Patent Law Blog (Patently-O)

Small Entity Status -- be careful of non-exclusive licenses.

Is a company’s “small entity” status with the PTO put in jeopardy by granting a non-exclusive license to a major corporation — assuming that the non-exclusive license does not convey any right to exclude others from making or using the invention?

According to 37 CFR 1.27, a small entity includes:

an inventor . . . who has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention. . . .

MPEP 509.02 defines “rights in the invention” in this section of the rules as “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.”  This therefore appears to indicate that a non-exclusive license to a large entity that does not convey any right to exclude others would not fall within rule. However, if you read further in the MPEP, you notice a discrepancy involving non-exclusive licenses:

A grant of a non-exclusive license to a “non-small” entity will disqualify applicant from claiming small entity status. See Ulead Systems, Inc. v. Lex Computer & Management Corp., 351 F.3d 1139, 1142 (Fed. Cir. 2003).

In yesterday’s decision in Nilssen v. Osram Sylvania (N.D. Ill. 2006), the district court found Nilssen’s patents unenforceable because, inter alia, Nilssen had failed to pay a large entity fee even though the patents-in-suit were nonexclusively licensed to Philips Electronics.

In addition, the patents were unenforceable due to: (a) a patentability declaration submitted by an undisclosed business partner; (b) Nilssen’s admission that he “opposes government fees, taxes, and the present legal system;” (c) Nilssen’s improper priority claims; (d) failure to disclose ongoing litigation to the PTO; (e) failure to disclose material prior art; and (f) unclean hands due a failure of decorum and courtesy in interactions with the PTO.

Regarding Nilssen’s unclean hands, the Court cited a petition to the Commissioner that reads as follows:

a) [The Examiner] cannot be characterized as being skilled in the arts to which subject applications pertain . . .
b) [The Examiner] is severely deficient in his understanding and use of reason and logic . . .
c) [The Examiner] has an inadequate command of the English language . . .
d) [The Examiner] has repeatedly shown himself to be overtly non-cooperative and non-caring.

Bruckelmyer Stands -- Expands Scope of Available Prior Art

Bruckelmyer v. Ground Heaters (Fed. Cir. 2006).

Bruckelmyer has two patents on methods of thawing frozen ground so that a layer of concrete can be laid on top of the ground. In a decision earlier this year, the CAFC found that Bruckelmyer's patents were obviated by the contents of a Canadian patent file history — thus affirming a summary judgment of invalidity.

On appeal, Bruckelmyer argued that the unpublished Canadian patent documents were not a “printed publication” under 35 U.S.C. Section 102(b) and thus, was not prior art. The CAFC found that the originally filed application was “publicly accessible,” and thus a prior art “printed publication” because the Canadian prosecution file was open to the public more than a year before Bruckelmyer filed his application.  Here, the Court found that this particular application could be located because the related patent discussed a solution for the same problem addressed by Bruckelmyer's patents.

The CAFC has now denied Bruckelmyer’s request for rehearing en banc.  However,  Judge Newman presented a forceful dissent from the denial of rehearing:

It is undisputed that these [disclosures] are not available in any database or any library, and that no index, no catalog, no abstract suggests their existence or their content. It is not contested that the only way to obtain these [disclosures] (although their existence was unknown) is to personally go to the Canadian Patent Office in Hull, Quebec, and ask to examine the file wrapper (the prosecution history) of this particular patent, which is entitled "Portable Construction Heating System". This is not the method for heating frozen ground in preparation for pouring concrete, which is the subject of the patent in suit. The only lead to this particular Canadian prosecution record, we are told, is to observe that the broad recitation in the Canadian patent that "other typical uses [of the invention] are . . . thawing frozen ground," and then to travel to Quebec to examine the file wrapper to see if it might contain information that was deleted from the Canadian application before issuance. This excised and unpublished and unreferenced material is not a "printed publication," no matter how generously that concept is defined. This court improperly relies on it to invalidate the United States Patents here at issue. . . . As Judge Linn observes in his dissent, a person searching for prior art cannot be reasonably expected to look in the prosecution history of a foreign patent that does not disclose the invention, on the off chance that its inventor might have invented something relevant to the search, and then cancelled it from the application before grant.

Notes:

• Denial of Rehearing with Newman Dissent
• Comments on Original CAFC Decision
• Original CAFC Decision (April 2006)
• Always thoughtful Professor Joseph Miller’s discussion of the Original CAFC Decision: Those posts are here, here, and here.

Red Hat Faces Patent Infringement Suit

Software company FireStar has filed suit against open source seller Red Hat, alleging patent infringement.  The suit, filed in the Eastern District of Texas, asserts infringement of U.S. Patent No. 6,101,502 that is directed to a method of interfacing an object oriented software application with a relational database.  Red Hat recently purched JBoss maker of the specific accused product Hibernate 3.0.

Claim 1 of the ‘502 patent reads:

1. A method for interfacing an object oriented software application with a relational database, comprising the steps of:

• selecting an object model;
• generating a map of at least some relationships between schema in the database and the selected object model;
• employing the map to create at least one interface object associated with an object corresponding to a class associated with the object oriented software application; and
• utilizing a runtime engine which invokes said at least one interface object with the object oriented application to access data from the relational database.

Red Hat has its own patent policy “that software patents generally impede innovation in software development and that software patents are inconsistent with open source/free software.”

Notes:

File Attachment: FireStar Complaint.pdf (140 KB)

File Attachment: Patent 6101502.pdf (593 KB)

File History [Not yet]

Paxil Patent Case: New Mandate

SmithKline Beecham v. Apotex (Fed. Cir. 2006, 04–1522o).

In February 2006, the CAFC affirmed a lower court’s invalidation of Apotex’s Paxil patent — finding that its product-by-process claims were invalid because they attempted to recapture the end-product from the public domain. According to that decision, “once a product is fully disclosed in the art, future claims to that same product are precluded, even if that product is claimed as made by a new process.”

On petition, the CAFC has now refused to rehear the case.  However, the court indicated that a new “mandate of the court will issue on June 29, 2006.”

Judge Newman dissented from the rehearing decision.  She argued that this case should be used to clarify the difference between products that could only be described by the way they are made (Scripps) and products whose production require use of a certain process (Atlantic Thermoplatics). 

This decision holds that a product-by-process claim that, for instance, claims “product X made by performing steps A, B, and C,” will be invalid if product X is known in the art — regardless of whether the known X was made through those steps.  This makes the claimed steps (A, B, and C) meaningless or, in Judge Newman’s words, “expands on the existing confusion by suggesting that the specific language of the claims is not relevant to anticipation.”

Paxil Cases: There are at least two Paxil patent cases that are ongoing. In 2005, the CAFC ruled that the patent covering the drug compound was inherently anticipated. The Supreme Court recently declined to hear that case on appeal.

Supreme Court: Time to Rethink Obviousness

KSR v. Teleflex (Supreme Court 2006).

The Supreme Court has granted KSR’s writ of certiorari and now will address fundamental questions of patentability that have been raised. The doctrine of nonobviousness ensures that patent rights are not granted on inventions that are simply throw-away modifications of prior technology.  Questions of obviousness are at play in virtually every patent case, in both proceedings before the USPTO and during infringement litigation.

Over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed its nonobviousness doctrine using a motivation/suggestion/teaching test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the High 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, the Teleflex patent is arguably obvious.

Professor John Duffy has done a masterful job of shepherding this case through the system.  In an article several years ago, Duffy predicted the current rise of Supreme Court interest in patent case.  In fact, at that time he announced that the very issue now being debated in KSR was ripe for adjudication:

One very good candidate for [Supreme Court] review is the law governing whether an invention is not ‘‘obvious’’ at the time of invention. . . . [The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old). . . . None of this is to say that the Court will necessarily reject the doctrine developed by the Federal Circuit; it is only to suggest the Court is likely to end its long absence from this doctrinal area soon.

The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Robert Brauneis another GWU law professor led a group of 24 law professors in support of the petition. Although he did not file a brief (to my knowledge) Richmond Professor Christopher Cotropia argues that (1) recently, the CAFC has removed some rigidity from the obviousness determination and (2) the requirement for proof of a suggestion to combine should be thought of as a rule of evidence. [link].

According to Professor Duffy, the preliminary amici briefing schedule is as follows:

• Amici supporting petitioner or neither side: August 10, 2006 (45 days after cert granted).
• Amici supporting respondent: September 14, 2006 or 35 days after petitioner brief is filed — whichever is less.

Crouch’s Commentary: For those of you concerned about the potential impact of this case — It is very likely that the CAFC’s motivation test will be changed and briefs simply requesting “no change” are unlikely to to be given much weight.  Proposed solutions, including analogies to other areas of law (and foreign law) may be helpful.  In this case, I also believe that would be useful to provide the Court with a number of real-world examples of how the system works or how it should work.

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);
  • Teleflex Supplement.
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Prof Miller: KSR Liftoff!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious.
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link]

PTO Proposes New "Accelerated Examination" Procedures

In response to unrelenting criticism of the “backlog,” the USPTO has announced a new “accelerated examination” program that promises a 12–month final decision on patentability. This creative solution will give applicants the chance to cut in line if they meet certain criteria. To qualify, a patent applicant must:

• File the application electronically with a petition to make special (with fees paid and appropriate declaration);
• Conduct a search of prior art;
• Submit all prior art that is closest to their invention;
• Identify all the limitations in the claims that are disclosed in the submitted references (with pin cites to the references)
• Explain what the prior art teaches and how their invention is different (claim by claim);
• Explicitly discuss how the invention is useful and show how the written description supports the claimed invention;
• Include only 20 claims (3 independent);
• Agree to have an interview with the Examiner; and
• Agree to base claims of patentability only on the independent claims.

The applicant will only be given one-month (non-extendable) to reply to any office action. An applicant may abandon the accelerated application in favor of a continuing application, and the continuing application will not be given special status under the accelerated examination program (unless so requested).

The change in examination requirements will apply to all petitions to make special filed on or after August 25, 2006. Comments concerning petition to make special practice may be sent by email to mpepfeedback@uspto.gov.

According to the PTO, the accelerated examination procedure is designed to give applicants quality patents in less time. In exchange for quick examination, patent examiners will receive more focused and detailed information about the invention and the closest prior art from the applicants.  This increased disclosure up-front by applicants will help examiners more quickly make the correct decision about whether a claimed invention deserves a patent.

Caution: The rules and restrictions for this procedure are quite specific (onerous?) and have some potential for loss of rights for your clients. Make sure that you understand the rules completely before signing-up.

Link: http://www.uspto.gov/web/offices/com/sol/notices/71fr36323.htm

Aside: I had heard some rumors that the PTO would be enacting its proposed changes to continuation practice in August of this year.  Those do not appear to be true — Rather, that this change appears to be the August change and the new rules are likely around the end of the year.

Jury Trial Not Required For Inequitable Conduct Issues

AGFA v. CREO Products (Fed. Cir. 2006).

In patent litigation involving patented computer-to-plate printing technology, the Massachusetts district court held a bench trial on the issues of inequitable conduct and enforceability before a jury trial on infringement and invalidity. In that bench trial, the patent was found unenforceable.

AGFA appealed — asserting that inequitable conduct and enforceability should have been tried by a jury. The CAFC disagreed — holding that the Seventh Amendment right to a jury trial does not extend to questions of inequitable conduct and enforceability.

Dissent by Newman:

The panel majority holds that the factual questions of both intent to deceive and materiality of deceptively withheld information are not subject to the jury right. This is a departure from the established jury right, for materiality and intent are quintessential questions of fact, and have been tried to a jury throughout the nation's history. There is no basis for removing these factual questions from the jury when the jury is trier of fact. I respectfully dissent from the court's holding that there is no right to a jury, and that the jury demand can be rejected at the trial court's discretion.

More to come later . . .

In its first post-eBay injunction decision, CAFC vacated Abbott's preliminary injunction

Abbott Labs v. Andrx Pharma (Fed. Cir. 2006, 05–1433).

Abbot was awarded a preliminary injunction (PI) against Teva to stop alleged infringement of its patents relating to extended release clarithromycin. The CAFC reviewed that holding for abuse of discretion or clear error. 

Looking at the prior art, the lower court found no motivation to combine several prior art references that discussed azithromycin rather than clarithromycin.  On appeal, the CAFC found the motivation in the form of an implicit admission made by Abbott in one of its prior patents.  In that prior patent, the specification discussed only clarithromycin, but the claims were directed at both azithromycin and clarithromycin. 

Because the [earlier Abbott] patent explicitly discloses only clarithromycin controlled release compositions, yet claims azithromycin compositions, we conclude that Abbott has represented to the U.S. Patent and Trademark Office ("PTO") that the differences between clarithromycin and azithromycin were such that azithromycin could be substituted into a controlled release clarithromycin composition by a person of ordinary skill in the art without undue experimentation.

Based on the earlier Abbott patent, the CAFC found a substantial argument that a jury could find a motivation to combine the references with a reasonable expectation of success.

Regarding potential irreparable harm, the CAFC held that direct competition “alone does not establish that Abbott’s harm will be irreparable.” 

And, on the question of public interest, the appellate panel “agree[d] with the district court that the public is best served by enforcing patents that are likely valid and infringed.”  But, because of the chance that Abbott’s patents are invalid, the panel concluded “that the public interest is best served by denying the preliminary injunction.”

In dissent, Judge Newman argued that the majority opinion constituted de novo rule and did not give significant deference to the lower court — as is required by law.

My colleagues do not discuss the trial judge's careful explanations, but, upon finding that Teva has raised a "substantial question" about patent validity, they hold that Teva should be permitted to practice the Abbott invention before patent validity is decided. With all respect to my colleagues' concerns, they misapply not only the criteria of the preliminary injunction but also the standard of appellate review.

Newman argues that the criteria used by the majority for determining likelihood of success on the merits were not correct:

Thus my colleagues conclude that claim 4 of the '718 patent is "vulnerable to allegations of invalidity," and find "a substantial argument" as to other claims. These are not the criteria of likelihood of success.

CAFC: Use of Phrase "This Invention" Limits Claim Scope

Honeywell v. ITT Industries (Fed. Cir. 2006).

On appeal of a summary judgment of noninfringement, the CAFC considered the meaning of the claim term “fuel injection system component.” 

On four occasions, the specification refers to to “this invention” as relating to a “fuel filter.”  And, the specification does not indicate that a fuel filter is merely a preferred embodiment.

Consequently, the CAFC concluded that the patentee limited the scope of the patent claims to require a fuel filter.

Affirmed

A patent success story

Today I am truly proud of the patent system.  The block-buster drug Zocor (simvastatin) has transitioned off-patent and into the world of generics.  Unlike other areas of IP law, patents really are valid only for “limited Times” and when those years have passed the property right evaporates — leaving the inventions “free as the air to common use.” (In the words of Justice Brandeis).

There is no question that patent rights played a major role in providing incentive to Merck to develop and test Zocor and to push it through the difficult FDA approval process.  The incentive worked, Merck recouped its investment, and now generic versions will be sold at an unbelievably low price that is very near its production costs.

Metabolite Discussions

• Patently-O on the decision;
• Phil Mann’s Article is hilarious;
• NYTimes Article is descriptive;
• PHOSITA gives us a few good quotes;
• But, the 15–page dissent may be all you need to read.

Exhale: Supreme Court Dismisses Metabolite Controversy

Patent holders are breathing a sigh of relief with today's dismissal of LabCorp v. Metabolite -- a case pending before the Supreme Court.  That case had the potential of dramatically altering the landscape of patentable subject matter -- especially relating to method patents.  The case was dismissed as improvidently granted (DIG). In the IPO Amicus brief, we made this argument (as well as others) [IPO Brief]

Dissent: Three justices, led by Justice Breyer would have heard the case and would have found the patent invalid:

There can be little doubt that the correlation between homocysteine and vitamin deficiency set forth in claim 13 is a "natural phenomenon." . . . [The claimed] process instructs the user to (1)obtain test results and (2) think about them. . . . At most, respondents have simply described the natural law at issue in the abstract patent language of a "process." But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge.

The dissent also took shots at the State Street decision that started the business method craze.

Neither does the Federal Circuit’s decision in State Street Bank help respondents. That case does say that a process is patentable if it produces a "useful, concrete, and tangible result." But this Court has never made such a statement and, if taken literally, thestatement would cover instances where this Court has held the contrary. The Court, for example, has invalidated a claim to the use of electromagnetic current for transmitting messages over long distances even though it producesa result that seems "useful, concrete, and tangible." Morse. Similarly the Court has invalidated apatent setting forth a system for triggering alarm limits inconnection with catalytic conversion despite a similarutility, concreteness, and tangibility. Flook. And the Court has invalidated a patent setting forth a process that transforms, for computer-programming purposes,decimal figures into binary figures—even though theresult would seem useful, concrete, and at least arguably (within the computer’s wiring system) tangible. Gottschalk.

Documents:

• Read the LabCorp v. Metabolite Dissent 04-607.pdf
• NYTimes Article by Andrew Pollack

Question: Intentionally Obscure Prior Art

A recent newsgroup posting included the following request for information:

I'm [looking for] ways to file a disclosure so that it is beyond argument technically "publicly available" but is very difficult to find.

The questioner was hoping to find an obscure way to create prior art without really giving away trade secret information.  Of course, this approach is directly contrary to the purpose of the public disclosure requirement of 35 U.S.C. 102, and overt gaming of the system would likely raise the ire of a U.S. jury. 

However, if the prior art is intentionally indexed only in a remote off-line Ghanaian library, will it still serve as prior art?

In other news, the PTO is killing its document disclosure program.

New USPTO Website

USPTO has launched a new website design: www.uspto.gov.

In an effort to better serve those who visit uspto.gov for business and information purposes, we have redesigned our homepage to make it more user-friendly. Our homepage “makeover” is the first step of a larger plan to redesign the entire website over the coming months.

We are very interested in your comments on the changes we have just made and solicit your suggestions for changes to the rest of the website. Please let us hear from you at new_web_look@uspto.gov.

Meet me at the ABA 2006 Summer IPL Conference June 21 in Boston

I will be at the ABA Summer IPL Conference on Wednesday and Thursday.  John Welch along with the ABA Staff have put together a "Bloggers' Corner" at the "get acquainted" reception on Wednesday, June 21st, from 6:00 to 7:00 P.M. The cage-match will start at 6:30 -- Battle-of-the-Blogs. Come see:

• John Welch, TTABlog;
• Matt Buchanan, PromoteTheProgress;
• Dennis Crouch, Patently-O;
• Ross Dannenberg, Patent Arcade;
• Lee Gesmer, MassLawBlog.com; and
• Stephen Albainy-Jenei, Patent Baristas;

For a brief description of the bloggers, read this flier. John Welch has put together a set of photos that vaguely represent the bloggers (although Dannenberg may actually be only an avatar). 

         

 

Buchanan, Crouch, Dannenberg, Gesmer, Welch, and the Coffee Meistro

Barkoff (Orange Book Blog) can’t make it

Greg Aharonian's Public Comments on the PTO's Interim Guidelines for Patentable Subject Matter

June 17, 2006 Ray Chen / Linda Therkorn Office of the Deputy Commissioner of Patent Examination Policy

c/o Mail Stop Comments
P.O. Box 1450
Alexandria, VA 22313-1450

Dear Ray / Linda,

Your office is currently seeking comments on the "Interim Guidelines for Examination of Patent Applications for Patent Subject Matter".

One of the questions you ask is: "Is the distinction between physical transformation and data transformation appropriate in the context of the Patent Subject Matter Eligibility Interim Guidelines?"

My first comment is that this question is worded incorrectly. Something more appropriate would be:

– Is the distinction between physical transformation and data/information transformation appropriate in the context of the Patent Subject Matter eligibility Interim Guidelines? –

given that one standard definition of "information" is a "set of data".

To this latter question, and even the original question, the answer based on modern physics is "NO" - transforming data and transforming information is always a physical transformation, in light of information's role as a fundamental physical quantity of modern physics.

Included in this mailing is a copy of a book for your reading, titled "Decoding the Universe: how the new science of information is explaining everything in the cosmos from our brains to black holes" by Charles Seife (Viking Press, 2006). It is an excellent introduction to the physics of information, and should help your Office relate the question you ask to developments in modern physics.

Information is physical. Transforming information is a physical transformation. Any other view is a denial of the science of modern physics, a science the patent system helps progress. There is no progress in denying any aspect of such science. If you have any questions, please contact me.

Thanks,

Greg Aharonian

Citation of Unpublished Opinions

The CAFC has previously taken a hard-line against citation of nonprecedential opinions. In one case, the court threatened sanctions for future violations of its citation rules. However, in the wake of the Supreme Court’s amendments to the Federal Rules of Appellate Procedure, the CAFC will begin to allow parties to cite the court’s nonprecedential opinions. The proposed new CAFC Rule 32.1 reads as follows:

(c) Parties’ Citation of Nonprecedential Dispositions. Parties are not prohibited or restricted from citing nonprecedential dispositions issued after January 1, 2007. This rule does not preclude assertion of claim preclusion, issue preclusion, judicial estoppel, law of the case, and the like based on a nonprecedential disposition issued before that date.

(d) Court’s Consideration of Nonprecedential Dispositions. The court may refer to a nonprecedential disposition in an opinion or order and may look to a nonprecedential disposition for guidance or persuasive reasoning, but will not give one of its own nonprecedential dispositions the effect of binding precedent. The court will not consider nonprecedential dispositions of another court as binding precedent of that court unless the rules of that court so provide.

Any comments on the proposed rule changes are due to the CAFC Clerk by August 18, 2006.

The CAFC continues to issue many nonprecedential opinions.  In my opinion, a significant number of these opinions should instead be precedential.  As an example, in today’s case of Bennett Regulator v. Canadian Meter, the CAFC issued a 13 page nonprecedential opinion that included a dissent by Judge Mayer. The case involved the difficult question of whether a pre-filing, but not-fully-enabling public disclosure can invalidate a patent.  This one should be precedential. 

Prior Discussion:

• Patently-O April 2004
• Patently-O November 2004
• Patently-O September 2005
• Patently-0 April 2006
• Welch (TTAB blog) April 2006

eBay Casualty: E.D. Texas Court Denies Injunctive Relief to Halt Microsoft's Infringing Activities

I’m writing a paper on this very topic, but history is happening faster than I can type . . .

z4 Technologies, Inc. v. Microsoft (E.D.Texas 2006)

z4 Tech appears to be the first post-eBay decision denying a permanent injunction after a patent has been valid and infringed. Here, the jury found that the patents were willfully infringed by Microsoft and that there was insufficient evidence to find the patents invalid. z4 then asked the Court to enjoin Microsoft from making, using, or selling its infringing product (Windows XP).

The Court followed the “traditional four-factor test used by courts of equity.” to determine whether to issue an injunction:

I. Irreparable Injury to Patentee: The patentee argued that infringement of a patent created a rebuttable presumption of irreparable harm to the patentee.  The district court dismissed this “creative” argument as lacking precedential foundation:

z4's arguments for the application of a presumption of irreparable harm are creative, but z4 cannot cite to any Supreme Court or Federal Circuit case that requires the application of a rebuttable presumption of irreparable harm with regard to a permanent injunction.

In fact, the court cited the Supreme Court case of Amoco Production for the proposition that a presumption of irreparable harm in the context of an injunction is “contrary to traditional equitable principles.” 

Because z4 does not create any products, the Court found that z4 the first factor weighed in favor of the willful infringer, Microsoft.

In the absence of a permanent injunction against Microsoft, z4 will not suffer lost profits, the loss of brand name recognition or the loss of market share because of Microsoft’s continued sale of the infringing products. These are the type of injuries that are often incalculable and irreparable. The only entity z4 is possibly prevented from marketing, selling or licensing its technology to absent an injunction is Microsoft. As . . . z4 can be compensated for any harm it suffers in the way of future infringement at the hands of Microsoft by calculating a reasonable royalty for Microsoft’s continued use of the product activation technology. Accordingly, z4 has not demonstrated that it will suffer irreparable harm absent a permanent injunction.

II. Remedies Available at Law (Is Money Sufficient?): Here, the court cited Kennedy’s concurring opinion from eBay:

Justice Kennedy specifically mentioned the situation where a “patented invention is but a small component of the product the companies seek to produce” and states that in such a situation, “legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.” . . .

Here, product activation is a very small component of the Microsoft Windows and Office software products that the jury found to infringe z4's patents. The infringing product activation component of the software is in no way related to the core functionality for which the software is purchased by consumers. Accordingly, Justice Kennedy’s comments support the conclusion that monetary damages would be sufficient to compensate z4 for any future infringement by Microsoft.

In addition, Microsoft has promised that its new version of Windows (2007) will phase out all the infringing components.  Thus, any ongoing royalty would only last for a couple of years.  “For the reasons stated above, z4 has not demonstrated that monetary damages are insufficient to compensate it for any future infringement by Microsoft.”

III. Balance of Hardships: Microsoft argued that it would be really hard to redesign even a small component of Microsoft office.  From what I have heard about the complicated code noodle, that assertion must be true. Thus, the court found that the balance of the hardships weigh in favor of Microsoft.

IV. Public Interest: Microsoft office is really popular, and “it is likely that any minor disruption to the distribution of the products in question could occur and would have an effect on the public due to the public’s undisputed and enormous reliance on these products. . . . Although these negative effects are somewhat speculative, such potential negative effects on the public weigh, even if only slightly, against granting an injunction.”

Commentary: As I predicted earlier, one way to avoid an injunction is to be a very successful infringer.  I would have suspected that Microsoft’s willfulness would have weighed in z4’s favor, but the court did not even mention willfulness in its analysis of the equitable relief factors. 

In a forthcoming paper code-named Injunction Denied, I address the issue of injunctive and monetary relief in patent cases.  In particular, I focus on the situation where equities favor the defendant, and ask the question what monetary remedy a court should then impose? My answer may surprise you. . .

Primos v. Hunter: No Festo Estoppel When Newly Added Term is Found in the Accused Product

Primos v. Hunter’s Specialties (Fed. Cir. 2006, 05–1001).

Primos owns patents on game calls for hunting. In an infringement suit, a jury found that Hunter’s products literally infringed one patent and infringed another under the doctrine of equivalents (DOE).

On appeal, Hunter challenged the DOE decision arguing both (1) Festo Estoppel and (2) Vitiation.  In a surprise boost to the DOE, the CAFC affirmed — finding that the DOE could be asserted.

Estoppel:  Hunger argued that a claim amendment made during prosecution created an estoppel that, under Festo, prevented assertion of the DOE.  Primos countered that Festo estoppel should not apply because the “amendment bears no more than a tangential relationship to the accused element.”

As the Supreme Court explained in Festo, when a patent claim is amended during prosecution for reasons relating to patentability, there is a presumption that the patentee surrendered all the territory between the original claim limitation and the amended claim limitation. 535 U.S. at 740. There are situations, however, in which a patentee may overcome that presumption. Id. One such situation is when the "rationale underlying the amendment may bear no more than a tangential relation to the equivalent in question." Id. at 740-41.

Here, Primos had twice amended the claim to: (1) require that the “plate” have “a length” and (2) require that the plate be “differentially spaced” above the membrane.  Because “every physical object has a length,” the first amendment did not narrow the scope of the claim.  The accused product included a differentially spaced dome rather than a differentially spaced plate as claimed.  “Because the accused device’s dome includes the spacing, the amendment was merely tangential to the contested element in the accused device, and thus prosecution history estoppel does not apply to prevent the application of the doctrine of equivalents.”

Thus, this holding implies that Festo estoppel does not apply when the newly added limitation (or term) is found in the accused product. 

Vitiation: The Court had streak expanding the vitiation doctrine under the all-elements rule.  Here, Hunter asserted that allowing a "dome" to be considered an equivalent to a "plate" would eliminate (or vitiate) that limitation from the claim.  The CAFC balked at Hunter’s implicit suggestion that there might be no equivalent for the claimed plate:

Our precedent has recognized that "[t]here is no set formula for determining whether a finding of equivalence would vitiate a claim limitation, and thereby violate the all limitations rule. Rather, courts must consider the totality of the circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent limitation meaningless." Thus, because Primos’s theory of equivalence (i.e., that a dome is equivalent to the claimed "plate") does not "effectively eliminate . . . [the ‘plate’ limitation] in its entirety," it does not violate the all limitations rule.

This case is in line with my alternate theory that vitiation only applies to linkages and noun modifiers.

Links:

• Freedman Seating: Vitiation of the Doctrine of Equivalents;
• Wham-O: Vitiation Doctrine Used to Exclude DOE;

Interim Method Examination Guidelines

In a recent notice, the USPTO has given the public until July 31, 2006 to provide comments on the PTO’s proposed guidelines for determining whether an invention is “patentable subject matter.”  This delay is intended to give the public a chance to react to the upcoming Supreme Court decision in LabCorp v. Metabolite. That decision is expected to discuss the patentability of various “methods” including business methods.

Links:

• Discussion of Interim Guidelines
• Interim Guidelines
• Discussion of the Metabolite case

Patent Trolls: Fact or Fiction

Congress is holding hearings at 9:00 am (EST) June 15, 2006 to figure out whether legislative action should be taken to stop the evil marauding patent troll.  [Hearing Info] [Live Webcast] The speakers include Ed Reines (Weil Gotshal), Dean Kamen (Inventor), Paul Misener (Amazon.com), Chuck Fish (Time Warner).

Mr. Reines defines patent trolls by their activity -- a patent troll

• has no significant assets except patents;
• produces no products
• has attorneys as its most important employees; and
• acquires patents, but does not invent technology itself.

Reines is also clear that issues of "patent quality" are distinct from the patent troll issue and should be addressed separately.

In a loose proposal, Reines finds six problem areas of the law:

• Willfulness (it is too powerful and ruins attorney-client privilege);
• Submarine Patents (they are still around);
• Continuation Applications (Applicants shape pending applications to capture the current market);
• Damages (should be proportional to the value of the innovation in a larger product);
• Choice of Forum (forum shopping is rampant);
• Injunctions (eBay is wonderful, but might not be enough).

Documents:

• Download ReinesTestimony.doc
• Patently-O Defining Trolls

NTP Continues to Trouble Patent Office

Rumors continue to fly regarding reexamination of NTP’s patents and alleged misdeeds at the PTO.  Calling it “BlackBerryGate,” professor Hal Wegner notes that the allegations reach both PTO administration and into the Department of Commerce.

Although third-party communications in an ex parte reexamination is strictly forbidden, NTP has accused PTO officials of holding covert meetings with RIM officials, including RIM’s CEO and Canadian counsel.  According to the PTO, those meetings had nothing to do with the five ongoing NTP reexaminations.  However, it is clear that RIM was hoping to exert political pressure on the PTO, that the NTP reexamination were undertaken with record speed, and that rejections of NTPs patents were issued just before a critical hearing in the litigation between those two companies.

Of course, NTP has an incentive to fight the messenger — it only has weak direct arguments against the asserted prior arts.  NTP’s position is also weakened by its odd argument that the cited prior art is not good evidence based on a forensic analysis that asserts document tampering.

Crouch’s Comments — NTP’s filings do not present any hard evidence of PTO wrongdoing.  However, we all hope that the Office will come through with clear evidence that there were no improper contacts or pressure.

Documents:

• NTP’s Allegations (8 MB) Check out pp 74+ and also pp 61 – 74.
• BlackBerryGate by Hal Wegner
• Patent Prospector by Patent Hawk
• Time Article by Daren Fonda.
• IP-360 Article (available through e-mail).
• DowJones Article by Stuart Weinberg.

 

PTO: First Office Action Expected Fall 2019.

The PTO has given the law firm of [REDACTED] an estimate that one of its recently filed application will be examined within fourteen (14) years of the filing date. (Unverified) image attached. As would be expected, this application falls within the business method technology center.

Upcoming FDA Conference and other TidBits

American Conference Institute has put together a number of upcoming patent related conferences that look excellent.  One of our partners recently attended the FDA bootcamp in NYC and had a great time. I've listed a couple of the programs, but there are many others:

• IP Due Diligence - (Life Science focus) June 26, NYC: Complete Guide for M&As, Licensing, and Other Collaborations;
• FDA BootCamp - Sept 18-19, Chicago: Basic Training for Products Liability and Patent Lawyers.

Other Upcoming Events: I will be at the ABA's Intellectual Property Law Summer Conference in Boston from June 21-24.  Please introduce yourself [I look like this] or contact me to set up a time to meet.  The ABA has scheduled a "meet the bloggers" event at 6:00 on Wednesday evening.  I'll be there along with John Welch, Matt Buchanan, and others. 

CAFC Denies Pro Se Intervenor Rights

Motionless Keyboard Co. v. Microsoft Corp., (Fed. Cir. 2006) (non-precedential ruling)

By Tom Loos,

The CAFC upheld a ruling by the Oregon DC denying an individual inventor to intervene in behalf of a corporation. 

Motionless Keyboard Co.(“MKC”) sued Microsoft for patent infringement.  Microsoft prevailed at summary judgment.  Thomas L. Gambaro, inventor of the patents and MKC’s majority share holder, then attempted to intervene under Fed. R. Civ. P. Rule 24. Gambaro argued he needed to appear as “Pro Se to continue to represent the Plaintiff” since “counsel has withdrawn.” 

The CAFC cited 28 U.S.C. § 1654 and Rowland v. Calif. Men’s Colony, 506 U.S. 194 (1993) to state that “a corporation may appear in federal court only if represented by licensed counsel.”  Applying 9th Circuit law, the CAFC held “to allow Gambaro…to intervene rather than hire replacement counsel ‘would eviscerate section 1654’” (quote from United States v. High Country Broad. Co., 3. F.3d 1244, 1245 (9th Cir. 1993)).

After losing summary judgment, MKC transferred its patent rights to Gambaro.  The CAFC held that “Gambaro may have an interest allowing him to bring an infringement action in his own name [based on the patents], but he may not participate in the case filed by MKC as the plaintiff.”

Patents: Xerox v. 3Com

Xerox v. 3Com (Fed. Cir. 2006).

Back in 1997, Xerox sued 3Com for patent infringement — asserting that the PalmPilot’s Graffiti handwriting recognition software infringed a Xerox patent. Xerox’s initial summary judgment win was reversed on appeal (Xerox I), and on remand 3Com subsequently won on summary judgment.  The CAFC has now reversed/vacated once again.

Anticipation and Obviousness: In a showing of their technical forte, the appellate panel reviewed two prior art references in detail to determine the extent that those references anticipate the patent claims.  Their conclusion — that a genuine issue of material fact remains as to whether the references disclose the limitations of the asserted claims. 

Indefiniteness: The last portion of the decision focuses on indefiniteness. The lower court concluded that the claim term “sloppiness space” was ambiguous — leaving the related claims invalid as indefinite. However, in the specification, the patent provides a couple of examples of use of “sloppiness space.” As it has done before, the CAFC strained to find those claims not-ambiguous:

While those descriptions [in the specification] are not rigorously precise, they provide adequate guidance as to the types of symbols that are "well separated from each other in sloppiness space" . . . Thus, in light of the criteria provided in the specification, we hold that claims 9 and 11 are "subject to construction" and are not "insolubly ambiguous."

The case is remanded to the district court in upstate NY for reconsideration.

KSR v. Teleflex -- Certiorari Appears Likely

At the end of May, the Solicitor General filed an invited amicus brief supporting KSR's petition that asks the Supreme Court to take a fresh look at the obviousness standard for patentability.  The petition questions whether obviousness should require proof of some suggestion or motivation to combine prior art references.

Tom Goldstein, attorney for respondents (and SCOTUS Blog proprietor) has filed a response to the SG.  In the response, Teleflex argues that CAFC precedent continues to evolve and extensively discusses the recent Kahn decision that detailed the full scope of CAFC obviousness treatment.

In Kahn, the court affirmed the PTO’s finding of obviousness, explaining at great length that a "teaching, suggestion, or motivation" can be found "implicitly" based on precisely the factors that the Solicitor General says are relevant: "what the combined teachings, knowledge of one of ordinary skill in the art, and the nature of the problem to be solved as a whole would have suggested to those of ordinary skill in the art." 441 F.3d 987. In Cross Medical, the court of appeals applied the "implicit" obviousness standard to reverse a district court ruling that a patent was not obvious, explaining that obviousness could be found on the basis of a "problem [that] was within the general knowledge of those of ordinary skill in the art," 424 F.3d 1322, even if the patent is not directed at "the identical problem addressed in [the] prior art," id. No fair distinction can be drawn between the rule proposed by the Solicitor General and the flexible standard articulated by the Federal Circuit in these more recent decisions and adhered to in this case.

Teleflex's arguments regarding "implicit" motivation is an attempt to show that the CAFC has softened its approach to nonobviousness.  The "implicit" argument is also an attempt to subtly shift the conversation -- The question before the court is whether any "proof" of a motivation should be required. Of course, the proof could take the form of explicit or implicit evidence.

SG Support = Certiorari: A recent (unreleased) study by a patent law professor looked at all invited amici petition briefs filed by the solicitor general for the past five terms. The SG gave an unqualified recommendation for certiorari (as in KSR) in 15 cases. In all 15 cases, the Supreme Court then granted certiorari. 

A nice pat on the back:

"Blawgs" -- for the uninitiated -- are legal blogs, and if you haven't incorporated them into your daily reading, you are missing out. The most compelling, cutting-edge, honest legal writing being produced in this country today is happening on the Internet, and the crop improves daily. From the fistful of judges (including Richard Posner) who maintain regular blogs, to the vast and growing number of law professors and law students who find the time to post daily, it's clear that the real bones and guts and sinew of the national conversation is happening online, and not in print.

From American Lawyer (Dahlia Lithwick) tip to Kevin and Matt.

Court Order Dismissing Patent Suit Does Not Trigger 180-Day Exclusivity Period Under Hatch-Waxman

Apotex v. FDA, No. 06-5105 (D.C. Cir. June 6, 2006)

By Aaron Barkoff of the Orange Book Blog,

The Court of Appeals for the D.C. Circuit today upheld an FDA rule stating that a district court order dismissing a patent suit for lack of subject matter jurisdiction is not a "court decision" under the Hatch-Waxman Act, and is therefore insufficient to trigger the first ANDA filer's 180-day exclusivity period.

Apotex had challenged the FDA rule on the basis that it was inconsistent with the D.C. Circuit's holdings in two prior cases.  In those cases, the court found that FDA's rationale for the rule--that the FDA has insufficient resources to inquire into the legal effects of settlements, such as estoppel, that lead to dismissals--was not adequately justified.

Now, however, the D.C. Circuit has upheld FDA's rule--largely because the FDA offered a better justification this time around.  According to the court, "FDA is indisputably correct that equitable estoppel in the patent law context rarely presents pure issues of law amenable to easy resolution.  . . .  We have little doubt that applying this standard would force FDA, an agency lacking patent law expertise, to resolve borderline questions about the estoppel effects of patent-holder declarations."  The court continued:

As FDA sees it, the uncertainty inherent in an estoppel-based inquiry would lead to two inter-related problems, neither of which relates to the drain-on-resources rationale set forth [previously].  First, FDA believes that the uncertainty would "undermine marketplace certainty and interfere with business planning and investment."  And second, FDA worries that forcing it to parse court decisions will invite fruitless litigation from generic drug manufacturers seeking to trigger, or to avoid triggering, exclusivity periods.

The D.C. Circuit concluded:  "In our view, these perfectly reasonable propositions adequately support FDA's position that an estoppel-based approach to the court decision trigger is ill-advised."

Dennis Crouch’s Comment: I asked Aaron to write this short review of the Apotex case for Patently-O.  He has the primary documents and much more detail at his site, the Orange Book Blog.

Settlement and Stipulated Dismissal (with prejudice) Precludes Later Validity Challenge

Pactiv Corp. v. Dow Chemical Co. (Fed. Cir. 2006)

By Tom Loos,

The Federal Circuit has upheld the NDNY’s ruling that a settlement leading to dismissal of  a complaint with prejudice precludes Pactiv from re-challenging Dow’s patents.

 

In 1995, Dow sued Pactiv for infringement of two patents related to manufacturing polyethylene foam. This suit settled in 1998 and Dow’s complaint was consequently dismissed with prejudice.  In 2002, Pactiv stopped paying royalties as required by the agreement.  In late 2003, Pactiv followed up by filing a declaratory judgment action asserting the patents were invalid, unenforceable, and their own non-infringement.   Dow moved for dismissal under Rule 12(b)(6), claiming res judicata.  The district court agreed with Dow that Pactiv’s action was barred by the prior final judgment since the settlement did not explicitly reserve Pactiv’s right to future litigation.

 

The CAFC found that claim preclusion is not specific to patent cases and thus applied the local circuit law to the case. Both the 2^nd Circuit and the CAFC agree a dismissal with prejudice is a judgment on the merits for purposes of claim preclusion.  Where there is a settlement, the CAFC found an express reservation to litigate is required for a settling party to relitigate a claim otherwise barred by res judicata. 

 

Pactiv also claimed they were not given a full and fair opportunity to litigate.  Pactiv argued that Dow’s expert’s data “had been fabricated” and that Pactiv would not have settled if it had known the data were false.  The CAFC agreed that failure to receive a full and fair opportunity to litigate would be a valid defense to issue preclusion.  However, the CAFC held that “res judicata was precluded only where there was a denial of due process.”  Since the 1998 dismissal with prejudice met due process, the judgment was upheld.

 

What could Pactiv have done once they learned the circumstances of the expert's report?  The CAFC suggested they seek relief under Rule 60(b). Rule 60(b) provides one year to reopen final judgments due to mistake, new evidence, fraud, etc.

 

Practice tip for those representing patentees: Condition settlements on receiving a stipulated dismissal of suit with prejudice.

 

Notes:

• This post was written by Tom Loos, PhD.  Tom is a summer associate at MBHB and a law student at the University of Michigan School of Law.  He plans to graduate in 2007.
• Dennis Crouch’s Comments: This case takes another step away from the Supreme Court’ 1969 public policy decision in Lear v. Adkins, which held that a licensee did not waive its right to later challenge the validity of a patent.  Lear is also the focus of an upcoming Supreme Court case of MedImmune v. Genentech.  The MedImmune case questions whether a licensee can challenge a patent’s validity while continuing to pay royalties.

Conference: PLI Webcast on eBay v. MercExchange

On June 14, 2006, you might want to take an hour break (1–2pm EDT) to take part in an audio webcast discussing: Permanent Injunctions in Patent Infringement Cases After eBay Inc. v. MercExchange L.L.C. The PLI CLE will be moderated by Professor John Duffy and will feature the two attorneys who argued the case: Carter Phillips and Seth Waxman.  Professor Duffy is one of the few patent attorneys who was also a Supreme Court clerk (Scalia).  Topics for discussion include:

• The changed landscape of patent disputes
• An analysis of the Supreme Court’s unanimous decision
• An analysis of the two important concurring opinions
• The application of the 4-factor permanent injunction test in patent infringement cases

Register here. $299. 

Inventor's Post-filing Publication Disparaging Invention Leaves Patent Unenforceable

Research Corporation Technologies v. Microsoft (D. Az. 2006).

After a bench trial, Arizona District Court Judge Manual Real of found that RCT’s patents were unenforceable based on inequitable conduct that occurred during prosecution of the patents in suit. And, because it was an “exceptional case,” the judge granted Microsoft’s request for $8 million in attorney fees.

Back in 2001, RCT sued Microsoft for its patents directed to a “blue noise mask” used in halftoning digital images.  The new procedure was touted in the patent application as being “visually pleasing” and lacking “low frequency graininess at every level of gray.”  At the same time the inventors published a paper that reported resulted of “visually annoying clumps” with graininess.  In the paper, the inventors reportedly rejected the claimed algorithm in favor of another technique that was inconsistent with the patent.  That paper was never submitted to the PTO. 

The court found this seemingly contradictory information material because a “reasonable Patent Examiner clearly would have considered [the contradictory information] important to at least the written description and enablement requirement for patentability.”  For intent, the judge found that:

It is not credible that they did not know that a reasonable Examiner would consider it important to know that patent applicants’ reported efforts to practice the applications’ disclosed No K technique had led to “visually annoying clumps,” not the “visually pleasing” images promised by the patent applications and their patent claims.” 

In addition, the inventors were awful on the stand — one was “not credible” and the other “evasive.” Thus, further supporting the finding of intent to mislead the PTO.

According to a release by Microsoft’s attorney John Vandenberg*, the patents previously had been asserted against Hewlett-Packard Company, Seiko Epson Corporation, and Lexmark International, each of whom had settled out of court and taken a license. In awarding Microsoft attorney fees, the Court found it to be an “exceptional case” and that RCT knew or should have known of the inequitable conduct before the Patent Office. 

• RCT Finding of Fact;
• RCT Judgment.

A couple of readers wrote-in to identify Judge Manny Real as a legendary old-school federal judge, and former chief judge in the central district of California. It appears that Judge Real is sitting by designation for this patent case. 

NonInfringement Opinion Discounted By Lack of Disclosure Evidence

Liquid Dynamics v. Vaughan (Fed. Cir. 2006)

In a detailed decision involving technology for pumping sewage, the CAFC affirmed a finding of infringement and willfulness.

An interesting aspect of the case involved the evidence of willful infringement. 

• The CAFC agreed that Vaughan's use of a former LD employee was persuasive evidence in proving copying.
• Vaughan's noninfringement opinion was properly discounted because the attorney was not given all the important evidence.

The case also gave a further analysis of Daubert principles in patent cases.

Biotech: Written Description Does Not Require Recitation Of A Known Structure

Falker-Gunter Falkner v. Inglis (Fed. Cir. 2006, 05–1324)

by Donald Zuhn, PhD

In an appeal from a decision of the PTO Board, the Federal Circuit affirmed judgment for Appellees (Inglis et al.) in an interference involving vaccines comprising modified viral vectors. In particular, the subject matter of the interference concerned vaccines comprising a poxvirus vector having a deleted or inactivated essential gene, wherein the modified poxvirus is capable of producing infectious viral particles when grown in a host cell modified to produce the absent essential viral gene product. In contrast with the vaccines of the invention, traditional vaccines had been prepared by deleting or inactivating inessential genes in the viral vector, since the deletion or inactivation of essential genes made it difficult to produce vaccines in commercial quantities.

On appeal, Appellants (Falkner et al.) reiterated several arguments made before the Board, each concerning the common issue of whether Appellees had adequately described and enabled a poxvirus-based vaccine. Specifically, Appellants argued that because Appellees did not identify any essential poxvirus genes or the inactivation of any such genes, Appellees had not sufficiently described and enabled vaccines comprising a poxvirus vector having a deleted or inactivated essential gene.

With respect to the Board's determination that Appellees had sufficiently described vaccines comprising poxvirus vectors having modified essential genes, the Court noted that there was undisputed testimony before the Board that at the time of filing of Appellees' earliest application, the DNA sequence of the poxvirus genome and the locations of essential poxvirus genes had been disclosed in the scientific literature. Adhering to the well-established rule that "[a] patent need not teach . . . what is well known in the art," the Court held that "there is no per se rule that an adequate written description of an invention that involves a biological macromolecule must contain a recitation of known structure." In affirming the Board's determination that Appellees adequately described the invention, the Court concluded that because "accessible literature sources clearly provided, as of the relevant date, [poxvirus] genes and their nucleotide sequences (here "essential genes"), satisfaction of the written description requirement does not require either the recitation or incorporation by reference (where permitted) of such genes and sequences."

NOTE: This post was written by Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both prosecution and litigation at MBHB LLP in Chicago. (zuhn@mbhb.com).

CAFC "Clarifies" Design Patent Jurisprudence but Denies Rehearing En Banc

Lawman Armor v. Winner Int’l (Fed. Cir. 2006, en banc).

In February 2006, the Federal Circuit decided Lawman Armor in a way that utterly devalued design patents.  The decision appeared to read a design patent would never be enforceable if the patent was simply a novel combination of known elements.  Essentially, the decision held that, for the point of novelty test, multiple prior art references could be combined without any prior suggestion or motivation for doing so.  As noted in the AIPLA’s amicus brief requesting rehearing, if this result were true, there would be very few enforceable design patents because most (if not all) designs are combinations of old forms.

On motion for rehearing and rehearing en banc, the original CAFC panel issued a new opinion intended to “clarify” the original:

In our [original] decision, we did not intend to cast any doubt upon our prior decisions indicating that in appropriate circumstances a combination of design elements itself may constitute a ‘point of novelty.’ Such a combination is a different concept than the overall appearance of a design which, as indicated, our cases have recognized cannot be a point of novelty.

Thus, the result:

• A unique combination of known elements may be a “point of novelty” for design patent infringement analysis; but
• The “overall appearance” of a design cannot serve as such a “point of novelty.”

As one of the attorneys of record pointed out to me in a post-decision conversation, this distinction does not make sense for this case because the Appellant never argued that the point of novelty was simply the “overall appearance.” Rather, the Applicant set forth eight constituent elements and also argued that the combination of those elements was a ninth point of novelty.

Judge Newman, joined by Judges Rader and Gajarsa would have heard the case in an en banc panel. In a dissenting opinion, those judges argue that the overall appearance of a design should be sufficient to constitute patentable novelty:

The patentability of a design is determined on statutory criteria, as for all patents. The protocol called "point of novelty" has often aided the analysis of the application of these criteria to designs, but it is not a different concept from patentability based on the invention -- the design -- as a whole, and has not replaced the statutory provisions. Contrary to the panel's view, the overall appearance of a design can indeed be novel, and can indeed constitute the patentable novelty.

Documents:

• CAFC Original Opinion
• CAFC Clarifying Opinion
• CAFC Order On Rehearing with Newman Dissent
• Lawman Petition For Rehearing
• Nike's Amicus Brief
• ISDA's Amicus Brief

Links:

• Design Patent: Patently-O discussing the petition for rehearing
• Design Patent: Patently-O discussing the CAFC original panel decision
• Welch: Discussing the CAFC original panel decision I
• Welch: Discussing the CAFC original panel decision II
• Welch: Discussing the rehearing decision
• Welch: Discussing the Nike Brief
• Welch: Discussing the IDSA brief