Patent Law Blog (Patently-O)

LabCorp v. Metabolite: Supreme Court To Hear Patent Case Questioning Patentability Of Medical Method

Laboratory Corp. of America (LabCorp) v. Metabolite Laboratories (Supreme Court 2005).

The Supreme Court has announced that it will hear LabCorp’s appeal that will again question the scope of patentability in the U.S.  Specifically, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.

The question on review is as follows:

Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

Patent in suit: This case revolves around claim 13 of Metabolite’s U.S. Patent No. 4,940,658

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Thus, the method comprises two steps, (i) assaying a body fluid and (ii) correlating the measure with a mineral deficiency.

LabCorp’s argument: LabCorp argues that claim 13 is invalid for a number of reasons.  Most pointedly, although the claim requires a step of “correlating,” there is no description of how the correlation would take place. According to the petitioner, “[s]uch a vague claim cannot be valid; for if it could be, parties could claim patent monopolies over basic scientific facts rather than any novel inventions.” In addition, the claim arguably fails the written description requirement because “the specification does not describe what a practitioner must do to perform the active ‘correlating’ step.”

Comment: The Supreme Court appears bent on making this case a question of subject matter patentability.  If it takes that course, it will likely answer many of the questions left open by Lundgren and Fisher.  Of course, as a general rule the decisions from the Court raise more questions than they answer.

Eolas v. Microsoft

Eolas v. Microsoft (Continuing Saga).

The Supreme Court has denied Microsoft’s petition for a writ of certiorari.  And, the case will be wholly returned to the district court to resolve a number of pending issues.  At first glance, Microsoft seems to be running out of legal arguments: M$ lost $500 million at the district court; substantially lost on appeal, lost in its bid to get the Supreme Court to hear the case, and lost in its bid for the Patent Office to reject the patent on reexamination.

On a closer look, however, the reexamination may actually give Microsoft breathing room again at the district court.  The Examiner’s reasons for allowance make clear that the Eolas claims require an “‘executable application’ that is a separate application from the browser application.” (emphasis in original). Of course, it would be difficult for Eolas to argue that Microsoft’s accused ActiveX controls, applets and plug-ins are separate applications rather than components that are called by an application.

It will be interesting to see whether Microsoft can capitalize on this implicit limitation that has been created by the PTO.

Happy Halloween

Settlement of declaratory judgment action based on pre-filing statements insufficient to trigger 180-day exclusivity period

Teva Pharmaceuticals v. FDA (D.D.C. 2005)

Generic manufacturer Teva filed an abbreviated new drug application (ANDA) in 2000 seeking permission to sell generic pravastatin once one of the patents expires in April 2006(paragraph III certification) and an assertion that the generic version would not violate three patents on the drug (paragraph IV certification).  After Teva filed, several other generic manufactures filed parallel applications.

After approving Teva’s application, the FDA determined that Teva’s 180–day exclusivity period was started by the conclusion of a lawsuit between Apotex and BMS involving the same patents. (Under Hatch Waxman, the 180–day exclusivity is triggered by a “decision of a court” or “holding” that has preclusive effect.)

In that case, Apotex had sued BMS for declaratory judgment of noninfringement even though BMS had told Apotex that it would not sue on the patents based on Apotex’s proposed formulation.

BMS & Apotex reached a voluntary dismissal prior to any hearing taking place, and filed a “consensual stipulated dismissal” based on the pre-suit representations by BMS.

Teva argued that the Apotex-BMS settlement was not a “decision of a court” and thus should not have triggered the start of the exclusivity period.

The DC Court agreed with Teva, finding that the stipulated dismissal was insufficient to fulfill the requirements of Hatch Waxman.

The underlying terms of the stipulation are not physically incorporated into the four corners of the dismissal order, and there is no statement of a "good cause" finding on the face of the order. Neither Apotex nor BMS ever asked the district court to look beyond the signed stipulation, and no hearing or argument ever took place. Thus, the district court could only review the voluntary, private settlement agreement: it did not have to weigh evidence, or make any implicit determinations. Indeed, it did not even have to sign the document, and under Second Circuit and D.C. Circuit law, as well as Rule 41(a)(1)(ii), the filing of the signed stipulation of dismissal automatically effectuated the dismissal without any court action. The district court was divested of jurisdiction at the very moment that the stipulation, containing the signatures of both BMS and Apotex, was filed -- there cannot have subsequently been any predicate finding of fact as to estoppel or any other issue. And there is nothing in the record to suggest that, notwithstanding this jurisdictional bar, any predicate finding of fact was actually made.

The Apotex-BMS decision was “not a court decision or holding” and “Teva's 180-day exclusivity clock was never triggered.” As such, the D.C. Court determined that the FDA's determination was "arbitrary, capricious . . . or otherwise not in accordance with the law" under § 706(2) of the APA.

Read the decision.

Upcoming Conferences

BlawgThink 2005

Leading legal bloggers will be in Chicago November 11 and 12 for BlawgThink 2005: a bold new approach to learning about legal blogging. Day One will feature more traditional sessions broken-out led by top legal bloggers on topics such as blogging how-to, blogging tools, marketing tips, content strategies, RSS and ethics. Day Two will have some planned activities, but will be agenda will be primarily attendee driven with collaborative brainstorming and small group discussions. This will be one of the most innovative, creative, and energetic conference that you have ever attended.  The organizers have lined up nice sponsors with some great freebies. . . Contact Matt Homann (matt@lexthink.com) for an invitation.  A number of IP bloggers will in attendance including Stephen Nipper, Matthew Buchanan, Douglas Sorocco, Cathy Kirkman, Brandy Karl, Russ Krajec, and me.

Doctrine of Equivalents: Vitiation and Estoppel

If you are in Kansas City on November 16, I would love to meet you at the KCMBA sponsored luncheon from 12:30 to 1:30.  I will be discussing the DOE and how recent case-law has changed our perspective.  Sean Bradley of Erikson & Kleypas will moderate.

Others:

• November 14–15, Advanced Patent Prosecution, New York – PLI
• November 18, Resolving Uncertainty in Biotechnology Patent Law, Boston – Suffolk University (looks to be an excellent discussion on a timely issue)
• November 28–29, Patent Litigation, Chicago – PLI
• November 30 – December 2, Fundamentals of Patent Prosecution, San Francisco — PLI (great intro for attorneys with 1–3 year experience)
• December 5,  16th Annual PTO Day, Washington, DC – IPO

USPTO Releases New Business Method Guidelines: Requires "physical transformation" or "concrete and tangible result"

In the wake of the Lundgren case, the USPTO has released a set of interim examination guidelines for determining subject matter eligibility of patent applications. (Link).  The guidelines will be used by examiners “in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter.”

The crux of the new guidelines is that an invention falls within the scope of 35 U.S.C. 101 “if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.”  The application itself should enable one of ordinary skill in the art to understand the utility of the invention.

How to find Statutory Invention Registrations

Although rarely used, an inventor can apply for a statutory invention registration with the patent office under 35 U.S.C. 157.  Under the law, the inventor must waive the right to receive a patent on the invention.  The statutory inventions are searchable through the USPTO patent database and are given “H-numbers”—such as H342. 

There are currently just over 2100 published SIRs, most of which were filed by the U.S. government.  This search (SEARCH) will grab them all.

(NOTE — This tip comes from the PUIG newsgroup).

 

IP Due Diligence: A How-To Guide (Free Webinar Thursday Oct 27)

Two partners at MBHB (my firm), Jim McCarthy and Emily Miao, have put together what looks to be a great “webinar” on intellectual property due diligence to be held on Thursday, October 27, 2005 at 2:00 pm CST. Issues to be discussed:

• When should a due diligence review be conducted?
• How can validity of a patent or strength of a trademark be determined?
• What can be done if any intellectual property is the subject of a lawsuit?

There will be a Q&A session at the end as well.

 

Please contact Megan McKeon at 312.913.2105 or mckeon@mbhb.com for more information or to register. (Must register by 1:00 pm CST).

NTP v. Research-in-Motion: Supreme Court Denies Stay

NTP v. Research-in-Motion

After the CAFC denied RIM’s request to stay proceedings pending an appeal to the Supreme Court, RIM took its argument directly to new Chief Justice John Roberts — asking him to stay the issuance of an injunction pending the outcome of the Canadian company’s petition for writ of certiorari.  Roberts denied that request without comment and trading of RIM’s stock was again halted.

 

Declaratory Judgment Jurisdiction: Fourteen Month Time Lag Destroys Apprehension of Imminent Suit

Citizen Electronics v. Osram (D.D.C. 2005)

Osram owns several patents related to multi-color LEDs.  In 2003, Osram and Citizen discussed potential licensing, but the two companies never reached a deal. Osram sued several LED importers in the ITC and in Europe and announced that it “would not tolerate any infringement of its patent rights and would take legal action against unauthorized use.”  However, after 2003, the two companies did not have any direct discussions regarding the patents.

Fourteen months later, Citizen filed suit against Osram asking for a declaratory judgment of invalidity and noninfringement.  Osram challenged the basis for jurisdiction.

The court agreed that Osram’s actions in the other lawsuits did not give rise to any “reasonable apprehension of suit.”

[W]hether OSRAM broadly interpreted its patent rights in a suit against a third party (as opposed to filing the suit) does not provide plaintiff with a reasonable apprehension of suit, since it is mere conjecture to argue that OSRAM would have acted on its interpretation by instituting suit against Citizen.

In addition, the court found that the “nervous state of mind” created by the 2003 communications between the companies “not enough to demonstrate a reasonable apprehension of suit” in January 2005. Specifically, the court noted that there must be a reasonable apprehension of imminent suit, and a fourteen month time lag belies any such apprehension.

Case dismissed with prejudice for lack of subject matter jurisdiction.

Almost 20% of patent applicants receive an office action within nine months of filing.

Tim Palmer helped me to grab some data for a new paper on patent office statistics. Here are some preliminary results:

Using data from Series 10 (Serial No. 10/xxx,xxx) with filing dates from October 2001 through May 2005, I created a simple cumulative percentage table showing the expected time delay for a first office action.  As can be seen, around seven percent of cases receive a first OA within the first six months, and the median delay is between one and two years.  Of course, this table is slightly skewed because the October 2001 start date does not allow for delays of more than four years.

DELAY AFTER FILING UNTIL FIRST OFFICE ACTION

Three Months	1%
Six Months	7%
Nine Months	18%
One Year	32%
Two Years	82%
Three Years	96%

NTP v. RIM in Hands of District Court.

As predicted by several Patently-O readers, the CAFC has denied RIM’s petition to stay the infringement suit brought by NTP while the case is appealed to the Supreme Court.  Now, this case will continue on three parallel tracks: (i) district court adjudication in the wake of the August 2005 revised appellate opinion; (ii) Reexamination of NTP’s patents at the USPTO; and (iii) the petition for writ of certiorari at the Supreme Court.

Manual of Patent Examining Procedure (MPEP)

Link: The USPTO has released a PDF version of the new Manual of Patent Examining Procedure (8th ed., 3rd rev.). This revision incorporates a number of changes that have previously been covered in Patently-O, including:

• "Revision of Power of Attorney and Assignment Practice;" 
• "Rules of Practice Before the Board of Patent Appeals and Interferences;"
• "Changes To Implement the Cooperative Research and Technology Enhancement Act of 2004;" and
• "Changes to the Practice for Handling Patent Applications Filed Without the Appropriate Fees."

The “blue pages” provide a reference to each and every change in the new version of the official patent guide.

Reissue Patent Invalid Because Reissue Was Filed To Correct Procedural Error

Medrad v. Tyco (W.D. Pa 2005).

Medrad sued Tyco for infringement of its patented injection system for use with an MRI.  The patent, RE 37,602, underwent two reissue procedures before being asserted by Medrad. 

Tyco asserts, however, that the reissue patent is invalid because the reissue process was not initiated to correct one of the four statutorily identified errors:

1. Defect in the specification;
2. Defect in the drawing;
3. Error in claiming too much; or
4. Error in claiming too little.

Rather, in this case, the patentee filed the second reissue to correct a mistake made during the prosecution of the original reissue. (The patentee failed to file a supplemental reissue declaration in compliance with PTO Rule 1.175).

The district court agreed with the defendant that Section 251 (Reissue) can only be used to correct an error in the specification, drawings or claims and cannot be used to correct a procedural error that is not reflected in the patent grant itself.

“While we recognize that this holding produces a harsh result — ultimately, plaintiff’s patent is invalidated because it failed to file a supplemental declaration with the PTO — we cannot reconcile plaintiff’s legal argument with the language of section 251, and the controlling case law interpreting it.

Thus, the court found Medrad’s reissue patent invalid because the reissue was filed for a purpose other than that enumerated in the statute.

Comment: This case should serve as a reminder to patent practitioners that the PTO can occasionally be convinced to give you more than what the law allows. If that happens, it is the patentee who pays the ultimate price.

Licensee Lacks Standing; Dismissed With Prejudice

Sicom Systems v. Agilent (Fed. Cir. 2005).

Sicom’s lawsuit was dismissed by the Delaware district court after finding that the plaintiff was not an “effective patentee” and thus lacked standing to sue.

The patent in question uses “eye patterns” for automatic monitoring of signal transmissions.  (Patent).  The patent was originally assigned to the Canadian Government and then licensed to Sicom, a company owned by the inventors. Under the license agreement Sicom had rights to bring “commercial infringement actions.”  However, the district court found that such rights were insufficient to allow a licensee to bring suit because “Canada may still be able to pursue non-commercial customers of Defendants like governmental entities, the military and universities, thereby creating multiple risk of litigation over the same patent, a result which is inconsistent with a genuine exclusive right to sue.”

Generally, a patentee and successors in title have rights to sue for patent infringement as do licensees who receive “all substantial rights under the patent.” Thus, a nonexclusive license confers “no constitutional standing on the licensee to bring suit.”

On appeal, the CAFC agreed that Sicom did not possess all substantial rights under the patent — focusing on Canada’s ability to sue other infringers and Canada’s retention of a right to practice the invention.

Dismissal With Prejudice: Sicom also argued that the lower court’s dismissal with prejudice should be set aside to give Sicom a third chance to establish standing.  However, because the company already had one chance to correct the standing defect, the CAFC affirmed, finding that the district court was within its discretion to dismiss the case with prejudice.

 

CAFC Jurisdiction Set At Filing of Complaint

MedImmune v. Genentech (Fed. Cir. 2005)

MedImmune, a licensee in good standing, filed a declaratory judgment action to challenge the patents validity and enforceability. The district court dismissed the action, without prejudice, finding no “case of actual controversy.” On appeal, the CAFC affirmed holding that a licensee in good standing is not under threat of being sued for patent infringement and thus cannot bring a DJ action. (Citing MedImmune v. Centocor).

MedImmune also had pending antitrust claims and asked that once the Federal Circuit had disposed of all the patent claims, the case be transferred to the Ninth Circuit Court of Appeals.  The CAFC panel disagreed, finding that “the jurisdiction of the Federal Circuit is established by the well-pleaded complaint in the district court, whereupon the Federal Circuit must exercise jurisdiction of all of the issues in the case.”  According to the panel, jurisdiction is determined “at the outset of litigation” and does not change — except when sham charges of patent infringement are brought to manipulate the appeals process.

In dissent, Judge Clevenger argued that the district court’s dismissal without prejudice was “equivalent for jurisdictional purposes to an amendment removing the declaratory judgment claims from the complaint.”  Because no other claims in MedImmune's complaint "arise under" patent law, Clevenger argued that the regional circuit should now have jurisdiction over the case.

USPTO News: Preliminary amendments requiring substitute specification

Link: The USPTO has clarified the requirements for submitting a substitute specification upon the filing of a preliminary amendment to an application, so that publication of applications can proceed smoothly.

In brief, preliminary amendments to the specification of continuation and divisional applications will trigger OIPE to send a Notice to applicants requiring the submission of a substitute specification. The only preliminary amendment to the specification that does not require a substitute specification is an amendment to the priority claim. Applicants can avoid this Notice by filing a new specification that includes the desired preliminary amendment(s), obviously as long as the addition(s) include no new matter.

Amendments to the claims and abstract can be included on separate sheets as a preliminary amendment, or they can be incorporated into the specification (as if they were the original, using proper page numbering, etc.). Either of these options neither triggers the Notice, nor requires a substitute specification. One caution: Preliminary amendment pages are added to the entire specification (including the non-examined claims & outdated abstract) for purposes of calculating application size.

NOTE: This USPTO News Update was written by Christopher Singer.  Chris has a PhD in bio-inorganic chemistry from Northwestern University and is a patent attorney at MBHB.  [Singer Bio].

Real Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

Because of the “technological arts” requirement, I have always thought the term “business method” to be a misnomer when applied to patents.  Famous business method patents such as Bezos one-click patent and the State Street patent are really directed at software for e-commerce and data processing.

However, when a skilled business person thinks of a method of doing business, their proposal is generally not limited to software or tied to a computer.  I can’t count the number of times that I have explained to a confused business inventor that the PTO would not allow their broad claim because of a form-over-function limitation that a “computer” must be recited in the claim.

Regardless of your stance on patenting of business methods, the “technological arts” rule — requiring simply that a computer be recited somewhere in the claim — was indefensible.  I’m just happy that I will now be able to explain business method patents in terms that business leaders understand.

Links:

• Ex parte Lundgren.(from Patently-O)
• Tim Wall’s APLF article on the old rule.
• Official BPAI Opinion.

Patent Board Eliminates "Technological Arts" Requirement For Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

In a landmark decision, the Board of Patent Appeals and Interferences has issued a precedential opinion eliminating the Patent Office procedure of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”

Our determination is that there is currently no judicially recognized separate "technological arts" test to determine patent eligible subject matter under § 101.  We decline to create one. Therefore, it is apparent that the examiner's rejection can not be sustained. 

This decision will once again expand the role of business method patents by freeing them from being tied to a computer or other electronic device.  At the same time, this decision widens the gap between the US and many other countries who are still debating patentability of software.

It is unclear at this point whether the PTO solicitor will ask the Federal Circuit to review this case.

The Majority Opinion:

Lundgren had claimed a “method of compensating a manager” that involved several steps of calculating a proper compensation based on performance criteria and then transferring payment to the manager. The examiner rejected the claims arguing that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.”

A five member panel reviewed this action, and three signed on to the per curiam majority opinion that found the claim to “produce a useful, concrete, tangible result” without being a “law of nature, physical phenomenon or abstract idea.”  Regarding the PTO “technological arts” test, the majority found that such a test does not exist under the law.

Rejection reversed, there is no judicially recognized "technological arts" test for patentability.

Dissent by Judge Smith:

Judge Smith dissented, arguing that the “technological arts” standard is simply the modern lexical equivalent to the phrase “useful arts” found in the US Constitution. He then argued that Congress does not have power to pass patent laws that expand beyond those “useful arts.”

While I do not question the power of Congress to pass laws to carry out this mandate, whatever law passed by the Congress cannot be applied in such a manner as to enlarge the constitutional mandate.  Thus, any laws passed by the Congress to grant patents should be applied in a manner that is consistent with the constitutional mandate. 

The dissent then implicitly calls for the Federal Circuit to review the case and explicitly calls fro Congress to “step in and clarify the limits of 35 U.S.C. § 101.”

Dissent by Judge Barrett:

In a 78 page dissent, Judge Barrett suggests a new test under section 101 that would require some transformation of physical matter.

Notes:

• The BPAI holds its appeals in secret — and the Ex parte Lundgren opinion is yet to be officially released by the Board.  I published this article on the case after receiving copies of the opinion from reliable sources. Opinion.v1; Opinion.v2.
• Link. Read more about Dr. Lundgren.

CAFC affirms Salad Spinner claim construction

World Kitchen and OXO v. Zyliss Haushaltwaren (Fed. Cir. 2005) (nonprecedential). 

OXO and Zyliss both make salad spinners. OXO’s spinner has “push-to-spin” technology while the Zyliss spinner uses a pull-cord.  OXO sued for patent infringement and asked for a preliminary injunction to get the Zyliss product off the market.  After a preliminary claim construction the district court denied the PI motion, finding that OXO had not shown a likelihood of success on the merits.

On appeal, OXO argued that lower court erred by construing the term “lid” according to its ordinary meaning.  The CAFC, however, affirmed — agreeing with the district court that a “lid” is “something that covers the opening of a hollow container,” but does not include items secondarily attached to the lid that do not serve the function of covering the opening. Thus, in this case, the brake disc used to stop the salad spinner is not part of the lid because it does not participate in covering “the opening of a hollow container.” (File under “if it looks like deference and smell like deference . . .”).

Denial of PI affirmed.

Amendment to 271(g)

35 U.S.C. 271(g) makes clear that importation of a product that is made by a patented process is infringement. However, the statute includes limitations that the “product” is no longer infringing if it is either “materially changed by subsequent processes” or is “a trivial and nonessential component of another product.”

Kinik v. ITC: In 2004, the Federal Circuit determined that the language of 271(g) does not apply to Section 337 * actions at the ITC. [Opinion]  In that decision, court noted that the statute explicitly limits itself “for the purposes of this title.”

Thus, when a defendant is accused of improper imports under Section 337, he cannot raise the defenses of material change by subsequent processes or trivial component.

Amendment: Now, there is a movement afoot to change this aspect of the law, striking words that limit those defenses to actions under the Patent Act so that they could be applied with equal force at the ITC.

* Section 337: The Tariff Act of 1930 allows administrative relief through the International Trade Commission (ITC) to determine whether there is unfair competition in the importation of products into the US. Section 337 of the act makes infringement of a US patent an unlawful practice in import trade.  ITC actions are extremely fast as compared to traditional patent infringement suits and are often the best way to stop an infringing importer.

 

Patently-O Tidbits

1. Book Reviews Ok’d: Last week, I started a new series known as “Book Review Monday.”  Although I gave a good review to David Pressman’s book, I am glad to know that negative book reviews published on the internet are not actionable — Hammer v. Amazon.com (“[N]egative reviews could not be construed as anything other than opinion.”).

2. Reader Survey: The Patently-O archives are growing rapidly (900+ articles) but several readers have lamented that would like a better access to the actual cases.  I wonder whether any readers would find it useful if I provided a Westlaw or Lexis (or BNA) link to the case in each case review? Of course, after clicking on the link, you would still have to login and pay the rates.  Please let me know if this would be a beneficial feature? (crouch@mbhb.com).

3. The Latest Information on the New Patent Bar Exam: PLI is presenting this free audio briefing via either phone (register phn) or web (register web) on Wednesday October 19, at Noon (Central). You can also register via phone by calling (800) 260-4754 and mentioning Priority Code: PRW5-8AEM1.

4. BlawgThink 2005: If you are interested in starting a legal blog, BlawgThink 2005 is the place to be — November 11, 12. A number of IP bloggers will be leading discussions including Stephen Nipper, Matthew Buchanan, Douglas Sorocco, Cathy Kirkman, Brandy Karl, and me.

How Are Patent Cases Resolved?

An important new working paper by Illinois Professor Jay Kesan and PhD candidate Gwendolyn Ball presents a statistical analysis of the resolution of patent cases.  This type of data can be very useful when planning expected litigation costs and predicting settlement behavior.  The paper, entitled How Are Patent Cases Resolved? An Empirical Examination of the Adjudication and Settlement of Patent Disputes, is available through the SSRN website.

Some findings:

• The rule of thumb is correct that 5% of cases go to trial. 
• The rule of thumb that 95% settle is not correct — this ignores the fact that “8–9% of cases are terminated through final rulings on a motion for summary judgment.”  This means that the real battle in most patent cases revolves around establishing a strong position early in the game.
• The figure below is one of a number of examples from the paper — this one shows the total pendency of cases filed in 1997 that were eventually adjudicated (rather than settled).

Caveats

• Because of the time-lag of patent cases, the authors used 1995 and 1997 data. It is unclear today how things have changed today. Although Professor Kesan reports that they are working on 2000 data, and that anecdotal evidence continues to indicate that summary judgment is as important as ever.
• The statistical significance of the study is also unclear.

CAFC Denies RIM Rehearing (UPDATE)

The big patent news on Friday was that RIM’s petition for a rehearing en banc at the Court of Appeals for the Federal Circuit was denied.  This news was so hot that trading of RIMM on Wall Street was halted for three hours.  (Someone on the Street does not understand odds because the denial was entirely expected.)

RIM has ninety days to file a petition for writ of certiorari with the Supreme Court and line-up any Amicus curiae.  NTP will then have thirty days to respond in opposition.  This time-line easily pushes the Court’s decision on whether to even hear the the case into 2006.  In all likelihood, the Court will decline — thus allowing the case to return to the district court to determine: (1) whether a the “term sheet” was an actual settlement; (2) whether an injunction should issue immediately; and/or (3) how new hearings/trial should proceed on the issues vacated by the August 2005 opinion [pdf]. (see UPDATE below).

In a parallel process, the patents in suit are all undergoing reexamination at the PTO.  Each patent has been initially rejected in a first office action.  However, those initial rejections have yet to be made final.

 UPDATE: I received several comments on my implied conclusion that the district court would not take-on the case until after the Supreme Court came to a conclusion on the petition for cert:

Love your blog. . . . The district court gets jurisdiction back as soon as the Fed Cir mandate issues. . . . The district court can thus act even while RIM is drafting a cert petition and the Supremes are reviewing it.  In most cases, a district court will move forward because the odds of cert are so low.  The district court can, however, stay the case pending Supreme Court review.  If I were NTP, I'd be in Judge Spencer's face right now pushing for action on this case and telling him that the revised Fed Cir opinion makes Supreme Court review highly unlikely.  If I were RIM, I'd be asking for a stay based on the progress of the re-exams, and I'd be citing the Fed Cir's stay of the MercExchange case.

 

Case Questioning Patent Injunction Standards Moves Towards Supreme Court

eBay v. MercExchange (on petition for certiorari).

EBay’s petition for a writ of certiorari had gained further support from a group of patent law professors led by Mark Lemley of Stanford.

In eBay v. MercExchange, the Court of Appeals for the Federal Circuit held that, absent exceptional circumstances, a district court should issue a permanent injunction after finding that a patent is not invalid and infringement.

The amicus brief, signed on behalf of thirty-five of the top patent law professors in the country, argues that the injunction decisions should conform to the traditional principles of of equity and should be reasonable.  These principles of equity are grounded in four equitable factors:

(i) whether the plaintiff would face irreparable injury if the injunction did not issue;
(ii) whether the plaintiff has an adequate remedy at law;
(iii) whether granting the injunction is in the public interest; and
(iv) whether the balance of hardships tips in the plaintiff’s favor.

The professors readily admit that “injunctive relief is the appropriate remedy in ordinary patent cases.”  However, they that the threat of injunctions without considering the equities may lead irreparable harm to the defendant

[A]n absolute entitlement to injunctive relief can and does permit unscrupulous patent owners to “hold up” defendants by threatening to enjoin products that are predominantly noninfringing and in which the defendant has already made significant irreversible investments. . . .

A microprocessor may include 5,000 different inventions, some made by the manufacturer and some licensed from outside. If a microprocessor maker unknowingly infringes a patent on one of those inventions, the patent owner can threaten to stop the sale of the entire microprocessor until the defendant can retool its entire plant to avoid infringement. Small wonder, then, that patentees regularly settle with companies in the information technology industries for far more money than their inventions are actually worth.

Although not explicitly included in the brief, Professor Lichtman’s consideration of “Irreparable Benefits” might also be an important factor for consideration.

Links:

• Download Professor Brief.pdf (50 KB)
• Download eBay Brief.pdf (4452 KB)
• Download MercExchange Brief.pdf (3480 KB)
• Download the CCIA Brief.
• Download the EFF brief. 
• Dennis Crouch: Discussion of eBay’s petition
• Dennis Crouch: CAFC Opinion in MercExchange v. eBay
• Peter Zura: Reexam of MercExchange’s Patents

Disclosing Expected Result as an Actual Result Leads to Unenforceable Patent

Novo Nordisk v. Bio-Technology (Fed. Cir. 2005).

The district court held Novo’s patent unenforceable due to inequitable conduct during prosecution.  The patent, covering a synthetic human growth hormone (hGH).

Inequitable conduct was based on:

• The wording of a prophetic example in the past tense — thus hiding the fact that the example was merely a prediction.  
• The fact that during the nine years of prosecution, Novo never alerted the PTO to the prophetic example — especially in light of the fact that Novo was never able to produce hGH using the described methodology.
• During interference, Novo failed to inform the BPAI that it was unable to produce hGH using the described methodology — even though it presented extensive expert testimony regarding use of the methodology.

On appeal, the CAFC affirmed, finding no “clear error” in the district court’s decision.  In addition, the CAFC rejected Novo’s argument that its attorneys should not be charged with inequitable conduct because the inventors had not fully informed the attorneys.

At the same time, Novo asks us to hold that its counsel’s failure to disclose the truth about Example 1 to the PTO or Board is excused because the inventors failed to fully inform them of the details surrounding Example 1. As we have done in similar situations in the past, we reject the "circular logic" of this request.

 

CAFC applies Pfaff case to public use defense.

Invitrogen v. Biocrest (Fed. Cir. 2005)

Invitrogen sued several defendants for infringement of its patent that broadly covers a method of growing E.coli cells.  On summary judgment, the district court found Invitrogen’s patent invalid under the public use bar of 35 U.S.C. § 102(b).  102(b) codifies a “critical date” of one year before filing of the patent application (or priority document).  Public use or sale of the invention before the critical date will invalidate the patent.

Invitrogen had used the claimed process before the critical date, within its own laboratories.  However, the process was kept confidential within the company, the process was not sold, and no products of the process were sold.

Rule: On appeal, the CAFC first determined that the Supreme Court’s analysis in Pfaff should be extended to cover public use — noting that both the public use and on sale bars are “based on the same policy considerations.  Under the new rule, a patent will be invalid if it is (1) in public use and (2) ready for patenting before the critical date. (Explicitly rejecting the old ‘totality of the circumstances’ test).

Public Use: “The proper test for the public use prong of the § 102(b) statutory bar is whether the purported use: (1) was accessible to the public; or (2) was commercially exploited.” In this case, because there was no evidence that Invitrogen received compensation for internally, and secretly, exploiting its cells, Invitrogen’s use cannot constitute “public use.”

File Attachment: Invitrogen.pdf (78 KB)

 

Single Embodiment Of Claim Element Fails To Describe Element Generically

LizardTech v. Earth Resource Mapping (Fed. Cir. 2005).

On summary judgment, the district court deemed LizardTech’s patent invalid for failing to meet the written description requirement of 35 USC 112 para 1.  The asserted patents were related to the use of discrete wavelet transform (DWT) to compress digital images.

The specification provides an example method for creating a seamless DWT including the step of “maintain[ing] updated sums” — that procedure is the focus of claim 1.  Claim 21, however, is a broader claim that lacks the “maintains updated sums” limitation.  The specification did not explicitly describe a method that did not include that limitation. (Although claim 21 was included in the original disclosure)

On appeal, the CAFC paid lip service to the rule that a claim will not be invalidated under Section 112 for only disclosing a single embodiment.  However, the court went on to determine that claim 21 was directed at “all seamless DWT’s” — a coverage not adequately supported by the single embodiment.

After reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by "maintaining updating sums of DWT coefficients."

[A] patentee cannot always satisfy the requirements of section 112, in supporting expansive claim language, merely by clearly describing one embodiment of the thing claimed.

As noted by David Long, this case is a “must read for those addressing written description (or enablement) issues.

Comments:

• I see this as a quite odd decision.  First, although claim 21 arguably covers either “seamless DWT” or  “non-seamless DWT,” such a result is explicitly claimed.  The CAFC did not point to any element of claim 21 that was not sufficiently described.  Rather, the court found the claim invalid because an an embodiment arguably covered by the claim (seamless DWT) was not sufficiently described. 
• A fellow patent attorney and Patently-O reader e-mailed this morning with a different take:

Section 112 requires that the patentee have both possession of the invention and an enabling disclosure. In this case, the Court found that because the patentee had only described (and apart from claim 21) claimed the one embodiment that required "maintaining updating sums of DWT coefficients" this shows that the method including this element was really the scope of what the patentee considered their invention. That is, the patentee didn't think they had invented a more generic way of creating a seamless DWT that did not include that element.

The Court went on to say that any such generic method is also not enabled -- first because it is not described in the specification and second because it is not within the ability of one of ordinary skill to practice without undue experimentation. As the Court noted, both these requirements usually rise or fall together. The last paragraph of the opinion makes clear, however, that even assuming that patentee had possession of this invention (by virtue of claim 21 being part of the original application) the claim is still not enabled. That is, even if one of ordinary skill in the art read claim 21 and recognized that it covered a generic method of creating a seamless DWT, that person still would not have been able to come up with the generic method (i.e., one not using the updating sums element) without undue experimentation. Therefore, the claim doesn't satisfy the requirements of 112.

Thus, after this case (and as was the case, no pun intended, before LizardTech) one is free to describe one or more embodiments in the application and draft claims that cover other broader embodiments that are not described in the application. Those broader claims will be valid provided that the patentee had possession of those broader embodiments and the broader embodiments are enabled. Presumably they would be enabled because, even though not described in the application, they would still be within the ability of one of ordinary skill in the art to practice without undue experimentation.

• The lesson for prosecutors is that broad claims will generally require multiple embodiments of each element. Specifically, if you claim A+B+C+D, do not expect that you can claim A+B+C without adequately disclosing that D is not necessary or that D can take alternative forms.
• Philip Mann of IP Litigation Law Blog was counsel for LizardTech.

Documents:

• Read the case.
• Read the patent.
• Link: LizardTech Opening Brief.
• Link: Earth Resource Response.
• Link: LizardTech Reply.

Solicitor General to Opine on Landmark Obviousness Case

KSR International v. Teleflex (On Petition for Certiorari).

KSR is challenging the Federal Circuit’s “teaching-suggestion-motivation test” for determining whether two references can be combined in an obviousness rejection.  This test has been a stalwart of Federal Circuit jurisprudence for twenty years.  During that time, however, the Supreme Court has not heard a single obviousness case. 

The case is now on petition for certiorari at the Supreme Court — awaiting the High Court’s decision on whether to hear the case.  Signaling at least a tepid interest in the case, on October 3, 2005, the Court has asked the Solicitor General to file a brief expressing the views of the US Government.  The new Chief Justice (Roberts) took no part in the decision.

At this point, it is likely that the Court will follow the Solicitor General’s recommendations — although it is still unclear what those recommendations will be.

Support for the petition: Respected law professor John Duffy is an attorney of record on the KSR brief, which argues that the CAFC’s obviousness test goes against Supreme Court precedent, against precedent of other circuits, and is bad policy. Professor Duffy is a former clerk of Justice Scalia.

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.

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
• Amicus Briefs
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Prior Discussion of the CAFC decision;
• Patently-O Prior Discussion of Law Professors Brief.

CAFC Finds Liability For Export of Catalyst Used in Patented Process Abroad

Union Carbide v. Shell Oil (Fed. Cir. 2005).

A jury found that Shell infringed Union Carbide’s patented process for producing Ethylene Oxide.  However, the court did not allow Union Carbide to collect damages for Shell’s foreign sales under 35 U.S.C. 271(f) because the statute is “not directed to process claims.”

On appeal, the CAFC reversed the district court and reaffirmed the recent Eolas decision that 271(f) is directed to “every component of every form of invention” and that the statute is “not limited to physical machines.”

Thus, the court found that Shell’s exportation of a catalyst used abroad to facilitate the patented process constituted infringement under the law. Remanded for a new determination of damages.

Links:

• Union Carbide v. Shell.pdf (119 KB)
• 271(f) Under Eolas v. Microsoft
• 271(f) Under RIM v. NTP
• 271(f) Under AT&T v. Microsoft
• 271(f) Under Pellegrini v. Analog Devices
• Shell’s Amicus Brief in Eolas

Means-Plus-Function: Identification of Function and Corresponding Structure Reviewed De Novo

JVW Enterprises v. Interact Accessories (Fed. Cir. 2005).

In a case involving a video game controller, the appeals court reversed-in-part, finding that the lower court had misconstrued the means-plus-function limitation.

De Novo: Like other claim construction, the interpretation of means-plus-function language is reviewed de novo.  More particularly, identification of the function and corresponding structure is reviewed de novo.

In this case, the CAFC found that the district court’s opinion “confuses function with structure.”  According to the appellate panel, “function must be determined before corresponding structure can be identified.” 

Function as claimed: The function of a means-plus-function claim is found in the claim language.  In this case, the district court erred in interpreting unclaimed functions into the claims. 

Structure as described: The corresponding structure of a claimed function must be found in the specification — and must be clearly associated with performance of the function.

The CAFC reversed and remanded based on consequences of the err in claim construction.

Patent It Yourself Book Review

Patent It Yourself
by David Pressman
2005 (11th edition)
Paperback 512 Pages

$32.99 from Amazon.com

Book Review: When I arrived back from two-years of service as a Peace Corps Volunteer in West Africa with the naive idea of becoming a patent attorney, the first book that I purchased was Patent It Yourself.  The book is written in a very optimistic tone and is easy to read.  It sharpened my already keen interest in the field and gave me an opportunity to learn basics of patent law terminology and practical patent application practice.  When I wrote my first patent application, this book was there by my side.  I have to say that Patent It Yourself is still the best introductory resource book that I have seen for an inventor or new patent professionals.

Caveat: This book is an introduction and is missing many important details of the patent application process.  Rely on it to become familiar with the field but do not use it as your treatise or reference guide. ** Finally, despite the title, do not take this book as a replacement for an experienced patent attorney **

Who should read Patent It Yourself:

• Inventors (regardless of whether you are working with a patent attorney).
• New patent agents or techies thinking about joining the field.
• Litigators moving into patent litigation.

About Book Review Monday: This is the first review of what I hope will be a successful series of reviews of patent related books.  The current plan is to release a two or three book review each month (each on a Monday).  Let me know if you are interested in writing a book review. (Send your proposal to crouch@mbhb.com).

Patently-O Tidbits

1. Official Patent Opinions: The UK patent office has begun a new program offering opinions on patent validity and infringement for issued UK patents — Cost £200. Link.

2. UChicago Law Faculty Blog: Levmore, Picker, Strahilevitz, Strauss, Sunstein, Lichtman.  Posting begins October 3, 2005. Link. (See also, Becker-Posner, Levitt-Dubner).  Like Will, I enjoy being a cheerleader for my alma mater.

3. Advice for Small Companies and Individual Inventors: Write a business plan before thinking about a patent. Link.

4. Be wary of knock-off logo designers. Link.

 

 

Means Plus Function Disavowal of Equivalents?

Cross Medical v. Medtronic (Fed. Cir. 2005).

After an award of summary judgment of infringement, the Central District of California District Court issued a permanent injunction against Medtronic’s use of Cross’s patented spinal implants.  After determining that it had jurisdiction, the CAFC reversed the claim construction and remanded for a new determination of infringement based on the corrected construction.

Jurisdiction: Cross argued that, the injunction had no coercive effect because had Medtronic pulled its products from the market prior to the injunction, and thus, that there was no jurisdiction for an appeal.  The CAFC disagreed, highlighting their clear rule that: “if the district court’s order expressly grants an injunction, the order is appealable under § 1292(a)(1), without regard to whether the appellant is able to demonstrate serious or irreparable consequences.”

Claim Construction: The appellate panel began its claim construction analysis by referring to Webster’s definition of an “interface.” This was permissible under Phillips because the dictionary definition did not “contradict any definition found in or ascertained by a reading of the patent documents. Using the new definition, the CAFC modified the district court’s construction.

Means Plus Function: In an office action, the applicant referred to the claimed “securing means” as “i.e., the nut.”  Despite this reference to the a specific securing structure, the CAFC found that there had been no disavowal of scope in the means plus function element.  In dicta, the court noted that it had not decided whether there could ever be “a disavowal of § 112, ¶ 6 equivalents.”

The court then conducted a thorough analysis of infringement and validity, eventually vacating the summary judgment and remanding for further proceedings.

Download the case.