November 2006

Revising the Northern District of California’s Local Patent Rules

Patent

Northern District of California enacted its patent rules in January 2001.  The district is now ready to reevaluate those rules and has asked for public comments and concerns. Ed Reines, who is on the N.D. Patent Local Rules Committee has asked whether Patently-O readers have some input on potential improvements to the rules:

The committee knows that the patent community has a variety of views on patent local rules.   Because a healthy debate and full ventilation of issues is likely to lead the best outcome, the committee seeks broad input on potential changes to the patent local rules.

The Northern District of California patent rules have served as a set of model for a number of districts contemplating their own patent specific local rules. In addition, many district judges across the country require litigants to follow some form of the rules. Comments should be e-mailed to patentlocalrulescommittee@gmail.com and submitted by December 15, 2006.

My initial comments: (1) We need to revisit claim construction proposals and get the court involved with the technology a bit earlier.  As we have seen in several CAFC cases, the claim construction process requires a very good understanding of both the invention and the accused infringing device.  The CAFC has also now clarified the roles of various types of evidence used in claim construction. Claim construction proposals should include clear tables showing how the various levels of evidence support the proposed claim construction. (2) In addition, the court should set-up rules to ensure that there is an early understanding of whether the plaintiff has a chance at obtaining injunctive relief.  This will help guide settlement.

Are Design Patents Worthless? Preliminary Injunction Vacated

Patent, Patent Cases 2006

PatentlyO2006002PHG Tech v. St. John (Fed. Cir. 2006).

PHG’s design patents cover ornamental designs for medical label sheets.  PHG sued St. John’s for infringement and was awarded a preliminary injunction based on the court’s belief that PHG had a reasonable likelihood of success on the merits.

St. John’s appealed the preliminary injunction (PI) to the Court of Appeals for the Federal Circuit (CAFC).

The CAFC reviews a PI grant for abuse of discretion, and only vacates a PI when there is “clear error.”  In general, however, a PI should only issue after weighing “(1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.”

The first factor is a deal-breaker — if the plaintiff does not show a likelihood of eventually succeeding in the case then a PI should not be awarded. Here, St. John’s argued only the first factor based on its argument that PHG’s patents impermissibly cover designs that are primarily functional. 

Functionality in design cases is a tricky beast. 35 USC 171 requires that a design be “ornamental,” and this has been interpreted to exclude designs that are “primarily functional rather than ornamental.”  Of course, every design has some function . . . One way that the court gets at functionality is to see whether there are equally useful alternative designs.  If an alternative design would reduce the utility, then it is “not truly an alternative.”

In this case, the lower court found that there were “a multitude of alternative designs,” but the lower court did not make specific findings as to whether or not those alternative designs altered the utility. St. John’s did, however present expert testimony that the “alternative” designs were not as useful. On appeal, the CAFC was swayed by St. John’s expert and found “clear error” because the lower court (1) did not make any “explicit findings” regarding utility of the alternatives and (2) failed to even mention St. John’s expert report.

“The evidence presented by St. John, in our view, was sufficient to raise a substantial question of invalidity.”  Preliminary Injunction Vacated.

 

Patent

02 Micro v. Monolithic Power (Fed. Cir. 2006).

02 Micro holds a patent covering an DC/AC conversion circuit to allow a laptop batter to control a fluorescent lamp. 02 Micro sued Monolithic for infringement.

Following the local patent rules of the Northern District of California, 02 Micro filed its final infringement contentions within 30 days of the district court’s claim construction hearing. At that time, discovery was still ongoing, and during a late deposition, 02 Micro discovered another (much better) theory of infringement based on the defendant’s design.  After an extended period of negotiation, the defendant refused to stipulate to an amended infringement contention. Then finally, three months after the deposition, 02 Micro submitted a motion to amend.

The case is on appeal because the magistrate judge denied 02 Micro’s motion to amend.  The N.D.Cal. rules allow amendments for “good cause.” However, the magistrate found that the three-month delay showed no diligence, that the negotiation time did not justify a delay because no settlement was reached, and that allowing the amended infringement contentions would prejudice the defendant and reopen discovery. The new theory of infringement was the only viable theory, and without that theory, summary judgment quickly followed.

Applying typical formalism, but no real analysis of the language of the rule, the CAFC affirmed summary judgment — finding that the required “good cause” requires diligence:

If the parties were not required to amend their contentions promptly after discovering new information, the contentions requirement would be virtually meaningless as a mechanism for shaping the conduct of discovery and trial preparation.

The two stated purposes of discovery are to (1) allow the parties to “develop facts and support” their theories and defenses; and (2) allow the parties to pin down the other side’s theories and defenses.  In this case, 02 Micro proposed amending contacted the defendant within three weeks of learning the new information about the defendant’s products.  All the parties knew of the new theory, there was just bickering over procedure.

Obviousness: Skill in the Art Avoids Death Ray

Patent, Patent Cases 2006

Optivus and Loma Linda v. Ion Beam Apps. (Fed. Cir. 2006).

Focused proton beam therapy offers real promise to cancer victims. Optivus and Loma Linda control rights to several relevant patents including a multi-room proton therapy apparatus. The pair sued IBA for patent infringement as well as various business torts (unfair competition) based on IBA’s marketing of its devices without FDA approval.

The district court granted summary judgment in the defendant IBA’s favor on invalidity, noninfringement, and unfair competition. Optivus and Loma Linda appealed.

Appellate Practice Waiver of Arguments: In their opening brief, appellants argued a lack of motivation to combine various pieces of prior art, but did not raise an argument as to whether the prior art contained all of the claim elements.  They then attempted to raise that issue in their reply brief. The CAFC, however, dismissed that issue as a matter of procedure — holding that the argument was “waived because it was not raised in Loma Linda’s opening brief.”

Death Ray: On motivation to combine prior art, Loma Linda argued that modifying a UW Neutron therapy center by sending protons to the patient would create a “death ray” that would kill the patient. After defining “skill in the art” as familiarity with particle beam technology uses in medical treatment, the CAFC dismissed this “teaching-away” because our PHOSITA would know to turn down the intensity. 

Unfair Competition: Marketing Non-Approved Device: The CAFC reversed the dismissal of the California unfair competition claims — holding that California law provides a right of action on unfair competition even where the claim is based on violation of a law and the law does not provide for a private right of action. 

Doctrine of Equivalents, Avoiding the Tronzo-Trap

Patent, Patent Cases 2006

Depuy Spine v. Medtronic (Fed. Cir. 2006).

PatentlyO027Medtronic won summary judgment of non-infringement for its Vertex spinal implants, but the jury found that its MAS spinal screws were infringing. Both sides appealed, and we discuss two issues here:

Claim Construction:  Depuy tried to get the CAFC to buy into its argument that a the conical wall of the Vertex model was also a spherical wall.  Although impressed with its novel argument, the CAFC did not bite at the elementary calculus or basketball analogy showing how, at the limit, cones and spheres are virtually indistinguishable.

PatentlyO2006001

Doctrine of Equivalents and Vitiation: This case seems right-on-point with Tronzo, and the patentee learned the appropriate lesson. In Tronzo, the theory of equivalence would have allowed any shape to be equivalent to “generally conical.”  Here, however, the patentee argued that there was a special nexus between the claimed spherical shape and the alleged equivalent conical shape. The tailored argument made the difference, and the CAFC agreed that equivalents could apply without vitiating the term. The CAFC also found it important to the DOE analysis that the patent does not label other shapes as either prior art or inferior. [Practice Tip…].

Pharmaceutical Patent Doctrine of Equivalents Survives Challenge

Patent, Patent Cases 2006

TestAbraxis (AstraZeneca) v. Mayne (Fed. Cir. 2006).

Mayne attempted to around Abrxis’s anesthetic formulation patent covering DIPRIVAN. The district court, however, found that Mayne’s product still infringed, both directly and under the doctrine of equivalents, despite its replacement of EDTA (“edetate”) with DTPA. 

On appeal, the CAFC reversed the direct infringement based on claim construction, but agreed that there was infringement under the DOE.

Infringement under the doctrine of equivalents is reviewed for clear error.  To infringe under the DOE, the accused device must perform “substantially the same function in substantially the same way to obtain the same result” as the patented invention.

During the design-around, the defendant had attempted to identically match the characteristics and stability function of the Abraxis product.  They eventually chose the DTPA replacement because it is “structurally similar to edetate, [and therefore] product stability is predicted to be unaffected.”

Even so, the defendant argued under the modern DOE exclusion principle that the patentee’s use of the “restrictive term edetate,” rather than a more generic term, precluded extension of equivalents coverage as a matter of law. The CAFC disagreed, finding that equivalents could be asserted because the inventors “did not clearly disavow” broader coverage.

There is no evidence that the patentees made a clear and unmistakable surrender of other polyaminocarboxylates, or calcium trisodium DTPA in particular, during prosecution.

Furthermore, because the use of DTPA was admittedly unforeseeable, it is proper to extend DOE.

The defendant also asserted that DOE should not be extended to cover DTPA because Mayne was able to obtain a patent to cover that modification. The CAFC did not buy that argument either. As noted above, the patent shows that the equivalent was unforeseeable at the time of the invention (weighing in favor of DOE).  In addition, the district court’s fact finding of “substantial evidence of equivalence” withstood CAFC scrutiny.

 

Claim Term Limited to “Scoop of the Invention”

Patent, Patent Cases 2006

ScreenShot063Akeva v. Adidas (Fed. Cir. 2006, NON-PRECEDENTIAL)

Akeva’s patent covers shoes with a rear sole “secured” to the heel of the shoe.  The patent is clear that the rear sole may be detachable or rotatable.  In order to capture Adidas’s activity, Akeva also argued that “secured” could mean permanently secured.  The court disagreed with that claim construction based on the language of the specification:

the language of the ‘471 specification specifically states that the invention of the ‘471 patent is an athletic shoe with a detachable heel: “However, in a radical departure from conventional shoes, the shoe of the present invention incorporates a heel structure, including a detachable rear sole, that significantly alleviates heel wear problems associated with conventional soles and provides enhanced cushioning and/or spring.”.

Once again describing the “present invention” resulted in the specification serving to limit the scope of the claim terms.  The truth is, however, the seeming requirement of a detachable sole pervades the patent and, in CAFC terminology, was “the scoop of the invention.”  The “field of the invention,” for instance, was written “as athletic shoes with interchangeable/detachable rear soles.”

As could be expected, the boilerplate language at the end of the specification was deemed worthless even though the language asserts that the specification is not limiting in any way.

The court did find this case distinguishable from others because the detachable sole is “not one of several features, it is the primary feature of the invention.” 

Filing of Sequence Listings on EFS-Web Version 1.1

Patent, Patent Prosecution

SingerBy Chris Singer, PhD

With the release of EFS-Web 1.1 on < ?xml:namespace prefix ="" st1 />October 14, 2006, the USPTO has streamlined the filing of sequence listings for practitioners and patentees. The prior version of EFS-Web was limited because it allowed submission of files in .pdf format only and was not enabled to handle sequence listings, which are typically written as text files (.txt). The latest version of EFS-Web overcomes this limitation and allows practitioners to submit electronically files such as sequence listings, computer program listings, and mega tables. This eliminates the need to submit these types of files on supplemental electronic media (e.g., CD-R, 3.5″ disk, etc.), which avoided fees relating to application size (currently $250 for large entities and $125 for small entities per 50 pages after the first 100).< ?XML:NAMESPACE PREFIX = O />

According to sources at the USPTO Electronic Business Center, the requirements of Title 37 of the Code of Federal Regulations (37 C.F.R. §§ 1.52(e), 1.821-1.825) have been relaxed for sequence listings that are filed using EFS-Web 1.1. Specifically, filers need only submit a single .txt file containing the sequence listing and an amendment that incorporates the sequence listing into the specification. Practitioners no longer need to include the compliance statement under 37 C.F.R. § 1.821(f) or the paper copy of the sequence listing (or the duplicate copies of the sequence listing on CD-R in lieu of a paper copy) when filing sequence listings using EFS-Web. However, the USPTO recommends that filers include a statement that the content of the sequence listing does not extend beyond the original disclosure (i.e., does not contain new matter), either as a separate document, or as a part of the “Applicant arguments/remarks made in an Amendment” section of a response.

For the time being, the USPTO will also accept sequence listings filed through EFS-Web 1.1 in a .pdf format; however the practice is strongly discouraged, since the USPTO must convert such .pdf files to .txt files to accommodate the sequence listing in its database. As a result, filing sequence listings in .pdf format creates the possibility that conversion could introduce errors in the sequence that could compromise its capacity to be accurately processed and searched, and could even affect sufficiency of disclosure under 35 U.S.C. § 112.

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.

Hindsight Bias

Patent, ,

In my patent policy seminar at Boston University Law School, we recently studied hindsight bias and how it can play-out in the innovation sphere.  Professor Gregory Mandel at Albany Law School has a pair of great empirical papers on the topic here and here.  Mandel concludes that a juror’s knowledge of the invention makes the juror much more likely to believe that the invention would have been obvious.

To reach a proper non-obvious conclusion, the decision-maker must step backward in time to a moment when the invention was unknown. Unfortunately, Humans are cognitively incapable of ignoring what they have learned, as required for the proper ex ante analysis.

In class, I followed-suit and gave the students a test of their own hindsight bias.  In one group, students were given a problem and were also told how it was solved.  The other group was simply given the problem. Both groups were asked to rate the nonobviousness of a solution.

ForesightHindsightII

Although not statistically significant because of the small seminar size, my class results closely followed Mandel’s results.  Students who did not know of the solution were more likely to think that a solution was nonobvious.  However, after students learned how the problem was solved, they were then more likely to think that the solution was obvious. This is the crux of hindsight bias. 

Notes:

  • Something that makes the results even stronger is that before the class, all the students were assigned the Mandel hindsight bias reading and they also knew that the topic of the day was hindsight bias. 
  • Professor Joseph Miller at Lewis & Clark Law School is working on this issue as well — he gave me the idea for this specific problem-solution.
  • Peter Zura discusses hindsight bias here.

Upcoming Events

Patent
  • E-Discovery: On Wednesday, November 15 at 2:00 p.m. CT., Richard Carden and Jennifer Kurcz from MBHB will present a FREE one-hour webinar on how the new e-discovery rules will impact future litigation and discovery efforts. Register here: http://mbhb.netspoke.com/.  If you prefer, you can just read the new rules as of 12/1/06: link.
  • Blog Law: Still room for this two-day conference held in NYC and run by Cathy Kirkman. November 16–17.
  • Software Patents: Come visit my temporary home at Boston University Law School for an academic debate on the continued viability of software patents.  The results of this debate may well serve as the backbone of future legislative activities. Nov. 17. (Registration only $35).
  • 618L07-BOSBiotech Patents: Cut through the confusion of the myriad new challenges facing biotech patent practice. I’ll be there presenting.

New Appreciation of Composition’s Properties are Not Patentable

Patent, Patent Cases 2006

SevofluraneAbbott Labs. v. Baxter Pharm. (Fed. Cir. 2006).

Way-back-when, Abbott went through a recall of its inhalation anesthetic sevoflurane because of excess Lewis acid buildup.  Abbott’s scientists figured-out that mixing water in the solution would bind an deactivate Lewis acids, and stabilize the product. Abbott changed its product and also obtained patent protection.

When Baxter filed its Abbreviated New Drug Application (ANDA) to begin selling its version of a sevoflurane inhaler, Abbott sued for infringement.  After a bench trial, the patent was found valid, but not infringed.  Abbott appealed.

The CAFC pointed its laser vision on the question of validity.  A prior reference had indicated that water could be combined with sevoflurane, but had not realized that the composition would work to prevent the acid buildup. Framed in this manner, the prior-art was found to be anticipatory:

Our cases have consistently held that a reference may anticipate even when the relevant properties of the thing disclosed were not appreciated at the time.

The CAFC went-on to find that a claim directed to the newly discovered property of the prior art cannot support a patent because it is inherently disclosed by the art.

This rule holds equally well to process claims:

an inventor may not obtain a patent on a process having the same steps as a prior art process, in which the new process merely identifies a new, advantageous property of the prior art process.

Reversed on validity.

Election punditry on Patent Reform

Patent

VoteFrom IP Law360

“A Democratic takeover of the U.S. House of Representatives on Tuesday could deal a blow to broadly criticized efforts by the [USPTO] to change continuing applications procedures, observers say.”

The article only cites an unnamed former PTO official as its source. 

Although my old law school professor (Barack Obama) is not running this term, this is still an important election. Get out and vote. 

GO GO GO JOSEPH, Reject That Business Method

Patent, Patent Prosecution

JosephProfessor Joshua Sarnoff of American University just directed me to a gem of a response by occasional Patently-O reader Dean Alderucci.  The Examiner rejected Walker Digital’s the pending claim 2 with the most ancient of references:

In Genesis, Chapter 41, we are told that Pharoah appointed Joseph to be his representative and instructed him to enter into contracts to purchase grain.  These contracts included an offer with an activity (supply grain) and a benefit (get paid for the grain). Payment was made upon delivery of the grain.  The story of Joseph is about 4,500 years old. . . . the principal/agent relationship is of immemorial antiquity.  It no doubt predates civilization itself. . . . Many of Applicant’s [other] claims could also be rejected using the same reference.

Dean.bmpIn response, Alderucci notes that the Examiner “has completely misinterpreted the most popular and analyzed book in all of human history. . . . [Nevertheless], the claims as pending have been carefully amended to steer clear of embracing of any of ancient practices of Joseph, the Pharoah, or the [ancient] Egyptians.” 

File Attachment: Bible Response.pdf (218 KB)

The application (10/212,636) is sitting on a response after final. Amended claim 2 reads as follows:

2. A method comprising:

  determining a recipient;
  determining an offer which includes an activity and a benefit;
  transmitting to a representative instructions to provide the offer to the recipient;
  determining whether the recipient has performed the activity; and
  providing the benefit to the recipient if the recipient has performed the activity, in which the recipient is a player at an electro-mechanical gaming device.

Encouraging Consumer Suits

Patent, Patent Legislation

MeijerGrocer Meijer has reportedly filed an antitrust suit against drug maker Eisai for monopolization of the U.S. market for its billion-dollar GERD treatment Aciphex.  (S.D.N.Y.). Meijer charges that the patent was obtained fraudulently and that it is either invalid or unenforceable.  Meijer runs pharmacies in its stores, and the patent threat keeps generics out and prices high.

Although there is some precedent for these consumer-led cases, they tend to be few and far-between.  In the wake of several innovator-generic reverse-payment settlements, there appears to be some political will to find another market lever that encourages challenges to potentially unenforceable patents.  One suggestion is to boost-up the antitrust damages that could be collected by companies in Meijer’s situation.  Another suggestion is to facilitate cooperation and cost-sharing between the potential plaintiffs (e.g., pharmacies).

Caution: Disclosure of Opinion’s Conclusions Waived Attorney-Client Privilege

Patent

In re Target Technology (Fed. Cir. 2006, Non-Precedential).

On mandamus, the CAFC affirmed a district court’s discovery order compelling disclosure of three letters between two different law firms and the president of the defendant.

Although such communications are ordinarily protected by attorney-client privilege, the appellate court found that privilege was waived by the President by his statement in a sales letter that “I also asked my patent attorney to conduct a search in the US patent literature, and no potential infringement was found.”

Applying 9th Circuit law, the panel fount that the company president’s extrajudicial disclosure that revealed the attorney’s conclusion waived privilege to the contents of the letter even though the disclosure did not reveal the details of the privileged communication.

The CAFC was careful to note that the waiver only applied to portions of the communications relating to the disclosed conclusions.

Aside:

  • Cite: 2006 U.S. App. LEXIS 26240.
  • CAFC Clerks: Please Post ALL Opinions Online: I found this opinion by chance through a LexisNexis search.  The CAFC does a good job of posting its opinions online.  For some unknown reason, however, the court rarely posts its Mandamus orders.  These orders are especially important in cases such as the recent TiVo case where the court granting a temporary stay of the injunction.  The stock market reacted to this order, but because it was not publicly posted, certain insiders may have received the information first.