Patent Law Blog (Patently-O)

Hynix Fails to Beat Rambus on Collateral Estoppel Issue

Hynix Semiconductor v. Rambus (N.D. Cal. 2005).

In an earlier lawsuit against Infineon, a court dismissed Rambus's patent claims in a bench statement that "I have concluded that [Infineon] has proved, by clear and convincing evidence, a spoilation that warrants dismissal of [the patent infringement case] as the only appropriate sanction after having considered the alternatives."  However, the case settled before the judge issued a written opinion.

Now, Hynix argues that Rambus should be collaterally estopped from re-asserting the spoilage issue.  The N.D. Cal. disagreed with Hynix, finding that the elements for a finding of collateral estoppel were not met.

In the 9th Circuit, a party asserting collateral estoppel must show four elements:

1. Full and fair opportunity to litigate in the previous action;
2. Issue was actually litigated in that action;
3. Issue was lost in a final judgment; and
4. The person against whom collateral estoppel is asserted in the present action is in privity with the party from the previous action.

Using these elements, the court found (i) that the issue of spoilage (unclean hands) is particular to each litigation and thus had not been litigated in the Infineon case; and (ii) that the Infineon court's statements from the bench did not constitute a "final judgment" because they were not "sufficiently firm."

While there is no question that Judge Payne was sufficiently settled in his decision that he was willing to dismiss Rambus's patent claims at the conclusion of the evidentiary hearing on spoliation, he never issued a reasoned opinion, either written or oral, explaining his ruling. Before Judge Payne could issue such a ruling, Infineon and Rambus settled the action between them, stipulating to a dismissal with prejudice.

Seemingly to protect against the CAFC's veto power, the opinion noted that even if all the elements of collateral estoppel were met, the court would use its discretion to deny the motion because such offensive uses of collateral estoppel are disfavored.

Hynix's motion to dismiss Rambus's patent claims for unclean hands on the basis of collateral estoppel is denied.

Patent Appeals via Videoconference

The Board of Patent Appeals and Interferences (BPAI) has begun to allow oral arguments from attorneys in remote locations (such as Chicago) using a video/audio feed.  The PTO has created a new "Electronic Hearing Room" that will allow for oral hearings in both ex parte and inter partes proceedings.

While three administrative patent or trademark judges preside from the USPTO in Alexandria, Va., an attorney can present a client’s case from anywhere around the globe with equipment capable of dialing Standard - H.320 (ISDN) protocol.

As the attorneys make their case, the judges will be able to watch your every move through their 50 inch plasma screen.

France: Right To Privacy Includes DVD Copying For Personal Use

Monsieur Stephane P v. Universal Pictures Video France (Court d’Appeal de Paris 2005).

In a move to protect privacy rights, a French Appellate Court has ordered DVD vendors to stop selling copies of the film “Mulholland Drive.”  The court found that copy prevention software on the DVD violated privacy rights of DVD purchasers because it precluded them from transferring the film onto a VHS tape for personal use.

Assistance — Does anyone have an English translation of the case? (crouch@mbhb.com).

Links:

• File Attachment: DVD Opinion.pdf (2617 KB) (Courtesy of the fabulous site Juriscom.net)
• AP Article

 

PATENT REFORM: Preventing Inequitable Results Under Knorr-Bremse Willfulness

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the landmark decision of Knorr-Bremse v. Dana Corp., an en banc panel of Federal Circuit judges recently held that no adverse inference is to be drawn from the absence of an opinion of counsel in willfulness determinations.  This ruling overruled the Court’s earlier precedent in Quantum and was a dramatic change.  The proposed legislation attempts to balance this swing in jurisprudence by adding a section on willfulness that incorporates the Knorr-Bremse holding while carving out broad exceptions.  

The proposed changes repeat the Knorr-Bremse holding that “[t]he absence of an opinion of counsel shall not create an inference that the infringement was willful.”  Further, the legislation makes mere knowledge of a patent or its contents insufficient for a finding of willfulness against the defendant.

The legislation diverges from Knorr-Bremse by listing “other factors” that may be considered in increasing damages against an infringer.  Included as one such factor is intentional copying by a defendant who has specific knowledge he is infringing patented subject matter.  However, unlike Knorr-Bremse, the defendant must rebut proof of specific knowledge by proffering evidence of an “informed good faith belief” that the patent is invalid, not infringed, or unenforceable (i.e. an opinion).  Thus, while no adverse inference of willfulness will be drawn in the absence of an opinion under the proposed changes, the defendant will still have the onus to provide an opinion in cases in which the plaintiff proves the defendant’s specific knowledge of infringement.

Finally, the legislation also proposes adding to the statute for increased damages the “factor” of prior litigation between the parties for substantially similar infringement.  Thus, in a later action between parties for colorably similar infringing conduct, willfulness may be based on the knowledge the infringer has maintained since the earlier litigation.

Antitrust: FTC confronts decision that liberally allows patent settlements

Schering-Plough v. FTC (11th Cir. 2005) (on petition for en banc review).

In a March 8 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers over the patented blood pressure drug K-Dur.  The FTC had concluded that the settlement was an "unreasonable restraint of trade."  The 11th Circuit disagreed, finding that because the suit involved patented products, neither a per se nor a rule of reason analysis would be appropriate.

By their nature, patents create an environment of exclusion, and consequently, cripple competition. The anticompetitive effect is already present. “What is required here is an analysis of the extent to which antitrust liability might undermine the encouragement of innovation and disclosure, or the extent to which the patent laws prevent antitrust liability for such exclusionary effects.” Therefore, in line with Valley Drug, we think the proper analysis of antitrust liability requires an examination of: (1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects.

Applying their rule to the facts, the Court concluded that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law. Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.

Petition en banc: Now, the FTC has filed a petition for rehearing of the case en banc. In the petition, the Commission raises three primary contentions:

• Not every patent infringement litigation settlement should be shielded from antitrust scrutiny, so long as entry of the allegedly infringing product is not precluded at any time subsequent to expiration of the patent;
• That the decision subverts the goals of Hatch-Waxman; and
• That the decision used an improper standard review of critical disputed facts.

If this petition for rehearing fails, the Government is expected to appeal to the Supreme Court.

Links:

• Download the FTC petition
• Download Schering Antitrust Decision.pdf
• Patent at issue, No. 4,863,743
• NYTimes Article
• PubPat Amicus Brief to the 11th Circuit [pdf]

2005 USPTO Partnership Meetings Scheduled for May 4, 2005

On Wednesday May 4, the Patent Office is holding a couple of “Customer Partnership Meetings.”  These meetings are designed to provide insight into how the patent office handles patent applications and tend to give some informal insight into peculiarities of particular technology areas. They are also free of charge.

1) Nanotechnology

The PTO has a newly formed Nanotechnology art unit class.  The Wednesday discussion will provide a look at how the new art unit is collecting and searching the prior art.  In addition, an industry panel will give feedback to the PTO and participants.  There will also be time for an open floor discussion.  Although the deadline for signing up for the conference has passed,

there is still some room for those interested.  Contact Jill.Warden@uspto.gov.

2) Business Methods

Because of a popular believe that business method patents are of lower quality, the PTO has instituted a number of initiatives to improve quality in the art unit.  The PTO is focusing on speeding up a process that currently involves long delays.  John Love, director of art unit handling business method patents as well as other members of the unit will be available to discuss these issues.  This conference may be full — however Joseph.Thomas@uspto.gov may be able to fit you in.

Note: I’m planning to be at the business methods conference.  I look forward to meeting you there.

How should a future patent attorney choose a law school?

The new USNews law school rankings have been released.  Everyone knows that the rankings are worthless, but we follow them anyway.  Engineers and scientists usually do pretty well on the LSAT and often end up with the following law school options:  

• Attend a highly-ranked law school;
• Attend a lower-ranked law school with a renowned intellectual property program; or
• Attend a lower-ranked law school as a night student and continue making money during the day.

The name of the law school matters most when you are looking for your first job out of law school.  Many people advise students to attend the highest ranked school where they can gain admittance.  Others would advise you to go to the school that offers the best financial package.  Not many advocate part-time solution — because it is such a hard road to work full-time then attend school four nights a week.  However, some of the most skillful attorneys that I know went through school that way.

What is your advice for hopeful pre-law students? Please leave a comment:

PATENT REFORM: Quick highlights from the Senate hearings.

The Senate Intellectual Property subcommittee held hearings on Monday, April 25, 2005 to discuss patent reform.  Some highlights:

• Jon Dudas, Director of the Patent Office believes in the goal of “educating the world on the importance of patents.”  I believe that a major part of this should be to restore the mystique of the American inventor/entrepreneur.
• On behalf of the AIPLA, Michael Kirk shot down BSA proposals to limit the availability of injunctive relief and the size of damage awards.  Kirk also mentioned that Congress should consider repealing 35 U.S.C. 271(f).
• David Simon from Intel promoted changes to the notion of when an injunction should be granted.  In his viewpoint, there should be “a return equitable principles to determine whether an injunction should be granted.”

Patent Claim Construction: Whereby Clause Limits Claim Scope

Hoffer v. Microsoft Corp. (Fed. Cir. 2005) (per curiam).

By Eric Moran

In Hoffer, the patentee (appearing pro se) appealed a summary judgment holding that defendants Microsoft, IBM, and Ariba did not infringe claim 21 of U.S. Patent No. 5,799,151 (the ‘151 patent) and that claim 22 of the ‘151 patent was invalid for indefiniteness.  The Federal Circuit reversed the judgment on invalidity and affirmed the judgment of noninfringement.  In affirming the judgment of noninfringement, the Federal Circuit affirmed the construction of a “whereby” clause, which “generally states the result of a patented process” and generally does not limit claims.  Here, however, as discussed below, the Federal Circuit held that when a “whereby” clause “states a condition that is material to patentability, it cannot be ignored in order to change the substance of the invention.”

The ‘151 patent involves methods and systems that allow remote users of computer terminals to obtain economic data from an index, and interactively post and receive messages concerning economic topics.  Claim 21 of the ‘151 patent in Hoffer included the phrase:

whereby a trade network supports users at said plurality of [remote user terminals] who are each guided by said [integrated application program interface] to select an economic activity, to identify that index topic that corresponds to said activity, to enter that topic board dedicated to said topic, and who are collectively able to concurrently engage in interactive data messaging on said topic boards.

The accused method allows real-time posting of messages, but not interactive data messaging in which users can communicate with each other.

The patentee argued that under Minton v. Nat'l Ass'n of Securities Dealers, Inc., 336 F.3d 1373, 1381 (Fed. Cir. 2003), a “whereby” clause cannot limit method claims when the “whereby” clause simply states the intended result of a method step.  In particular, the patentee contended that the “whereby” clause in claim 21 did not state the mechanics of the claimed method, but only stated an overall objective, and, moreover, his invention does not require interactive messaging.

The Federal Circuit disagreed, finding that, based at least on the “Summary of the Invention” section of the patent and statements in the prosecution history, interactive messaging “is more than the intended result of a process step; it is part of the process itself. . . . [It is] an integral part of the invention.”  Thus, the Federal Circuit held that the “whereby” clause stated a condition that was material to patentability, and claim 21 was limited to interactive messaging and did not extend to real-time posting of messages.

Judge Newman, in a panel that also included Judges Bryson and Dyk, authored a concurrence in which she disagreed with the panel’s failure to decide each of the appealed claim construction issues. 

Eric Moran (moran@mbhb.com) is an attorney at the intellectual property law firm of McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. His practice runs the gamut of intellectual property issues and includes patent, trademark, and domain name disputes.

Notes:

• File Attachment: Hoffer v. Microsoft.pdf (58 KB)
• File Attachment: US5799151.pdf (1917 KB)

 

PTO and patent examiner union should focus on goal of patent quality and timeliness

The Patent Office Professional Association (POPA) is the union representing patent examiners at the patent office.  The POPA newsletter is certainly a propaganda piece, but it always reflects some semblance of truth and provides a gauge of the PTO esprit de corps.  In the most recent issue (February-March 2005) POPA discusses its contract negotiations with the PTO:

While boosting fees to the patent-user community, the USPTO hopes to slash examiner award pay and workplace benefits. If it succeeds, the agency's next step likely could be upping the already-high examiner work goals. The USPTO proposals undervalue the examiners' job, reduce quality by increasing speed-at-all-costs, and impede the government's ability to attract top-notch recruits to the USPTO ranks.

My hope is that the PTO and the examiner’s union can come to an agreement that makes the examiners happy by reward them for high-quality and timely work.

Full Panel Denies Rehearing in Fosamax Patent Case

Merck & Co. v. Teva Pharmaceuticals (Fed. Cir. 2005) (on petition for rehearing).

Merck & Co. owns the patent on the best-selling drug Fosamax.  Teva, a generic manufacturer lost an infringement case at the district court after the court found the patent valid and infringed.  In January 2005, the Court of Appeals for the Federal Circuit reversed the district court — vacating the lower court’s finding of validity and infringement. 

Merck, with the amicus support of PhRMA, subsequently filed a petition for rehearing en banc.  The CAFC has denied that the request, thus maintaining the panel decision. 

DISSENT: In a two-page dissent, Judge Lourie, supported by Chief Judge Michel and Judge Newman, argued that the panel decision erroneously concluded that commercial success was not probative to obviousness in this case and by linking commercial success with the failure of others.

Commercial success is a fact question, and, once it is established, as found here by the trial court, the only other question is whether the success is attributable to the claimed invention ("nexus"), rather than to other factors such as market power, advertising, demand for all products of a given type, a rising economy that "lifts all boats," etc. It is not negatived by any inability of others to test various formulations because of the existence of another patent. Success is success. The panel's rule is especially unsound in the context of an improvement patent, as here, because it holds in effect that commercial success for an improvement is irrelevant when a prior patent dominates the basic invention.

Commercial success is also independent of any "failure of others," as that is another, separate secondary consideration.

Respectfully, the full court should have reheard the appeal to eliminate the confusion in the law that the panel opinion creates.

Interestingly, Judge Rader dissented in the three-judge panel opinion, but now agrees with the majority that the case should not be reheard.

The case will be remanded to the district court on April 28, 2005.

A REUTERS article indicates that Merck & Co. plans to petition the Supreme Court to hear an appeal from the CAFC decision.

Links:

• Patently-O Discussion of the January 05 Decision
• Patently-O Discussion of the Dissent in January 05 Decision
• File Attachment: Merck v. Teva Rehearing Denied.pdf (26 KB)

Microsoft ordered not to release patented TCP software

Alacritech v. Microsoft (N.D. Cal. 2005) (04–C-03284)

In an April 12 decision, Judge Jeffrey White of the Northern District of California granted Plaintiff Alacritech’s motion for a preliminary injunction against Microsoft — thus preventing Microsoft from releasing its TCP Chimney or Longhorn software. Alacritech’s patent covers a software method of establishing a TCP connection with reduced processor load and accelerating digital communication. 

In the thirteen page decision, Judge White determined that the patent was likely to be found valid and infringed and that the balance of hardships weighed in favor of the plaintiff, Alacritech.  Factors considered include:

• A finding of likelihood of success on the merits leads to a presumption of irreparable harm in patent cases;
• Because Alacritech is a small start-up, it would not be able to withstand infringing competition from Microsoft; and
• Microsoft has not yet released the TCP Chimney software

Links:

• File Attachment: Alacritech v. Microsoft.pdf (32 KB)
• File Attachment: Alacritech Patent.pdf (1079 KB)
• Alacritech Press Release

Patent Applicant's Claim Takings Claim Barred by Res Judicata

Hornback v. U.S. (Fed. Cir. 2005).

Back in 1986, Mr. Alton Hornback applied for a patent on a error slope sensor for a missile.  The invention was found to be patentable but was withheld from issuance because of a secrecy order under 35 USC 181. The secrecy order was renewed annually until 1999, and the patent finally issued in June of 2000.

Hornback requested compensation for the delay in issuance, arguing that it was a taking.  Because Hornback had argued the takings issue in a previous case, the CAFC found that his claim was now barred by res judicata.

Hornback argued that the present case raised new issues because the military had de-classified then reclassified the technology in the interim.  The CAFC rejected that argument, however, finding that the classification action internal to the military did not alter his rights — “because only the Commissioner of Patents may rescind a secrecy order.”

In addition, the Appellate Panel agreed that the Court of Federal Claims “does not have subject matter jurisdiction of an adverse ruling of the PTO director.” 

28 U.S.C. §1361 vests "original jurisdiction" for the issuance of mandamus orders in the district courts, authorizing the district court to hear any action "to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff."

Dismissal affirmed.

Aside: In 1996, Hornback made another precedent when the CFC held that a pro se patent applicant without legal training is not held to the same standard as trained counsel.

Link:

• File Attachment: Hornback.pdf (30 KB)

Merck v. Integra: Transcript of Oral Arguments

On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity).  A transcript of the oral arguments is attached.

Based on the briefs and the oral arguments, I expect that the CAFC decision narrowly interpreting 35 USC 271(e)(1) will be reversed.  Respondent Integra’s strongest argument is a technicality — that the question on appeal is not based on any case or controversy remaining between the parties.

In many eyes, the question is not whether Merck’s actions are protected by the statutory safe harbor.  Rather, the point of speculation is: How far will the Supreme Court extend the safe harbor?

• File Attachment: Merck KGaA v. Integra Transcript (73 KB) 

Merck v. Integra: Supreme Court Hears Drug Development Patent Case

On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity).  However, the oral arguments do not appear to have raised any new issues that will impact the case. 

The High Court was critical of the Federal Circuit prose:

• “not a crystal clear opinion by any means” (J. Ginsburg).
• “pretty foggy” (J. Breyer).

These remarks did not extend to the substance of the opinion.  Book-makers expect that the CAFC’s decision will be at least partially reversed — the real question is the eventual breadth of the statute.

In January 2005, Tom Mauro of the Legal Times reported that Justices Sandra Day O’Connor and Stephen Breyer did not participate in the decision to grant cert.  Interestingly, both Justices took part in the oral arguments.

A decision is expected this summer.

Links:

• Patently-O: Information on the case
• AP Article by Hope Yen [2nd copy]

Written Description: Defendant's Own Expert Deposition Testimony Used to Overturn Summary Judgment of Invalidity

Space Systems/Loral  v. Lockheed Martin (Fed. Cir. 2005)

By John Smith

Loral, the owner of U.S. patent 4,537,375 (the '375 patent), sued Lockheed for infringement of claim 1. The District Court ruled in favor of Lockheed, finding the claim invalid for violating the written description requirement of 35 U.S.C. § 112.

The '375 patent is directed to an improved method for maintaining the orientation and attitude of a satellite in space by a process known as station-keeping.  After an initial thrust, the satellite re-checks its position, and often fires its thrusters again to better correct its position. Station-keeping thus uses the limited fuel supply on board a satellite and contributes to shortening the life of satellites. The '375 patent discloses a method directed to improving the efficiency of the corrective procedure.

Claim 1 of the '375 patent entails a multi-step procedure of thruster-firing, data storage, checking of position and correction of position, and minimization of error in correction of position. Essentially, the satellite fires its thrusters to correct its position, then checks its position and compares its current error in position to its previous error in position before firing its thrusters again. Lockheed argued that the patent was invalid, because the second step of claim 1 was not adequately described in the specification.

Defendant Lockheed’s expert, when asked at deposition where one would find the second step description, answered (over counsel objections) that the second step was depicted in Item 96 of Figure 2B.  The court found this, along with the testimony of plaintiffs’ expert, established that the specification sufficiently described the claim.

Lockheed also argued that the second step of claim 1 was not inherent in the written description because the specification did not state that the second step was necessarily used in the satellite position correction procedure. On appeal, the Federal Circuit noted that the second step of the claim at issue in the procedure comes only (if at all) after thrusters are fired and actual position error and historical position error are compared. According to the Federal Circuit, this “does not diminish the descriptive content of the specification.”

The Federal Circuit reversed the finding of invalidity, and remanded back to the U.S. District Court for the Northern District of California for further proceedings.

John Smith is an attorney at MBHB LLP in Chicago.  He earned both his JD and PhD (inorganic chemistry) from Vanderbilt University. He has co-authored numerous articles and served as a faculty member in the Chemistry Department of Lipscomb University in Nashville, Tennessee.

Notes:

• File Attachment: Lockheed Martin Opinion.pdf (34 KB)
• In his Case Alert, David Long of the Howrey firm correctly noted that this case should be “kept in mind by litigators taking or defending technical expert depositions on written description issues.”

Groklaw Patent Resource Page

Pamela Jones at GrokLaw, the fabulous pro-Linux blog, has created a patent resource page with links to all the patent resources that you would like to find:

GrokLaw’s Patent Page:

• Patent Law (Laws, Rules, Cases, Other Guides);
• Primary authorities (PTO, Courts, WIPO);
• International Patent (Harmonization, WIPO, PCT);
• Convergence of Intellectual Property and Antitrust Laws;
• Online legal journals (such as Patently-O);
• Patent searching;
• Groups and Organizations;
• and more.

Bookmark this great new resource. -DDC 

Links:

• What is GrokLaw?
• Patent Resource Page
• Hieros Gamos (Another great patent resource page)

PATENT REFORM: House and Senate to Hold Hearings this Week

House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures.  The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link].  The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA.  In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE -- Strong indications are that the Senate will postpone the hearing to April 25].

Links:

• Patent Reform Proposal

PATENT REFORM: Injunctions Only When Money Is Not Enough

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity."  The terms of the injunctions need only be "as the court deems reasonable."

The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions.  Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages."  In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors.  One of these factors is "the extent to which the patentee makes use of the invention."

One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm.  The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.

PATENT REFORM: Overturn Eolas v. Microsoft

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S.  The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.

The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."

This change would essentially overrule Eolas v. Microsoft.

• File Attachment: Draft Patent Statute (182 KB)

PATENT REFORM: Proposed Changes Allow Assignee to File Patent Application

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

Under the current statute, an employer has quite a bit of trouble filing a patent application when the inventor refuses to sign a declaration or is otherwise unavailable.

In order to file the application without the inventor’s help, the statute (35 U.S.C § 118) requires a proof that such action is “necessary to preserve the rights of the parties or to prevent irreparable damage.”

The proposed changes make it easier for the company to file the application without the inventor’s assistance.  Specifically, the proposal allows an assignee (or a person owed an obligation to assign) to apply for a patent after showing that the action is “appropriate.”

• File Attachment: Draft Patent Statute (182 KB)

PATENT REFORM: Proposed Changes to Definition of Prior Art

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

The legislation proposes to completely rewrite 35 U.S.C. Section 102 to change (expand) the definition of qualifying prior art. A major change is to substantially eliminate the one-year grace period except in the case where public access of the invention was disclosed (directly or indirectly) by the inventor.

Under the new Section 102, a patent would not be available if:

The claimed invention was (1)(A) patented, described in a printed publication, or otherwise known more than one year before the effective filing date of the claimed invention, (1)(B) patented, described in a printed publication, or otherwise known before the effective filing date of the claimed invention, other than through disclosures made by the inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor; or (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published under section 122(b), in a case in which the application or the patent names another inventor and the application was effectively filed before the effective filing date of the claimed invention.

According to the proposed statute, an invention becomes “known” when it is “reasonably and effectively accessible” and can be “accessed and comprehended without resort to undue efforts.” The proposal would eliminate 102(c)-(g).  The need for these sections seemingly eliminated by the switch to a First-to-File system (supra).

Over the next few weeks, Marcus Thymian, Jennifer Swartz, and Dennis Crouch will discuss the various sections of the proposal in a series of posts.

• File Attachment: Draft Patent Statute (182 KB)

PATENT REFORM: House IP Subcommittee Prepares Sweeping Patent Law Changes

The attached legislative proposal was prepared by the House Subcommittee on Intellectual Property chaired by Congressman Lamar Smith (R Tex).  Although the proposal is merely a discussion draft at this point, it is expected that a parallel Bill will be introduced within the next few days.  The Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April [25th].  It is quite possible that this proposal will serve as an agenda for the Senate hearings.

The proposed legislation includes changes to:

• Creating a post-grant opposition procedures;
• Willfulness: Increased damages may not be awarded based merely on the knowledge of a patent or its contents;
• Taking away the clear right for an injunction for infringing activity;
• First-to-file (rather than first-to-invent) rights;
• Expanded definitions of prior art;
• Assignee may file for the application and be granted a patent (rather than the inventor);
• Elimination of the best mode requirement;
• Changes to the duty of candor and unenforceability;
• Damages: when invention is a portion of a larger product, royalties are only calculated for a portion of the product;
• Publication of all patent applications after 18 months;
• Prior user rights;
• Overruling Microsoft v. Eolas — component must be tangible;
• and more.

Over the past year, the AIPLA, IPO, Microsoft, and others have all been beating the patent reform drum — each with a separate agenda.  This proposal appears to be an amalgamation of all the proposals — with enough controversial points to get most everyone up in arms. 

Over the next few weeks, Marcus Thymian, Jennifer Swartz, and I will discuss the various sections of the proposal in a series of posts.

• File Attachment: Draft Patent Statute (182 KB)

Case Questions CAFC's Obviousness Jurisprudence

KSR International v. Teleflex (On Petition for Certiorari)

In January 2005, the CAFC decided Teleflex v. KSR — holding that when combining two or more references in an obviousness finding, there must be a suggestion or motivation to combine the teachings.  This “teaching-suggestion-motivation test” has been a stalwart of Federal Circuit obviousness jurisprudence for twenty years.  During that time, the Supreme Court has not heard a single obviousness case.

Now, KSR has petitioned the Supreme Court for a writ of certiorari.  In its petition, the company makes a couple of interesting points that may push the High Court to accept the case:

• In Anderson’s-Black Rock (1969) and Sakraida (1976), the Supreme Court held that “a combination which only unites old elements with no change in their respective functions” is precluded from patentability under 103(a).  Under the Sakraida standard, which remains law, the Teleflex patent is arguably obvious.
• With the emergence of Holmes Group, circuit splits will become more of a possibility in patent law.  On this issue, the Federal Circuit has acknowledged the existence of a circuit split between itself and the Fifth Circuit.  KSR points out that the split extends to other circuits as well.  The other circuits have followed the Sakraisa standard while the CAFC sticks to its requirement of an explicit motivation to combine.

A consortium of five major corporations, including Microsoft, Cisco, and Hallmark have filed as amicus supporting the petition.  Their brief argues that the current structured test for obviousness is too easy a hurdle for patentees and that the formalities of the test undermines courts ability to truly determine whether an invention is obvious to one skilled in the art.

In addition, Teleflex has filed its opposition to the petition — arguing that (1) obviousness is well settled law and need not be revisited; (2) the CAFC’s test is consistent with Graham; and perhaps most importantly (3) this case does not hinge on the obviousness issue.

Eli Lilly wins patent ruling on Zyprexa

Eli Lilly v. Zenith Goldline (N.D. Ill. 2005).

In a much anticipated decision, Judge Richard Young of the Southern District of Indiana has ruled that Eli Lilly’s patent covering the drug Zyprexa is valid, enforceable and infringed.  The patent is not scheduled to expire until 2011.

The well-written 224 page opinion reads like a biography of Patent No. 5,229,382, the Zyprexa patent.  In particular, the court details the prosecution history of the patent and provides a full analysis of the prior art references that the generic manufacturers cited against the patent.  In the end, court determined that the generics could not prove invalidity or unenforceability:  

Defendants have failed to prove by clear and convincing evidence that claims 1, 2, 3, 7, 8, and 15 of the ’382 patent are invalid as anticipated under 35 U.S.C. § 102, as obvious under 35 U.S.C. § 103, under the double patenting doctrine, or as barred by prior public use under 35 U.S.C. § 102. Defendants have further failed to prove by clear and convincing evidence that the ’382 patent is unenforceable for inequitable conduct.

The defendant generic manufacturers had stipulated that if the ’382 patent is valid and enforceable, then their actions constitute infringement. Thus, the court found that their ANDA submissions constituted an act of infringement. 

• File Attachment: District Court Opinion (353 KB)
• More News on the Issue

TechnoLawyer

For years, the TechnoLawyer community has provided insightful e-newsletters with interesting and helpful content.  Each week, I receive the TechnoLawyer intellectual property newsletter, known as “IP Memes,” that is written by intellectual property attorney Stephen Nipper.  IP Memes is continually filled with important discussions that were often missed by mainstream news organizations.

Now, TechnoLawyer has started its own blog: http://blog.technolawyer.com/.

Links:

• TechnoLawyer.
• Stephen Nipper.
• Dennis Kennedy’s Report on the Tablet PC (Published by TechnoLawyer).

 

 

USPTO moves towards electronic patent filing -- questions PDF ambiguity.

Carl Oppedahl runs the extremely helpful e-filing listserv from his site www.patents.com.  Most recently, Mr. Oppedahl has provided a brief summary and analysis of the PTO’s next steps in the inevitable move to electronic patent filings.

• The PTO is worried about whether the PDF format is good enough — for instance, there are cases where PDF printouts vary according to the system doing the printing.  The PTO would like comments on this issue.
• A web-based electronic filing system will be in beta testing this fall for a limited number of participants.
• The beta system includes electronic filing of IDS forms.
• Mr. Oppedahl expects the web-based filing system to be wildly successful.

Files & Links:

• File Attachment: Oppedahl Letter.pdf (4 KB)
• EFS Users Resource Page

 

 

Statements by Patent Examiner to FBI Deemed Frivolous and Not Protected Whistleblowing Activity

Jack v. Department of Commerce (Fed. Cir. 2005) (05–3023) (NONPRECEDENTIAL).

Todd Jack is an Examiner at the US Patent Office (PTO).  In 2000 Mr. Jack alleged to the FBI that he had been approached by employees of the PTO who “proposed that he join them in a scheme to sell patents and perform patent searches for persons outside the PTO for cash payments.”  Mr. Jack made several other allegations regarding identity theft and bribe-taking by PTO employees and he brought his case to several agencies, including a congressional office, the Secret Service, Department of Commerce security officers, and the Office of Inspector General.

Later, in 2002, Mr. Jack’s supervisor gave him a written and oral warning that his performance was “unacceptable.”  Another supervisor proposed that Mr. Jack be removed for “(1) Harassing and threatening behavior exhibited toward your supervisor and co-workers; (2) Making false statements concerning another employee; (3) Creating a hostile work environment; and (4) Inappropriate behavior in the workplace." 

In January 2003, the PTO sustained all the charges against Mr. Jack, but reduced the proposed removal to a 120–day suspension.

Mr. Jack filed an appeal at the PTO Board.  The administrative judge assigned to the appeal held that the Board lacked jurisdiction and that Mr. Jack had failed to make a non-frivolous allegation that would be protected whistle-blowing activity.

On appeal again, the Court of Appeals for the Federal Circuit (CAFC) did not touch the issue of “whistle-blowing activity.”  Rather, the appellate panel found that Mr. Jack’s claims regarding improper procedure at the Board were without merit, and thus, upheld the Board’s decision denying his appeal.

File Attachment: Jack v. Commerce (21 KB)

How (not) to file a Motion for Summary Judgment

Tel-Lock v. Jasco (N.D. Ill. 2005).

In her most recent patent opinion, Northern District of Illinois Judge Joan Lefkow took both parties to task for their failure to comply with “the straightforward Local Rules of the U.S. District Court for the Northern District of Illinois.”

Before determining whether a genuine issue of material fact exists with regard to either Tel-Lock’s claims or Jasco’s counterclaims, the court must wade through the parties’ Local Rule 56.1 filings. [Motion for Summary Judgment]. It is apparent to the court that both parties, Tel-Lock in particular, require instruction.

Judge Lefkow proceeded to detail the improper legal conclusions submitted, the failure to cite to supporting evidence, and the submission of affidavits filled with conclusory allegations.

In the end, the court granted partial summary judgment to the defendant, Jasco on the issue of price erosion, but denied its invalidity motion. In addition, the Court granted Tel-Lock’s motion to dismiss Jasco’s trademark counterclaim.

Links:

• File Attachment: Tel-Lock v. Jasco (SJ).pdf (150 KB)
• File Attachment: Patent at Issue.pdf (236 KB)

Merck KGaA v. Integra: Supreme Court Set to Hear FDA Safe Harbor Case

On April 20, 2005, the Supreme Court will hear Merck KGaA v. Integra to determine boundaries of the statutory safe harbor created by 35 USC 271(e)(1).  The safe harbor immunizes would-be infringing activity when the activity is done while preparing an FDA application for drug approval.  Attorneys for both Merck and Integra as well as for the U.S. Government are expected to present oral arguments.

Merck KGaA has now filed its reply brief that focuses on picking-apart Integra’s answer.  In particular, Merck begins its argument with the statement that “everyone agrees” that “preclinical experiments reasonably related to an IND application are immune from patent infringement claims as clinical trials.”

Importantly, Merck challenged Integra’s procedural argument that the is “no present controversy.”  This issue is one that could allow the High Court to completely avoid deciding the important statutory issues.

The SCOTUS Blog provides an excellent preview of the case here.

Briefs on the Merits:

• In Support of Merck:
• Brief by Petitioner Merck KGaA
• Reply Brief by Petitioner Merck KGaA
• NY Intellectual Property Law Association's Brief
• EON Labs Brief
• AARP Brief
• Amicus Brief for the Consumer Project and the Electronic Frontier Foundation (EFF)
• PhRMA Amicus Brief
• Amicus Brief for Sepracor
• Brief of Genentech and Biogen Idec
• Brief for the United States Government
• Brief of Amici Curiae Eli Lilly, Wyeth, and Pfizer
• In Support of Neither Party:
• Professors' Amicus Brief
• AIPLA Amicus Brief
• Bar Association of the District of Columbia (BADC) Brief
• San Diego Intellectual Property Law Association (SDIPLA) Brief
• Biotechnology Industry Organization (BIO) Brief
• In Support of Integra:
• Brief by Respondent Integra
• Benitec Amicus Brief
• Vaccinex Amicus Brief
• Applera and Isis Amicus Brief
• Invitrogen Amicus Brief
• WARF Amicus Brief

 

CAFC: District Court Improperly Dismissed Infringement Suit for Failure to Serve Defendant

Bowling v. Hasbro (Fed. Cir. 2005) (04–1364).

Michael Bowling’s infringement case against Hasbro was dismissed with prejudice by th Arizona district court after Bowling failed to properly serve Hasbro, basing its decision on FRCP 4(m) and 41(b).  The district court then denied Bowling’s motion for reconsideration.

On appeal, the CAFC applied 9th Circuit law and reversed.

The CAFC first determined that FRCP 4(m) does not permit dismissal with prejudice:

Thus, Bowling is correct that the district court’s dismissal with prejudice could not be based on Rule 4(m).

Regarding FRCP 41(b), the CAFC found that the 9th Circuit “places strong emphasis on warning and consideration of less drastic alternatives.”  Because the district court had only warned as to a Rule 4(m) dismissal, the appellate court determined that the warnings were insufficient to warrant a dismissal with prejudice.

As an aside, do not attempt to obtain attorney’s fees by citing a non-existent rule:

Hasbro argues that it is entitled to attorney’s fees and expenses incurred in this appeal under Federal Circuit Rule 47.7(1), even though it chose not to submit any substantive argument in support of the district court’s dismissal. Because no such rule exists, we assume that Hasbro is asserting an entitlement to attorney’s fees under Federal Circuit Rule 47.7(a)(1). In view of our disposition of this case, we see no reason to award Hasbro its attorney’s fees and expenses for this appeal. (Emphasis added).

Links:

• File Attachment: Bowling v. Hasbro.pdf (47 KB). 

It is proper to limit the scope of the claims according to the specification

Rhodia Chimie v. PPG Industries Inc., (Fed. Cir. 2005)

By Baltazar Gomez, Ph.D.

Rhodia is an international chemical company and the assignee of U.S. Pat. No. 6,013,234 ("the '234 patent"). The patent discloses and claims certain essentially spheroidal precipitated silica particulates. Rhodia markets “Micropearl” which is a silica particulate covered by the patent. PPG also makes three silica products, namely, Hi-Sil SC60M, SC72 and SC72C. Rhodia alleges that these products infringe claim 1 of the '234 patent.

The district court granted summary judgment for noninfringement in favor of PPG. On appeal, Rhodia argued that the district court erred in interpreting claim 1. The CAFC, however, affirmed the district court’s construction.

Claim 1 of the '234 patent partly reads as follows: Dry, dust-free and non-dusting, solid and homogeneous atomized precipitated silica particulates essentially spheroidal in geometrical configuration… (emphasis added)

In addition, the specification included examples tested both for flowability and dusting properties. Flowablity tests were performed by a pour test which compared the flowability of Micropearl with the prior art. The dusting tests were measured by the German DIN 53 583 standard (the "DIN test").

During the district court’s claim construction hearing, PPG asserted that the phrase "dust-free and non-dusting" should be interpreted literally to mean "no dust cloud whatsoever." Conversely, Rhodia argued that such a meaning was improper in view of the results of the pour test that showed production of some dust. Accordingly, Rhodia advocated construing "dust-free and non-dusting" to mean "very low dust."

The district court was concerned, however, that Rhodia's proposed definition of the phrase was relative and that such a definition would not meet the statutory requirement that the claims particularly point out and distinctly claim the invention. Thus, to resolve the perceived ambiguity of the phrase, the district court adopted a construction based upon the only meaningful guidance provided in the patent, namely the DIN test.

On appeal, Rhodia argued that the DIN test was not the only means by which to assess the amount of dust produced by the invention. Rhodia asserted that the pour test could also be used to determine the level of dustiness, and therefore, it is inappropriate for the district court to limit the phrase "dust-free and non-dusting" to the DIN test. Further, Rhodia cited statements made during prosecution of the ‘234 patent explaining that the pour test could be used to show the non-dusting and free-flowing properties of the ‘234 patent.

In affirming the district court's construing of "dust-free and non-dusting", CAFC noted that although the pour test may also provide evidence of dustiness, the results of the pour tests presented in the '234 patent were only identified as evidence of the products' flowability.  The CAFC further noted that there is no language in either the claims or the written description that taught the application of the pour test to determine the level of dustiness.  Finally, CAFC stated that Rhodia's statements made during prosecution cannot serve to fill such a gap.  Thus, the CAFC concluded that the district court did not erred in limiting the scope of the claims by defining the phrase "dust-free and non-dusting" to the only disclosure in the patent.

Note: Dr. Baltazar Gomez is a scientific advisor at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University.

File Attachment: Chimie v. PPG.pdf (98 KB)

Appeals Court Dismisses Apotex Case Against Pfizer's Quinapril Patent

Apotex v. Pfizer (Fed. Cir. 2005) (NONPRECEDENTIAL)

Apotex filed an ANDA to begin manufacturing a generic version of Pfizer’s patented drug quinapril.  After Pfizer refused to file an infringement suit, Apotex filed a declaratory judgment action — hoping to prove that the patent was invalid. 

At the district court level, this case fell in line with the recent CAFC decision Pfizer v. Teva holding that an ANDA filing does not, by itself, create a reasonable apprehension of suit. In dissent in Teva, Judge Mayer argued that the statute does provide that an ANDA filing constitutes an act of infringement sufficient to trigger a justiciable controversy.  As it turns out, Judge Mayer was also a panel member for the Apotex v. Pfizer appeal, along with Judges Plager and Gajarsa.

Less than one week before oral argument, and after learning that Judge Mayer would be a panel member, Pfizer covenanted not to sue Apotex for infringement of U.S. Patent No. 4,743,450.  In their decision, the Appellate Panel unanimously found that the covenant not to sue was determinative:

A covenant not to sue, such as that provided by Pfizer, moots an action for declaratory judgment. . . . As a result, the judgment and opinion of the district court are vacated and the case is remanded with instructions to dismiss for lack of jurisdiction.

During oral arguments, the Judges were clearly displeased with Pfizer’s litigation strategy.  Although Pfizer won the day, the court did award costs to Apotex.

Links:

• File Attachment: Apotex v. Pfizer.pdf (15 KB)

CAFC: District Court Failed to Construe Terms in Sufficient Detail for Appellate Review

Nazomi Communications v. ARM Holdings (Fed. Cir. 2005)

In a dispute over a patented “Java hardware accelerator” for translating Java bytecode into native instructions for a CPU, the district court construed the claim term “instruction” and found that ARM’s accused device did not infringe.

On appeal, the Federal Circuit found that the lower court had not been detailed enough in its claim construction ruling:

This court’s review of a district court’s claim construction, albeit without deference, nonetheless is not an independent analysis in the first instance. Moreover, in order to perform such a review, this court must be furnished "sufficient findings and reasoning to permit meaningful appellate scrutiny." Gechter v. Davidson, 116 F.3d 1454, 1458 (Fed. Cir. 1997). This requirement for sufficient reasoning applies with equal force to issues of law, such as claim construction, and issues of fact, such as infringement. Id.

This opinion was written by Judge Rader and the panel members include Chief Judge Michel and Judge Proust.  Harold Wegner has noted, and I tend to agree, that this opinion appears to be written as a foreshadow of where Rader would take the Phillips decision -- a decision that not expected until late this summer.

Links:

• File Attachment: Nazomi Communications.pdf (66 KB)

SmithKline Beecham v. Apotex part VI

In the CAFC’s April 8 decision of SmithKline Beecham v. Apotex, the en banc panel vacated the original appellate court’s opinion relating to the experimental use exception to the public use bar of 102(b). The lower court had, somewhat controversially, found that 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, because the “clinical trials tested only the safety and efficacy of PHC hemihydrate as an anti-depressant,” the original appellate panel found that those trials were not an experimental use of the chemical compound as claimed in claim 1.

Rather than offering any opinion, the CAFC en banc decision simply vacated the court’s decision.  At the same time that the en banc order was released, the three-member appellate panel released their rewritten opinion that avoided the experimental use issue entirely by finding an alternative grounds for finding the patent invalid.  Specifically, the court (J. Rader) found that the patent was “inherently anticipated.”

What makes the case even more odd is that, Judge Newman’s dissent from the order declining to hear the case en banc was essentially a written as a dissent from the new Rader decision.  Judge Newman criticized the new opinion’s expansion of the doctrine of inherent anticipation, arguing that the “breadth of the panel's theory of inherent anticipation contravenes long-established precedent.”  According to the dissent, if a compound’s existence “is not reasonably known to persons of skill in the field, its later discovery cannot be retrospectively ‘inherently anticipated.’”

 According to the new decision, however, inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.  Thus, it appears that a defendant, in order to invalidate a patent, must simply show that, more likely than not, a natural result flowing from an operation taught in the prior art would result in the claimed product.

In this case, the recreated panel found that the prior art was sufficient because it disclosed the manufacture of PHC anhydrate that naturally results in the production of the claimed compound (PHC hemihydrate).  However, the court stated that a mere possibility of inherency is not sufficient for anticipation. (Citing Schering Corp.).

In concurrence, Judge Gajarsa found 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.

Gajarsa’s concurrence is a foreshadow to the next few years where patentable subject matter will become a controversial area once again.

Links:

• File Attachment: SKB Apotex en banc order (49 KB)
• File Attachment: SKB Apotex Panel Decision (230 KB)
• SKB Apotex Original Panel Decision (From Georgetown Law Center)
• File Attachment: SKB Apotex District Court.pdf (2443 KB)
• Discussion of the original panel opinion: Part I, Part II, Part III, and part IV.
• Discussion of the en banc order and new appellate opinion: Part V, Part VI
• Howard Bashman provides an excellent commentary on the case via one of his readers.
• Information on SKB’s pay-out in the class action antitrust suit. (Link).

TEAS Plus: Proposed Changes to Electronic Filing Rules in Trademark Cases

The USPTO has announced a proposed rule that would reduce fees associated with filing a trademark application if the applicant follows certain rules that go beyond those normally required to receive a filing date.  The program, termed ‘TEAS Plus’ would reduce the application fee by $50 to $275 per class. 

Comments on the proposed changes should be e-mailed to TEASPLUS.comments@uspto.gov by May 9, 2005.

More info: http://www.uspto.gov/web/offices/com/sol/notices/70fr17636.pdf 

 

Federal Circuit Makes En Banc Decision in Paxil Case: Patent Inherently Anticipated

SmithKline Beecham Corp. v. Apotex Corp. (Fed. Cir. 2005) (en banc order)

Paxil(R) is a blockbuster drug sold by SmithKline Beecham (SKB).  SKB’s patent covering the drug was initially invalidated in an opinion by 7th Circuit Judge Richard A. Posner who sat by designation as a district court judge.  On appeal, a Federal Circuit panel (J. Rader) rejected almost all of Judge Posner’s reasoning, but affirmed the invalidation decision on other grounds. 

Now, the CAFC issued an en banc decision to vacate the panel’s original decision with regard to the issue of experimental use, and the panel (J. Rader) has issued its new decision.

This case involves 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 question of experimental use arises because SKB performed clinical trials that occurred more than one year prior to filing of the patent application.  Normally, a public use of a patented invention more than a year before filing invalidates the patent under 35 U.S.C. §102(b).  However SKB has argued that the clinical trials were a form of experimental use. 

In its new decision, the CAFC majority simply avoided the issue of experimental public use in totality.  Rather, they found alternative grounds to invalidate the patent, holding that the asserted claims “invalid for inherent anticipation by the ’196 patent under § 102(a).”

Judge Posner had rejected this argument because Apotex “did not prove by clear and convincing evidence that it was impossible to make pure PHC anhydrate in the United States before the critical date.”  The appellate panel, however, found that Judge Posner erred by requiring Apotex to meet this standard of proof, “which is too exacting.”

Apotex did not need to prove that it was impossible to make PHC anhydrate in the United States that contained no PHC hemihydrate, but merely that "the disclosure [of the prior art] is sufficient to show that the natural result flowing from the operation as taught [in the prior art] would result in" the claimed product.

Links:

• File Attachment: SKB Apotex en banc order (49 KB)
• File Attachment: SKB Apotex Panel Decision (230 KB)
• SKB Apotex Original Panel Decision
• File Attachment: SKB Apotex District Court.pdf (2443 KB)
• Discussion of the original panel opinion: Part I, Part II, Part III, and part IV.
• Howard Bashman provides an excellent commentary on the case via one of his readers.

Children Rejoice -- Peanut Butter and Jelly Patent Rejected on Appeal

In what may be rival as the swiftest justice in the history of the Court of Appeals for the Federal Circuit.  On April 8, only two days after hearing oral arguments, the CAFC rejected Smuckers appeal.  The case, in re Kretchman, was widely covered media and involved Smuckers attempt to obtain a broad patent on its Uncrustables(TM).

Rather than issuing an opinion, the court issued a per curium Rule 36 decision without opinion.  Generally Rule 36 decisions are reserved for cases that are so clearly on one side of standing precedent that a written opinion is deemed unnecessary. 

Link:

• Discussion of Oral Arguments
• Details on the Case
• The always irreverent Crescat Sententia has a post on the case by Raffi Melkonian who only now realizes that patent practice is actually quite fun.

CAFC: Claims should be interpreted according to the specification and the pertinent art

Nellcor Puritan Bennett, Inc. v. Masimo Corp. (Fed. Cir. 2005)

by Baltazar Gomez

Appellant Nellcor owns U.S. Patent No. 4,934,372 (“the ‘372 patent”), which covers a pulse oximeter and method for using signals from red and infrared light, and processing the signals to measure blood oxygen saturation noninvasively. Appellee Masimo also makes pulse oximeters of the same type as Nellcor.

Nellcor filed suit in the U. S. District Court for the Central District of California alleging that Masimo products infringed the ‘372 patent. The district court granted summary judgment of noninfringement. On appeal, CAFC vacated and remanded for further proceeding because the district court erred in interpreting the claims.

Claim 1 of the ‘372 patent covers a method for detecting, digitizing, and processing the signals, separating much of the aperiodic noise from the signal, and calculating the oxygen saturation from the processed signal. Claim 1 describes the processing and separating step as follows:

processing the time-measure collectively to determine a composite waveform having a relative maximum and minimum amplitude corresponding to a composite periodic waveform of the periodic information in the time-measure so that the aperiodic information present in the time-measure is attenuated and filtered from the composite; (emphasis added)

The district court construed the phrase “attenuated and filtered” to mean “reduced and removed,” and concluded that Masimo did not infringe the ‘372 patent.

On appeal, Nellcor argued that the district court erred by construing “filtered” to mean removal rather than simply reduction. In determining the meaning of the phrase “attenuated and filtered,” CAFC examined the meaning the patentee used in the specification of the ‘372 patent. The ‘372 patent describes the relative reduction of the impact of the aperiodic noise by the small relative weight assigned to it that results in it being “quickly and effectively attenuated, and thus filtered out.” The ‘372 patent further describes that the claimed phrase “attenuated and filtered from the composite” is used to refer to “effective removal” of data, rather than the absolute removal of unwanted data. Further, CAFC also looked at the meaning of “filter” in the IEEE standard dictionary which defines “filter” as separation of data, signals, or material in accordance with specified criteria and elimination of certain portions of a signal. The CAFC agreed that the definition from the IEEE dictionary was consistent with the meaning given in the specification of the ‘372 patent. Thus, the CAFC concluded that the district court misinterpreted the claims of the ‘372 patent because the phrase “attenuated and filtered from the composite” means “reduced in comparison to the desired information.”

Vacated and remanded to evaluate whether Masimo infringes based on the new claim construction

Note: Dr. Baltazar Gomez is a scientific advisor at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University.

Links:

• File Attachment: Nellcor v. Masimo (45 KB)
• In a parallel case, a jury recently found that Nellcor illegally excluded its competitors from the market for pulse oximeters, a device which monitors oxygen levels in blood. [AP Article]

Federal Circuit Judge Admits that Family Member is Infringing PBJ Claims

IP Law Bulletin has a nice follow-up article on Smuckers’ Peanut Butter & Jelly patent appeal at the Federal Circuit.  According to their report, the judges on the panel were somewhat hostile to the applicant:

Judge Arthur Gajarsa noted that his wife often squeezes together the sides of their child's peanut butter and jelly sandwiches to keep the filling from oozing out. "I'm afraid she might be infringing on your patent!" he said.

Smuckers is appealing the USPTO’s rejection of its patent application on its crustless sandwich making process.  Smuckers already holds one patent on the technology, but is hoping to capture a broader claim-set with this appeal.

A decision is expected within about four months.

Links:

• CBS Evening News: scroll down to ‘Peanut Butter Politics.’ (Thanks to Jonathan Krit at Emrich & Dithmar).
• WSJ Article.  (Thanks to Kevin Heller at www.TechLawAdvisor.com).

Re-announcement: Patently-O Patent Law Blog Daily Newsletter

Several months ago, I implemented an e-mail newsletter to provide updates to the Patently-O patent law blog.  Like the blog, the newsletter is free.  List members receive a daily e-mail (usually between 1 and 4 a.m. EST) that contains any new articles from the previous 24 hours.  By all accounts, the newsletter is a smashing success — one reader recently wrote in that she loves reading Patently-O every morning.  “I don’t drink coffee,” she writes, “so you are my caffeine kick.”

I often include images and pdf files on the blog.  However, to save everyone’s bandwidth the e-mailer only contains a snippet of the text of each post.  HTML links are provided for readers to click-through to the full version of the articles.

If you have not yet signed up, why not give it a try today? If you decide that you do not like getting the e-mail, you can unsubscribe quite easily.  Each daily e-mail includes an “unsubscribe” link.  All that you have to do is click on the link and your subscription will be canceled.

In the upper right corner of the site, there is a newsletter subscription box, add your e-mail address and click "subscribe" to sign up for the Patently-O Daily Newsletter.

— Dennis Crouch

ps. Most new Patently-O readers arrive via word-of-mouth referrals.  I have no marketing budget and instead of marketing the blog, I would rather spend my time providing daily posts that are both useful and enjoyable.  If you enjoy the blog, chances are that your colleagues and associates would as well. . . .

What Does it Take to Become a Patent Attorney?

The Practicing Law Institute is hosting a free audio webcast IP Career Series directed to young lawyers, law students, and people thinking about law school.  Their next audio briefing is titled “So You Want to Be a Patent Lawyer...," and will be held on April 18th from 1:00-2:00 p.m. EST.  John White (who helped me learn patent law) and Katharine Patterson will present topics that include:

• What does it take to become a patent attorney?
• What does it mean to say you're a patent attorney?
• What is life like as a patent attorney?

In answering the general questions, White & Patterson expect to delve into how to decide between a prosecution or a litigation career and other sub-topics such as: The distinction between patent agents and patent attorneys; Hot undergraduate technical degrees; Whether and when a PhD is important; Geographical areas; and how to find a firm that wants to hire you.

Registration info:

• Via Live Audio Webcast, April 18, 2005;
• Via Live Telephone Briefing, April 18, 2005;
• Register by Phone: (800) 260-4754. (Priority Code: CRA5-8BLG2).

Antitrust: Court Should Not Consider Potential Patent Validity in Sherman Act Analysis

In re Ciprofloxacin Hydrochloride Antitrust Litigation (E.D.N.Y. March 31, 2005)

Bayer produces Cipro® (ciprofloxacin hydrochloride) and is assignee of U.S. Patent No. 4,670,444, which claims the active ingredient and its generic equivalents.

Hoping to produce a generic version, Barr Labs filed an ANDA requesting permission to produce the drug before the expiration of the patent — arguing that the patent was invalid and unenforceable. (Paragraph IV certification). Bayer then sued Barr for infringement.  The two companies eventually settled.  Under the settlement agreement Bayer paid Barr $398 million and Barr agreed to amend its ANDA to a Paragraph III certification, which would permit it to market the drug only after the patent expires.  The settlement agreement included an “out” for Barr in the case that the patent was subsequently declared invalid or unenforceable.

In the wake of the settlement, a class of buyers sued Bayer and Barr for antitrust violations under the Sherman Act, arguing that the exclusion-payment scheme is a form of anti-competitive conduct falling under Section 1 of the Act using a rule of reason analysis.  The district court, however, sided with Bayer, finding that there was no impermissible anticompetitive effect because the agreement did not extend beyond the “zone of exclusion” of the patent. 

Here, plaintiffs have failed to demonstrate anticompetitive effects in the market for ciprofloxacin because, although the Agreements undoubtedly restrained competition, they did not do so beyond the scope of the claims of the '444 Patent. The '444 Patent allows a zone of exclusion within the bounds of its claims.

Further, the court held that the “potential invalidity of the claims” could not be used to diminish the protection that the patent offers against Sherman Act claims.

This result is compelled by the presumption of validity Congress accorded patents and the destabilizing effect on patent law that a contrary decision would work. Any readjustment of the competing interests affected by exclusion payments is a matter better addressed by Congress than the courts.

Because the plaintiffs were unable to prove the first element in the rule of reason analysis (anticompetitive effect), defendants cannot be liable for the alleged antitrust violations.

Calvert Crary, a litigation analyst who writes the highly informative LitigationNotes sees this decision as falling in line with the March 8, 2005 11th Circuit decision in Schering-Plough v. FTC, but predicts that these decisions may result in a complete undermining of Hatch-Waxman.

[T]hese decisions, if broadly adopted, will decimate the statutory mechanisms of the Hatch-Waxman Act that remove barriers to price competition arising from invalid or inapplicable drug patents. (From Crary’s report on Kos Pharma v. Barr Labs).

Mark Lemley is a law professor at Stanford, but he has also been quite involved with a number of patent appeals over the past several years.  In an e-mail, Professor Lemley argues that the Cipro court is “entirely wrong-headed” in this case.  In his view, this decision essentially creates a rule that allows obvious cartels regardless of the strength of the patent.

[The court] cites the 6th Circuit and [Schering-Plough v. FTC] for the proposition that we don't want to enquire into patent validity in an antitrust case.  That's true enough.  But those courts found the exclusion payment illegal without having to inquire into patent validity.  By rejecting the per se approach, and also rejecting any inquiry into the merits, the court has essentially created a rule of per se legality for a pretty obvious cartel.  No matter how weak the patent claim is, or how obviously the payment is a means of artificially maintaining a monopoly, under the court's reasoning it will be permissible.  This is an abdication of antitrust responsibility.

In a recent paper, Lemley, along with Professors Herbert Hovenkamp and Mark Janis argue that “exclusion payments that exceed litigation costs should be deemed illegal per se.”  According to their analysis, there is “no legitimate reason for such payments, and the most likely reason . . . is anticompetitive.”  The three professors book, entitled IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law is available at Amazon.com.

 

 

Links:

• File Attachment: Bayer Cipro Decision.pdf (128 KB)
• File Attachment: Cipro Patent.pdf (1172 KB)

Federal Circuit to Decide Patentability of Crustless Sandwich

On April 6 at 2:00 pm, Judges Clevenger, Gajarsa & Prost will hear in re Kretchman (Case No. 04–1448) that involves peanut butter and jelly sandwich technology.  Smuckers has already received one patent on its highly profitable “Uncrustables,” and is now appealing a patent office rejection of a second, broader set of claims. Adam Jaffe was quoted in today’s Wall Street Journal poo-pooing the effort.

"People think it is amusing to talk about patents on a peanut butter and jelly sandwich, but it is a patent that never should have been issued," laments Adam Jaffe, professor of economics at Brandeis University in Waltham, Mass., and a co-author of a book on the U.S. patent system. "This is a technology -- if you can call it that -- that has been around in many forms for many years."

I have not examined the proposed claims or the prior art, but it seems that the comments by Jaffe & his co-author Josh Lerner appear to be directed toward whether food packaging should be patentable subject matter.

Link:

• Wall Street Journal Article ($)
• Jaffe, Lerner Book: Innovation and its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It (2004).
• File Attachment: Sealed Crustless Sandwich Patent.pdf (329 KB)

(Thanks to TechLawAdvisor for the tip.)

Teva's Request for Rehearing of Declaratory Judgment Action is Denied

Teva Pharmaceuticals v. Pfizer (Fed. Cir. 2005) (On petition for rehearing).

In January 2005, the Court of Appeals for the Federal Circuit (CAFC) issued a controversial decision in the case of Teva Pharm. v. Pfizer.  Teva, a manufacturer of generic drugs had filed an Abbreviated New Drug Application (ANDA), seeking approval from the FDA to market a generic version of sertraline hydrochloride — a drug sold by Pfizer under the Zoloft® brand.  Under the provisions of the Hatch-Waxman Act, Pfizer had 45-days to sue Teva for patent infringement based on Teva's ANDA filings.  However, Pfizer did not sue.  Teva then brought a declaratory judgment action against Pfizer, seeking a determination that its generic drug did not infringe Pfizer's patent. 

The question on appeal was whether the Teva’s apprehension of suit was sufficient to create jurisdiction for its declaratory judgment action.  On appeal, the CAFC determined that Pfizer’s Orange Book listing along with Teva’s ANDA were insufficient to create an actual controversy

The listing of a patent in the Orange Book by an NDA filer is the result of a statutory requirement. Without more, Pfizer’s compliance with the Hatch-Waxman listing requirement should not be construed as a blanket threat to potential infringers as far as Pfizer’s patent enforcement intentions are concerned. . . . More is required for an actual controversy than the existence of an adversely held patent. . . . We are not prepared to hold that listing a patent in the Orange Book evinces an intent to sue any ANDA filer who submits a paragraph IV certification with respect to the patent.

As such, the CAFC affirmed the District Court’s dismissal of Teva’s action.  Now, Teva has requested an en-banc rehearing and amicus curiae briefs were field by the FTC, the Generic Pharmaceutical Association, Ivax Pharmaceuticals and Senators Edward Kennedy, John McCain, and Charles Schumer.  However, that request has been denied.

In a precedential order, the CAFC denied Teva’s petition for a rehearing — noting that “a poll was requested, taken, and failed.”

However Judges Dyk and Gajarsa both filed dissenting opinions explaining their reasons for hearing the case.

Gajarsa Dissent: Judge Gajarsa, who was a member of the original Teva panel, argues that the ANDA situation is quite different from other patent infringement situations and requires a separate form of analysis.

The contextual differences between the second ANDA filer and the typical patent infringement case make the reasonable apprehension test inappropriate for this action. By guiding the patentee’s conduct in the typical case, the reasonable apprehension analysis allows the patentee to avoid litigation. Identifying a justiciable controversy in terms of a threat of infringement litigation, the doctrine establishes the circumstances in which the uncertainty of legal rights materially harm a potential infringer in the marketplace. The injury facing Teva in this case is different in kind, but no less actionable.

Gajarsa goes on to say that the panel decision’s Constitutional analysis (Article III limitations) “forestalls legislative correction” of the decision.

Dyk Dissent: Judge Dyke provides a full Article III analysis and concludes that the Teva panel was wrong in determining that a reasonable apprehension or imminent suit was required for declaratory judgment jurisdiction.

There are relatively few Supreme Court cases dealing with Article III and declaratory judgments, but the few cases that do exist provide no support for a reasonable apprehension of imminent suit requirement.

Teva and its cohort of supporters are expected to appeal petition for certiorari.

The Senators’ Brief: Senators Edward Kennedy, John McCain and Charles Schumer filed an amicus brief supporting the petition for rehearing. The brief made the point that there was a Congressional intent surrounding the passage of the Hatch-Waxman Act to expand subject matter jurisdiction over declaratory judgment actions by generic drug companies “to the constitutional limit” and that the panel opinion in Teva v. Pfizer frustrates the purposes of the amendments. (Thanks to Theodore Whitehouse at Willkie Farr for providing a copy of the Senators’ brief)

Links:

• File Attachment: Teva v. Pfizer Rehearing Denied.pdf (94 KB)
• File Attachment: Panel Decision.pdf (184 KB)
• Patently-O Notes on the Panel Decision 
• File Attachment: Ivax for Rehearing.pdf (590 KB)
• File Attachment: Teva Petition for Rehearing (2).PDF (2402 KB)
• File Attachment: Pfizer Opposition to Petition for Rehearing.pdf (904 KB)
• File Attachment: GPhA Amicus Brief.pdf (616 KB)
• File Attachment: FTC brief in Teva v. Merck (81 KB)
• File Attachment: Senators Brief in Teva v. Pfizer (500 KB)

Patently-O Patent Prosecution TipCast No. 1

The first Patently-O Patent Prosecution TipCast has just been released.  The TipCast series is an audio lecture series that is intended to provide helpful hints and information to patent attorneys and agents.  TipCast No. 1 provides a tip relating to revival of abandoned applications.

Click to Download and Listen to TipCast No. 1. (2.9 MB, mp3 format, 3 minutes audio).

Show-notes:

• Field Hybrids v. Toyota Motor Corp.
• Prior discussion of Field Hybrids.
• 37 C.F.R. 1.137, Revival of abandoned application or lapsed patent
• Music on the TipCast is courtesy of brad sucks under a creative commons license.
• Podcast RSS feed will be setup at a later date.  As this is my first TipCast, your comments, suggestions, and advice are all quite welcome.

Thanks goes to Evan Brown and the rethink(ip) group for their inspiration and encouragement.  For those interested in the creation of the TipCast — I used my laptop computer hooked to a Logitech USB microphone ($14) and a software package titled Media Wizard (CDH Productions, $50) to record my voice.  I also used Media Wizard to mix-in the music.  Although I have some radio experience from my days as an announcer at WPRB Princeton, this was my first digital recording.

A client who is also a Patently-O reader sent me a note this morning that the recording was very nicely done, but that it seems like a lot of work on my part — She asks, “why the audio form rather than visual?”

My Response: There is new technology coming along that is going to make the audio format very easy to use -- although right now only the real techno-geeks and audiophiles are involved. I have to admit that I still know very little about this, but there is technology available to allow your hand-held device, such as your iPod or even your cell phone, to subscribe to an audio feed. Each time the feed is updated, the device would download the mp3 file and allow you to listen to the newest update. With a touch of a button, you could listen while on your morning commute or while working out at the gym.

 Thank you for all the comments and complements on the TipCast.  Even my wife was very nice this morning to mention that I certainly have the face for Podcasts. . .

Do not copy this article!

Today’s "blog-flog" in the world of intellectual property concerns the notion of copyright.  Writing for Between Lawyers, the newest Corante weblog, trademark attorney Marty Schwimmer discusses a recent spate of case-summary copying.  For the most part, I agree with Marty’s conclusions:

Forget about copyright. Think of it in terms of manners. Do not copy word for word without credit. Show respect for the small things of others.

You should note, that I just copied part of Marty’s post — However, I used proper copying etiquette by letting the reader know the origin of the quote.  Over at the TTABlog, John Welch talks about his recent experiences:

The TTABlog strives to provide well-written, readily understandable case summaries and commentary. It takes a considerable amount of work to produce that kind of writing, and it is quite upsetting to find someone else using that work product without permission, or even attribution. Just such an incident occurred today.

Kevin Heller, the Tech Law Advisor, gets into the fray as well, as does Bill Heinze, who comments that he provides links to all of his sources.

I have seen entire posts from Patently-O copied and posted in other blogs, on robot-built websites, in other languages, on newsgroups and in other locales as well.  I have even given a few people, such as the editors of IPFrontLine, the freedom to copy entire posts for their own use.  The copycat activity is often good publicity for me, the blog, and my firm (MBHB).  However, if there is no source identifier, then there is no publicity value. 

I have received nice notes from half a dozen law school professors and even a few high-school teachers who asked to copy portions of the blog for their courses.  In another instance, I talked with an attorney who wanted to use information from the blog in a bar association presentation.  Each time I have said yes.  The best part is that, on several occasions, this initial contact was the beginning of a growing friendship — just another example of how copyright is a public good. (I.e., this is an example of how copyright is good for the public.)

In one particularly bad case of copying, I saw a nicely written IP blog post reviewing a new case (not from Patently-O).  A few weeks later, I received a mailer from a major law firm reviewing the same case.  (No, the particularly bad element is not that it took the major firm several weeks to write a case review.)  The particularly bad element is that the major law firm’s case review was almost an exact copy of the the blog post. The greatest difference being that the name of the blogger as author had been replaced with the name of an attorney at the major firm.  We IP bloggers are too polite to name names, but the copycats should be on their toes.

An old friend e-mailed me about this post — his comments are valid:

Your note about blog plagiarism is about the same old stuff of simple plagiarism in any form. "Copying" is too neutral a word. . . . This is serious, serious stuff.

The truth is that if you are a professional and you plagairize, it will come back to haunt you one day.

Here is my copyright policy: Anyone should feel free to copy a short snippets from the blog, so long as you attribute the material source. Shoot me an e-mail if you want to copy an entire post or a series of posts.  You can print out individual posts and send them to a client — just don’t white-out my name or replace my name with your own. 

Kevin Heller e-mailed to ask why I don’t use the creative commons license?  The truth is that I love the CC licensing system — my problem is that I like to get an e-mail or telephone call from the person/organization that wants to use the material.

Welcome to April!

A Mr. G. Aharonian holds the patent on a holiday boardgame that includes the fine American holidays of April Fool’s Day, Tax Day and Arbor Day. (U.S. Patent No. 4,915,391).

Abstract: A board game whose gameboard design is composed of an endless path of purchasable blocks representing the major national American holidays. . .

I wonder if the inventor has any relation to the famous G. Aharonian?

In other April First news, the IPO, as expected, has called for “more patents and fewer courts.”  From the press release:

Today IPO announced its 2005 legislative program. Key objectives are to quadruple the number of U.S. patents granted each year and to automatically enforce all patents without costly litigation. To this end, IPO called for eliminating the jobs of the 5,000 patent examiners at the USPTO and abolishing all federal courts that have offended IPO members by denying or refusing to enforce patents. Money saved by cutting these unnecessary government jobs can be used to create a federal program to subsidize businesses known at "patent trolls," in order to increase patent licensing income and strengthen the U.S. economy.  (IPO April 1 Special Report).

Just to be clear — this press release is a joke.