Patent Law Blog (Patently-O)

Book Review: Undue Diligence

Book: Undue Diligence
by Paul Haughey (of Townsend Townsend & Crew)
$15.95 from Amazon.

I had low expectations when I began to read my free copy of Undue Diligence. . . . A legal thriller about a patent attorney written by a patent attorney? — Give me a break!  

As it turned out . . .  I hardly put the book down until it was finished! It is a fun story, well written with plenty of action. The patent prosecutor (Joe Nile) is the hero; patent troll villains allow for a continuous stream of jabs at the  patent system; and the office politics are real.  If you like Grisham, you’ll enjoy Undue Diligence as well.

Premier Cru: CAFC State of the Court

Chief Judge Paul Michel raises several important issues in his “state of the court” address on June 28.

• Veterans Cases On the Rise: With continued war, we can expect that veteran benefit cases will continue to rise and may potentially “swamp [the] court before year’s end. . . . it could be catastrophic. . . . Three remedies are being pursued: we are working harder, adding visiting judges, and relying on mediation.”
• Patent Reform: “Two provisions of this complex, lengthy bill are of concern. They could impose enormous burdens on the court: one making all claim construction rulings immediately appealable as of right and another that dictates that courts in every case must apportion reasonable royalty damages, and do so by one particular methodology that requires valuation of all prior art. I have informed Congress of my concerns and I know they are being considered.”
• Pro Bono Opportunities: Those interested in getting CAFC appellate experience should contact the Chief Clerk (Pam Twiford) about volunteering for MSPB appeals.
• Electronic Documents: The plan is to get e-document PACER working by this Fall. (That means I won’t have to post briefs on Patently-O any longer!).

Broadened Continuation Receives Broad Construction; Enablement Questioned

Saunders Group v. Comfortrac (Fed. Cir. 2007).

Typical use of continuation practice: (1) Patentee files application claiming feature B1 (as the only described embodiment of generic class B). (2) Competitor releases product that would be infringing except for its feature B2. (3) Patentee files continuation that replaces B1 with the generic element B. (4) patent issues. What happens in upcoming litigation?

This scenario, which is exemplified in Saunders Group, raises at least three particular litigation issues listed in order applicability: (1) whether the broad scope of element B has been properly enabled; (2) whether the specific element B1 is an essential element of the invention whose removal would be a violation of the written description requirement discussed in Gentry Gallery; and (3) whether the broad term B should be construed in a limited fashion to avoid problems 1 and 2 (applying the maxim that claims should be construed to preserve validity).

We know from Saunders Group, of course, that it is impermissible to import limitations into a claim even when hoping to preserve validity of the claim.  Especially where here, there was no question that “the applicant expressly and unambiguously state[ed] his intention to claim broadly.”

Here, the lower court had issued a summary judgment of non-infringement based on its narrow claim construction (construing B as B1). The CAFC reversed that holding, but suggested that invalidity under enablement is the correct avenue to pursue on remand:

[W]e hold only that the court’s validity analysis cannot be used as basis for adopting a narrow construction of the claims. Instead, any validity issues that the defendants have preserved and wish to press can be addressed on remand, as was done in the Liebel-Flarsheim case. See Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371 (Fed. Cir. 2007) (holding invalid claims that had been given a broad construction at the patentee’s behest in an earlier appeal).

Notes:

• This type of case may soon be history if new continuation rules are truly effected.

Justice Breyer on Free Riding

Leegin Creative Leather v. PSKS (Supreme Court 2007)

[updated] In today’s Sherman Act decision, the Supreme Court found that the antitrust effect of vertical minimum-price restraints should be judged under a rule of reason. This overturns a longstanding per se rule.

An interesting aspect of the opinion is Justice Breyer’s dissent where he focuses on benefits of free riding.

[F]ree riding often takes place in the economy without any legal effort to stop it. Many visitors to California take free rides on the Pacific Coast Highway.  We benefit freely from ideas, such as that of creating the first supermarket. Dealers often take free rides on investments that others have made in building a product's name and reputation.  The question is how often the free riding problem is enough significantly to deter dealer investment.

Despite Breyer’s dissent, this case continues the trend to allow increased downstream control (through both property and contract) of the use of a company’s goods and services.

• Antitrust Blog

CAFC: "Near the Edge" Not Indefinite; Curing Inequitable Conduct

Young v. Lumenis, Inc. (Fed. Cir. 2007)

Dr. Young invented a surgical method of declawing a cat using lasers. (feline onychectomy).  Lumenis makes surgical lasers that were allegedly during unauthorized infringing surgeries.

Lumenis is a manufacturer, seller, and distributor of surgical laser instruments that were alleged to have been used to perform Young’s patented surgical procedure.

Young filed an infringement suit and Lumenis counted with an inter partes reexamination. (Patent 6,502,579). The PTO issued an office action rejecting the claims and the district court found the patent invalid and unenforceable

Indefinite: In particular, the district court found the word “near” to be indefinite as it was used in claimed step: “forming [an] incision in the epidermis near the edge of the ungual crest.”  Although the district court roughly understood its meaning, it found “near” to be indefinite because it “fails to distinguish the invention over the prior art and does not permit one of ordinary skill to know what activity constitutes infringement.”

On appeal, the CAFC reversed — noting again that claims are indefinite only when they are “not amenable to construction or are insolubly ambiguous.”  An indefiniteness ruling necessarily requires claim construction and examination of any intrinsic evidence. Here, the intrinsic evidence resolves the meaning of near — with both a drawing and reference to cat-sized measurements.  Here, the court distinguished the infamous Amgen case that found “about” to be indefinite: in Amgen, the potential error range of “about” was quite wide and the term had been added to the claims post-filing.

Inequitable conduct — better late than never: The CAFC also disagreed with the lower court’s finding of inequitable conduct — finding that Young’s late submission of contrary deposition statements cured any potential problem: “The essence of the duty of disclosure is to get relevant information before an examiner in time for him to act on it, and that did occur here.”

Reversed

Injunctive Relief: Splitting the baby?

Verizon v. Vonage (Fed. Cir. 2007).

Both Judge Dyk of the CAFC and Judge Hilton of the Eastern District of Virginia raise the issue of partial injunctive relief. 

For his part, Judge Hilton issued a permanent injunction barring infringement by Vonage, but partially stayed the injunction pending appeal to the CAFC. According to the temporary modification, Vonage would be permitted to continue to sell infringing services to current customers, but would stop Vonage from infringing activity associated with any new customers. That injunction was stayed without discussion by the CAFC on an emergency motion before a panel of Judges Michel, Gajarsa, and Dyk. (2007 WL 1202744).

In oral arguments of the appeal, Judge Dyk shifted the focus to what he calls a “middle ground” when the infringer is facing an irreparable harm such as bankruptcy. 

Judge Dyk: “They say no injunction, you say injunction. But, isn’t there kind of a middle ground in these cases where the injunction would put someone out of business? Shouldn’t that be a consideration in framing the injunction? Shouldn’t the district court perhaps allow time for a work-around as part of the injunction? Verizon’s interest is in not losing customers. I’m not sure that Verizon has an interest in putting Vonage out of business. Shouldn’t the district court under these circumstances consider whether the injunction should be framed in such a way as to allow reasonable time for a work-around – particularly where as here, it is non-willful infringement?”

Both judges focus on a middle-ground with a temporal limit. For Judge Hilton, the limited injunction ends at the appeal decision. For Judge Dyk, an injunction might remain entirely stayed, but only for a limited time to avoid bankruptcy while a work-around is developed.  The problem with these stays is that they undermine the rule of law as well as the patentee’s legal claim.  In addition, they run the risk of being proverbial solutions that leave neither party better off.  Despite the problems, the temporal opportunities available in injunction jurisprudence should not be overlooked.  A patentee who is denied injunctive relief should be allowed to present evidence of irreparable harm at a later date. Similarly, an enjoined infringer should be allowed to later provide new evidence of the sufficiency of monetary relief.

Nonpracticing Entity (CSIRO) Gets Injunction

CSIRO v. Buffalo Technology (E.D.Tex. 2007)

CSIRO operates as a technology licensing arm of the Australian Government. CSIRO does not practice its inventions, but has asserted its wireless LAN patent against a number of accused infringers, including Intel, Microsoft, Marvell, and Buffalo. The patent is broad enough to cover all 802.11a/g wireless technology and has a 1992 priority date.

In the case against Buffalo, CSIRO won a slam-dunk summary judgment of validity and infringement. The court then considered whether to award a permanent injunction in favor of the non-practicing entity (NPE).

Stay Pending Appeal: Denied for Qualcomm at ITC

US (Broadcom) v. Qualcomm (ITC 2007).

The International Trade Commission (ITC) is an increasingly popular venue for patent infringement issues. The ITC’s only power is to enjoin imports (no money damages), but in competitor suits that is the optimal result.

As part of a large ongoing patent battle, Broadcom filed a Section 337 action against Qualcomm — asserting that Qualcomm's mobile-phone chip imports infringed Broadcom’s patent nos. 6,374,311, 6,714,983, and others. An administrative law judge (ALJ) sided with the patentee Broadcom, and the Commission affirmed (but limited the scope of injunction).

Qualcomm and its supporters requested that the ITC stay relief pending appeal to the CAFC. 

ITC Stays: Section 705 of the Administrative Procedure Act (APA) provides the ITC with authority for granting a stay. Generally, the ITC determines stays based on the same four factors used to determine whether to grant a preliminary injunction. (It is also approximately the same test used by the CAFC and discussed in Standard Havens).

In order to obtain a stay pending appeal, the moving party must prove:

• (1) a likelihood of success on the merits of the appeal (or an “admittedly difficult legal question”);
• (2) irreparable harm absent a stay;
• (3) that issuance of a stay would not substantially harm other parties; and
• (4) that the public interest favors a stay.

Here, the ITC determined (without reasoning) that Qualcomm had failed to satisfy the four-prong test.

The CAFC is expected to make an independent determination regarding the stay within the next week.

Notes:

• Stay opinion
• Opinion on the remedy
• Patently-O coverage of Stays Pending Appeal:
• Abbott Labs v. Sandoz
• Verizon v. Vonage
• Echostar v. Tivo
• Immersion v. Sony
• Two of the six commissioners would have granted a stay.

Patently-O TidBits

• Sign up for the Patently-O free full-text e-mail service. Thousands of patent attorneys can’t be wrong . . .
• More meetings with the OMB regarding continuation rules: the NanoBusiness Alliance asks that the PTO at least provide some “analysis of the effect these two rule packages might have on innovation or the economy . . . we are very skeptical that the most cost-effective solution involves curtailing of continuations and the number of claims per application.” Maebius Letter.
• Solveig Singleton on patent trolls and the “loser pays” rule: “As a general rule, the "loser pays" rule is more fundamentally fair than a rule where each party pays his own costs. Only ‘loser pays’ fully compensates the winning party in a lawsuit and makes him whole.”
• Technology Liberation Front (TLF) on patent damages reform: “The result will be to reduce protection for all patents, not just the bad ones.”

A Dangerous Prosecution Trap

By Paul F. Morgan

I recently retired from a position in which I was also providing legal advice to patent application prosecution attorneys and others.  I had noted the following relatively frequent source of legal confusion in current law for some patent examiners, with the result that some patent prosecutors were being dangerously misled by incomplete examiner rejections. Hence, this warning note.   

A prior U.S. PTO published patent application can qualify as prior art under multiple portions of 35 U.S.C. §102 – resulting in varying effective dates, and requiring different attorney or agent responses. Often, the multiple effective dates are not reflected in examiner rejections.  However, getting a patent application allowed incorrectly can be fatal to the patent’s validity or even lead to inequitable conduct accusations.  Legal misunderstandings of the patent examiner during ex parte prosecution do not create a valid legal excuse for prosecuting attorney legal errors.

A published US patent application has a §102(e) prior art date as of that application's filing date, and also a §102(a) or §102(b) prior art date as of its publication date. The office action rejection should discuss both dates if the publication date was prior to the rejected application.  But, even if the examiner's rejection was legally incomplete, the applicant's attorney must still overcome both, correctly.

If the published application was commonly owned at the time of its invention, a §102(e)/103 rejection can be overcome by asserting common ownership under §103(c).    The protections of §103(c) do not apply to 102(a) or 102(b) prior publications.  Rather, that section only applies to 102(e),(f) and/or (g)!  Furthermore, §103(c) only applies to obviousness issues, not anticipation. Nor does §103(c) eliminate what should have been an alternative rejection for double patenting.  

Obviously, a §102(b)/103 reference from an application publication date more than a year before the subject application date cannot be eliminated, only argued over.   While a §102(a)/103 rejection might be overcome by presenting evidence of an earlier invention date, that avenue is considerably more difficult and dangerous.  In particular, patents obtained via 37 CFR 1.131 declarations of alleged prior invention have a poor litigation record. Where appropriate, 102(a) prior art may be overcome by perfecting a valid priority claim to an earlier application. 

One final related danger that arises from the fact that most U.S. applications are now  published within 18 months of their first filing date.  Even self-publications qualify as 102(b) prior art.  That means that patent applications on improvement inventions from the same client, especially with different or partially different inventors, need to be filed ASAP to avoid prior-filed basic applications from becoming prior art under §102(a) or (b) against the improvement applications [which cannot be avoided by §103(c).]

The above, of course, is oversimplified, and other commentators may wish to “chip-in.” with practical advice.

Notes:

• Paul Morgan recently retired, as the Assistant General Patent Counsel
  for a major U.S. Corporation, after 44 total years of patent practice.

Individual Inventors: Who Will Represent You Now?

Bender v. Dudas (Fed. Cir. 2007)

Although this case is extreme, it should also server as a warning to any patent practitioner who regularly represents ‘unsophisticated clients’ — You will be held to a higher ethical standard. The opinion also creates a trap for flat-fee prosecution — because, according to the CAFC, the flat rate provides an incentive to shirk responsibilities.

Here, Bender, a patent attorney, worked with an invention promotion company (AIC) to prosecute over 1000 design patent applications. The applicants were never asked whether they intended to file design or utility patent applications and were not provided with information weighing the two options.

The PTO found that Bender had violated several rules of ethics and expelled him from practice.  The district court (DC) affirmed. Bender then appealed to the CAFC, which also affirmed on all issues.

Standard of Review: Under the APA, a PTO sanction will be upheld unless “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The underlying factual conclusions are reviewed for substantial evidence.

Neglecting an Entrusted Legal Matter:  The PTO argued that Bender had neglected to ensure that his clients were aware of the differences between design and utility patents and that they intended to file design patent applications. Bender did provide a description of the differences in a letter to clients, but the CAFC found that “an entirely hollow and formalistic gesture” because it did not provide particularized advice.

Bender’s engagement letter was an entirely hollow and formalistic gesture because it did not provide any of the Gilden applicants with advice that directly related to the particular inventions at issue, the type of patent best suited to protect these particular inventions and the inventor’s interests therein, or the consequences of pursuing a design patent instead of a utility patent.

Bender should have discussed the particulars of each case with the inventors to determine the proper type of application that should be filed. CAFC found evidence of motive in the billing arrangement: Bender was paid a flat rate by the invention promotion company who had a money-back guarantee if no patent issued. And, design patents are cheaper to file and much easier to obtain.

Any reputable attorney would have appreciated that the wholesale filing of design applications under such circumstances and the unauthorized addition of design embellishments were driven in large measure if not entirely by AIC’s money-back guarantee.

Bender also failed to advise clients regarding final rejections as should always be done (regardless of who foots the bill.

Conflict of Interest: Bender should have explicitly discussed his fee arrangement with each client — as must always be done if someone else is footing the bill.  Generally this type of arrangement can only proceed with clients permission after a full disclosure. (including the amount that Bender received from the invention promotion company).

Lying to the Feds: The CAFC also a affirmed on a charge akin to obstruction of [administrative] justice. Bender failed to give full and complete answers to the PTO’s requests for information. Although Bender had objected to the questions as argumentative and based on false premises, the CAFC agreed with the PTO — that his responses hindered the investigation.

Exclusion from practice affirmed.

Notes:

• [UPDATE] Leon Gilden is the patent attorney who was initially part of the AIC scheme. Gilden skipped town and is now a fugitive at large. [Wanted Poster of Leon Gilden]
• The violations included (1) neglecting an entrusted legal matter; accepting employment where professional judgment may be affected; accepting compensation from a non-client without full disclosure to the actual client; and engaging in conduct that was prejudicial to the administration of justice. 
• Individual inventors who are not yet versed in the rules of patent law create problems for patent prosecutors. The work generally takes more time and effort, the malpractice risk is often greater, and the ability to pay is usually less. A number of law firms now have policies against representing individuals (except for the very wealthy).
• Justifying the lack of procedural safeguards on the PTO’s requests for information, the CAFC explained that the lack of safeguards actually “protects practitioners by providing them with an opportunity to explain any questionable conduct and present reasons why disciplinary proceedings are not warranted.”

New Patent Blogs

New blogs that I recently found:

• PatentlyAcademic by an anonymous examiner going through the PTO's training academy. I have no idea if it is true, but I consider this site something like the spawn of Patently-O.
• PLI Blog by famed patent bar exam teachers White & Quinn
• Patent Librarian by Canadian Michael White brings a fresh perspective.
• Patentability Defined by Mike Kondoudis focuses his theories of patent prosecution.
• Anticipate This! by Jake Ward of Perrysburg Ohio fame.

I continue to enjoy:

• Just a Patent Examiner
• Peter Zura's 271 Blog
• Fire of Genius - Professor Miller
• Patent Prospector Patent Search Expert and Economist Gary Odom
• OrangeBookBlog - Aaron Barkoff
• PatentDocs A genuine discussion of biotech and pharma patent issues
• And many others . . .

Patent Reform: Changes to Continuation and Claiming Practice

As all patent prosecutors know, the PTO has proposed a set of rule changes that would limit the number of continuation applications that may be filed based on a given priority document. In addition, the proposed changes would also limit the number of claims to be examined in each application.

The final version of the proposed rules are not yet public, but are being reviewed by the Whitehouse before final implementation.

Three groups have now met with the OMB and complained about the rules [LINK].

• Former PTO Director Bruce Lehman, now a lobbyist working for Akin Gump, joined forces with BIO to argue that the changes would create significant harm to small biotech companies. Materials Used: Chart Memo.
• Derek Minihane (in-house at Intermolecular) and Jeffrey Birchak (in-house at Fallbrook Tech) presented on behalf of he innovation alliance — making the argument that “the proposed rules would impose hundreds of millions of dollars of additional costs on inventors and could destroy billions of dollars in property rights and business value.” Materials Used: Memo Presentation.
• David Boundy (Cantor Fitz) and Mike Strickland (GlaxoSmithKline) also met with OMB officials to present the case against changes on behalf of a few dozen interested companies. Their documentation highlights what they see as illegal PTO actions leading-up to the new rules.  [LINK]

Within the Whitehouse Office of Management and Budget (OMB), the Office of Information and Regulatory Affairs (OIRA) reviews final regulatory changes before implemented. Susan Dudley, OIRA director is expected to release a decision within three weeks.

Notes

• Stanford Professor Mark Lemley’s article regarding continuations (coauthored with Judge Moore) was used as a justification for the PTO’s rule changes. Interestingly, the objectors cite another Lemley article (coauthored with Allison, Moore, and Trunkey) for the proposition that patents based on continuations are generally more valuable. The second article, titled “Valuable Patents” makes its conclusion by combining the observation that patents based on continuations are litigated more often with the assumption that litigated patents are, on average, more valuable than those that are not litigated.
• The Lemley/Moore article is not overly concerned with the administrative trouble created by continuations. It does, however, point to four major problems created by extensive continuation practice:

First, at a minimum, continuation practice introduces substantial delay and uncertainty into the lives of a patentee’s competitors, who can never know whether a patent application is pending. Second, the structure of the PTO suggests that continuations may well succeed in “wearing down” the examiner, so that the applicant obtains a broad patent not because he deserves one but because the examiner has neither incentive nor will to hold out any longer. Third, continuation practice can be – and has been – used strategically to gain advantages over competitors by waiting to see what product the competitor will make and then drafting patent claims specifically designed to cover that product. Finally, some patentees have used continuation practice to delay the issuance of their patent precisely in order to surprise a mature industry, a process known as “submarine patenting.”

• Patently-O: http://www.patentlyo.com/patent/2007/04/continuation_an.html
• Third parties may submit written comments to the OMB on any rule under review. [VIA FAX at (202) 395-3047 or 202-395-5806 or (202) 395-6566]. 

Procedure: Expert Testimony Deserves Weight on Summary Judgment

Omegaflex v. Parker-Hannifin Corp (Fed. Cir. 2007) (nonprecedential)

On summary judgment, the Massachusetts District Court found the Omegaflex pipe-fitting patents novel, nonobvious and infringed. Parker appealed.

Respect the Expert: On several points of contention, the district court gave no probative weight to Parker’s expert’s testimony.  On summary judgment, the evidence should be weighed in the “light most favorable” to the non-movant (Parker). Because the expert testimony creates issues of material fact, the CAFC reversed and remanded.

In dicta, the three-member panel (Judges Michel, Dyk, and Garbis) probed the Supreme Court’s recent KSR decision — noting that it will continue to look for some reason to combine prior art references in an obviousness rejection.

Quoting KSR: “a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art.”

Reversed and remanded.

Means-Plus-Function Element Found Indefinite Without Corresponding Structure

Biomedino v. Waters Technology (Fed. Cir. 2007).

Biomedino holds a patent for removing psychoactive drugs from a blood sample for toxicology studies. The district court found the patent invalid as indefinite under 35 U.S.C. 112 ¶ 2. In particular, the lower court held that the recited limitation "control means for automatically operating [a] valving" was indefinite because the specification did not include any structure corresponding to the means-plus-function language.  On appeal, the CAFC affirmed.

35 U.S.C. 112 ¶ 6 allows a patent applicant to broadly claim a "means" for performing a specific function. That claim, however, must be backed-up by a patent specification that describes "some structure which performs the specified function."

Here, the patentee had indicated that the invention “may be controlled automatically by known differential pressure, valving and control equipment.” This disclosure was, however, insufficient.

[A] bare statement that known techniques or methods can be used does not disclose structure. To conclude otherwise would vitiate the language of the statute requiring “corresponding structure, material, or acts described in the specification.

In addition, the court held that the structure must be disclosed in the specification even if one of skill in the art could implement a structure without such a disclosure.

Invalidity affirmed.

Biaxin Litigation: Sandoz' Motion for Stay Pending Appeal Denied by District Court

Abbott Labs v. Sandoz (N.D. Ill. 2007) (05 C 5373).

Abbott and Sandoz are in a tussle over Abbott’s patented clarithromycin antibiotic (BIAXIN). Abbott sued Sandoz and was granted a preliminary injunction in April 2007. Sandoz immediately requested a stay of the preliminary injunction pending appeal to the Federal Circuit. 

Under FRCP 62(c), a district court “in its discretion” may suspend or modify a preliminary injunction pending resolution of an interlocutory appeal.  In Hilton v. Braunskill (non-patent), the Supreme Court discussed the four-factors used to determine whether to stay pending appeal:

1. Movant’s strong showing of potential success on appeal;
2. Movant’s potential irreparable injury if stay is denied;
3. Potential injury to patentee if stay is granted; and
4. The public interest.

Here, potential success on appeal must refer to success in appealing the preliminary injunction — a much easier showing than success on the merits of the case as a whole. And the party’s “strong showing” of potential success does not need to reach even a 50% chance of winning on appeal — If the movant’s chances on appeal were greater than 50% then no PI should have issued in the first place.

Based on KSR, Sandoz argued a strong likelihood that the patent would be found obvious.  The district court, however, disagreed, finding that none of the prior art disclosed a claim limitation relating to PK levels.

There was no indication that either prior art disclosed the specific PK limitations of claim 1 and 4, and thus, there was no indication that the prior art would motivate a person of ordinary skill in the art to combine their teachings to arrive at the '718 patented invention. After reading the Supreme Court's KSR opinion, this Court is left with the understanding that the need to demonstrate the presence of all claim limitations in the prior art (when the legal theory is based upon obviousness due to the combination of prior art teachings) has not been obviated.

Motion to stay denied. The PI will thus stay in force unless released by the CAFC on appeal.

• The CAFC has already adjudged two PI cases regarding the patents-in-suit — affirming a PI against ANDRX and vacating a PI against Teva.
• Cases Discussing Stay Pending Appeal:
• Hilton v. Braunskill, 481 U.S. 770 (1987);
• Hinrichs v. Bosma, 440 F.3d 393 (7th Cir. 2006).

Peer-to-Patent: Live

The new Peer-to-Patent system is now live with five patent applications ready for review. The applications have been voluntarily offered for review by Peer-to-Patent supporting companies including GE, HP, Intel, IBM, and Red Hat.

 

For those of you who like to participate in the prior-art-search-fest, sign up at peertopatent.org.

Peer-to-Patent opens the patent examination process to public participation for the first time. Become part of this historic pilot program. Help the USPTO find the information relevant to assessing the claims of pending patent applications. Become a community reviewer and improve the quality of patents.

Notes:

• More info will be provided through a Second Life answer-session on June 18 at 3pm EST (12pm PST). http://tinyurl.com/348nyb.

No Appellate Jurisdiction For Appeal of Preliminary Injunction Contempt Order

Entegris (Mykrolis) v. Pall Corporation (Fed. Cir. 2007).

Mykrolis sued Pall -- accusing its competitor of infringing patents related to high-quality liquid filters used in the semiconductor industry. After claim construction, the district court issued a preliminary injunction, but Pall continued to sell a 'modified' design.  During a contempt proceeding, the court held Pall in contempt for its continued sales, but also dissolved the preliminary injunction based on new evidence of invalidity. Both sides appealed.

Jurisdiction for appeal of contempt order: The CAFC has interlocutory jurisdiction over preliminary injunction issues such as the issuance, modification, or dissolution of a preliminary injunction. However, the CAFC here held that there is no interlocutory jurisdiction for an appeal of a contempt finding that does not itself modify the injunction. In addition, even though Pall must pay the contempt fine immediately, under Supreme Court precedent, a contempt decision is not considered an appealable final judgment. Finally, interlocutory appeals do not generally provide supplemental jurisdiction unless issues are inextricably intertwined. The contempt appeal was thus dismissed.

Preliminary Injunction: The burden of proving validity is shifted at the preliminary injunction stage where the patentee must show "a likelihood of success on the merits" with respect to both validity and infringement.  A defendant who raises a "substantial question" of invalidity will defeat a preliminary injunction unless it "lacks substantial merit." 

It is often difficult for a plaintiff to win an appeal after dissolution or denial of a preliminary injunction because the lower court's decision is based on a loose set of factors that are reviewed only for clear error. Here, Mykrolis failed to show clear error in the lower court's finding of a substantial question of invalidity.

Affirmed.

Notes:

• Interlocutory jurisdiction: Power to hear an appeal before the lower court issues a final judgment. Interlocutory jurisdiction is generally quite limited and narrowly granted.
• Hamilton Brooks cooperated with Ropes & Gray in representing the plaintiff Entegris.
• Leydig Voit represented the defendant Pall Corp.

Patently-O TidBits

• Advisory Office Action: A Patently-O reader queries why 35 U.S.C. 133 does not extend to after-final advisory actions. Under Section 133, "any action" by the PTO must allow at least thirty-days for a response.
• Chief Judge Michel continues to operate behind-the-scenes to block certain elements of patent reform.  In a letter to Howard Berman's staff, Judge Michel argues again that the proposed economic apportionment provisions damage would be difficult to implement. The letter also highlights the recent damages analysis by former AIPLA president BIll Rooklidge while taking a dig at the credibility of law professors who have been pushing for reform -- "Lawyers employed by particular companies, like most law professors, have little or no experience [in patent litigation]. Mr. Rooklidge, by contrast, has several decades of litigation experience in precisely these types of cases." MICHEL LETTER , ROOKLIDGE ARTICLE.
• Despite a strong brief, the Supreme Court has denied Zoltek's petition for certiorari that challenges the CAFC's determination that Governmental patent infringement is not a 5th amendment takings. LINK.
• Republicans on Patent Reform: Slow down and get it right. LINK.

MercExchange v. eBay: Injunction Hearing

MercExchange v. eBay (E.D.Va 2007).

Using a typical defense strategy, eBay has slowed MercExchange's infringement case to a virtual crawl. Over three years ago, a jury found that eBay willfully infringed MercExchange's patent. Part of the verdict was eventually picked-up by the Supreme Court who held that injunctive relief in patent cases must be determined through the traditional four-factor test of equity.  After the verdict, eBay also filed for a reexamination of the asserted patent. That reexamination is still pending, although all of the claims have been rejected by the PTO.

On Tuesday, the issue of injunction will once again return to the Virginia district court (Norfolk).  EBay has asked for a stay of relief pending conclusion of the reexamination process to "prevent enforcement of invalid patents." On the other side, MercExchange argues that injunctive relief is proper even under the Supreme Court's more stringent requirements.

MercExchange provides several reasons for not staying final adjudication pending reexamination, including eBay's delay in seeking the reexamination and eBay's unclean hands before the court (for allegedly submitting false authentication).

• Download ebay_motion_for_stay.pdf
• Download merc_brief_in_opp_to_motion_for_stay.pdf
• Download ebay_reply_to_motion_for_stay.pdf

• Download merc_renewed_motion_for_permanent_injunction.pdf
• Download ebay_opp_to_merc_renewed_motion_for_permanent_injunction.pdf
• Download merc_reply_for_renewed_motion_for_permanent_injunction.pdf

Two new USPTO Notices

• e-Office Actions:  The PTO is continuing its e-Office Action pilot project with a few modifications. [Link] [Contact ebc@uspto.gov].

• Public Submission of Peer Reviewed Prior Art begins JUNE 15, 2007: "This project will test whether [a loose public] collaboration can effectively locate prior art that might not otherwise be located by the Office during the typical examination process." Documents will be submitted by the Peer-to-Patent project "under a waiver of certain sections of both 37 CFR 1.99 and 1.291." [USPTO Notice] [Peer-to-Patent Website]
  

Tribunal Theory

The tri prefix of tribunal may evoke an image of three judges sitting jointly at the bench.  In practice, however, tribunal refers to any sitting judicial body – regardless of the number of judges.

The Court of Appeals for the Federal Circuit (CAFC) normally convenes in three judge tribunals to hear appeals. Motion practice, such as an emergency motion for a stay of an injunction, is often heard by a single judge.  According to statute, en banc panels usually consist of all (twelve) active members of the court. 28 USC 46(c).

A larger panel is thought to provide more stability and predictability, while a smaller panel theoretically provides a greater variance.

To see how panel size might alter litigation practice, lets take an example case where the lower court issues a permanent injunction that will be enforced within ten days. Question: Should the losing defendant hope for (1) a three judge panel to hear its emergency appeal or (2) a lone appellate judge? 

The answer, after several assumptions including independence, is that the appellant's favored panel size varies with the strength of its argument.  If the appellant has a high (greater than 50%) chance of convincing each expected judge, then it is better off with a larger panel.  On the other hand, if the appellant has a low (less than 50%) chance of convincing each judge then he would likely get better results from a single judge.

This is easy to work out a computational example: For the first case, if we expect that the appellant has a 65% chance of convincing each judge of its case, the probability of convincing at least two judges rises to 72%. Thus, the appellant would be better off with a panel (72% chance of winning) rather than a single judge (65% chance of winning). On the other hand, if the appellant thought that its appeal had only a 35% chance of convincing each judge, the probability of convincing at least two judges drops to 28%.  Thus, the appellant who expected to lose would be worse off with a panel (28% chance of winning) rather than a single judge (35% chance of winning).  The larger panel also helps smooth over variance amongst the judges — tilting the scales further in favor of an expected winner.  A long shot case would hope for the squirrelly judge on a small (solo) panel.

In a May 6, 2007 distribution, Hal Wegner suggested a series of “Mini en banc” panels with seven (or five or nine) members — especially in the area of obviousness.  As the panel size increases, good cases theoretically win more often and should be losers lose more often.

Four Judge Panels: One simple step that could make a tremendous difference regarding stability of appellate determinations would be to shift the normal panel size from three judges to four judges.  The CAFC has power to make this change under 28 USC 46, which states that “the Federal Circuit may sit in panels of more than three judges if its rules so provide".

On appeals, a split judgment is equivalent to an affirmance of the lower court decision. Thus, an appellant arguing to a four judge tribunal must convince three of the four judges of its case — creating a much larger, super-majority hurdle for the appealing party. The problem with the four judge approach is that it also creates an outcome skewed toward affirmance — something that could be seen as unfair. However, I expect that claim construction decisions reviewed de novo by a four member panel would help us return from our long vacation (or at least reduce the number of claim construction opinions being vacated).

The four judge approach would also violate Federal Circuit Rule 47.2, that requires “a panel consisting of an odd number of at least three judges.”

Testing of System Aboard Commercial Aircraft Not a Barred Public Use

Honeywell v. Universal Avionics (Fed. Cir. 2007).

Honeywell holds a number of patents covering a virtual terrain warning system for aircraft. The system compares flight-data with a digitized map to ensure a clear path.  Universal and Sandel Avionics have similar functioning systems, and Honeywell sued for infringement. After losing summary judgment, Honeywell appealed on claim construction and the defendants appealed on validity.

On Sale: Section 102(b) of the Patent Act creates a statutory bar to patentability of an invention “in public use or on sale in [the US] more than one year prior to the date of application.”

Under Pfaff, an invention is on sale if (1) subject to a commercial sale or offer for sale and (2) ‘ready for patenting’ at the time of the offer or sale.  Prior to the critical date, Honeywell offered its system for sale to Gulfstream, but required a program to test the system’s in-cockpit results. In its decision, the CAFC agreed that the tests were “part of Honeywell’s program to determine that the invention worked for its intended purpose.”  Thus, even though no system changes were introduced based on the testing, the tests were a “demonstration of the workability or utility of the claimed invention” — thus were sufficient to avoid the ‘ready for patenting’ prong of the on sale bar.

Public Use: The system was tested aboard commercial aircraft. On one flight, a reporter was told of the system — a fact he mentioned in a published article.  This arguably commercial use did not create a public use bar because the use did not employ “a completed invention in public, without confidentiality restrictions, and without permitted experimentation.” 

Claim Construction Jurisdiction: The summary judgment of non-infringement was based on only two-terms. On appeal, the CAFC refused to limit its decision to those terms (as requested by a defendant). Rather, the appellate panel looked at each of the five terms where “the district court discerned factual issues in dispute regarding infringement.”  According to the Court, the two primary terms were correctly construed, but summary judgment vacated on factual issues — giving Honeywell another shot.

Patently-O Comment Wars

The Patently-O daily full-text e-mailer is a great resource, but it has one major problem — The e-mail readers miss the extensive commentary posted by other Patently-O readers.  Over the past year, Patently-O readers have transformed the site from a primarily one-way resource into a rich community. The growth of reader comments is shown below (Graph).

Although only about 1/3 of the comments contain high-level useful commentary, this is still above-average for lawyerspeak. Like most readers, the comments also arrive primarily during business hours. (Graph).

As might be expected, the majority of comments are written under pseudonyms. Of the top-ten most frequent commentators, it appears that only one uses his real name: Michael Slonecker — a patent attorney primarily retired from practice.  Malcolm Mooney, an anonymous and acerbic patent attorney is leading the pack with over 600 comments.  [Mooney is likely ascorbic as well]

When comments are posted, I receive an e-mail with your IP address. Based on those addresses, the majority of comments come from law firms, quickly followed by government agencies (US Courts, USPTO, FAA, etc.) and businesses.  There is also a large group of comments associated with more generic ISPs (Verizon, Comcast, AT&T, etc.).

Three comment related projects:

1. Threading of comments so that you can more easily follow various posts.
2. Ranking of comments (as on SlashDot) so that you can exclude low-ranking posts.
3. A comment [RSS] feed. So that you can more easily follow the most recent comments. (Thanks to Adam Kessel for this idea)

Of course, I do all the programming and configuration for Patently-O — Let me know if you have easy solutions for any of these projects! dcrouch@gmail.com.