKET VALUE.-Upon a showing to the satisfaction of the court that the claimed invention's specific contribution over the prior art is the predominant basis for market demand for an infringing product or process, damages may be based upon the entire market value of that infringing product or process.
''(B) ESTABLISHED ROYALTY BASED ON MARKETPLACE LICENSING.-Upon a showing to the satisfaction of the court that the claimed invention has been the subject of a nonexclusive license for the use made of the invention by the infringer, to a number of persons sufficient to indicate a general marketplace recognition of the reasonableness of the licensing terms, if the license was secured prior to the filing of the case before the court, and the court determines that the infringer's use is of substantially the same scope, volume, and benefit of the rights granted under such license, damages may be determined on the basis of the terms of such license. Upon a showing to the satisfaction of the court that the claimed invention has sufficiently similar noninfringing substitutes in the relevant market, which have themselves been the subject of such nonexclusive licenses, and the court de termines that the infringer's use is of substan tially the same scope, volume, and benefit of the rights granted under such licenses, damages may be determined on the basis of the terms of such licenses. ''
(C) VALUATION CALCULATION.-Upon a determination by the court that the showings required under subparagraphs (A) and (B) have not been made, the court shall conduct an analysis to ensure that a reasonable royalty is applied only to the portion of the economic value of the infringing product or process properly at tributable to the claimed invention's specific contribution over the prior art. In the case of a combination invention whose elements are present individually in the prior art, the contribution over the prior art may include the value of the additional function resulting from the combination, as well as the enhanced value, if any, of some or all of the prior art elements as part of the combination, if the patentee demonstrates that value.
''(2) ADDITIONAL FACTORS.-Where the court determines it to be appropriate in determining a reasonable royalty under paragraph (1), the court may also consider, or direct the jury to consider, any other relevant factors under applicable law.
I’ll use this opportunity to plug a new book by Richard Cauley: Winning the Patent Damages Case (Oxford 2009). Great book, the only problem is the $185 price tag.
The Bills have received numbers: H.R. 1260 is sponsored by Rep. Conyers (MI) and co-sponsored by Reps. Berman (CA), Goodlatte (VA), Jackson-Lee (TX), and Smith (TX). S. 515 is sponsored by Sen. Leahy and co-sponsored by Sens. Crapo (ID), Gillibrand (NY), Hatch (UT), Risch (ID), Schumer (NY), and Whitehouse (RI). Both Bills have been referred to their respective Judiciary Committee which are headed by the Bill sponsors.
Dennis Crouch, Patent Reform Act of 2009, Patently-O (March 3, 2008).
William Rooklidge, “Reform” of Patent Damages.
Dennis Crouch, Patent Reform 2007: Apportionment of Damages, Patently-O (May 25, 2007).
Amy Landers, 2007 Patent Reform: Proposed Amendments on Damages, Patently-O (April 29, 2007).
Posted on Mar 03, 2009 at 07:49 PM in Articles and Publications, Damages, Patent Legislation | Permalink
Patent reform legislation has now been introduced in both the House and the Senate. The provisions call for major reforms and mirror much of the proposed legislation from 2008. If anything, this is not a consensus Bill. File Attachment: SenateBill.pdf (116 KB) File Attachment: HouseBill.pdf (180 KB)
Proposed changes in the Senate Bill include:
First to File: Moving to a first-to-file system that credits invention based on the filing date of the patent application rather than on the date of actual invention. The provision eliminates the one-year grace period for most cases. Thus, any independent third-party publication prior to filing is considered prior art regardless of the date of invention. Likewise, secret prior art (102(e)) cannot be 'sworn behind' based on prior invention. This provision obviously hurts folks who delay in filing patent applications.
Damages: Must look to the invention's "specific contribution over the prior art" to determine damages. There is an interesting provision that a reasonable royalty may be calculated as the price of licensing a "similar noninfringing substitute in the relative market." In some cases, this could push damages to zero if the noninfringing substitute is in the public domain. The provision also codifies that treble damages are limited to instances where a judge finds that an adjudged infringer recklessly continued to infringe after receiving particularly specified written notice sufficient to create declaratory judgment jurisdiction and without relying on reasonable advice of counsel.
Expanded Reexamination Proceedings: Reexaminations may be requested based on published prior art, or evidence of prior public use or sale in the US. Inter partes reexaminations would begin to look more like court cases and would be heard by administrative patent judges. The Bill would clarify that parties would be estopped from filing inter partes reexamination requests after a district court judgment.
Additional Post Grant Review: Within 12 months of issuance, a third party can file a cancellation petition based on any ground of invalidity (rather than simply prior art). The post grant reviews would also be conducted by the administrative patent judges.
Pre-Issuance Submissions: Third parties can submit prior art during examination of the patent as well as a statement regarding the relevance of the art. The art should be submitted the latter of (1) six months after publication or (2) before the first office action on the merits.
Patent Litigation Venue: "A party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court." Venue is only proper were (a) defendant is incorporated; (b) defendant has its principle place of business; (c) where the defendant is permanently located and has committed substantial acts of infringement; or (d) where the plaintiff resides if the plaintiff is a nonprofit or individual inventor. The court should transfer venue to avoid evidentiary burdens when transfer can be accomplished without causing undue hardship to the plaintiff."
Interlocutory Appeals: The Federal Circuit will have jurisdiction over interlocutory appeals of claim construction when approved by the lower court.
Administrative Patent Judges: The BPAI would become the Patent Trial and Appeal Board (PTAB). Interferences would be gone, however they would be replaced by derivation proceedings as well as reexamination and post-grant trials.
PTO Powers: The PTO has power to set its fees, including reducing fees.
Oath: Easing the rules to more easily allow rights-holders to file patent applications on behalf of the inventor.
Federal Circuit Judges: Making legal it for a Federal Circuit judge to reside more than 50 miles from DC.
As you can see, this is very much the type of reform that companies like Google would like to see. Google is regularly faced with charges of patent infringement and rarely sues for infringement. Some of these changes will benefit the system as a whole, but it is clear that this is not "balanced" reform. The damages provision will almost certainly reduce patent awards. And, perhaps equally important, the damages provision provides adjudged infringers a real cause to appeal jury awards if they did not directly follow the expert testimony.
I believe that the expanded use of reexaminations and post grant review and prior art submissions will be beneficial, and I have faith that the administrative patent judges will be able to handle their newfound responsibilities. That said, these provisions provide challengers with new ways to attack patent rights.
The plaintiff bar in the Eastern District of Texas is quite good, and defendants are doing what they can to escape from their grasp. The venue provision moves in that direction and would thus weaken the value of patents.
The trick with the first to file system is to realize that it is not about some mythical race to invent between competitors. Rather, it is about keying the priority on the date of filing the application rather than the date of invention or even one year prior to filing. This provision weakens patent rights because more materials will be considered prior art. It is possible to switch to a first-to-file system without eliminating the grace period so dramatically – this legislation does not, however meet that standard.
The Bill is sponsored by both Senators Leahy (D-VT) and Hatch (R-UT). Representative Conyers (D-Mich) introduced parallel legislation in the House, the legislation is largely similar, but does contain some differences. (I have not reviewed the House version in detail). Some opposition has already formed. Reps Manzullo (R-IL) an Michaud (D-ME) issued a joint press release titled "New patent bill encourages IP theft, destroys American jobs." Their focus was on the damages provision.
There are some changes from the 2008 legislation.
The Bill does not require that all applications be published at 18 months.
Applicants would not be required to search prior art.
The 2009 Bill allows public use or sale in the US to be reasons for challenging patents.
CHECK 21 provisions are gone.
Fee Diversion is allowed in the 2009 Bill. (Oddly, Leahy explained that PTO Examiners perfer a system of fee diversion)
The 2009 Bill does not address inequitable conduct.
Stephanie Condon writes "Controversial provisions remain in patent reform bill."
Diane Bartz writes "Congress takes up patent redo, damages fight looms."
David Ingrim writes "Lawmakers Pledge Bipartisan Effort on Patent Changes."
Zusha Elinson writes "Silicon Valley Raises Voice on IP Reform."
Brent Kendall writes for Dow Jones "The patent system has not been overhauled in more than 50 years." [huh?]
Posted on Mar 03, 2009 at 01:58 PM in Damages, Patent Legislation, Reexamination | Permalink
A patent reform bill is expected to be introduced today in the Senate and House. Below is a (yet unauthorized reproduction and) editorial by Michelle Lee, Head of Patents and Patent Strategy at Google (Originally posted here)
After the last time I blogged about patent reform in late 2007, the House went on to approve the Patent Reform Act. The bill unfortunately got bogged down in the Senate the following year. Since then the problems of the current system — and the need for reform — have only grown.
Consider this: Of the 20 patent lawsuits filed against Google since late 2007, all but two have been filed by plaintiffs who don’t make or sell any real product or service — in other words, by non-practicing entities or “patent trolls.” Most of these cases seem to feature the same small set of contingent fee plaintiff's lawyers asserting patent claims against the same small set of companies. We've also noticed a more disturbing trend: in many of these cases, the patents being asserted against us are owned by — and in a surprising number of cases, are even “invented” by — patent lawyers themselves.
Unfortunately, the temptations and opportunities for abuse have gotten too high. Lawyers and plaintiffs have seen the potentially huge payoffs available in patent litigation. Before 1990, there had been just one patent damage award of over $100 million. Since 1990, there have been at least 15, with at least five topping $500 million.
That's why I'm excited that patent reform legislation is slated to be reintroduced today by Senators Patrick Leahy and Orrin Hatch and Representatives John Conyers and Lamar Smith. Once a driver of creativity, our patent system now poses a hurdle for innovation. All too often, Google and other companies face mounting legal costs to defend against questionable patent claims from speculators gaming the system to reap windfall profits. And those lawsuits make it more difficult and costly to introduce the next revolutionary product.
I wrote a bit last Congress about the reform provisions that Google cares the most about. The most pressing of those is ensuring fair damage awards. The current system too easily allows damages to be assessed based on the value of the whole product often containing many features — not just the value of the innovation of the allegedly infringed patent — which means the threat of potentially massive awards forces defendants to settle. Balance should be restored by requiring damages to be based on the value of the innovation's contribution to the product.
As members of the Coalition for Patent Fairness, we're optimistic that patent reform faces better odds in 2009 than it has before — not least because President Obama has pledged his support. Passage of patent reform is long overdue.
Posted on Mar 03, 2009 at 12:24 PM in Patent Legislation | Permalink
Eastern District of Texas as the Best Venue
Mayer Lebowitz was a noted inventor of security technology. He died in 2005, but the trustee of his estate (Gellman) sued to enforce patent rights against various security companies including ADT, Diebold, Digital Security, Europlex, NAPCO, Numerex, Protection One, and Telular. Gelman lives in Texas and brought suit on behalf of the estate in the Eastern District of Texas – alleging infringement of U.S. patent No. 6,075,451. The '451 patent covers the method and electronics for sending alerts via a cellular network. That way, the lines can't be cut, and installation may be much cheaper.
Judge Ward rejected the defendants motion to transfer Venue to the Northern District of Illinois – finding that the Plaintiff's Texas location weighed heavily in favor of keeping the case in Texas. Gellman v. ADT Sec. Services, Inc., 2008 WL 4280351 (E.D.Tex. 2008). Following In re TS Tech, Telular has now moved for mandamus – asking the Federal Circuit to order that venue be transferred. In a preliminary ruling on the Motion, Judge Dyk demanded that Gellman brief the matter.
In a parallel case, Judge Ward recently refused to transfer a case that had been filed against a dozen auto manufacturers. MHL TEK, a Texas corporation, sued Audi, VW, Nissan, Hyundai, Kia, BMW, Porsche, Isuzu, etc. The defendants asked that the case be sent to the Eastern District of Michigan, Judge Ward found numerous reasons why Michigan was a poor choice of venue. MHL TEK, LLC, v. NISSAN MOTOR COMPANY, 2009 U.S. Dist. LEXIS 13676 (E.D. Tex. 2009). In his opinion, Judge Ward made the law on venue look quite silly when applied to major multi-party patent cases. For instance, the convenience factor looks at distance to the forum: "For defendants flying in from Germany, the Detroit airport would possibly be closer than the Shreveport airport. For defendants flying in from Asia over the Pacific, the Shreveport airport would possibly be closer than the Detroit airport." As in the Gellman case, at least one defendant here (VW) has asked for the Federal Circuit to rule on mandamus. Briefing on that motion continues.
Both cases are easily contrasted with Odom v. Microsoft. (AKA Patent Hawk) In Odom's case, both the patent holder and defendant were located in the Pacific Northwest, and the defendant asked that the case be transferred to the Plaintiff's home jurisdiction. In both Gellman & MHL TEK, the plaintiffs are located in Texas and the multiple defendants are located throughout the country and the world without any particular site of nexus.
Posted on Mar 03, 2009 at 12:02 PM in Jurisdiction, Patent Cases 2009 | Permalink
I used a software algorithm to count the number of inventors in each utility patent application published June 2007- February 2009. The histogram below shows the result. The median application has two inventors. One German application lists 100 inventors (I'll post the patent number when I get back to my office).
Northwestern Law School's Journal of Technology and Intellectual Property (NJTIP) is putting on a great event in Chicago on March 6, 2009 (Friday).
Howard University's Institute of Intellectual Property and Social Justice IP Symposium – March 5-6. Day two will focus in patent issues and will include a year in review by Irving Kayton, a discussion of design patent issues by Jon Wood (Bridgestone); and panels that include Chief Judge Michel and Judge Linn as speakers.
Federal Circuit Year in Review (St. Louis) – March 13 – I'll be presenting this one hour session sponsored by the Bar Assn. of Metropolitan St. Louis.
Fordham IP Conference (NYC) - April 15-16. This conference has strong cross-Atlantic ties and will include judges and scholars from both continents.
IAM's IP Business Congress in Chicago – June 21-23 – As the name suggest, this annual event focuses on how IP can be used in business. Sessions include "brand IP, strategic IP and business alignment, and IP value creation, as well as a range of breakouts examining legal, financial, strategic and business-related topics."
Posted on Mar 03, 2009 at 12:13 AM in Bits and Bytes, Conference or CLE, Inventorship | Permalink
Patentable Subject Matter Redux: Bilski 2009
In February 2009, the Board of Patent Appeals (BPAI) issued nine decisions that touched on Bilski and patentable subject matter under Section 101 of the Patent Act. In eight of the cases, the BPAI either affirmed an examiner's Section 101 rejection (five cases) or entered a new ground of rejection under Section 101 (three cases). In the remaining case, the BPAI remanded - asking the examiner to consider wether the claims were patentable under Section 101. All nine cases were related to software or electronics type applications.
In Ex Parte Motoyama, Appeal 2008-2753 (Bd. Pat. App. Int., Feb. 27, 2009), for instance, the BPAI reversed an examiner's Section 103(a) obviousness rejection, but entered a new ground of rejection as failing the Bilski test of patentable subject matter under Section 101 of the Patent Act. The Motoyama claim (owned by Ricoh) reads as follows:
1. A method for a monitoring device to obtain an identifier of a monitored device, comprising: obtaining manufacturer information of the monitored device using a hierarchical approach by comparing a response to a query of the monitored device to an anticipated response; accessing the monitored device using a first method to attempt to obtain the identifier using the manufacturer information; if the identifier is not obtained in the accessing step, obtaining a MAC address of the monitored device as the identifier; if the MAC address is not obtained, generating the identifier using a second method; and storing the identifier of the monitored device for use by the monitoring device. The panel recognized that the claim language did refer to a "monitoring device." However, according to the BPAI, the method "is not recited in terms of hardware or tangible structural elements. Rather, the method could be implemented on a software system, where the elements of claim 1 are implemented solely in software or algorithms. Thus, the nominal recitation of "for a monitoring device" in the preamble does not transform claim 1 into patentable subject matter under 35 U.S.C. § 101." Likewise, none of the steps call for transformation of an article.
Although the BPAI's focus on Bilski has been primarily in software applications, there are many that see a potential for Bilski to spill-over into other areas of technology. Right on this frontier are applications focusing on methods of diagnosing. Filing a couple of days early, Medistem has submitted its brief supporting certiorari in the Bilski case. (Briefs in support of certiorari are due Monday, March 2, 2009). Medistem explains to the court Bilski also limits they types of patents that it can obtain over newly invented predictive tests
The Federal Circuit’s limiting the scope of patentable subject matter for “process” inventions in Bilski casts a cloud of uncertainty as to whether Medistem and other biotech companies can continue to protect with patents their inventions relating to methods of diagnosing causes of diseases and methods of selecting beneficial treatment protocols. Medistem fears that should biotech companies lose the ability to obtain enforceable patent protection on diagnostic and treatment methods, the ability to attract investment capital will sharply decline, and as a direct result the incentive to search for better ways to diagnose causes of diseases and find more effective treatments will decline. Medistem is not alone in its view. Addressing this issue in his dissent from the en banc court’s opinion, Circuit Judge Rader cogently noted that excluding patent protection for methods of using discovered biological or physiological correlations will “undermine and discourage future research for diagnostic tools.” Bilski, 545 F.3d at 1014.
Medistem's primary problem with the Bilski test is that it is the "exclusive test" for determining patent-eligibility of claimed processes. In that sense, the company argues, the rule limits the statute beyond prior Court precedent and beyond Congressional intent.
Bilski-Medistem-SCT.pdf
Posted on Mar 01, 2009 at 09:30 PM | Permalink