Federal Circuit recently ruled that economic policy should not be considered during claim construction. (SKB). However, the FTC is still pushing its economic view of patent policy. If you want to bone up on your economic theory, try David Chamberlain’s Idea Shop. (Maybe this will convince David to write a short piece about the economics of intellectual property).
It appears that the USPTO had (or is having) some office trouble handling petitions filed under MPEP 1002.02(b). If you submitted a 1002.02(b) petition after June 20,2003 that has not been answered, the Office invites you to send them an "email alert."
The email should be sent to: firstname.lastname@example.org The email should include: Application number; Date of petition; and CFR code under which the petition was filed.
A single email may be used for all of your petitions. Other information in the email will not be considered. A sample email is shown in the notice. (PDF); EFS Help Desk: (703) 305-3028
Note: There are at least three types of petitions 1002.02(b), (c), and (r).
(b) petitions are decided by the office of the deputy commisioner for examination policy.
(c) petitions are decided by the technology centers.
(r) petitions are decided by the office of publications.
Some examples of 1002.02(b) petitions include: petitions to revive, petitions for express abandonment, etc. (a total of 32 types are listed in the MPEP).
The mail stops that should no longer be used are: Mail Stop Application Number, Mail Stop CPA, Mail Stop Design, Mail Stop Non-Fee Amendment, Mail Stop PGPUB-ABD, Mail Stop Patent Application, and Mail Stop Provisional Patent Application. Mail Stop Non-Fee Amendment has been changed to Mail Stop Amendment.
In addition, Mail Stop PGPUB-ABD has been changed to Mail Stop Express Abandonment and all requests and petitions for an express abandonment under 37 CFR 1.138 should be directed to Mail Stop Express Abandonment or transmitted by facsimile to (703) 305-8568. Lastly, Mail Stop L&R and Mail Stop Post Issue have been established.
Additionally, a new mail stop has been established: Mail Stop Post Issue. (PDF)
Correspondence that should be directed to Mail Stop Post Issue includes correspondence in applications that have issued as a patent, such as requests for changes of address (other than a fee address, which should be addressed to Mail Stop M Correspondence), powers of attorney, revocations of powers of attorney, withdrawal of attorney, and submissions under 37 CFR 1.501.
1. List the elements sought to be protected and their interrelationships.
2. Analyze each element asking:
a) Is the element necessary for preserving functionality?
b) Is the element needed to distinguish over the prior art?
c) Can the element be generalized in a way that retains claim novelty?
d) Can elements be combined in a way that retains claim novelty?
3. Review the entire claim, discarding any words not absolutely necessary for functionality or novelty.
According to Stephen:
Sanitizing the wordage, generalizing terminology and combining claim elements will improve the likelihood of literal infringement, because a competitor will find it more difficult to argue persuasively that a claim element is missing, from its competitive product or service.
IP Worldwide recently ran an article questioning whether independent IP firms are viable in today's marketplace. (Discussing the fall of Lyon & Lyon). The APLF has offered a response to the article.
The fact remains that very few large general practice firms can offer the depth and breath of expertise, in litigation, prosecution or counseling service, that are the standard offerings of independent IP firms. If the large general firms have an advantage, it is their willingness and ability to devote large budgets to advertise and promote their services. Few independent IP firms have (or desire to spend) the resources that many large general firm devoted to advertising and promoting their IP departments. Of course, those large advertising budgets also give rise to higher billing rates, a separate phenomenon which clients are also coming to recognize.
According to the majority, SKB’s testing of PHC's performance as a human antidepressant was not necessary to reduce PHC to practice. The majority does not make clear, however, why testing a light pole’s performance at illumination under severe weather conditions was necessary to reduce the light pole to practice, Manville, why testing an all-weather activity mat’s performance in harsh weather was necessary to reduce the mat to practice, Seal-Flex, or why testing a floating dock’s performance in rough, choppy water was necessary to reduce the dock to practice, EZ-Dock.
In all four cases, the claims at issue were product claims that did not claim the tested features explicitly. In all four cases, the patentees possessed the claimed product in substantial enough form to test their products’ performance at their intended functions. The majority does not explain why only one of these four patentees had reduced its claimed invention to practice sufficiently to preclude the experimental use doctrine.
The Douglas J. Kline has a nice article in the Technology Review that outlines a typical patent infringement suit. Kline also gives three tips for preparing for litigation well in advance:
1) Thoroughly and diligently prosecute your patents.
2) Learn about your competition and draft patents that cover competitor's technology.
3) Identify competitor's patents early in your product development and consider design-arounds.
See my earlier posts on claim drafting tips here and here.
Judge Gajarsa filed a Concurrence in SKB based upon his sua sponte analysis of Section 101. SKB had argued that its claimed compound (PHC hemihydrate) had been seeded in the environment and, once seeded, will naturally contaminate any synthetically made PHC anhydrate.
J. Gajarsa agreed that the manufacture of PHC hemihydrate could be "a natural physical process" occurring "under normal climactic conditions and with no human intervention," and thus found that it was an unpatentable process of nature.
In short, patent claims drawn broadly enough to encompass products that spread, appear, and "reproduce" through natural processes cover subject matter unpatentable under Section 101--and are therefore invalid.
Finally, the Concurrence derided the Majority's approach, saying that it has created "unfortunate precedent that will complicate future considerations of the experimental use doctrine."
One reason that corporations continue to obtain patents is that a strong patent portfolio can alter Wall Street’s outlook on the portfolio holder. During any merger or large acquisition, the associated patent portfolios should be given some review. In some instances, however, the review may simply take the form a Patent Quality Rating. PatentRatings is one company that calculates and sells such ratings. (U.S. patent 6,556,992).
The quality ratings are purely objective and can be based on a number of factors. Here are some tips to increase your rating:
1) Increase the number of claims.
2) Decrease the length of each claim.
3) Increase the length of the specification.
4) File patent as a continuation or CIPs.
5) Vary the type of claims.
6) Cite more references in your IDS.
7) Cite non-patent references or foreign patents.
8) Limit patent prosecution history.
Lawrence Devers from Pittsburg, Kansas (my hometown) has recently patented a new hand-operated wood panel clamping tool. (U.S. Patent No. 6,726,192).
Wood panels for cabinet doors are typically constructed from a number of boards that are glued together edge-to-edge to form the complete panel. The panel may then be sanded or planed flat and milled out or routered to produce a design on the front face of the panel. Small cabinet-making shops typically lack a good way of forcing the boards into flat alignment with one another and holding them in such alignment while the panel is being squeezed from the sides by pipe clamps or the like until adhesive between edges of the boards sets up. Typically, cabinetmakers may have to use mallets to pound the boards into place while they adjust and readjust the pipe clamps at various locations along the length of the boards. It can be a slow, tedious, inexact, and sometimes frustrating procedure.
As I mentioned in a previous posting, anecdotally, the Orphan Drug Act has been quite successful in providing incentives to pursue drug research in areas that may have otherwise been overlooked. Here are several links that provide further information and analysis:
The United States could have a backlog of 1 million patent applications awaiting approval within five years if Congress doesn't pass a bill that would boost funds for the nation's patent office, deputy director Jon Dudas said Monday in Madison.
According to Dudas, USPTO has 470,000 patent applications waiting for action with an average processing time of 27 months. The funding bill has passed the House, but is awaiting action in the Senate. S. 1760 (PDF).
The USPTO will begin publishing lengthy tables (200+ pages) separately on the sequence homepage rather than as part of the patent documents. The Office encourages applicants to submit lengthy tables on CD in ASCII as provided in 37 CFR 1.52(e).
37 CFR 1.705(d) has been amended to provide that a patentee may request reconsideration of PTA within 2 months of issuance if the patent indicates a revised PTA relative to the PTA indicated on the notice of allowance.
The purpose of § 1.705(d) is to provide patentees with an avenue to obtain reconsideration of the patent term adjustment indicated in the patent when the patent term adjustment indicated in the patent differs or should have differed from the patent term adjustment indicated in the notice of allowance due to events occurring after the mailing of the notice of allowance. Section 1.705(d) is not an avenue for patentees to seek review of issues that were raised, or could have been raised, in an application for patent term adjustment under § 1.704(b).
The changes also clarify that under certain circumstances, a panel remand by the Board of Patent Appeals and Interferences (BPAI) shall be considered a decision for purposes of patent term extension or adjustment.
Experimental use was a major issue in the case. According to the court, experimental use may only be used to negate a 102(b) public use if the purpose of the experimental use was to assist in designing or testing of a claimed feature. Thus, in SKB, the “clinical trials tested only the safety and efficacy of PHC hemihydrate as an antidepressant” and were not an experimental use of the chemical compound as claimed in claim 1.
One striking idea from the case is that experimental use is now analyzed on a claim-by-claim basis. Thus, the court found that the clinical trials “may serve to negate a public use bar with regard to the inventions claimed in the more specific claims of the ’723 patent.”
Rather than determining whether the invention was undergoing experimental use, courts must now determine whether an alleged experimental use negates a 102(b) public use for each claim individually.
1) Agrees that a post-grant review process may help enhance patent quality;
2) Opposes reducing the presumption of validity associated with an issued patent;
3) Sees no need for any legislative change regarding the suggestion for combining prior art references;
4) Supports additional USPTO funding;
5) Strongly opposes increased use of PTO Rule 105 information requests;
6) Skip for now;
7) Agrees with an 18-month publication rule for all pending patent applications;
8) Supports prior user rights in use before the effective filing date.
9) Strongly supports requiring written notice of infringement or deliberate copying of the patentee's invention, knowing it to be patented, as a predicate for liability for willful infringement; and
10) Questions whether economic analysis should be applied in patent law decisionmaking.
The USPTO has posted a notice to remind applicants to clearly mark submitted trade secret information, proprietary information, and protective order materials as outlined in MPEP 724.02. Materials not properly marked will be published in electronic format and will only be removed from public access for reasons of national security.
Also, there are new procedures for applications subject to secrecy orders.
Always controversial Judge Richard A. Posner of the 7th Circuit sat as the district judge in this case. His outcome was preserved on appeal, but only after two of his holdings were reversed. This is a very well written, interesting opinion by Judge Rader. If you only read one every three-months, this should be it.
Simplification: The case involved PHC anhydrates (without water) and PHC hemihydrates (some water). In the 70’s PHC anhydrates were invented in the UK. In 1984, SKB invented PHC hemihydrates and eventually patented a PHC hemihydrate compound. (U.S. Patent No. 4,721,723) In 1998, Apotex filed an ANDA to market a prior art PHC anhydrate.
The holding is simple: 1) SKB’s clinical trials that occurred more than one year prior to filing are a public use under §102(b). The clinical trials were not a form of experimental use because the trials were experiments of the medical usefulness of the claimed compound (a PHC hemihydrate) and did not reflect upon the structure or ability to enable the claimed compound. 2) There is no room for a policy-driven inquiry during claim construction. Posner erred in adding a “commercially significant” limitation into the compound claim.
The most interesting aspect of Posner’s opinion was left for another day as moot. In his opinion, Posner created a new equitable defense to infringement that would bar enforcement of a patent when the patentee’s own conduct significantly inhibits non-infringing practice of the prior art. In this case, Apotex’s ANDA request involved making a prior-art PHC anhydrate. SKB argued that after 1984, the environment became seeded with hemihydrate crystals, and that it was no longer possible for Apotex to make PHC anhydrate that would be free of infringing hemihydrate. Under Posner’s new defense SKB would be estopped from enforcing its patent because its conduct (manufacturing hemihydrates and seeding the environment) had effectively eliminated Apotex’s ability to practice the prior art.
There is much more to this opinion including a thought provoking concurrence by Judge Gajarsa.
In a standard claim construction case, the Federal Circuit vacated a grant of summary judgment in an infringement case involving technology for inspecting electronic components. (U.S. Patent No. 6,064,756 and 57). The lower court found that “comprising . . . an illuminating apparatus” was limited to a single apparatus, while the appellate court held that the phrase would include one or more.
Update: April 29, 2004. Although ICOS Vision Systems lost the appeal, their press release indicates that they may still have a good case.
Anton DeProft, president and chief executive officer of ICOS Vision Systems, commented, "We are disappointed with this decision, but note that the ruling was on a very narrow issue of claim construction, and involved a relatively limited number of systems we sold. We continue to believe that we do not infringe any valid patents of Scanner Technologies and intend to continue to vigorously defend our rights."
The U.S. Patent and Trademark Office has begun shredding about 35 million patent documents — some dating back to the agency’s creation on July 30, 1790 — as it moves toward full electronic processing.
But Brigid Quinn, spokeswoman for USPTO, countered: “Nothing valuable is being disposed of. There is nothing original. These are paper copies of copies of copies. Nothing is historical or archaeological, and we’ve been doing this for years.”
As for what happens to historical patents, Ms. Quinn said, “The original patent goes to the patent holder, and original copies are kept in our warehouse for 10 years. Then they go to the Federal Records Center, where they are kept for 40 years. They are then examined by the National Archives,” which decides if they should be preserved or destroyed.
In a 1996 settlement agreement, plaintiff had agreed not to sue GTE or its subsidiaries, joint ventures or affiliates over disputed patent rights. In March 2000, plaintiff sued Bell Atlantic Mobile for infringement. At the time of the suit, Bell Atlantic Mobile was not an affiliate of GTE. However, four months later, through a series of transactions and transformations, Bell Atlantic Mobile became "Cellco" and an affiliate of GTE. After a trial, the Jury decided that Bell Atlantic Mobile (now Cellco) was an affiliate under the settlement agreement. Thus, the plaintiffs case was dismissed.
Commentary: This case simply involved contract interpretation. Drafting the settlement agreement with more clarity up-front could have avoided this litigation and its associated costs.
Guidant is in the news, having turned a profit this quarter. Guidant’s IP portfolio includes many medical device patents including a device that allows the heart to beat while surgeons perform coronary bypass surgery. (U.S. Patent 6,019,722). The website xq23 has more info about innovations in cardiac surgery.
Jon Dudas recently testified about IP piracy. Here is an exerpt from his prepared speech:
During a House International Relations Committee hearing in 2003, the Secretary General of Interpol identified a disturbing potential trend when he testified that IP crime “is becoming the preferred method of funding for a number of terrorist groups.” A customs expert with the European Commission recently stated that al-Qaeda and Hezbollah are among organizations believed to be using counterfeit goods to launder money and fund their activities. Mr. James Moody, former chief of the Federal Bureau of Investigation’s Organized Crime/Drug Operations Division, has stated that counterfeiting is likely to become “the crime of the 21st Century.”
Dudas reports that the IP crime and enforcement have become a top priority at the department of commerce. The people at GNU have their own philosophy on piracy:
Publishers often refer to prohibited copying as “piracy.” In this way, they imply that illegal copying is ethically equivalent to attacking ships on the high seas, kidnaping and murdering the people on them. If you don't believe that illegal copying is just like kidnaping and murder, you might prefer not to use the word "piracy" to describe it. Neutral terms such as "prohibited copying" or "unauthorized copying" are available for use instead. Some of us might even prefer to use a positive term such as "sharing information with your neighbor."
Many patent attorneys probably believed that, in their practice, they could avoid the moral dilemmas faced by criminal defense attorneys. As patent infringement becomes demonized as a crime, those dilemmas may become more frequent. Read the book.
MIT has released its 2004 “Technology Scorecard” (Excel) ranking U.S. patent portfolios of 150 technology companies in eight sectors. Ranks are based on the number of patents, patent citations, scientific paper citations, and technology cycle time. Pfizer and Delphi topped their respective sectors.
Adam Jaffe has done quite a bit of work in this area and has promoted the use of patent citation data as a proxy for patent quality and knowledge transfer.
Intellectual property traditionally takes the form of either patent, copyright, trademark, or trade-secret protection. Often, a business may protect a single technology with multiple IP types. For example, a new electronic gadget may have patents on its core technology and implementations, copyrights on particular computer code used in the gadget, trademarks on the look and feel of the gadget, trade-secrets on the manufacturing process and other implementation particulars that may not be patentable, and integrated circuit topography protection for the IC layout.
Karl Lenz introduced some of these ideas in his arguments that patents on software should be banned. However, this protection overlay is a reality that inventors and businesses can use to their advantage.
Fieldturf Int'l., Inc. v. Triexe Mgmt. Grp., Inc. (N.D. Ill. 2004)
An interesting case is brewing in the Northern District of Illinois between Fieldturf International and Triexe Management Group (Sportexe) over synthetic turf technology. (e.g., U.S. Patent 6,338,885). Fieldturf alleges that Triexe infringed its patents, intentionally interfered with its prospective economic advantage and committed common law conversion by selling or offering to sell synthetic turf to the U Wisc, UC Berkeley, the Baltimore Ravens, and a fourth project in Ireland. Triexe has denied the material allegations and has asserted counterclaims.
Prior litigation between the parties has involved domain name disputes stemming from Triexe’s registration of the domain name fieldturf.net. In his decision, the ICANN arbitrator found that Triexe’s registration was confusing and done in bad faith. In addition, Fieldturf recently lost an appeal in another patent infringement case for lack of standing. (Stephen Nipper).
Litigants in appellate courts may soon be citing unpublished opinions if the Federal Rules of Appellate Procedure are amended to conform to a recent advisory committee recommendation. (article). Federal Circuit Chief Judge Robert Mayer has a problem with citing unpublished opinions because they are generally "not written with the extra care and concern for language" evident in published opinions. Federal Circuit Judge William Bryson also indicated that he would write opinions differently if he knew they could be cited. The Federal Circuit Judges have unanimously voiced their opposition (pdf) to the proposed changes.
In the view of the judges of the Federal Circuit, the adoption of Rule 32.1, which will override our local rule, may adversely affect the administration of justice by skewing the allocation of judicial resources, delaying issuance of precedential opinions, increasing the issuance of judgments without an accompanying opinion, and harming litigants.
J. Craig Williams' opinion is that "citing an unpublished opinion is something like citing part of the law. It just doesn't work."
In an infringement action over a patented fireplace burner assembly, the district court, after a bench trial, found for the plaintiff patent holder. (U.S. Patent 5,988,159). A Federal Circuit panel vacated the infringement holding:
Because the district court’s sparse opinion provides this court with only bald conclusions for review, we conclude that the district court’s judgment as to literal infringement, contributory infringement, induced infringement, and infringement under the doctrine of equivalents is insufficient under Rule 52(a).
Additionally, the appellate court upheld a finding of validity. (Apparently, bald conclusions of validity satisfy Rule 52(a) because of the accompanied presumption of validity). Finally, the court refused to hear an inequitable conduct charge that had not been raised below.
From the Malta Independent Daily: Generic pharmaceutical companies are exploiting gaps in international patent rights to develop and stockpile drugs. For example, Malta and Iceland appear to be serving as safe-havens.
Asked by this newspaper why Pharmaco chose to locate its production base here, managing director Stenthor Palsson said that Malta, like Iceland, fell outside the patent jurisdiction of a number of pharmaceutical products.
Like Cold War superpowers agreeing to reduce nuclear stockpiles, Sun and Microsoft have stepped back from their own form of mutual assured destruction.
Perhaps eWeek is a bit too cynical. Another point-of-view would see the settlement as an indication that patenting does not lead to a technology stalemate. Sun and Microsoft were able to work through their differences and arrive at a solution that will be beneficial for both parties. Collaboration may also be aided by potential amendments to §102(f)/103
Senators Kerry and Daschle have introduced a Bill in the Senate (S.1886) that includes a “Small Business Foreign Patent Protection Grant Fund.” The fund is intended provide funds to small businesses who are hoping to file foreign patent applications.
To help small manufacturers and small R&D firms, we need to reduce trade barriers, so that they are able to sell their products and technologies in other countries. Small-business owners commonly cited the expense required to secure foreign patent protection as a significant barrier to their ability to operate in international markets. Part of encouraging the spread of their innovations into other countries is decreasing their vulnerability to big foreign corporations that can take their ideas when they try to sell their products around the world. Our small businesses need patent protection. However, the costs associated with filing such patents are often prohibitively expensive.
Patently Absurd discusses several of Arthur Pedrick's inventions including the following:
UK Patent No. GB1251780. A practice golf tee. Photocells monitor the path of the club head. If they detect that the player is about to hook or slice the ball, a puff of compressed air passes along the conduit 1" and up the middle of the tee. This blows the ball off the tee so that the player misses it, and does not have to search for a lost ball.
The Orphan Drug Act provides market incentives to develop new therapeutics for diseases affecting relatively small numbers of persons. (Providing a seven year period of market exclusivity.) The act applies specifically to therapies for treating diseases or conditions which affect less than 200,000 or affects more than 200,000 persons but for which there is no reasonable expectation that the costs of developing the drug will be recovered from U.S. sales of the drug.
One problem for the FDA has been determining whether the market exclusivity should apply for new entrants who produce a slightly different drug or who treat a slightly different condition.
Robert Bohrer argues (txt)(pdf) that, in the case of monoclonal antibody drugs, the approach to orphan drug exclusivity should be for the FDA to presume antibodies to the same antigen, of the same immunoglobin class and with the same mechanism of action to be the same drug unless the second antibody is shown to be clinically superior to the first.
David Rohde agrees (pdf) that the Act has had a great impact on the development of drugs for treating rare diseases. According to David, "ten times the number of orphan products were approved in the decade following the Act than in the decade preceding Act."
According to Susan Kuchinskas at internetnews.com, business leaders have begun meeting to solve “problems at the USPTO.” IT companies feel that patent quality has dropped as the number of applications has increased. Cisco, Intel, eBay, Symantec, Chiron, Microsoft, and Genentech said they will work with regulators and legislators on patent reform. Susan's reports come from yesterday and today's patent reform conference. Elizabeth Miles at Berkeley IPlog has a nice review of the conference. Elizabeth may have more on the conference tomorrow.
Generally, 35 U.S.C. §102 is the starting point for determining whether an invention is patentable. In this case, however, nothing in §102 bars patentability: §102(a) cannot block the patent because the goo-whiz was not known before GooCo came up with it. Goo-whiz came on the market less than one year ago, so no §102(b) bar. Goo-whiz was not abandoned under §102(c). The invention was not patented prior to filing a US application under §102(d). §102(e) only applies to prior U.S. applications or “international” applications, not to a nationally filed UK patent. Goo-whiz is not a derivative work under §102(f). And, there is no race to the patent office under §102(g).
The major loss of rights for GooCo is that it will no longer be able to claim a right of priority to the earlier UK application under 35 U.S.C. §119.
George Wheeler has published an article (pdf) that should be read by anyone and everyone doing prosecution work. Unlike most law review articles, the prose is easy to read and the advice is practical.
Here are some of George’s tips:
1. Write claims that will be literally infringed. 2. Do not rely on means-plus-function claims. 3. Write the specification expansively. 4. Claim in a circle, not a chain. 5. The Examiner is never wrong. 6. Cite the MPEP, not case law. 7. Do not add unnecessary claim limitations. 8. Do not write your opponents’ trial exhibits. 9. Do not just obtain a patent, build a patent position.
Scott Wolinsky has written an enlightening (if cynical) article about the patenting process. According to Scott, successfull prosecution of a patent application requires a novel invention, adequate prosecution skills, and also a bit of luck. Primarily Wolinski finds that the luck is getting the right examiner. (Thanks to Slashdot for the link.)
Professor Lichtman (UChicago) has a nice article (pdf) about this topic and its consequences for prosecution history estoppel. If the patent prosecution process truly has such a significant luck component, then the quality of the examination might need to become an issue when determining validity during litigation. Karl Lenz and Axel Horns discuss the purpose of the patent system (focusing mainly on software patenting).
The waffle ice-cream cone is approaching its 100th birthday. (Chicago Tribune). Popular legend is that the first waffle cone was developed at the 1904 World’s Fair in St. Louis. A New York vendor, however, obtained a patent in 1903 on an apparatus for making waffle ice-cream cups. (U.S. Patent 746,971). More Recently, Heinrich Herting patented an ice-cream cone with an edible logo (U.S. Patent 4,859,476). Because of a spike in the prices of butter, chocolate, and vanilla, ice-cream is expected to be expensive this summer. (The Slate)
GooCo filed a patent application for goo-whiz in the UK patent office 14 months ago. (Goo-whiz is a material that is useful as both a leak-stopper and an ice-cream topping.) The UK application is still pending and has not published yet. GooCo began selling the patent-pending product 6 months ago.
GooCo now wants to file for a U.S. Patent. Can it do so? (email) The answer will post tomorrow.
A patent challenger who succeeds in defeating a patent wins spoils that it must share with the world, including all its competitors. This forced sharing undercuts an alleged infringer's incentive to stay in the fight to the finish - especially if the patent owner offers an attractive settlement. Too many settlements, and too few definitive patent challenges, are the result.
Miller suggests that a litigation bounty delivered to the defendant could offset for the free-riding problem. In a further paper, Miller plans to expand his proposal to include a “patent attack bloc” that could allow defendants to better pool resources and rewards.
Sierra designed and tested a power supply that arguably infringes AEI's Patents. (E.g., U.S. Patent 6,001,224). Sierra filed a declaratory judgment action prior to putting its power supply on the market and conceded that it did not intend to sell the supply unless the Court determined invalidity or noninfringement in favor of Sierra. The court considered whether a sufficient case or controversy existed to support such a declaratory action.
AEI's counsel, at oral arguments, represented that AEI would not sue Sierra for its current in-house use (for design or testing) of its power supply technology. The Court found that these representations created an estoppel against AEI in future suits and thus eliminated any case or controversy for the associated actions. In reference to a second power supply technology being developed by Sierra, the Court ruled that Sierra's efforts at developing the device were not sufficiently far along "on the date of the complaint." Reversed-in-part, vacated-in-part, affirmed-in-part, and remanded.
Commentary: Declaratory judgments actions require action by both the defendant (e.g., threaten suit) and the plaintiff (e.g., arguably infringing activity) in order to be appropriate. It is interesting that the Court examined the plaintiff’s actions up to the date of filing the complaint (Sierra being far from completing its new product as of filing) but examined the defendant’s actions that occurred much later (counsel conceding at oral arguments that AEI will not file suit for in-house uses).