Source: http://patentlyo.com/patent/2008/10
Timestamp: 2014-04-20 00:59:24
Document Index: 613866345

Matched Legal Cases: ['§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§122', '§102', '§120', '§1498', '§ 154', '§154', '§154', '§ 1']

October | 2008 | Patently-O
October 30, 2008Patent, Patent Cases 2008, Patentable Subject MatterDennis Crouch	In re Bilski, __ F.3d __ (Fed. Cir. 2008)(en banc) The Federal Circuit has affirmed the PTO’s Board of Patent Appeals (BPAI) finding that Bilski’s claimed invention (a method of hedging risks in commodities trading) does not satisfy the patentable subject matter requirements of 35 U.S.C. § 101. In doing so, the nine-member majority opinion (penned by Chief Judge Michel) spelled out the “machine-or-transformation” test as the sole test of subject matter eligibility for a claimed process. The Supreme Court … has enunciated a definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. …. Because the applicable test to determine whether a claim is drawn to a patent-eligible process under § 101 is the machine-or-transformation test set forth by the Supreme Court and clarified herein, and Applicants’ claim here plainly fails that test, the decision of the Board is AFFIRMED.
State Street Test Is Out: In State Street, the Federal Circuit used the “useful, concrete, and tangible result” of a process as a touchstone for patentability. In Bilski, the en banc panel found the State Street formulation “insufficient to determine whether a claim is patent-eligible under § 101.” [W]e also conclude that the “useful, concrete and tangible result” inquiry is inadequate and reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply.
Some Business Methods and Software Are Still In: Still, the court made clear that business methods and Software will still be patentable – if they meet the machine-or-transformation test. We rejected [a categorical] exclusion in State Street, noting that the so-called “business method exception” was unlawful and that business method claims (and indeed all process claims) are “subject to the same legal requirements for patentability as applied to any other process or method.” We reaffirm this conclusion. … [A]lthough invited to do so by several amici, we [also] decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court
To be clear, the machine-or-transformation test is not a physicality test – i.e., a claim can still be patentable even if it does not recite sufficient “physical steps.” On the flip-side, “a claim that recites ‘physical steps’ but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter.” Here, the court spelled out the specific issue in mind: a claimed process where every step may be performed entirely in the human mind. In that situation, the machine-or-transformation test would lead to unpatentability. “Of course, a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing. As a result, it would not be patent-eligible under § 101.” Along this line, the court also dispelled two rising concerns, noting that that (1) neither novelty nor obviousness have any relevance to the section 101 inquiry, and (2) the fact that an individual claim element is – standing alone – patent ineligible does not render the claim unpatentable because patent eligibility is considered while examining the claim as a whole. What is a Transformation?: The courts have already developed an understanding of transformation as it relates to the Section 101 inquiry. Here, the Federal Circuit referred to the distinction made in the 1982 Abele case. There, the court distinguished between two of Abele’s claims – finding only one patentable. The unpatentable claim recited “a process of graphically displaying variances of data from average values” without specifying “any particular type or nature of data … or from where the data was obtained or what the data represented.” The patentable dependent claim identified the “data [as] X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.” In retrospect, the Federal Circuit sees the difference between these two claims to be that of transformation. The second claim included sufficiently specific transformation because it changed “raw data into a particular visual depiction of a physical object on a display.” Notably, the transformation did not require any underlying physical object. As the court noted later in the opinion, the transformed articles must be “physical objects or substances [or] representative of physical objects or substances.” The Bilski claims themselves were not seen as transforming an article: Purported 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. Applicants’ process at most incorporates only such ineligible transformations. . . . As discussed earlier, the process as claimed encompasses the exchange of only options, which are simply legal rights to purchase some commodity at a given price in a given time period. The claim only refers to “transactions” involving the exchange of these legal rights at a “fixed rate corresponding to a risk position.” Thus, claim 1 does not involve the transformation of any physical object or substance, or an electronic signal representative of any physical object or substance. The principle behind the test is to prevent a patentee from obtaining claims that preempt the use of fundamental principles. That principle reaches back more than 150 years to the Morse case where the inventor was precluded from claiming all uses of electromagnetism to print characters at a distance. We believe this is faithful to the concern the Supreme Court articulated as the basis for the machine-or-transformation test, namely the prevention of pre-emption of fundamental principles. So long as the claimed process is limited to a practical application of a fundamental principle to transform specific data, and the claim is limited to a visual depiction that represents specific physical objects or substances, there is no danger that the scope of the claim would wholly pre-empt all uses of the principle.
What is a “Particular Machine”?: For software and business methods, the question will remain as to whether a general purpose computer is sufficiently particular to qualify as a “particular machine.” “We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.” As Professor Duffy noted in an earlier Patently-O article, the PTO Board of Patent Appeals (BPAI) has already answered this question: “A general purpose computer is not a particular machine, and thus innovative software processes are unpatentable if they are tied only to a general purpose computer.” See Ex parte Langemyr (May 28, 2008) and Ex parte Wasynczuk (June 2, 2008). More commonly, the claim may tie the software to computer memory or a processor – is that sufficiently particular? I suspect this fact pattern will arise shortly. Unpatentability Affirmed Notes: Although three dissenting opinions were filed, Judge Newman is the only judge who found patentable subject matter in Bilski’s claim. In Dissent, Judge Mayer thought the decision did not go far enough: “Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain.” Citing work by Professors Dreyfuss and Pollack, Mayer argues that business method patents have the overall effect of stifling innovation by restricting competition. In his Dissent, Judge Rader asks the insightful question of why a new test is necessary when settled law already answers the question. Rader would have decided the opinion with one line: “Because Bilski claims merely an abstract idea, this court affirms the Board’s rejection.” I believe Rader’s position is quite defensible. In particular, the majority justifies its need for the test as a way to ensure that we avoid the “preemption of fundamental principles.” In the majority construct, the machine-or-transformation test serves as a fairly accurate proxy for preventing preemption. The court does not, however, answer why any proxy is necessary – if the purpose is to exclude overbroad abstract ideas why not simply rely on the current rule preventing patenting of abstract ideas (as well as the law requiring full enablement)? Concurring opinion by Judge DYK (joined by Judge LINN) attempt to reconcile the history of the patent system with the new rule of patentability. Reasonable Billing Rates
October 29, 2008Attorney Fees, Patent, Patent Cases 2008Dennis Crouch	Matlink v. Home Depot & Lowes (S.D. Cal. 2008) Matlink sued the big box retailers for infringement of its patent covering a supply re-ordering system. After some discovery “stonewalling,” the district court awarded attorney-fees to the defendants for their time wasted on a motion to compel. Here, the attorney fees were calculated based on the rates charged by the defendant’s three Southern California Winston & Strawn attorneys: Partner with 15 years experience
In awarding fees, the court found these rates “not … excessive in this context.” A similar situation recently arose in Quantronix v. Data Trak (D. Minn 2008). There, the district court looked at the hourly billing rates for several Salt Lake City patent litigators from the Trask Britt firm: Partner with 15 years experience
The Quantronix court found these rates reasonable as well. “Considering the experience levels of the individuals on the Quantronix billing statements and the Court’s own experience with and knowledge of prevailing rates in this market, the Court finds that the hourly billing rates submitted by Quantronix are reasonable and commensurate with the rates of other attorneys in this area with similar knowledge and practice experience.” When Richmond based attorneys from Troutman Sanders requested attorney fees earlier this year, they used the following rate chart: Partner with 20 years experience
Thomas & Betts Power Solutions v. Power Distrib., Inc., (E.D. Va. 2008). The Florida IP firm of Allen Dyer requested similar rates in AC Direct, Inc. v. Kemp (M.D. Fla. 2008) Founding partner with 40 years experience
The AC Direct court found those rates reasonable. “In the Court’s experience, the rates charged by the attorneys and paralegals assigned to this case are within the range of reasonable legal fees for the Orlando, Florida marketplace. Further, the fees are appropriate given the level of skill displayed in this case.” Notes: I saw the original report of Matlink in the Docket Navigator; The other cases were found in Westlaw. Patently-O Bits and Bytes No. 74
October 28, 2008Bits and Bytes, PatentDennis Crouch	Our thoughts and prayers go out to Peter Zura of the great 271 Patent Blog. Peter is now officially cancer free. Professor Doug Lichtman is offering free CLE Credit. Listen online: www.ipcolloquium.com DMCA is 10 years old. [EFF] [News] The US Government has Seized the Mongol’s trademark and is now “seiz[ing] all products, clothing, vehicles, motorcycles … or other materials bearing the Mongols trademark” [Randazza] I don’t know what they will do with this guy’s head… Via Kelly Talcott: $125 Million is a Lot to Pay for Fair Use PTO To Delay IDS & Markush Rules Until 2009
October 27, 2008PatentDennis Crouch	According to an AIPLA release, the PTO will not finalize its proposed rules on IDS statements or Markush claims before a new president takes office in January 2009. Peggy Focarino (PTO Deputy Commissioner) reportedly made this announcement on October 24, 2008 at the AIPLA Annual Meeting. This decision falls in line with the OMB Memo to all federal agencies that any “final regulations should be issued no later than November 1, 2008.” As discussed earlier on Patently-O, IDS statement proposal would require an applicant to provide supplemental information for any submissions more than 25 pages in length or written in a foreign language. Likewise, the supplemental information would be required when more than 20 documents are submitted in a single case. The supplemental information includes pin-citation to important features of the document and a discussion of how the disclosed features relate to the applicant’s claims. Patently-O Bits and Bytes
October 27, 2008PatentDennis Crouch	Publications: A little over 60,000 patents issued May-September 2008. Of those, 90% were also published as applications under 35 U.S.C. §122(b). (This excludes the 1.5% filed prior to December 2000). How has this shift changed the business of patents? Needed: Senior ANDA Litigator. Bilski Coming?: IPO has planned a December 1 session to discuss “Patentable Subject Matter after In re Bilski” (via Hal Wegner). Co-Inventors Contribution Must Be “More Than The Exercise of Ordinary Skill”
October 27, 2008Inventors, Patent, Patent Cases 2008Dennis Crouch	Oren Tavory v. NTP (Fed. Cir. 2008)(nonprecedential) In March 2006, RIM settled its patent dispute with NTP for $600 million+. In the wake of that settlement, Tavory filed an inventorship claim against NTP arguing that he was a co-inventor of at least one of the NTP patents. The district court dismissed the case – finding that Tavory did not provide “sufficient independent evidence to corroborate his inventorship allegations.” On appeal, the Federal Circuit affirmed in NTP’s favor. Back in the late 1980′s and early 1990′s Tavory worked with Tom Campana as a computer programmer for Telefind. While there, Tavory developed a computer program to facilitate an e-mail-to-pager system. He was also part of a team that created the pager-to-laptop e-mail system. Telefind ran out of money in 1991 and Tavory left for greener pastures. When Don Stout later filed Campana’s patent applications, he appended a copy of the code that Tavory had co-authored. During the RIM trial, Tavory testified for NTP. At that time, he did not claim inventorship. Correcting Inventorship: An issued patent is presumed to name the correct inventors. Thus, an inventorship challenge must bring “clear and convincing evidence” that the newly surfaced inventor “contributed to the conception of the claimed invention.” “Simply reducing to practice that which has been conceived by others is insufficient for co-inventorship.” Under the clear and convincing standard, the inventorship challenge “must be corroborated by independent evidence.” Contribution Must Be “More Than The Exercise of Ordinary Skill”: Tavory suggested that his contribution was the claimed “interface switch.” However, the Federal Circuit rejected that claim because (1) Tavory did not prove that the “interface switch itself was not in the prior art”; and (2) Tavory likewise did not prove that “his alleged contribution to the claimed invention—the interface switch—was the result of anything more than the exercise of ordinary skill in the art.” Consequently, “he has failed to establish co-inventorship.” Judge Newman concurred with this result, but would have decided the case on laches (based on the long delay in making the claim) and estoppel (based on Tavory’s silence during the NTP trial). The Health Impact Fund
October 27, 2008Articles and Publications, Bits and Bytes, PatentDennis Crouch	Last week I spoke with Yale Professor Thomas Pogge about his proposal for a “Health Impact Fund.” The mission is to provide incentives to develop and distribute drugs that will achieve major global health impacts. Pogge sees the current patent system as valuable, but lacking. The problem is that the most innovative pharmaceutical companies find it very difficult to make money from treatments that are focused on the problems of the developing world. Although helpful, charity donations of drugs are typically insufficient and lead to the problem of parallel imports. The solution proposed by Pogge is to form a global fund and pay innovator companies based on the global health impact of their new treatment. The more “quality adjusted life years” (QALYs) saved, the more money a company gets. The intent of this reward scheme is to focus the innovators on developing and distributing treatments that will have the greatest worldwide health impact. The system is intended simply as an additional incentive layer. A drug developer may obtain patents as usual. However, in order to qualify for the program, the patentee would agree to sell its drugs at cost and guarantee access. Pogge’s models suggest that the fund would have a major impact if funded with $6 billion annually. Notes: HIF Book is online I like the idea of aligning economic interests of the innovators with a health impact. If structured correctly, innovators will like this program because it does not take away the option of simply using the traditional patent system. The problems are primarily logistical: who pays the $6b?; how do you measure health impact?; how do you prevent gaming the system (by, for example, only using the program when the patents are likely to be challenged)?; etc. President Bush’s “Emergency Plan for AIDS Relief” is set to spend about $6 billion on global AIDS treatment this year. [Link] Judge Posner on Inequitable Conduct
October 26, 2008Inequitable Conduct, Patent, Patent Cases 2008Dennis Crouch	New Medium (J. Carl Cooper) v. Barco N.V. (N.D. Ill. 2008) (J. Posner) Sitting by designation, Seventh Circuit Judge Richard Posner recently found New Medium’s asserted patent unenforceable due to inequitable conduct during ex parte reexamination of the patents. This case is important as one of the first decisions to consider inequitable conduct in the wake of Star Scientific. Barco presented two theories of inequitable conduct: (1) that New Medium had misled the PTO by failing to disclose that its expert declarants had been ‘retained’ and paid; and (2) that inventor/owner Carl Cooper made false statements to the PTO regarding his association with the experts. Judge Posner rejected the first theory, but agreed with the second. Disclosing Payment to Declarants: All four of New Medium’s experts were retained and paid by the company. However, only two of the experts disclosed their relationship to the PTO. Judge Posner found the lack of disclosure to be “not misleading.” As a default, the PTO should expect that the patent applicant retained and paid its experts. “[A]ll expert reports in an ex parte proceeding before the Patent Office are procured by the patent owner or applicant, and it is customary to pay the experts for their time, as was done in this case. There is nothing in the reports of the two experts who didn’t say they had been retained to suggest they were charging no fee—no suggestion that they had been moved by altruism or a strong conviction of the rightness of the application to volunteer to submit an expert report gratis.”
This pragmatic default rule makes some sense. If the failure to disclose the payment was not misleading, it could not be material to patentability or lead to a finding of inequitable conduct. False Statements About Cooperation: In his declaration to the PTO, Mr. Cooper stated that he had “never met or talked with any of these experts” before contacting them to submit reports. Judge Posner found that statement “false.” Cooper had solicited and paid for a bid from one of the experts (Klughart) seven years prior. (Klughart is also a patent attorney). Judge Posner also found that Cooper and Klughart’s testimony about forgetfulness difficult to believe: “I conclude that Klughart is not neutral and that his forgetfulness may be strategic. . . . Cooper testified that when he submitted his report in August of 2001 he had forgotten his prior dealings with Klughart. I do not believe that testimony. . . . I am also disturbed by the statement in Cooper’s brief that ‘Mr. Cooper didn’t think his past contact with Dr. Klughart was ‘material’ and that’s why he didn’t disclose it.’ That is an admission that Cooper lied in his declaration, though I imagine it is unintended.”
Judge Posner had no problem finding intent to deceive the PTO. The second question then is whether the deception was material to patentability. Several prior opinions have held that failure to disclose relationships can be material. See Ferring v. Barr (Fed. Cir. 2006); Nilssen v. Osram (N.D. Ill. 2006). Here, Judge Posner also found materiality: “Clearly the fabrication was material. It bore centrally on the credibility of one of the expert reports. . . . Suppose Cooper had explained the circumstances to the patent examiner—that Klughart, a practitioner of modest means and prospects, had submitted to Cooper a $250,000 proposal that Klughart may at the time he prepared his expert report have thought he still had a chance of winning; Cooper had not responded to his proposal and Klughart was unaware that the project had been awarded to someone else. Klughart testified that the $250,000 proposal would have netted him about $200,000—a good deal more than a year’s income for him. . . . Had these circumstances been disclosed to the patent examiner in Cooper’s declaration, Klughart’s report would have been rejected and perhaps the other reports as well, contaminated by the evidence of Cooper’s bad judgment in soliciting a report from Klughart.”
The question of whether deception was material to patentability is an issue of predictive fiction. Here Judge Posner recognized that the reexamination might have had the same result even with full disclosure. However, he implicitly applied the rules of equity to block New Media from such an argument, Quoting Refac, “an inventor cannot submit a misleading affidavit among a plurality of affidavits and later argue that it was the nonmisleading affidavit that resulted in allowance, thus effectively curing the defective affidavit.” Inequitable conduct: After finding both intent and materiality, the court next determines whether their combined harm is sufficient for a finding of inequitable conduct. Here, Judge Posner found that the intentional submission of false statements tipped the scales. “The making of a deliberate, material misrepresentation to a patent examiner is extremely serious misconduct because of the ex parte nature of most patent proceedings, including the reexamination proceeding at issue in this case. . . . Because even material misrepresentations made to the Patent Office will usually not be detected, it is necessary to impose a severe sanction for such misrepresentations when they are detected, at least when as in this case they are deliberate. The appropriate sanction will normally be, and in this case I have decided that it should be, the cancellation of the patents.”
Claim by Claim: The expert reports focused only on a few claims. Cooper argued that the court should only hold those claims unenforceable. Following precedent, Judge Posner rejected that approach. “The suggestion is that since the expert reports pertained to only a fraction of the claims in the ’780 patent, I should declare unenforceable just those claims. The Federal Circuit has repeatedly ruled that if inequitable conduct is proved, the entire patent is unenforceable and not just the claims affected by that conduct.”
Holding: Asserted patents are unenforceable. Notes: Posner also suggested that the PTO take some action in this case – noting that it “might warrant discipline by the Patent Office (Cooper, as a registered patent agent, is subject to such discipline).”
October 23, 2008Academic Studies, Articles and Publications, PatentDennis Crouch	The patent laws promote an early filing doctrine. Most directly, by filing patent application documents early, an applicant can avoid problems created by pre-filing disclosures that can negate patentability.[1] Inter alia, early filing also provides a presumptive date of invention and reduction to practice that may have important evidentiary benefits for the applicant.[2] Some doctrines push against early filing. Notably, earlier filed applications may be more likely to have inadequate disclosure. A rushed disclosure could result in the patent application being rejected under the utility, written description, or enablement requirements of the Patent Act.[3] Alternatively, if the application is filed prior to gaining an understanding of the eventual market, an applicant may have insufficient disclosure to support the most valuable claims potential. Going unrecognized is another benefit of early filing – the ability to keep secret later developed innovations and parameters. That secret information can then be protected and exploited as trade secret information. At the time of filing, the applicant must provide a complete description including the best mode contemplated by the inventor. However, many if not most patent applications are filed well before the associated product or method is ready for public consumption – before the inventor knows the best commercially viable mode. Post-application developments could take any number of forms, such as particularly operative formulations; ideal antibiotic manufacturing parameters; software code that implements a novel algorithm; a more durable circuit arrangement; etc. Commonly, these tweaks and advances may take the form of a specific species of a disclosed and claimed genus. Of course, this later-stage developments could be incredibly important to anyone wanting to practice the invention or develop some follow-on technology. Even though product development typically continues after the patent application is filed, the law allows the patent applicant to legitimately keep any later developed information as trade secret. Patent applications are not allowed to add ‘new matter’ to a patent application during prosecution. Likewise, the applicant has no duty to otherwise inform the patent office or the public of ongoing development. Rather, the application is set at filing and ex post developments are generally irrelevant to patentability.[4]
This holding is in tension with the controlling precedent of In re Wertheim, 646 F.2d 527 (CCPA 1981). In Wertheim, the CCPA held that for a continuation-in-part application, the parent’s filing date may serve as a §102(e) date, but only if the parent contains full §§120 and 112 support for the disclosure. In this case the Examiner found that the Narayanan provisional application fully supported the eventual publication – and thus that the 102(e) date for narayanan was the filing date of the provisional. The applicant was unable to disprove these findings and the BPAI affirmed the rejection. Intellectual Property in a Public Health Crisis
October 22, 2008Academic Studies, Articles and Publications, PatentDennis Crouch	On Friday, I will be speaking at the Seton Hall Law Review’s Health Law Symposium. This year’s topic is focused: Preparing for a Pharmaceutical Response to Pandemic Influenza. [LINK] A portion of my talk will focus on how patent law may react during a public health crisis. The reality is that in a pandemic situation, the patent rights covering important treatments will be ignored. Under TRIPS, during a national emergency would-be patent infringement becomes a legitimate unauthorized use. At some later point, the patent holder should receive payment based on “the economic value of the authorization.” In all likelihood, however, that ex-post payment will be a small fraction of the potential monopoly profits that could have been earned. There are several legal avenues to allow “unauthorized use” in the US. One avenue is by denying injunctive relief. Even before eBay, no court would order an injunction in the face of a public health crisis that could be mitigated by allowing infringement. The test for injunctive relief specifically looks to the public interest. And here, easy access to treatments would weigh heavily in the public interest. Further, a patentee has no right to injunctive relief if the infringer is the US Government. 28 U.S.C. §1498. Thus, another avenue for unauthorized use is through direct government intervention. In 2001, Congress and the Administration were reported to have seriously considered “breaking” Bayer’s patent on Cipro in order to stockpile the drug against a potential anthrax attack. In the Cipro case, the Government apparently used the threat of breaking the patent to negotiate a long-term contract with Bayer at an unusually low price. This approach might be termed ‘bending’ the patent. Individual states within the US may also apply pressure and threat of unauthorized use while retaining immunity from suit under the 11th Amendment of the Constitution. What Incentive?: We all understand that governments will not be able to avoid the temptation of breaking (or bending) patents covering important treatments that may be useful in some future crisis. Unfortunately, this prediction of the likely future greatly diminishes today’s incentives to innovate crisis-specific treatments. Many empirical questions remain: Will the ex post compensation be a sufficient incentive to innovate? Will the most valuable treatments have non-crisis uses where patent rights will operate more normally? Are the potential crises so well defined that a grant or prize system could work better? Notes: The tables below show patenting and patent application data for patents relating to influenza (search influenz$). For applications filed in 2001, almost 2,500 have been published. Less than 50% of those published applications have issued as patents in the seven year interim. Although we will never be sure, it looks like a little under 20% of the “influenza” applications filed in 2001 kept secret rather than publishing. The next chart shows the average number of non-patent references cited in the influenza patents as compared to patents in general. Rethinking the four ‘factors’ of preliminary injunctive relief
October 21, 2008Injunctions, Patent, Patent Cases 2008Dennis Crouch	Abbott Laboratories v. Sandoz, Inc., (Fed. Cir. 2008)(Newman, J.) Preliminary injunctions decisions are blessed with their own four-factor equitable test. I like to think of the test as having two required elements (likelihood of success on the merits and potential irreparable harm) and two optional factors (balance of the equities and public interest). A preliminary injunction (PI) will only issue when (1) the first two elements are demonstrated by the patentee and (2) the combined result of all four elements/factors weighs in favor of a PI. The district court granted a preliminary injunction to Abbott to stop Sandoz from making or selling a generic version of its extended release clarithromycin antibiotic. In 75 pages of split opinion, the Federal Circuit affirmed with Judge Newman writing the majority opinion; Senior Judge Archer signing-on except for the two juicy parts: I and VI; and Judge Gajarsa in vigorous dissent. The dispute revolves around the meaning of the required PI element of ‘likelihood of success on the merits.’ To win on this element, the patentee typically needs to provide evidence of infringement of at least one valid claim. Often this element turns on the defendant’s rebuttal proof of invalidity. Here, the defendant provided some evidence of potential invalidity, but not conclusive evidence. Thus, while the defendant did raise a substantial question of the vulnerability of the patent, it did not provide any clear and convincing evidence of invalidity. Judge Gajarsa argued that Federal Circuit precedent requires a PI be denied when substantial questions of validity are raised. This standard is exemplified in the Federal Circuit’s recent Erico decision – which found the threshold “substantial question” met by evidence which simply “cast[s] doubt on the validity” of the asserted claims. Judge Gajarsa: “Under our precedent, the likelihood of success factor is properly analyzed by considering whether the alleged infringer raises a substantial question as to validity.”
Both sides are well supported by conflicting precedent, and this case may well be a good vehicle for an en banc discussion of preliminary injunctive relief. Patenting the Statue of Liberty
October 20, 2008Bits and Bytes, PatentDennis Crouch	One of the more famous design patents is that of the Statue of Liberty, patented by Auguste Bartholdi of Paris in 1879. (more…)
Holding of MPF claim invalidity affirmed. Patent Term Adjustments Just Got Longer
October 19, 2008USPTO News	Wyeth v. Dudas (D.D.C., Sept. 30, 2008). 35 U.S.C. § 154(a) establishes the patent term at twenty years from the filing date. Section 154(b) introduces various term adjustments due to PTO delay. One of the adjustment provisions broadly works toward a "guarantee of no more than 3-year application pendency." The other primary adjustment provision more narrowly focuses on the timeliness of individual PTO actions – such as providing an office action within 14-months. (These are §154(b)(2) and (b)(1) respectively). Because some delays may qualify under multiple provisions, the statute also includes a clause to prevent double counting. This double counting statute – §154(b)(2)(A) – is written to ensure that "the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed." In calculating the adjustment, the PTO calculates the adjustment under the broad rule and separately calculates the adjustment under the narrow rule. Then, to avoid double counting, uses only the adjustment that is greater. Thus, the applicant only gets credit for either the broad rule adjustment or the narrow rule adjustment, whichever is larger. In this case, Wyeth has successfully challenged the PTO's interpretation. As the court holds, the double-counting problem does not arise when the specific PTO (b)(1) delay occurs before the application has been pending for 3-years. This case, if it holds on appeal, will potentially add 22-months to the eventual term of the patents awaiting examination in the PTO bottleneck. Already issued patents: 37 C.F.R. § 1.705(d) provides a two month deadline for reconsidering the PTO's calculations. Notes: MBHB Patent Docs have written a more thorough interpretation of the case. [Patent Docs][Patent Hawk] File Attachment: pta.pdf (46 KB)
View all 9 comments	Judge Improperly Cut Patentee’s Million Dollar Jury Verdict Without Offering a New Trial
October 17, 2008Damages, Patent, Patent Cases 2008Dennis Crouch	Minks v. Polaris (Fed. Cir. 2008) Floyd Minks won a jury verdict of $1.3 million based on a judgment of infringement by Polaris. The district court slashed that award by 95% — finding that Minks was adequately compensated by $27,000 in damages and $117,000 in attorney fees and an extra $27,000 for willfulness. On appeal, the Federal Circuit vacated the reduction in damages based on a procedural issue. As a safety device, many all-terrain vehicles (ATVs) include a reverse-direction governor to prevent operating the vehicle at high speeds while driving backwards. The Minks patent covers a particular type of electronic governor to accomplish this goal. Through his company, Minks Engineering, Minks designed the electronic governor for Polaris and also patented the design. Later, Polaris found a cheaper vender with a redesigned governor. At that point, Minks sued for infringement. After the $1.3 million dollar verdict, the district court granted the Polaris motion for a reduction of the damage award “as a matter of law” under Fed. R. Civ. Pro. 50. In the appeal, the Federal Circuit agreed that some reduction may be proper. However, the appellate panel held the Seventh Amendment of the US Constitution requires that a new trial on damages as a prerequisite to any reduction. “The issue before us on appeal is whether the Seventh Amendment required the district court to offer Minks the option of a new trial in lieu of accepting the reduced damages award”
The fact-law distinction found throughout patent law is important because of Seventh Amendment’s high regard for factual decisions by a jury. The “reexamination clause” of the Seventh Amendment reads as follows: “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of common law.” Here, the damage amount is a factual inquiry, and the Seventh Amendment has been interpreted to usually require that a district court offer a new trial on damages as an option when considering setting aside an excessive jury award. The Eleventh Circuit (where this case arose) allows a judge to reduce a jury verdict without offering a new trial in the limited case where the error was a “legal error” as opposed to an error in adjudging a factual issue. Here, however, the error was in the jury’s determination of the number of infringing sales, royalty base, and royalty rate – all factual issues. “A comparison of the Georgia-Pacific factors and the standard of a hypothetical negotiation to the evidence of record in this case makes clear that the district court’s reduction of compensatory damages necessarily amounted to an assessment of the sufficiency of the evidence, and as such, the option of a new trial was required.”
This case is in tension with Tronzo v. Biomet (Fed. Cir. 2001). In that opinion, the Federal Circuit agreed that a new trial was not necessary even though the district court had reduced compensatory damages from seven million dollars to only five hundred dollars. The distinction may be that in Tronzo, the reduction was a legal issue because the patentee had presented no credible damages evidence. Here Minks presented at least “limited evidence” of damages. Vacated and remanded for a new trial on damages. Protecting Design Patents on Shoes
October 16, 2008Design Patent, PatentDennis Crouch	Nike v. Wal-Mart (N.D. Ill. 2008) Nike has sued Wal-Mart for design patent infringement asserting infringement of Pat Nos. D498,914 and D499,248. As with many design patent lawsuits, the patentee here (Nike) also makes a product covered by the design. Design patents have become more important to Nike as the company’s trademark ‘swoosh’ has been less prominent in recent shoe designs. Every year during the past decade, Nike has ranked in the top ten owners of newly issued design patents. Damages for design patent infringement may be calculated a few different ways. Section 284 calls for compensatory damages with a base of a “reasonable royalty.” Section 289 looks to disgorge profits from the infringer.
October 16, 2008Academic Studies, Articles and Publications, PatentDennis Crouch	A 2006 paper by Kal Raustiala (UCLA) and Chris Sprigman (UVA) titled the Piracy Paradox discusses intellectual property and the fashion industry. The authors conclude that the legal ability of manufacturers to create knock-off versions of fashion designs actually promotes innovation and investment in that industry. Similar phenomena have been explained in other industries. In music, for instance, some studies have shown that peer-to-peer file sharing of copyrighted work actually increases sales because of the increased popularity of the artist. Since the dawn of radio, record companies have paid stations to broadcast their music – even though the broadcast would be considered infringement. My question is whether there are patent specific examples of this process going on? Are there times when ‘piracy’ of a technology actually encourages further R&D? Patently-O Bits and Bytes: Partners, Events, and Jobs
October 16, 2008PatentDennis Crouch	New Partners at the Patently-O Job Board:
Invention Analysis & Claiming Strategies Seminar. Register for Ron Slusky’s unique program for patent prosecutors and receive a $50 discount as a Patently-O reader. The conference offers 13 hours of accredited CLE. Discount code: PO50. The seminar presents principles that enable patent prosecutors to better identify the broad inventive concept and its fallback features and to develop a suite of claims that will maximize the patent’s value to the patent owner.
October 23-24, 2008: I will be speaking at the Seton Hall Law Review’s upcoming conference titled “Preparing for a Pharmaceutical Response to Pandemic Influenza.” Our panel on intellectual property issues includes Professor Kane (Penn State); Professor Ho (Loyola Chicago); and Professor Opderbeck (Seton Hall). The event (including CLE) is open to the public and free. However, you should pre-register.
January 30, 2009: I will be part of the Santa Clara Computer and High Technology Law Journal’s 25th Annual Symposium – speaking on inequitable conduct issues.
February 6, 2009: I will be part of the Texas Intellectual Property Law Journal’s Tenth Annual Intellectual Property Law Symposium at the University of Texas. The title of my talk is Evidence Based Prosecution: Empirical Results from the Prosecution Files of One Million Recently Issued Patents.
Patent Attorney – Small Corporation – Rochester, N.Y.
Chief International Patent Counsel – Large Corporation – Madison, N.J.
Biotech Patent Associate or Patent Agent – Law Firm – Portland, Ore.
Patent & Trademark Associate – Law Firm – Boulder, Colo.
Patent Agent – Law Firm – New Bern, N.C.
Patent Litigation Attorney – Law Firm – Portland, Maine
Paralegal – Non-Profit – Seattle, Wash.