Patent Law Blog (Patently-O)

Most Litigated Patents 2005-2007

The following table lists the patents asserted most often in patent infringement litigation since January 2005.

• Patent No. 5,790,512. Asserted by electronics giant Koninklikje Philips in 29 separate lawsuits.
• Patent Reissue No. 38,014. Asserted by Mag Instruments in 29 separate lawsuits.
• Patent No. 5,313,229. Asserted by F&G Research in 24 separate lawsuits.
• Patent No. 4,792968. Asserted by Ron Katz in 19 separate lawsuits.
• Patent No. 6,766,304. Asserted by Trading Technologies in 17 separate lawsuits.
• Patent No. 5,352,605. Asserted by Monsanto in 17 separate lawsuits.
• Patent No. 6,241,739. Asserted by Altair Instruments in 16 separate lawsuits.

Interestingly, only two of these patents appear to be controlled by non-practicing entities.

(From Westlaw Patent Litigation Data)

LISTING OF COMMONLY OWNED APPLICATIONS AND PATENTS UNDER 37 CFR 1.78(f)

In November 2007, 37 CFR 1.78(f) will become effective (along with a host of other rules).

Recently, the PTO made public its draft form SB206 for complying with rule 78(f).

The instructions for completing the form are as follows:

Notes

Under 37 CFR 1.78(f)(1), applicant in a nonprovisional application that has not been allowed (37 CFR 1.311) must identify by application number (i.e., series code and serial number) and patent number (if applicable) each other pending or patented nonprovisional application, in a separate paper, for which the following conditions are met:

• (A) The nonprovisional application has a filing date that is the same as or within two months of the filing date of the other pending or patented nonprovisional application, taking into account any filing date for which a benefit is sought under title 35, United States Code;
• (B) The nonprovisional application names at least one inventor in common with the other pending or patented nonprovisional application; and
• (C) The nonprovisional application is owned by the same person, or subject to an obligation of assignment to the same person, as the other pending or patented nonprovisional application.

Under 37 CFR 1.78(f)(2)(i), a rebuttable presumption shall exist that a nonprovisional application contains at least one claim that is not patentably distinct from at least one of the claims in another pending or patented nonprovisional application if the following conditions are met:

• (A) The nonprovisional application has a filing date that is the same as the filing date of the other pending or patented nonprovisional application, taking into account any filing date for which a benefit is sought under title 35, United States Code;
• (B) The nonprovisional application names at least one inventor in common with the other pending or patented nonprovisional application;
• (C) The nonprovisional application is owned by the same person, or subject to an obligation of assignment to the same person, as the other pending or patented nonprovisional application; and
• (D) The nonprovisional application and the other pending or patented nonprovisional application contain substantial overlapping disclosure. Substantial overlapping disclosure exists if the other pending or patented nonprovisional application has written description support under the first paragraph of 35 U.S.C. 112 for at least one claim in the nonprovisional application.

Instructions:

1. In the column on the right, list the numbers of the applications and patents that meet the conditions set forth in 37 CFR 1.78(f)(1)(i). For supplemental lists, please do not list previously submitted applications and patents.
2. In the first column on the left, place a check mark in the box if the cited application or patent also meets the conditions set forth in CFR 1.78(f)(2)(i) and applicant attached an explanation of how the application contains only claims that are patentably distinct from the claims in the cited application or patent.
3. Place a check mark in the box in the second column on the left, if the cited application or patent also meets the conditions set forth in CFR 1.78(f)(2)(i) and applicant attached a terminal disclaimer in accordance with 37 CFR 1.321(c).
4. Place a check mark in the box in the third column on the left, if applicant also attached an explanation why there are two or more pending nonprovisional applications containing patentably indistinct claims. See 37 CFR 1.78(f)(2)(ii)(B).

PTO Claim Construction: "Flexible Foam" Is Not "Rigid Foam That Is Flexible When Crushed"

In re Buszard (Fed. Cir. 2007)

The Buszard application is directed to a flame retardant composition that includes a flexible polyurethane foam base. The PTO Patent Appeal Board rejected Buszard’s patent application as anticipated by a prior patent.

On appeal, the CAFC reversed — Judge Newman penned the opinion that focused on the PTO’s practice of giving claims their ‘broadest reasonable interpretation.’

“Buszard's specification and claims specifically state the requirement of a flexible polyurethane foam…. No matter how broadly "flexible foam…" is construed, it is not a rigid foam…. The [cited prior art] reference describes only a rigid foam reaction mixture that produces a rigid product. Only by mechanically crushing the rigid product into small particles is it rendered flexible, as a rock can be mechanically crushed to produce particles of sand. This description cannot reasonably be construed to describe, and thus to "anticipate," the flexible foam product of a flexible foam reaction mixture. We agree with Buszard that it is not a reasonable claim interpretation to equate "flexible" with "rigid," or to equate a crushed rigid polyurethane foam with a flexible polyurethane foam.”

Interestingly, Judge Newman’s claim construction intertwines analysis of the claim language with analysis of the scope of prior art disclosure.  Although the PTO may give an applicant’s claims broad interpretation — the scope of the prior art cannot extend beyond its disclosure.

Judge Prost dissented. In Prost’s view, any ambiguities in patent claim terms should be construed against the patentee during prosecution of the patent. That approach avoids the usual ‘guessing game’ of Phillips-style claim construction and it is quite easy for an applicant to make clarifying amendments to claim language.  

Peter Detkin on the New Patent Market

Peter Detkin is Intel’s former director of patents, licensing, and litigation who coined the term patent troll. More recently, Detkin co-founded Intellectual Ventures. IV’s product is intellectual property and IP licenses. The company buys patents from small companies and individual inventors and also files patents on its own inventions.

Detkin has an interesting new article in John Marshall’s RIPL journal titled “Leveling the Patent Playingfield.” In the article, Detkin does a great job of explaining IV’s role in the process.

Normally small players have great difficulty simply avoiding being marginalized by major players.  One part of IV’s business is to aggregate the patent rights held by small players and then use its newfound size and power to license those portfolios.

Although IV’s purpose is clearly to make money, he also sees the results as helping the little guy:

“By matching patent owners with patent users, this market may enable small inventors to have a greater stake in their technological efforts.”

The article is an interesting and quick read (especially for a law review).

• Read the Article
• Intellectual Ventures website

Ford Design Patents Block Import of Repair Parts - Infringers Call for Patent Reform

In re Certain Automotive Parts, 2007 WL 2021234 (ITC 2007)

Ford Motor Company owns dozens of design patents covering various aspects of its vehicle designs. D496,890, for example, covers a vehicle grille; D493,552 covers a vehicle head lamp; D503,135 covers a bumper lower valance; and D496,615 covers a side view mirror. In 2005, Ford initiated a Section 337 action before the International Trade Commission (ITC) asking for an exclusion order against various auto parts importers whose imports violated the Ford design patents. For the most part, the accused parts are used to repair post-crash vehicles.

An administrative law judge (ALJ) found that the majority of the asserted patents were valid and infringed, although some patents were invalid.  The ITC then issued an order to exclude importation of the unlicensed repair parts.

Repair doctrine: Over the years, courts have created a non-statutory doctrine of permissible repair. Under the doctrine, post-sale repairs made to a patented object are not considered actionable. On the other hand, reconstruction of the patented object will be actionable as an unlicensed “making” of the invention.

Although interesting, the repair doctrine does not apply here. The accused infringers are not repairing anything — rather, they are importing replacement parts that on their own are infringing.

Calls for Patent Reform: After losing on the merits, the would-be importers have jumped on the patent reform bandwagon asking for a “repair parts” exception to the design patent laws. [Quality Parts Coalition]. Car manufacturers would like to go the other way — adding vehicle hull design protection to the Copyright Act. [See Boat Hull statute]

Appeal: The case, captioned as Ford v. ITC, 07–1357, is now on appeal at the CAFC — A decision is expected summer 2008.  The critical question for Ford — will the patents pass the CAFC’s dreaded points-of-novelty test?

DC Court Rejects PTO's Novel Theory of Double Patenting

Takeda v. Dudas (D.D.C. 2007)

Takeda’s priority date stretches back to 1974 when the company filed a Japanese patent application disclosing a set of anti-microbial agents known as cephem compounds. The first US patent did not issue until 1988 (‘606 patent). In 1996, Takeda’s ‘216 patent issued – also reaching back to the 1974 priority date. The ‘216 patent claims a process of compounds claimed in the earlier ‘606 patent — those process claims were not, however, added until 15 years after the priority date.

During a reexamination, the PTO Board of Patent Appeals rejected the ‘216 patent after applying the non-statutory double-patenting doctrine. Under the Board’s decision, the Takeda was guilty of attempted double patenting despite the fact that the two sets of claims were not obvioius variations. Instead, the Board found that the second patent was invalid becaues it “unjustly extends the patent rights of the first patent.”

In particular, the Board held that a process patent with an extended patent term will be invalid for double-patenting “where (1) the claimed method for making the [compound] is described in the [original] patent and (2) there is no credible alternative method for making the [compound] which does not involve an infringement of the method patent?” The Board also faulted Takeda for its 15 year delay in presenting the new claims.

Takeda appealed the BPAI rejection to the DC District court. That court granted summary judgment — ordering the PTO to issue a reexamination certificate.

Only way to make a previously patented product: Takeda submitted an unrebutted declaration that convinced the court that there were multiple ways to create the cephem compounds. Thus, the PTO’s conclusions regarding the lack of alternative methods were factually incorrect.  In its decision, the court rejected the PTO’s argument that the alternative methods must have existed as of 1974. Rather, the court held that those methods may be shown in subsequent technological advances.

Double Patenting Based on Delay: The court went on to find that a patentees delay in pursuing claims could never, on its on, be grounds for a double patenting rejection. Rather, the grounds for double patenting always primarily rest on the lack of patentable differences between the two inventions.

Rejection Reversed

Notes:

• Hal Wegner along with Ed Polk, Leon Radomsky & Steve Maebious handled the appeal for Takeda
• BPAI Decision

Continued Patent Trouble for Vonage

Verizon v. Vonage (Fed. Cir. 2007)

Judge Dyk wrote the majority opinion. Each of the five substantive sections of the opinion garnered two votes. Chief Judge Michel joined Parts I and V while Judge Gajarsa joined Parts II-IV. Both Judges Michel and Gajarsa filed additional dissenting opinions.

Earlier in 2007, Vonage was found to infringe three of Verizon’s IP Telephony patents. The verdict awarded $58M in damages along with an ongoing 5.5% royalty rate and an injunction against further infringement.

On appeal, the CAFC affirmed that two of the patents were valid and infringed and that an injunction had been properly granted. As to the third patent (the ‘880 patent), the CAFC vacated and remanded after finding claim construction errors, potential errors in application of the obviousness doctrine under KSR, and errors in determining injunctive relief under eBay. The damage award was also vacated because the jury verdict did not apportion damages according to the various patents.

Thus, Vonage still infringes, but perhaps not as severely. It is unclear at this point whether avoiding infringement of one patent helps Vonage in any substantive way…

Chief Judge Michel would have affirmed across the board. And, interestingly, he would not have disturbed the $58M damage award even though one of the three patents was not infringed.

“When, as here, the evidence shows that each of the accused products infringes all of the patents-in-suit, and the infringer fails to make any showing on appeal that the damages award would not be supported by only those patents for which we affirm liability, we must affirm the damages despite our reversal of part of the infringer's liability.”

Judge Gajarsa found claim construction errors in one other Verizon patent, but could not convince a colleague.

============

Sprint v. Vonage (E.D.Kan. 2007) On September 25, a Kansas City jury found that Vonage also infringes a patent held by Sprint Nextel — tacking on another 5% in royalty revenue. [LINK].

Notes:

• Vonage stock has lost 90% of its value since Sept 2006.
• Stay Pending Appeal I
• Stay Pending Appeal II
• Stay Pending Appeal III

Need for Patent Reform?

Won’t it be interesting if the internet telephone industry is decimated through the assertion patent rights held by the largest telephone companies? How does this reflect on patent reform issues? Are there any examples industries being destroyed (or companies crippled) based on patent troll activity/

Supreme Court to Decide Patent Exhaustion Case

Quanta v. LG Electronics (Supreme Court 2007)

The Korean chaebol LG licensed a set of patents to Intel.  The license expressly excludes Intel's customers and similarly does not cover any customer product made by combining an Intel product with a non-Intel product.

When LG sued a host of Intel chip-based computer manufacturers for infringement, they complained of attempted double-dipping.  According to the defendants (including Quanta), their use of licensed Intel chips implicated the first sale doctrine of patent exhaustion.

Now the Supreme Court has granted certiorari to determine whether LG’s narrow license terms avoid exhaustion.

Question presented: “Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent’s patent rights were not exhausted by its license agreement with Intel Corporation, and Intel’s subsequent sale of products under the license to petitioners.”

Exhaustion – also known as the first sale doctrine – serves as a default rule in both patent and copyright laws. Under the principle, a license fee is only be charged one time per object. Thus, a rights holder controls the first sale of a protected object, but does not control subsequent sales. The copyright rule is codified in Section 109. The patent rule, however, is only based on case law.

Lower Court Ruling: The lower court found that Intel’s "unrestricted" license and Intel's sale of its chips under the license exhausted LG's rights to any additional patent recovery.

CAFC Ruling: On appeal, the Court of Appeals for the Federal Circuit (CAFC) reversed, finding that when restrictions are placed on a license, "it is more reasonable to infer that the parties negotiated a price that reflects only the value of the ‘use’ rights conferred by the patentee." The appellate panel found that there was no exhaustion because of express conditions on the use of Intel's licensed products -- specifically that the products could not be combined with non-Intel parts.

Quanta's argument is quite simple:

• Intel sold chipsets to the petitioners;
• Those sales were fully authorized under the LG license and were made without restriction;
• Therefore, LG's patent rights are exhausted.

Quanta goes on to say that under Supreme Court jurisprudence, a sale cannot be conditional. (No improper restraints on alienation).  And, without citing Arizona Cartridge, the petition lists a set of upcoming problems if conditions for sale are allowed for patented items:

[T]he Federal Circuit's new jurisprudence threatens to kick off a new era of "notices" attached to sold goods.  Obvious candidates include "single use only," "no use outside of Massachusetts," "no repair," "no resale," or "no resale for less than the price of purchase."

On the other side, LG points-out that Intel made a business decision not to cover its customers.  Because of that decision, Intel received a cheaper license, but now the customers must make-up the difference.

[When there are no patent misuse or notice concerns,] parceling out of the exclusivity rights is simply a matter for negotiation in the marketplace, not for a legal override of commercially fashioned terms.

An amicus on behalf of Dell, HP and others identifies the origin of the current CAFC precedent: Mallinckrodt.

Mallinckrodt held that a restriction on the post-sale use and enjoyment of a patented article is enforceable under the patent laws as long as it does not “venture[] beyond the patent grant and into behavior having an anticompetitive effect not justifiable under the rule of reason.”

According to the Amicus (and Quanta), the Mallinckrodt decision and its progeny do not follow Supreme Court precedent as stated in Univis Lens.

Univis Lens ... held that the authorized sale of an article manufactured “under the patent” exhausts all patent claims in the article regardless of any purported limitation on the subsequent use and enjoyment of the article. . . Univis Lens held that a condition on the post-sale use and enjoyment of a patented device violated the antitrust laws because it was not enforce-able under the patent laws, and thus was not protected against antitrust scrutiny. See 316 U.S. at 252 (“[t]he price fixing features of appellees’ licensing system, which are not within the protection of the patent law, violate the Sherman Act”).United States v. Univis Lens Co., 316 U.S. 241 (1942)

Notes

• It turns out that the patents were originally issued to Wang Labs and are indeed quite broad. U.S. Patent Nos. 4,918,645; 5,077,733; 4,939,641; 5,379,379; and 5,892,509
• Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992)
• Jazz Photo v. ITC, 264 F.3d 1094 (Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002)("United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent.").
• Arizona Cartridge Remanufacturers Association Inc. v Lexmark International Inc, 421 F.3d 981 (9th Cir. 2005)
• United States v. Univis Lens Co., 316 U.S. 241 (1942)
• Birdwell, ''Exhaustion of Rights and Patent Licensing Market Restrictions,'' 60 J. Pat. Off. Soc'y 203 (1978)

Let me Repeat: Means-Plus-Function Element Found Indefinite Without Corresponding Structure

Maurice Mitchell Innovations v. Intel (Fed. Cir. 2007) (non-precedential)

Mitchell’s patent is invalid as indefinite. In its opinion, the CAFC used a simple three step analysis:

1. The claimed “means for causing” is a means plus function limitation.
2. The specification contains no structure linked to the claimed means.
3. Therefore, the claim is invalid as indefinite under 35 U.S.C. 112 p2.

The patentee pointed to a structure in the specification that could serve as the claimed “causing means.” That approach failed because the structure must be “linked” within the specification to the claim language.

Quid pro quo: The CAFC noted that a patentee creates additional burdens by using means plus function language:

“The quid pro quo for using a means-plus-function limitation requires specificity in reciting structure and linking that structure to the limitation.”

In recent history, a more accurate version of this quid pro quo may be written as follows: The quid pro quo for using a means-plus-function limitation is that the patent claims will either be found invalid or narrowly construed.

The CAFC had no reason to issue this as a precedential opinion because it almost identically follows the recent Biomedino case: Biomedino, LLC v. Waters Technologies Corp., 490 F.3d 946, 950 (Fed. Cir. 2007).

Invalidation: Corroborating Evidence Required, Invalidity Judged by Totality of the Evidence

Adenta GMBH v. OrthoArm and American Orthodontics (Fed. Cir. 2007).

History:

• OrthoArm patented a new type of bracket for holding orthodontic braces.
• In 2001, OrthoArm assigned patent rights to American Orthodontics (in a settlement agreement). American agreed to pay an ongoing royalty of 4%. 
• American distributes Adenta’s products — in a contract between American and Adenta, the German company began to share royalty payments.  
• Adenta threatened to stop paying its share of the royalties and American responded with threats.
• Adenta then sued for declaratory judgment of invalidity.

Declaratory Judgment Jurisdiction: In MedImmune, the Supreme Court made clear that declaratory judgment jurisdiction is much broader than allowed by CAFC precedent.  In particular, the court rejected the CAFC’s requirement that a DJ plaintiff show a “reasonable apprehension of suit.”  Under the court’s newly developed precedent, Article III jurisdiction will arise when a patentee asserts its patent rights against another party’s activity or planned activity.  No actual infringement is required nor is any cessation of royalty payments.

Here, jurisdiction was simple because the patent holder had threatened to assert its rights if Adenta failed to pay royalties — “thereby creating a substantial controversy.”

Evidence of 102(b) Public Use: Under the CAFC’s “rules of evidence,” a single person’s testimony is never sufficient to invalidate a patent. Rather, some corroborating evidence must always be presented. Once that threshold is passed, a jury may evaluate the validity of a patent considering all of the evidence as a whole (using a “rule of reason.”)

Here, Adenta brought forth five witnesses to testify that the invention had been shown at the trade show. In addition, Adenta produced a letter from a German attorney directing that the US application be filed quickly because of the trade show exhibit. Despite the patentee’s attempts to discredit the evidence, the CAFC found that the corroboration threshold was met and that the fact finder had not committed clear error in evaluating the totality of the evidence.

Sham Litigation: There is some indication that this was a sham litigation between Adenta and American. Although American owns the patent, it was required to continue to pay royalties to OrthoArm under their original settlement agreement. The CAFC, however, refused to hear that argument.

Notes:

• John Fredrickson of Boyle Fredrickson represented Adenta
• Thomas Reynolds of Michael Best (Milwaukee) took the other side

Warner Lambert's Neurontin Patent May Be Infringed

In re Gabapentin Patent Litigation (Fed. Cir. 2007)

Warner Lambert sells its drug gabapentin under the trade name Neurontin to treat epilepsy and as well as post-shingle nerve pain. The related patent covers a method of making gabapentin that is stable enough to work well for pharmaceutical use.  Using tools of the Hatch-Waxman Act, Warner Lambert filed this patent litigation to keep generic versions of the drug off the market.  After years of litigation, the district court granted the generic manufacturers summary judgment of noninfringement.

Summary Judgment Basics: On appeal, the CAFC reversed — finding that the NJ District Court had been too quick to discount Warner Lambert’s expert witness testimony. In particular, the patentee’s expert had performed a test on Teva’s samples and determined that the acidic content of those samples fell within the scope of the claims. On summary judgment, “all reasonable inferences” must be weighed in favor of the non-moving party — here, those inferences lead to the conclusion that Warner Lambert’s expert might be correct and that the summary judgment was improperly issued.

Claim Construction: The CAFC also affirmed that a claimed “anion of a mineral acid” is properly defined as an “anion derived from a mineral acid” based on the plain language of the claim. 

A jury will likely now decide whether the generic manufacturers have done enough to avoid infringement.

Typically, generic manufacturers stay off the market throughout patent litigation in order to avoid the potential risk associated with infringement damages. Here, however, Teva began selling gabapentin in 2004 and several other generic manufacturers quickly followed.

Notes:

• Morris Nichols of Delaware represented the Patentee
• Mr. Haug of Frommer Lawrence Haug; Steven Lee of Kenyon & Kenyon; and Richard Basile of St. Onge represented the various generic manufacturers.

 

 

Threatening Letters to Infringer's Clients Are Not Actionable Unless "Objectively Baseless" (Although They Will Create DJ Jurisdiction)

GP Industries v. Eran (Fed. Cir. 2007)

Eran makes “leakproof” rain gutter covers. Several Eran employees were fired during the summer of 2005.  Those individuals reorganized as GPI — a potential competitor to Eran. As a preemptive strike, Eran mailed letters to its distributors and contractors noting that GPI’s planned to sell a competitive product that infringed Eran’s patent.

After GPI filed for declaratory judgment, the district court (Nebraska) granted GPI’s motion for a preliminary injunction — stopping Eran from “(1) seeking to prevent GPI from making and selling its gutter products during the pendency of this litigation and (2) making vague and unspecified allegations of infringement against GPI in the marketplace.”

On appeal, the CAFC reversed — finding that the preliminary injunction had been improperly granted.

The party seeking a preliminary injunction has the burden of showing: “(1) a reasonable likelihood of success on the merits; (2) irreparable harm; (3) a balance of hardships in its favor; and (4) public interest in favor of the injunction.” Once granted, a preliminary injunction will only be vacated for clear error.

Injunction against Communications: Based on First Amendment rights and 35 U.S.C. § 287 (notice), injunctions relating to communications must pass a higher hurdle. In particular, “bad faith” is required in order to bar communications.

“One has a right to inform others of his or her patent rights. See 35 U.S.C. § 287. Thus, an injunction against communication is strong medicine that must be used with care and only in exceptional circumstances.”

In Globetrotter Software, the CAFC held that “bad faith” communications require “objectively baseless claims.”  Notably, these determinations are based on federal law that preempt any state laws that may be less strict.

Here, the CAFC found that Eran’s statements could not be “objectively baseless” since the lower court had noted the real potential that Eran would eventually succeed on the merits of the case.

Preliminary Injunction Reversed

Notes:

• Hovey Williams of Kansas City, Missouri represented the patentee, Eran.
• Kirton & McConkie of Salt Lake City, Utah represented the accused infringer.

Ineligible Subject Matter: 35 USC 101 Finds its Teeth (Biting into Nonobviousness)

In re Comiskey (Fed. Cir. 2007); and
In re Nuijten (Fed. Cir. 2007)

• Comiskey’s patent application claims a method of arbitrating that does not necessarily require the use of any ‘technology.’
• Nuijten’s patent application claims a signal containing a ‘watermark’ without being tied to a specific type of signal or any technology.

Both applications have been denied by the Federal Circuit under 35 U.S.C. Section 101 for their failure to claim patentable subject matter.

The scope of patentable subject matter is defined by Section 101 as any “new and useful process, machine, manufacture, or composition of matter.”  Any patent claim must fall within at least one of these categories.  Further limiting these categories is our precedential history that not every new and useful process constitutes patentable subject matter. See, for example, Flook & Benson.  In particular, the Supreme Court has noted that a process claim reciting an algorithm must either be (1) tied to a machine or (2) transformative of some composition of matter or device. Flook & Diehr.

Under these precedents, a claim that includes a mental process may be patentable — so long as it is otherwise tied to ‘reality.’

Comiskey: The Comiskey method of claim 1 admittedly does not require a machine, but it does require interaction with a ‘document.’  The reference to a document, however, was not enough to allow the “mental process” claim to be treated as legitimate.

“Thus, like the claims that the Supreme Court found unpatentable in Benson and Flook and the claims found unpatentable in our own cases, Comiskey’s independent claims 1 and 32 seek to patent the use of human intelligence in and of itself. Like the efforts to patent “a novel way of conducting auctions” which Schrader found to be directed to an abstract idea itself rather than a statutory category, Comiskey’s independent claims 1 and 32 describe an allegedly novel way of requiring and conducting arbitration and are unpatentable.”

Some of Comiskey’s claims arguably require a computer to operate through “modules.”  That claim construction transforms those claims to be patentable subject matter.  This means that software remains patentable subject matter if a computer limitation is a proper part of the claim.

Section 101 is Safe: Comiskey appear to reinstate something akin to the USPTO’s ‘technological arts’ requirement that had been eliminated by the Lundgren decision.  For Comiskey, recitation of a microprocessor as a limitation of the claims was sufficient to overcome the patentable subject matter issue. Notably, this is a rule of formality that, in most instances, can be followed without substantively reducing claim scope.  Under Comiskey, there is no requirement that the technical link be something novel or non-obvious. 

Section 103 is Lost: Although the question of patentable subject matter does not require a determination of nonobviousness, the reverse is not true.  Nonobviousness may now require an input from the patentable subject matter stage. The most interesting lines of Comiskey are as follows:

“The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness. Moreover, there is no pertinent evidence of secondary considerations because the only evidence offered is of long-felt need for the unpatentable mental process itself, not long-felt need for the combination of the mental process and a modern communication device or computer.”

The implicit holdings here: (1) evidence of secondary considerations do not apply to portions of an invention that are not considered “patentable subject matter;” and (2) during nonobviousness analysis, any portion of an invention that constitutes nonstatutory subject matter will be considered de facto obvious.

Nuijten: The Nuijten court bit off a bit more — finding that a signal is not patentable even if tied to a transitory form (such as a radio broadcast or light pulses in a fiber optic cable).  The problem - the court could not fit a ‘signal’ into any of the four categories:

• Process: Process is defined in Section 100 as a “Process, Art, or Method.” The ‘art’ term appears on its face different than a typically process — especially based on the constitutional statement of “useful arts.” However, the CAFC refused to expand the meaning of process to include items that do not require an action. Thus, a signal is not a process.
• Machine: The Supreme Court has defined a machine as “a concrete thing, consisting of parts, or of certain devices and combination of devices.” Burr (1863). Under this definition, a signal is not a machine.
• Manufacture: The court limited a manufacture to an “article” produced by man. According to the court, an ‘article’ is not transient and cannot exist in a vacuum — both qualities of a signal. Thus, a signal is not a manufacture.
• Composition of Matter: A transient electric signal is not a “chemical union, nor a gas, fluid, powder, or solid.” Therefore, a signal is not a composition of matter.

Failing to fit within a predefined category, the only conclusion is that a signal is not a patentable subject matter.

Rules of Practice:

• Gangrene Treatment: In the political world of the courts, this case might be seen as the CAFC’s gangrene treatment — where the Supreme Court is the disease and patent law jurisprudence is the patient.  Several toes have already been lost, and the CAFC is cutting off a foot to prevent the disease from spreading any further.
• Morse Code: One important statutory subject matter case is that of O’Reilly v. Morse (1853) – invoving the patenting of Morse code. In that case, the Supreme Court invalidated some claims as overbroad, but found that Morse’s claim to a “system of signals” to be patentable as an ‘art.’  The CAFC, of course, does not overrule Morse, nor does it adequately explain how Morse’s patent would fit within our modern conception of the four categories.

CAFC Denies Joint Infringement Claim and Maps Out Infringement Avoidance Schemes

BMC v. Paymentech (Fed. Cir. 2007)

BMC’s patents cover a method for processing a debit transaction without using a PIN. The payment industry is divided so that there is no single party that infringes an entire claim. However, when combined, the effort of a payee’s agent, an ATM network, and a financial institution

The usual rule is that direct infringement occurs only when a single actor performs “each and every element” of an asserted claim. Likewise, inducement requires proof of underlying single-actor direct infringement.  Under a doctrine akin to agency, all actions ‘controlled’ by the single actor are considered to be performed by the single actor.  Thus, courts have long held that you cannot avoid liability by simply “having someone else carry out one or more of the steps” on your behalf. 

Here, BMC acts for an extension of the law in cases where parties are cooperating in a manner that infringes the patent – even though no single party controls the others. The CAFC, however, refused to extend the law — even while admitting that its decision paves a clear pathway for would-be infringers to avoid liability:

“This court acknowledges that the standard requiring control or direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement.”

The CAFC’s concern, of course is that allowing this type of joint infringement would greatly increase potential liability of many many companies. For instance, here, BMC would like to hold ATM networks liable even though their actions do not involve any novel part of BMC’s invention. Without any controlling party, BMC’s claim of infringement fails.

As part of its justification, the court cited Mark Lemley’s divided infringement article. In that article, Lemley argues that patent drafters can avoid most potential joint infringement problems by drafting claims that focus on one party at a time.

Notes:

• The doctrine of control is certainly not as strict as typical agency doctrine.  And, in this opinion the court gives some positive language to capture bad behavior. For instance, the court noted approvingly that district courts have held parties liable for who ‘mastermind’ a scheme of contracting-out steps of a patented process.  As a strict liability claim, the CAFC is correct to avoid undue expansion of the class of potential defendants. However, the hole created by the CAFC is potentially quite large — I have proposed a new cause of action for conspiratorial infringement that would not require a single controlling entity, but would require a mens rea requirement similar to that of inducement.  
• Related Material:
• Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1568 (Fed. Cir. 1985) (finding no direct infringement by manufacturer who performed the first step of a process claim even where its customer performed the other step of the claim)
• Cross Medical Products, 424 F.3d at 1311 (rejecting patentees’ efforts to combine the acts of surgeons with those of a medical device manufacturer to find direct infringement of an apparatus claim).
• An expanded joint infringement notion is supported by the CAFC's recent On Demand decision where the court noted that "[i]t is not necessary for the acts that constitute infringement to be performed by one person or entity."
• In PharmaStem, the CAFC did not decide the issue, but noted that the “viability and scope of [the theory of joint infringement] liability is a subject of considerable debate.”
• Applied Interact, LLC v. Vermont Teddy Bear Co., Inc.  2005 WL 2133416 (S.D.N.Y.,2005), the district court noted that infringement by separate entities requires “some connection” between the entities.
• Free Standing Stuffer, Inc. v. Holly Dev. Co., 187 U.S.P.Q. 323 (N.D. Ill. 1974), requires a “sufficient connection to, or control over” third party entities performing some of the elements.
• Cordis Corp. v. Medtronic AVE, Inc., 194 F. Supp. 2d 323 (D. Del. 2002) (requiring close relationship between defendant and the doctors performing part of the patented process).
• Shields v. Halliburton Co., 493 F.Supp. 1376 (W.D. La. 1980) (finding defendants liable for infringement based on the combined actions of two entities).
• Wegner well thought viewpoint from 2001
• Sriranga Veeraraghavan, Joint Infringement of Patent Claims: Advice for Patentees, 23 Santa Clara Computer & High Tech L.J. 211 (2006).
  

 

How not to divide patent rights during bankruptcy

Morrow v. Microsoft (Fed. Cir. 2007)

In bankruptcy, AHC’s title to its patent transferred to a liquidating trust, AHLT. A second trust, GUCLT, was given the right to several causes of action, including patent infringement litigation (generally called Estate Litigation).  GUCLT was not granted a license to make or use the patent.

Through its trustee, GUCLT sued Microsoft for infringing Patent No. 6,122,647 – a patent relating to dynamic generation of hypertext links. Microsoft was awarded summary judgment on the merits. On appeal, GUCLT had trouble even getting a hearing.

Standing: To have standing, a party must show injury:

• The patent title holder has standing to sue because infringement injures the patent holder’s right to exclude.
• An exclusive licensee usually has standing to sue because the infringement injures the licensee’s ‘exclusivity.’ When the exclusive licensee sues, the patent title holder must be joined as a co-plaintiff.
• A non-exclusive licensee usually does not have standing because they have no right to stop others from making or using the invention.
• A non-licensee also has no standing to sue.

GUCLT holds the contractual right to sue, but is not a licensee. Ergo, GUCLT does not have standing.  (Under the bankruptcy plan, AHLT likewise has no right to bring litigation…)

Rule of Practice: A non-title-holder must be granted an exclusive license as well as full litigation rights in order to have standing to sue for patent infringement.

IP Hall of Fame 2007

The conservative British publication, Intellectual Asset Management (IAM) Magazine, sponsors an annual induction ceremony into the IP Hall of Fame. This years induction will be part of the Ocean Tomo Fall Auction in Chicago next month. However, IAM has released the names of winners already. Some highlights:

• Judge Pauline Newman (Federal Circuit Judge)
• Kevin Rivette (of Rembrandts in the Attic)
• Gerald Mossinghoff (Former USPTO Commissioner)
• Jerome Gilson (of Gilson on Trademarks)
• Karl Jorda (Franklin Pierce Law Center)
• Joseph Straus (Max Planck Institute for IP)
• Hugh Laddie (All around UK IP Bigwig)
• Hisamitsu Arai (Former Japanese Patent Office Commissioner)

I am a voting ‘academy member’ of the Hall of Fame along with a host of better qualified intellectual property leaders.

Notes:

• Read the IAM blog.

 

Patently-O Housekeeping

• Patently-O continues to grow with over 280,000 visits in August 2007. (Double last-year’s numbers). Please let me know when you run across some interesting patent law news for the site!
• Patently-O has now been consumed by a Missouri Limited Liability Corporation, Patently-O, LLC.
• Part of the ‘business’ transition includes site sponsorship. The Chicago Intellectual Property Firm MBHB LLP (my former law firm) has become the first major sponsor.  Current MBHB attorneys author two other well respected IP related blogs: The OrangeBookBlog and PatentDocs. Thanks MBHB!

$156 Million Verdict for Patentee

TGIP v. AT&T (E.D.Tex. 2007)

TGIP has won a jury verdict against AT&T for $156 million. The asserted patents – U.S. Patent Nos. 5,511,114 and 5,721,768 — both involve calling card processing. The jury also reportedly decided that the infringement was willful – District Court Judge Ron Clark will now decide whether to enhance damages based on the finding. (Judge Clark will also rule on JNOV motions).

TGIP appears to be a company that run by Charles Stimson, one of the named inventors. Interestingly, neither patent show-up in the PTO assignment database as assigned to TGIP. Stimson was formerly the president of “Call Processing, Inc.,” which is listed as an assignee (but not a plaintiff). In the late 1990’s CPI sued several companies for infringing the same patent. That case was dismissed without prejudice.

AT&T will appeal.

Notes:

• Verizon has reportedly settled with TGIP for an undisclosed sum. Other companies that (likely) settled include: IDT, DFTS Interactive, US South, Pre Solutions, Bell Atlantic, and reportedly MCI.

How long does a BPAI appeal take?

In the first two weeks of September 2007, the Board of Patent Appeals and Interferences released over one hundred opinions. I looked at the file wrapper histories of thirty of these recent BPAI decisions to get some picture of the timing of BPAI appeals.

On average it took just under 18 months (542 days) from the filing of the appeal brief until a decision was reached by the BPAI.  The mean hides a wide range of delay: From a minimum of 9 1/2 months to a maximum of 44 months. (Standard Deviation 255). 

Most of the time delay is not attributable directly to the BPAI. Rather, most of the delay occurs between the date that the appeal is filed and the date that the case is submitted to the BPAI.  On average, it took about 11 months (328 days) to ‘complete briefing.’ Typically, that time period involves the applicant’s brief; followed by an examiner’s answer; and finally a reply brief. Once the case is submitted to the BPAI, the average decision time was seven months (214 days).

If you win an appeal, the Examiner may reopen prosecution with an additional rejection, although the more common approach is to issue a notice of allowance.

Based on this information, you can advise clients that an appeal – pushed through to the end – takes an average of 18 months, but that there is a wide variance.  As I noted earlier in 2007, only fewer than of appeals are pushed-through to the end. [Link].  In many cases, Examiners withdraw rejections or applicants file RCE’s with new claims. These calculations also do not include time delays associated with BPAI rejections for improper appeal brief form. Instead, I only began counting once a ‘proper’ brief was filed. In an earlier study, I showed that approximately 25% of appeal briefs are rejected on procedural grounds as either defective or incomplete. [Link].

The prosecution history of a patent application typically includes at least two substantive rejections prior to the appeal brief. In this sample, the average application had been in process for over three years (39 months) before the appeal brief was filed. 

As with essentially every other area of patent law, we can expect that BPAI timing and results will vary by technology area.

Notes:

• Law Students: Work at the BPAI

Patently-O Tidbits

• Lemley (Stanford) & Myhrvold (IntVen) have released a short article on “how to make a patent market.” They suggest that an information gap is one problem creating friction in licensing negations. The solution — require publication of patent assignments and license terms. [LINK]
• Over the past few weeks, we have directed some focus on the protection of industrial designs. Why? (1) the law surrounding protection of industrial designs is in disarray; (2) I expect that protection of industrial designs will become more important as utility patent protection becomes more difficult and more costly; and (3) if well protected, industrial designs & fashion rights may well be worth more than the value of all non-pharmaceutical utility patents.
• New Patent Law Job Postings:
• Patent Engineer V - Novellus Systems - Silicon Valley
• Patent Engineer III - Novellus Systems - Silicon Valley
• Patent Prosecution - Schneck & Schneck - San Jose
• Electrical Engineering Patent Attorney - Washington DC
• Sr Mechanical Associate - Litig and opinions - Washington DC

Minimal Patent Infringement Complaint

McZeal v. Sprint Nextel (Fed. Cir. 2007).

McZeal’s pro se patent infringement complaint was dismissed for failure to state a claim. On appeal, the CAFC reversed – finding that the complaint was sufficient.

In particular, the court found that the complaint is not required to specifically describe where each element of the asserted claim is found in the accused device. Those specifics regarding infringement “is something to be determined through discovery.”

Design Patents: Corporate Parts Buyer as Ordinary Observer

Arminak v. Saint-Gobain Calmer (Fed. Cir. 2007).

In yet another serious blow to design patent protection the Federal Circuit has affirmed a lower court ruling that Arminak's spray nozzle design is not infringed by Calmer.

Design patent infringement is defined both in 35 U.S.C. 271 and 289.  According to Section 289, a design patent is infringed by unauthorized commercial manufacture, use, or sale of the design or a "colorable imitation."

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties. 35 U.S.C. 289.

Infringement: Overshadowing the statutory guidelines is the CAFC's judicially created infringement jurisprudence. According to the CAFC, infringement requires satisfaction of two distinct tests: First, in the eyes of an "ordinary observer," the accused design as a whole must be deceivingly similar to the patented design. Second, the accused design must appropriate one or more points-of-novelty that distinguish the design from the prior art.

Ordinary Observer: Like the PHOSITA in utility patent cases, the ordinary observer is a mythical being. However, instead of being 'skilled in the art,' the ordinary observer is aware of the patented design, but is not an expert in the art.

Arminak manufactures and sells spray nozzles. However, Arminak does not sell on a retail level.  Rather, the nozzles are purchased by other manufacturers who join them with bottles full of product.

The corporate nozzle buyers can distinguish between Arminak & Calmer nozzles without much trouble. Once assembled, retail customers have difficulty in distinguishing between the nozzles once assembled.  The case then turns on whether the ordinary observer is defined as the corporate buyer of the nozzle or a retail customer of the fully assembled product.

Sitting by designation, Judge Holderman determined that the ordinary observer should be defined by the patentee’s corporate structure. Because Arminak’s products pass through a middle-man for further processing, it cannot count the downstream retail purchasers as ordinary observers who “buy and use” the sprayer. Rather, the ordinary observer is the corporate nozzle buyer.  (Thus, eventual customer confusion regarding the final product makes no difference).

It was undisputed that a corporate buyer would not be deceived by overall similarities between the accused and patented designs — thus no infringement.

Point of Novelty: The panel also found that the accused design did not appropriate any “points of novelty” of the patented invention. In doing so, the court found that a side-by-side detailed comparison between the accused product and the patent design drawings was appropriate.

To establish infringement in a design patent case, the district court is required to compare the patented design with the accused design. Without comparing the patented design with the accused design, there was no way for the district court to determine whether an ordinary observer would find the accused design deceptively similar and whether the accused design appropriated points of novelty.

For utility patent experts, this type of analysis is second nature. However, for over 100 years prior to founding the CAFC, the rule has been that design patent infringement jurisprudence does not allow for such “side by side” examination. See Gorham Manufacturing Co. v. White, 81 U.S. 511 (1871) (rejecting a side-by-side comparison as leading to an ‘expert’ result rather than that of an ‘ordinary observer’).

Inducement Requires Proof of Underlying Direct Infringement

ACCO v. ABA Locks and Belkin (Fed. Cir. 2007).

ACCO’s patent covers a method for locking a computer. Belkin’s lock can be used in an infringing manner (as well as in a non-infringing manner). At trial Belkin and ABA were found liable for willfully inducing infringement.

Inducement requires an underlying direct infringement; some action to encourage the direct infringement; and specific intent to encourage the infringement. Direct infringement requires either evidence of “specific instances of direct infringement” or proof that using accused device “necessarily infringes.”

Here, ACCO provided no evidence that any customer (apart from the expert witness) ever used the lock in an infringing manner. And, although the arguably “most natural” way of using the lock would infringe, there were other non-infringing ways of using the lock. (Belkin described a non-infringing use in its instruction manual).

• The court suggested that a customer survey or other customer testimony would have been appropriate.

Based on ACCO’s failure to prove direct infringement, the CAFC reversed — finding no infringement.

Notes:

• This decision is a reminder to litigators, not anything new.

USPTO Guidelines for Examination Support Documents (ESD)

New Rule 256 (37 CFR 1.256) allows patent applicants to submit more than five independent claims or twenty-five total claims in an application if supported by a proper examination support document (ESD) prior to the first Office Action. The USPTO has released a set of guidelines for ESD content. [LINK]

An ESD has five substantive sections:

• Preexam search statement;
• Listing of closest references;
• Identification of claim limitations found in references;
• Detailed explanation of patentability; and
• Showing where each limitation of each claim is supported in the specification.

The preexamination search statement must include searches directed to each limitation of each claim. Additionally, if the claims are amended to include further limitations, the search statement must then be updated. It is advisable to hire a professional searcher to conduct the search. (Before hiring ensure they understand that the search must be fully documented.)

The office only wants a listing of the most closely related references. The best closest reference is the one that discloses the most claimed limitations. Other closest references will disclose a claimed limitation not shown in any other listed reference. References that do not meet this criteria may not be cited i the ESD, but rather must be submitted in an IDS.  If the applicant later discovers an even better reference, the ESD must be updated.

Small entities will not be required to file the identification of claim limitations.

 

IPWatchDog.com For Sale

Eugene Quinn is known by many as the IP Watchdog. Over the years, Quinn has developed his IPWatchdog.com site as a valuable resource. Now the well-traveled Internet resource including its contents is up for auction at SitePoint.  Minimum bid is $10,000, but the bidding may go well higher. Earlier this year, Patents.com was sold by patent attorney Carl Oppedahl for “an undisclosed amount reportedly between $1 to $2 million.”  (Carl — You’ve got to tell us…). 

Invention Obvious in Part Because Inventors Were Experts

Daiichi Sankyo v. Apotex (Fed. Cir. 2007).

Apotex filed an ANDA to begin making a generic version of Daiichi’s patented ear infection medication method – FLOXIN Otic. Daiichi sued and won a bench trial. On appeal, the CAFC reversed — finding the patented invention obvious.

Level of Skill: The nonobvousness doctrine requires an examination of what would be available to a person having ordinary skill in the art (PHOSITA). That inquiry is premised on a definition of the mythical PHOSITA.  The general theory is that highly educated and trained PHOSITA know more and tend to think more inventions are obvious. On the other hand, a PHOSITA with little education or training would have more difficulty in making connections and finding obviousness.

The 1983 Orthopedic Equipment decision outlines factors for determining a PHOSITA – including education level of the inventor.

Here, the CAFC found that the lower court erred by picking a pediatrician as the PHOSITA in creation of compounds to treat ear infections without damaging a patient’s hearing. Rather, the skill level should be an otologist who is engaged in developing pharmaceutical formulations. The court primarily based its PHOSITA Skill Level on the inventors’ skill level and the skill level of their peers (which, almost by definition will be the same).

Obviousness: Based on the high level of skill in the art, the CAFC concluded that an otologist would have found the patented method obvious.

Reversed — Patented Invention is Obvious

DDC Comment: Although the education level of the inventor appears to be relevant to determining the PHOSITA skill level, there are a few reasons why that data point should be excluded from the list of factors. The common major mistake here is to search for a PHOSITA capable of making the invention rather than simply searching for the level of a skilled worker in the area. The PHOSITA skill level inquiry is not a search for what it takes to be a successful inventor. Rather, the PHOSITA is merely a skilled worker.  The inventor’s biographical information may be indicative of a skill level for invention, but that is not the PHOSITA inquiry. 

Under 35 USC 103(a), patentability of an invention “shall not be negatived by the manner in which the invention was made.” Of course, the process of inventing is intimately tied-in with the inventor’s skill and education level. In essence, use of the inventor’s biographical information in determing the PHOSITA skill level allows the court to ask whether the invention would have been obvious to someone standing in the shoes of the inventor. That methodology nothing more than a backdoor approach to asking whether any steps that the inventor took included non-obvous leaps — a legally impermissible question.

Notes:

• This case was originally decided in July 2007, but was recently republished as a precedential decision. The OrangeBookBlog covered the original release.

Examiner's Oral Promise Does Not Bind PTO

In re Milton (Patent Petition 2007, App. No. 09/938,465)

During a telephone conversation, the Patent Examiner stated that a replacement office action would be forthcoming. Relying on that statement, the applicant did not respond to the already pending office action. Unfortunately, the Examiner did not issue the new office action and the case went abandoned.

37 C.F.R. 1.2 makes clear that an applicant should not rely on any oral promise from a patent Examiner. Applying this rule, the director of petitions rejected Milton’s petition for revival.

The oral promise could have immediately been memorialized in an interview summary — something that was not done in this case until after the abandonment.

At the time of Petitioner's reliance, the understanding was a mere oral promise. This section of the C.F.R. expressly prohibits Petitioner's reliance on the oral understanding, and withdrawal of the holding of the abandonment based on an action which is in contravention to a regulation would be improper.

Petition denied.

Notes:

• Thanks to Hal Wegner for providing information on this case.
• The real party here is HP.

KSR Extended to Obviate Component Purified from Known Mixture

Aventis Pharma & King Pharma v. Lupin Ltd. (Fed. Cir. 2007).

Altace is the King/Aventis brand of ramipril – a top-selling ACE inhibitor.  The patent claims ramipril formulated “substantially free of other isomers.” The district court found the patent not invalid, but only by a slim margin. On appeal the CAFC reversed – finding the patent invalid as obvious.

Prior Art: One reference (‘944 patent) was filed as a continuation-in-part of an already abandoned patent application. That application was eventually revived, but Aventis argued on appeal that the ‘944 patent should not be awarded the filing date of the parent.  The CAFC found this a potentially interesting argument, but refused to hear the argument because Aventis had failed to make the argument at the district court level.

The appellate panel also agreed that the experimental results of a Shering Doctor constituted 102(g)/103(a) prior art because the Doctor had not abandoned, suppressed, or concealed her prior invention.

Obviousness of a Purified Form: The district court, ruling pre-KSR, found the patent nonobvious. On appeal, the CAFC took a different view – finding that the purified form of a known mixture is prima facie obvious if a PHOSITA would have some reason to believe that the mixture derives properties from particular components.

However, if it is known that some desirable property of a mixture derives in whole or in part from a particular one of its components, or if the prior art would provide a person of ordinary skill in the art with reason to believe that this is so, the purified compound is prima facie obvious over the mixture even without an explicit teaching that the ingredient should be concentrated or purified.

The prima facie case of obviousness is especially difficult to rebut where, as here, the potency of the mixture varies directly with the amount of isomer in the mixture.

The court implicitly distinguished this case from Forest Labs — noting that obviousness may be rebutted by showing difficulty in purifying the mixture.

[A] purified compound is not always prima facie obvious over the mixture; for example, it may not be known that the purified compound is present in or an active ingredient of the mixture, or the state of the art may be such that discovering how to perform the purification is an invention of patentable

Reversed, Patent Invalid as Obvious

Gillespie v. DWIDAG: Prosecution Arguments Limit Claim Scope

Gillespie v. DWIDAG Systems (Fed. Cir. 2007)

During prosecution, Gillespie argued around a cited prior art mine roof bolt reference — arguing that the collar of the bolt ‘appears to be cylindrical on the outside, thus impractical…’ Reviewing claim construction de novo, the appellate panel led by Judge Newman limited the claim scope to only cover non-cylindrical collars. (Following the maxim that a “patentee is held to what he declares during the prosecution of his patent.”).

Gillespie argued that the claims should not be limited by his statements because the non-cylindrical collar shape did not turn out to be material to allowance. (The Examiner provided alternative reasons for allowance). The CAFC rejected that potential loophole – finding that Gillespie’s argument was sufficient regardless of its importance in the prosecution process.

DWIDAG’s bolts were thus found to not infringe this new construction.

Notes:

• The court appears to have been careful not to use the term disclaimer. 

 

Patent Reform 2007: House of Representatives Passes H.1908

Legislative patent reform still has a long road to travel before reaching its conclusion. However, the passage of H.1908 by the House of Representatives represents a major leap forward along the path. The following are some highlights of the statute as passed. [H.1908.As.Passed].

First to file system: Obviousness and novelty would now be considered as of the “effective filing date.”  Novelty grace period would be eliminated except for the inventor’s own disclosures. Although unclear, the grace period appears to be completely eliminated for obviousness analysis. Interferences are gone.

Damages: Reasonable royalty calculations (the most common damage awards) would all require courts to conduct a thorough analysis to ensure that damages are equal to the “economic value [of the invention] properly attributable to the patent's specific contribution over the prior art.” The entire value of a product or process can only be the basis for royalty calculations if the innovation is the “predominant basis” for market demand of the product. (a showing that may be impossible in most cases). Overall this would reduce damage awards.

Search Reports: PTO would be granted discretion in ordering search reports for all applications except those by a new group called ‘micro-entities.’

Treble Damages: The statute explicitly calls-out ‘willfulness’ as the sole reason for enhanced damages then severely limits the facts where willfulness can be found. Overall this reduces the likelihood of awarding treble damages.

Post-Grant Review: In addition to reexamination, a post-grant review proceeding would be available if filed within 12–months of issuance or with the patentee’s permission.

Open Examination: Anyone may submit prior art for any patent or pending application along with an explanation of why the art is important.

Tax Methods: A patent would not be available for a newly invented tax planning method. Tax planning methods do “not include the use of tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns.”

Venue and Jurisdiction: Strong limitations on venue would likely eliminate E.D.Texas as a potential choice.

Interlocutory Appeal: A district court would be given discretion to certify interlocutory appeals of claim construction decisions.

Inequitable Conduct: Inequitable conduct must be pled with specificity following FRCP Rule 9b. Inequitable conduct rules would be made explicit in the statute. Overall, this weakens the defense of inequitable conduct.

PTO Regulatory Power: The statute would give the PTO power to make the continuation rule changes that it has already implemented.

Patent Trial and Appeal Board: Following John Duffy’s Suggestion, the statute would have the board appointed by the Secretary of Commerce rather than the PTO Director.

Study of Patent Damages: The PTO will study how damage awards have changed based on the changes in the law.

Patently-O TidBits

• Dr. Tafas has submitted an amended complaint and withdrawn his motion for preliminary injuntion to stop implementation of the continuation rules.
• A sweeping patent reform bill passed in the House of Representatives. Action now moves to the Senate. IPO’s leader Herb Wamsley may force me to eat my hat.
• BNA is hosting a conference called Patent Obviousness on October 1 at the Arlington Ritz. Given the confusingly similar name, BNA is offering $150 discount to Patently-O readers who sign-up online: go to legaledge.bna.com for online registration and enter discount code "blog" at check out. (Price is still $1000 after discount)

Extending Liebel-Flarsheim: "distinctly different" embodiment of claim elements must be enabled

Automotive Technologies International v. BMW, et al. (Fed. Cir. 2007).

ATI’s patent claims are directed to an automotive side impact crash sensor used to trigger an airbag and include the following means-plus-function limitation:

“means responsive to the motion of said mass upon acceleration of said housing in excess of a predetermined threshold value, for initiating an occupant protection apparatus”

Following ATI’s suggestion, the district court construed the means limitation to include both mechanical and electronic sensor structures. Then, based on this interpretation, the district court ruled the patent invalid for lack of enablement. (summary judgment).  

On appeal, the CAFC affirmed the ruling — finding that the specification did not enable the full scope of the claimed invention.

The specification describes the mechanical sensor in detail with multiple figures. The electronic sensor, however, is only shown in a sparse “conceptual” Figure 11 (see image at right) and described in broad terms as potentially operating “through variety of technologies using, for example, optics, resistance change, capacitance change or magnetic reluctance change.”

Enabling One Embodiment Is Insufficient: Following on the heels of Liebel-Flarsheim v. Medrad, this case reaffirms the principle that the full scope of a claim must be enabled. Enablement of a single embodiment is not sufficient. Thus, the patent’s enablement of one mode of practicing the invention (the mechanical sensor) was not sufficient to satisfy the enablement requirement.

Looking back, Liebel-Flarsheim discussed “full scope” enablement as being “at least reasonable enablement of the scope of the [claim] range.” Here, the CAFC further defines that principle by noting that electronic sensors must be particularly enabled because they are “distinctly different” from the enabled mechanical sensor.

Novel Aspects Must Be Enabled: ATI also argued that Figure 11 and its accompanying text were enabling — especially when coupled with the knowledge of one having ordinary skill in the art. This argument was rejected based on the CAFC’s combined measure of law and fact. As a matter of law, enablement of the novel aspects of an invention must be enabled by the specification even if implementation would have been within the PHOSITA’s skill level. As a matter of fact, the CAFC concluded that sensor mechanism must be a novel aspect based on statements in the specification that side impact sensing is a “new field” and that the only available side-impact switch was a crush sensor.

Notes:

• Its unclear how the enablement doctrine will work in conjunction with the doctrine of equivalents.
• The summary judgment was reviewed de novo for clear and convincing evidence of non-enablement sufficient to overcome the patent’s presumption of validity.
• Disclaimer: My former firm, McDonnell Boehnen Hulbert & Berghoff LLP, handled this appeal on behalf of the plaintiff. Although I have not worked on the case, MBHB took-over the case while I was of counsel last year.

Legislative Patent Reform in the News

• The Bush administration supports patent reform. The Bush administration does not support the apportionment section of HR.1908 [LINK].

 

Video Explaining the Need for Patent Reform...

Patent reform is largely being driven by corporate entities who argue that patent protections are currently too strong. The following video offers a skeptical version of this lobbying activity:

The real question: Can Apple & Microsoft combine forces to create a better video about the harms caused by today’s patent laws — and will they allow it to be posted on youtube?

Injunction against "any products" that infringe is overbroad; Injunction against potential future contributory infringer is not overbroad

Forest Labs v. IVAX (TEVA) and CIPLA (Fed. Cir. 2007). (Read Part I of this case analysis)

(J.Lourie) IVAX’s infringement began when it filed an abbreviated new drug application (ANDA) with the FDA for approval to manufacture a generic version of Forest Lab’s blockbuster antidepressant Lexapro. Under 35 USC 271(e)(2), the mere submission of the ANDA is considered an “act of infringement.”

At the conclusion of the case, the district court issued an injunction ordering IVAX to refrain from making or using “any products” that infringe Forest’s patent. CIPLA, IVAX’s planned distributor, was also included in the injunction.

IVAX and CIPLA both appealed the injunctions.

Overbroad Injunction: An injunction may only extend to adjudicated products (or methods) and those “not more than colorably different.” In this case, the CAFC found that the injunction language was overbroad because it applied to “any products” that infringe the patent. The court consequently modified the injunction to specifically focus on the products at issue.  (Note: Under 271(e)(4), the court may issue injunctive relief to prevent the future manufacture and sale of the infringing product).

Injunction against CIPLA for Potential Contributory Infringement: IVAX is a direct infringer based on its ANDA submission. CIPLA, on the other hand, made no such submission and is not a direct infringer.  Likewise, CIPLA is not a contributory infringer based on the ANDA submission. As the majority noted – “Ivax is not currently liable for infringement, as long as it is only pursuing FDA approval.”

Despite any current infringement, the Appellate Panel found that it is proper to issue an injunction to prevent potential future contributory infringement.

“[If the drug were sold] CIPLA would be contributing to the infringement by IVAX, so the injunction should cover both partners.”

Judge Shall dissented – arguing that CIPLA should not suffer under an injunction.

Appellate Panel Upholds Forest's Lexapro Patent

Forest Labs v. IVAX (TEVA) and CIPLA (Fed. Cir. 2007).

The Court of Appeals for the Federal Circuit today upheld Forest Labs patent on its billion dollar SSRI Lexapro (escitalopram oxalate) — rejecting IVAX’s arguments that the patent is anticipated and obvious. Based on two FDA extensions, the patent is set to expire on March 14, 2012.

This case is an important stepping stone in our new understanding of obviousness.  Interestingly, in its multi-page discussion of obviousness, the appellate panel did not mention the Supreme Court’s recent landmark decision of KSR v. Teleflex. 

History: Forest holds an expired patent on a racemic form of citalopram. After considerable effort, Forest’s scientists doubled the strength of the drug by isolating the (+) stereoisomer (which turned out to be the only active isomer) and patented that isomer in a “substantially pure” form.  A prior art pharmacologic paper had suggested that the (-) stereoisomer would be the potent isomer, but that reference did not describe the preparation of the enantiomer.

Patent Reform News

House Report:Please see the House Report on HR1908 explaining the House’s view of why this particular patent reform bill is necessary. The report includes a marked-up version of the current version of the bill.  A vote is being threatened for this week or next.

• File Attachment: HR1908_report.pdf (959 KB)

Law Firms Loving Reform: Advertising with Google Adwords and other online media is relatively cheap — especially when compared with typical IP firm advertising costs that can easly run $10,000 for a single full sheet ad in an ill-read monthly. Typically, online ads serve as a way for smaller companies receive publicity.  Interestingly, several major lawfirms — notably Fish & Richardson along with Thelen Reid — have set up camp on Google for any searches relating to Patent Reform.

 

Damages: Contentious History Between Parties Justifies High Royalty Rate

Mitutoyo Corp v. Central Purchasing (Fed. Cir. 2007)

Mitutoyo and Central have been wrangling for more than a decade over Mitutoyo’s patent covering electronic calipers. The history includes Central’s 1994 agreement to exit the market; a 1995 DJ finding that the patent is not invalid or unenforceable; and a 2006 summary judgment against Central.

Both parties appealed on damages issues:

Reasonable Royalty: On appeal the CAFC found the lower court’s 29.2% reasonable royalty rate acceptable. Although a seemingly high number, Central’s profit margin is around 70%. Most interestingly, the appellate panel held that the parties “contentious history” supports a high royalty rate. This serves as a reminder that a the reasonableness of the royalty still takes-into-account the positions of the parties.

Lost Profits: Although Mitutoyo also sells calipers, Central was able to avoid lost profit damages by showing that the products had little customer or price overlap. (Central’s proof included economic evidence that the market for its $21 product was highly elastic – indicating few of its customers would have instead purchased Mitutoyo’s $100 product.)

Willful Infringement: Mitutoyo’s willful infringement claim was dismissed on the pleadings under FRCP 12(b)(6) for failure to state a claim and failure to prosecute. On appeal the CAFC reversed – finding that Mitutoyo’s allegation of willful infringement coupled with Central’s long history with the patent were “plainly more than sufficient to meet the requirement of Rule 8(a)(2) for pleading a willful infringement claim and avoid dismissal.” Similarly, the appellate court held that failure to file a summary judgment motion on willfulness does not indicate “an intent to abandon [the] willfulness claim.”

In its August 2007 Seagate en banc opinion, the CAFC raised the culpability standard for willful infringement. This case takes a step back to remind courts that the enhanced damages theory does not (yet) require a showing of fraud.

Standing of a licensee to sue: Mitutoyo’s primary US licensee was also a party to the litigation. However, a licensee only has co-plaintiff standing if it holds “at least some of the proprietary rights” of the patent. Here, the licensee has no standing because Mitutoyo also allows one other company to import and distribute its products in the US.

 

Starting Salaries for Class of 2006 Law School

NALP has released this interesting salary distribution for new law school grads. (via Bill Henderson). Newly minted patent attorneys make more on average, but I do not have hard numbers at this point. 

Patent Reform News Update

• House Vote potentially scheduled for Sept 7? – Passage Likely in the House.
• House Vote potentially scheduled for this week
• EFF supports patent reform bills
• POPA says patent reform bills are not good for examiner corps
• Google supports patent reform (Google is a member of the “coalition for patent fairness”)
• IEEE thinks that the patent reform bill is no good (We believe that much of the legislation is a disincentive to inventiveness, and stifles new businesses and job growth by threatening the financial rewards available to innovators in U.S. industry.)
• Congressional Budget Office: Patent Reform Won’t Cost the Government Anything
• HR 1908 (From Thomas.Loc.Gov)

Design Patent Litigation

In the past twenty years, the US Patent & Trademark Office has issued just over 268,000 design patents. During that time, almost exactly one percent (1%) of those issued design patents have been litigated to some degree. (i.e., at least a complaint was filed asserting infringement of the patent). The most commonly litigated are design patents covering ornamental features of shoes (7% of litigated patents) and lamps (5% of litigated patents). Other commonly litigated products include furniture (chairs & tables), eyeglasses, and golf equipment.

35 USC 171 outlines the scope of design patents as “any new, original, and ornamental design for an article of manufacture.”  The MPEP narrows this definition to only include “visual characteristics” of a design – although a court could force the PTO to include other sensory characteristics.  I suspect a product with ornamental textures – even if not visually distinct — could be protected (especially if the product was designed for blind individuals).  A further (and improbable) stretch would be to define design to include associated music, scent, and taste.

Protection for Fashion

Many product developers point to a large gap in the US protection for newly created articles and devices. In particular, product designs receive little coverage from any of the major IP regimes of patent, copyright, & trademark. Today, the fashion industry is the squeaky wheel and may be the most likely to receive sui generis coverage from Congress.  If the Senate Bill becomes law, we may finally have true fashion police.

• Counterfeit Chic
• NYTimes Article
• Congressional Action
• [Link to the Scarf photo]
• Design Registration League via Perry Saidman

 

The Chainsaw Caddie

Over the holiday, I met with my great-uncle who is a farmer in Southeast Kansas. Marvin and his wife had just returned from the Farm Progress Show in Decatur, IL. They were happy to announce that their Chainsaw Caddie had been awarded first-place in the show’s annual Inventor’s Challenge. 

The patented chainsaw holder design makes it easy to maneuver a saw near the ground without having to bend or stoop.

Congratulations Marvin & Sarah!

Links:

• Chainsaw Caddie Website
• Inventors Challenge

Enjoy the Labor Day Vacation

Enjoy Labor Day 2007. Per my usual schedule, I will be playing bocce and disc golf for the Labor Day weekend.