Patent Law Blog (Patently-O)

CAFC Overturns Jury Verdict of Non-Obviousness Because Combination Yields Predictable Results

Agrizap v. Woodstream Corp (Fed. Cir. 2008)

Agrizap holds a patent covering a method of electrocuting rats and gophers. The product is sold under the trade name "Rat Zapper."  Woodstream (maker of the Victor rat trap) first licensed the product then began manufacturing its own version.
 
The jury found the patent nonobvious and held Woodstream liable for both infringement (and for fraud based on its actions during the license.) In a post-verdict decision, the district court granted JMOL of non-infringement.

On appeal, the CAFC (Judge Moore) zeroed-in on the question of obviousness:

“[A]s the ultimate conclusion of obviousness is a question of law, it remains our duty as the appellate court to ensure that the law has been correctly applied to the facts. . . . In other words, we review de novo the conclusion on obviousness . . . [keeping in mind] that ‘[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.’” (Quoting KSR v. Teleflex, 127 S. Ct. 1727, 1739 (2007)).

Here, the CAFC found, as a matter of law, that Agrizap’s own commercial product (the “Gopher Zapper”) rendered the claimed invention obvious. The only difference between the two was the type of trigger mechanism, and the Rat Zapper’s claimed electrical switch was already well known in the cattle-prod art.

Secondary Considerations: When faced with a mere combination of familiar elements, even strong secondary evidence of nonobvious will not save the application. Here, Judge Moore took as true “the commercial success of the Rat Zapper, copying by Woodstream, and a long felt need in the market for electronic rat traps.” However, that evidence is “insufficient to overcome the overwhelming strength of Woodstream’s prima facie case of obviousness.”

Notes:

• Judges Bryson, Moore, and Wolle (S.D.Iowa).
• This case should be contrasted with Ortho-Mcneil v. Mylan , also decided this week. (Judges Michel, Rader, and Linn).
• Perhaps a strategic misstep by Agrizap?: During prosecution, the PTO made the identical argument as that made by Judge Moore. The only difference was that the PTO examiner rejected the Rat Zapper patent application based on the “Gopher Zapper” patent instead of the commercial product.  Instead of arguing around the asserted reference, Agrizap amended inventorship and filed a terminal disclaimer.  This left the Examiner’s rejection glaringly un rebutted when it turned out that the commercial embodiment (102(b) prior art) could not be swept away so easily. [See Patently-O discussion of whether to file a 131 declaration or argue over a reference.]

Computer Implemented Means-Plus-Function Element Must be Supported by Specific Algorithm in Specification

Aristocrat Technologies Australia (ATA) v. International Gaming Technology (IGT) (2007-1419) (Fed. Cir. 2008)

ATA and IGT have two parallel cases pending before the CAFC. This appeal focuses on whether ATA’s asserted claims are invalid as indefinite. (U.S. Pat. No. 6,093,102). The other pending case questions whether the PTO properly revived ATA’s unintentionally abandoned national stage application. (U.S. Pat. Nos. 7,056,215 and 7,108,603) [See Patently-O discussion of revival case].

This case focuses on a patent covering an electronic slot machine patent that allows players to pre-select which combination of symbol locations will be used to determine a winner.

Claims Indefinite: The district court held the claims invalid as indefinite under 35 U.S.C. § 112 ¶ 2. Its opinion focused on the claimed means-plus-function element “game control means” — finding the term indefinite because the specification did not provide “structure” to perform the claimed functions.  The specification did include the statement that the control means could be a microprocessor-based gaming machine with “appropriate programming.” However, the lower court focused on the absence of any “specific algorithm” or “step-by-step process for performing the claimed functions.”

On appeal, the CAFC affirmed, holding that computer implemented means-plus-function claims must include “more than simply a general purpose computer or microprocessor.”  The purpose of the requirement, according to Judge Bryson’s opinion, is to avoid overbroad “pure functional” claims.  Because of the ubiquity of general purpose computers, a bare microprocessor cannot be considered a sufficiently specific structural disclosure:

For a patentee to claim a means for performing a particular function and then to disclose only a general purpose computer as the structure designed to perform that function amounts to pure functional claiming.

Within PHOSITA’s Ability: The algorithm missing from ATA’s disclosure is almost certainly within the ability of an ordinary game programmer.  In fact, I believe that it would only take me (a law professor) only a few hours to create a rough algorithm showing how the ATA software program could operate.  Judge Bryson shot-down that argument: Structure for a means-plus-function element must be provided in the specification regardless of whether the structure is already well known in the art.

What is Required: “Source code” is not required to be disclosed, nor is a “highly detailed description of the algorithm.”  However, a computer oriented application using means-plus-function claims must “at least disclose the algorithm that transforms the general purpose microprocessor to a "special purpose computer programmed to perform the disclosed algorithm." (Quoting WMS Gaming)

Notes:

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

Patent Challenge of the Week: When does a patent expire?

Last week, I wrote about whether an infringement lawsuit can properly be filed at 12:01 am on the date that the patent is scheduled to issue. A plaintiff only has standing to sue once a patent is issued, and it is not clear to me that patent has actually issued by that point (even if the patentee holds exclusive rights for the entire day once the patent has issued).*

Expiration Date: At the other end of the spectrum is the patent expiration date. The language for the new twenty year term reads as follows:

35 U.S.C. 154(a)(2) TERM.-Subject to the payment of fees under this title, such grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States …

The optional seventeen year term language is parallel to the twenty year term, although slightly different: “The term … shall be the greater of the 20-year term as provided in subsection (a), or 17 years from grant.” 35 U.S.C. 154(c)(1).

The Question: Is the standard patent term (a) twenty years from filing, or is it (b) twenty years from filing plus one day?  I.e., if a patent is set to expire on April 2, 2008, can a generic manufacturer begin to make and sell the product on the morning of the 2nd without infringing? I would initially argue that the term should be (a) twenty years from filing — perhaps primarily because 154(c)(1) refers to the “20–year term.” However, I have heard of generic manufacturers who wait the extra day to be safe. (In certain drug cases, this extra day may be worth several hundred thousand dollars). What is the answer?

Notes:

• As a comment noted, Fed. R. Civ. P. 6(a) spells out the rules that courts should “apply in computing any time period specified in these rules or in any local rule, court order, or statute.” Rule 6(a)(1) states that “the day of the act, event, or default that begins the period” should be excluded.  In addition, under Rule 6, a time period is extended if it would otherwise end on a Saturday, Sunday, legal holiday.”
• 37 C.F.R. 1.7 may also be relevant. 
• * One bit of hard evidence answering last week’s question comes from dicta in a 1952 Helene Curtis patent case. In that case, the SDNY district court noted that the lawsuit had been filed “fifty-nine minutes after the patent had issued at noon of December 4, 1951” — and thus, was proper. See 105 F. Supp. 886. [Link]

Patently-O Bits and Bytes No. 26

• BusinessWeek: Michael Orey has written another interesting Troll Tracker article: Busting a Rogue Blogger.
• A recent comment raised an interesting question: Why do the pharmaceutical companies rarely (if ever) file their patent infringement suits in the Eastern District of Texas?
• In a tight economy, is there a tendency file more patents (to secure some assets as insurance against business failure) or fewer patents (to tighten the outflow of cash)?

Ex Parte Bilski: Once Again Rethinking the Scope of Patentable Subject Matter

We can expect over one dozen friendly briefs in the pending en banc case captioned Ex Parte Bilski by the amicus deadline of April 7. The Bilski case involves questions of whether an invention can fit within the requirements of 35 U.S.C. 101 if the invention does not specifically require the use of “technology.” 

35 U.S.C. 101: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

I was part of the team that drafted and submitted IPO’s 2006 brief to the Supreme Court in the Metabolite case. There, we argued on policy grounds that the court should not set arbitrary limits on the types of innovations that should be patentable. Instead, we asked the court to “support the expectation that innovations in yet unknown areas of technology will be eligible for patent protection.”  There will be at least one Bilski brief arguing along the same lines. It will, of course, be interesting to see whether the IPO and AIPLA have altered their positions in the past two years.

If the court chooses to narrow subject matter, the 2007 Comiskey decision will quickly become an elephant in the room. In that opinion, the Federal Circuit implicitly held that a patent applicant cannot rely on nonpatentable subject matter portions of an invention to prove nonobviousness.  Comiskey’s arguably unique inventive contribution was a method of arbitration. By itself, that method was considered an unpatentable mental process. And, Comiskey’s attempt to tie the process to a microprocessor were also unsuccessful:

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

Depending upon how it is interpreted, the Comiskey decision may greatly influence the impact of a rule narrowing patentable subject matter. For that reason, I hope that at least one brief will focus its effort on this important issue.

 

Patently-O Bits and Bytes No. 25

• Japanese Patents: Fordham’s new IPLJ blog wrestles with my question: “Why are relatively few non-Japanese applications filed in Japan?” [IPLJ][Patently-O]
• On the Radio: Legal Talk Network on Patent Troll Tracker: Ray Niro and I were guests on the internet radio show lawyer-to-lawyer.
• Tafas v. Dudas: The summary judgment motions are still pending.
• Conference in Concord, NH: Pierce Law (FPLC) is hosting its annual IP Symposium April 11, 2008: “International IP Owners: Current Battles & Future Challenges.” [Student IP Law Assn]

 

E.D. Texas Venue Case Goes En Banc; AIPLA Amicus Brief

The AIPLA believes that the Eastern District of Texas is hearing too many patent cases. Legally, the organization has decided that E.D. Texas judges are “misapplying federal transfer rules by giving too much weight to plaintiffs’ choice of venue.”

In re Volkswagen is up for an en banc hearing in the 5^th circuit court of appeals. The VW case is a product liability case stemming from a VW Golf crash that killed a 7–year old girl. The accident occurred in Dallas (location of the N.D. Tex.), but the case was filed 150 miles away in Marshall. 

VW argues that the District Court (Judge Ward) abused its discretion in denying the defendant’s §1404 venue transfer motion — arguing that it would be “unduly burdensome” for the multinational to litigate in the Eastern District of Texas rather than the Northern District of Texas.

28 U.S.C. §1391, the venue statute, broadly allows cases to proceed in any venue where a defendant corporation “is subject to personal jurisdiction at the time the action is commenced.”  Even when venue is proper, a court may still transfer the case to a more convenient location. 28 U.S.C. §1404 provides that a district court may transfer a civil action when it is both more convenient for the parties and witnesses and is “in the interest of justice.” 

In an amicus brief filed in the case, the AIPLA argues that there are many cases sitting in the Eastern District of Texas that should more properly be heard elsewhere, and that the district court has been too slow to transfer venue.

“The routine filing of patent infringement complaints in the Eastern District of Texas that have essentially no connection to that district has been encouraged by the seeming reluctance of courts in that district to transfer cases under § 1404(a).”

As a backstop to its arguments, the AIPLA also raised the threat of legislation:

“It is also worth noting that legislation on patent reform currently before Congress seeks to narrow drastically venue in patent cases, driven to a great extent by a desire to address the kind of forum shopping that occurs in the Eastern District of Texas.4 Providing the district courts clear guidance on applying the transfer provision will go a long way toward solving the forum shopping problem that is the impetus behind the pending venue legislation.”

The AIPLA Argument:

1. The location of filing should only be a presumptive starting point in the venue analysis. If a defendant shows “good cause” reason to transfer, then the presumption should evaporate.
2. “Proximity of evidence” should be a major factor.
3. This decision is made at a very early stage in the litigation, thus the court should not require a high level of precise evidence to prove convenience.
4. The “public interest” is usually a sham argument. (That the people of E.D. Tex. have an interest in having their courts adjudicate patent cases if the goods are sold there).

Read the AIPLA Brief

Rambus Jumps Up

Rambus Wins Hynix Patent Case, Shares Rise 39 Percent

Intramurals: The European Patent Divide

European IP Attorney Severin de Wit writes one of the best patent focused blogs on the European continent: IPEG. With his permission, I am reposting his article on European Patent No. 0455 750 B1 owned by the US company Document Security Systems, Inc. (DSS).

You are a European institution, the European Central Bank (ECB), and you seek the invalidation of what has been granted as a valid right by another European institution, the European Patent Office (EPO). The last weeks we got a taste of how The Great Patent Divide, the most un-European experience in patent law, has turned into Europe's Patent Demise.

Threatened by a patent infringement claim of a US company, Document Security Systems, Inc. (DSS) the ECB seeks invalidation in several European countries. The UK patents court (in first instance) invalidates the patent, EP 0455 750 B1 for a ‘Method of making a nonreplicable document’ on March 26, 2007. A day later the German Federal Patent Court ("BundesPatentGericht") disagrees with the UK court and finds the patent valid. By judgment of March 12, 2008 the District Court in The Hague, Netherlands, upheld the patent as valid and follows Germany. Just a few weeks earlier, on 9th January 2008, the French court ("Tribunal de Grande Instance de Paris") agreed with the UK court in first instance and distances itself from the German court and found the patent invalid.

On March 19, 2008, the UK Appeal Court affirmed the invalidity findings of its first instance colleagues. Patent dead, in the UK and France (so far, appeal in France still pending).

You still with me?

What a disgrace. What a sorry state European patent law is in. We know that Europe is lacking a European view on validity (and infringement for that matter), but how can this be explained? The view, generally held, is that UK courts are (very) critical on what comes out of the European Patent Office. [According to the UK,] Patent 0455750 should not have been granted. France, not yet known as “patent-unfriendly” has chosen the side of the UK in this case. Is this a scary sign of what is there to come? Maybe (just) an incident and no forbode of what is next (France as the next patent basher)? One begins to wonder, are the Germans more fond of what comes out of their (“own”) EPO, located in Munich? Is Holland more inclined to accept what comes out of Munich as well? Or is this all “coincidence”? We think not. We have seen this divide before (on stents: Angiotech's patent for Taxus stent revoked by UK Court of Appeal, (partially) upheld by the Dutch District Court, but then it was only for Germany & Holland versus the UK. Is France now joining the chorus of “we-know-it-all-better-than-the-EPO” ?

Recent Patent Law Job Postings on Patently-O

• Sr. Patent Agent - Large Corporation - Madison, N.J.
• Business Development/Patent Attorney - Law Firm - Irvine, Calif.
• Electrical Patent Attorney - Law Firm - Rockville, Md.
• Patent Attorney - Small Corporation - Chicago, Ill.
• Patent Attorney or Agent - Midsized Corporation - Chicago, Ill.
• Patent Attorney - Law Firm - Austin, Texas & the Pacific Northwest
• Patent Attorney - Law Firm - Syracuse, N.Y.
• Patent Prosecution - Law Firm - Los Angeles, Calif.
• Associate Director, Assistant General Counsel-Patents - Large Corporation - Chicago, Ill.
• Intellectual Property Attorney - Law Firm - Fort Collins, Colo.

 

Disavowal of Claim Scope: CDS v. Dell

Computer Docking Station v. Dell (Fed. Cir. 2008)

More than any other patent litigation issue, a winning claim construction argument needs to do more than simply convince the district court judge.  Rather, the best argument will both convince the district court judge and will also teach that judge how to write a claim construction opinion that holds up on appeal.

Limiting Preamble: CDS’s patent was filed in 1991 and includes the claim preamble: “portable computer.” In interpreting that preamble term, the CAFC found that it must be limiting because statements in the specification and prosecution history emphasize portability, but the portability limitation is not found in the claims.

“The written description and applicants’ statements during prosecution emphasize this feature of the invention, yet this limitation does not appear in the body of the claims. As a result, this court finds that the terms "portable computer" and "portable computer microprocessing system" limit the scope of the asserted claims.”

Disavowal of Claim Scope: The CAFC also found that CDS had, through its statements in the specification and during prosecution, disavowed coverage of a laptop computer device that included an attached keyboard and screen.  In claim scope disavowal, the court always looks for a linguistic hook in the claims. Here, it relied again on the “portable computer” preamble term — finding that the patentee had disavowed coverage of portable computers that included those features.

Attachable features: In several figures, the patentee showed how a keyboard and screen could be coupled with its device. However, the CAFC noted that those attachments were only temporary and did not become part of the portable computer. “Thus, a cable connects the physically separate keyboard to the main housing. The keyboard is neither built-in nor attached.”

Exceptional Case: The patentee is not liable for attorney fees because this is not an ‘exceptional case’ under 35 USC 285. In particular, the court noted that it was not “self-evident” at the beginning of the claim construction analysis that laptop coverage had been disavowed. (Of course, this finding cuts directly against the finding that the public was on notice of a clear disavowal of claim scope)

LinkedIn describes PTO Employees

The social networking site LinkedIn has created a profile of USPTO employees (Based on LinkedIn members). In their data, the most common career path is from ASRC (a major Gov’t Contractor) to the USPTO; then to Bingham McCutchen. Folks leave Bingham for Perkins Coie and Goodwin Procter. From there, they branch out to Ropes & Gray, Foley Hoag, Microsoft, Amazon, Expedia, Wilson Sonsini, and Google.

With all this job-hopping, LinkedIn helps me keep track of patent law folks I have met along the way (even after we change jobs and move across the world).

• Apparently, a LinkedIn membership is required before viewing the full employee profiles.
• My LinkedIn profile.
• Patently-O Facebook Group.

Patent Troll Tracker & Cisco's New Blog Policy

Most major companies are still trying to get their heads wrapped around the flat world concepts that Thomas Friedman presented in his 2005 bestseller. The reputational power of the internet is now driving many corporate balance sheets.  The business issue: ensuring that the reputation is going right way.  Certainly, this management may be a bit like herding cats: In less than five minutes, anyone with an internet connection and skills with a mouse can become an anonymous online publisher to the world without spending a dime.  The impact of cheap worldwide distribution is multiplied by a seeming societal shift away from a desire for privacy, away from strong employee loyalty, and away from a respect for intellectual property in favor of free speech and free software.

Cisco Systems found itself in the midst of a potential reputation firestorm when the popular anonymous blogger known as the Patent Troll Tracker (PTT) revealed himself as a Cisco IP Director Rick Frenkel.  The PTT blog focused on patent enforcement companies — so called patent trolls — that have sued major technology companies such as Cisco, Microsoft, Sprint, and others.  Frenkel and Cisco have been accused of defaming two Texas plaintiffs attorneys and have also been accused of a stealth anti-patent lobbying campaign. (Cisco is a major part of the “Coalition for Patent Fairness” — an organization lobbying for weaker patent rights).

One way that Cisco can emerge as a publicity winner is to promote and encourage employee publication and free speech.  Cisco appears to be taking this road. I discussed the Frenkel case with a Cisco spokesperson today who indicated that Cisco is defending against the lawsuit; that Cisco is “committed to supporting [its] employees and their right to online expression”; and that Frenkel will certainly be allowed to continue blogging while a Cisco employee.

The internet’s ease of anonymity is in tension with the prevailing blog notion of transparency.  The problem with anonymous corporate blogs is the potential for customer backlash when they discover the true content provider.  The other major problem with anonymous publication is the tendency of anonymous authors to become reckless authors. (See, e.g., anonymous Patently-O comments). Cisco’s new employee publishing policy takes these issues into consideration. The policy: No anonymous blogging or comments on issues associated with your Cisco job.

“If you comment on any aspect of the company’s business or any policy issue the company is involved in where you have responsibility for Cisco’s engagement, you must clearly identify yourself as a Cisco employee in your postings or blog site(s) and include a disclaimer that the views are your own and not those of Cisco. In addition, Cisco employees should not circulate postings that they know are written by other employees without informing the recipient that the source was within Cisco.”

I disagree with many of Cisco’s patent reform suggestions, but I admire the way the company is handling this issue.

Notes:

• Cisco Blog: New Policy (Interestingly, there is no author listed for Cisco’s post on this topic)
• Cisco Blogging Policy
• Interested in a workshop on Corporate Blog Policies?
• PTT Defamation Lawsuit
• Frenkel Revealed as PTT

CAFC Again Vacates Preliminary Injunction: No Likelihood of Success

A G Design v. Trainman Lantern (Fed. Cir. 2008) (nonprecedential)

AG sued Trainman for infringement of its hand-held RR Lantern patent. (US Pat. No. 7,118,245).  The W.D. Washington district court issued a preliminary injunction after hearing an expert report that Trainman’s product was essentially identical to the patented device (except for one claim element).

On appeal the CAFC vacated the preliminary injunction — finding that the lower court had committed legal error in finding that the patentee had “a likelihood of success on the merits.”

Legal Standard for Preliminary Relief: The CAFC nominally applies a four factor standard for determining whether preliminary relief is warranted. However, two factors are requisite and typically determinative: (a) Likelihood of success on the merits and (b) irreparable harm associated without preliminary relief.

Likelihood of Success: A likelihood of success on the merits requires some proof that the defendant “infringes at least one valid and enforceable claim” of the asserted patent. The likelihood of success may be rebutted by an accused infringer who raises a “substantial question” regarding the patent’s validity, enforceability, or whether the accused device infringes the asserted claims.  In a recent case, the a different panel (Judges Rader & Dyk) found the substantial question threshold met by evidence that “cast[s] doubt on the [claim’s] validity.” Erico Int'l v. Vutec & Doc’s Marketing (Fed. Cir. 2008).

Lacking a Claim Element: Because the accused device here lacked a claim element (a ‘plurality of ports’ in the reflector), it could not literally infringe. Likewise, the CAFC found that the ‘plurality of ports’ limitation had been added during prosecution to narrow the claims — presumptively foreclosing infringement by equivalents. (Unless AG can show that the “rationale for the amendment is tangential to the equivalent in question.”).

Validity Questions: The CAFC also found error in the district court opinion because the court did not specifically analyze whether a disclosed prototype included “all of the limitations of any of the asserted claims.”  Instead, for the purposes of the PI, the district court had only noted that the prototype was “different” from the patent claims.

Expired Non-Compete: The parties here have a history including a non-compete agreement that expired during the appeal.  Because it is now expired, the CAFC found that the non-compete could not serve as a basis for preliminary relief.

Notes:

• This should be a precedential opinion.
• Under 28 U.S.C. § 1292(c)(1), the grant or denial of a preliminary injunction is immediately appealable to the Federal Circuit. See, Dennis Crouch, Using Preliminary Injunction Decisions to Seek Immediate Appeal; Dennis Crouch, De-Stabilizing Preliminary Injunctions through De Novo Review of Claim Construction; Dennis Crouch, No Immediate Appeal of PI Contempt Order;  
• Dennis Crouch, As a Matter of Law, Preliminary Injunction Defeated by Casting Doubt on Patent's Validity.
  

 

Courts Resist Using the Term Patent Troll

Despite being used en gross by accused defendants, courts have largely resisted using the term “patent troll” in their decisions. A Westlaw search revealed only seven examples of the pejorative term in court decisions:

• IP Innovation v. Ecollege.com (Fed. Cir. 2005) (The CAFC noted that the term had been used in the defendant’s argument, but refused to engage in a discussion of its implication).
• Colida v. Sanyo (Fed. Cir. 2004) (In dissent, Judge Newman argued that attorney fees should not be granted against an accused “patent troll”)
• Hynix Semiconductor v. Rambus (N.D. Cal. 2008) (Judge Whyte granting Rambus motion in limine to prohibit use of the term “patent troll” during the trial)
• Taurus IP v. DaimlerChrysler (W.D. Wisc. 2007) (Citing Magliocca’s article; piercing the corporate veil of the accused “nonpracticing entities”)
• InternetAd Systems v. Opodo ( N.D. Tex. 2007)  (Defining a patent troll as a “small company that did not manufacture products or supply services based on patents in question but enforced patent rights against accused infringers in attempt to collect licensing fees”).
• Overstock.com v. Furnace Brook (D.Utah 2005) (The court indicated a preference for finding that “patent trolls should be subject to more general jurisdiction, perhaps as a way of deterring coercive baseless litigation.” However, the court could not find a legal hook for such a holding.).
• Black & Decker Mfg. v. Baltimore Truck Tire Service (D.Md. 1928) (Patent was issued to Mr. Fred Troll)

In the eBay decision, the Supreme Court ruled that the status of the patent owner may not operate as a categorical exclusion from the prospect of injunctive relief.

Oakley's Sunglasses and Design Patents

Oakley recently sued Fox, Marvel, and others for infringement of its design sunglasses design patent No. D470,166. According to the complaint, the movie industry has knocked-off Oakley’s design to promote Silver Surfer DVDs.

Oakley owns over 100 design patents on its various sunglass designs. Since 2004, the fashion trend-setter has filed over 30 complaints against accused infringers.

Apparently, Mardsen wore genuine Oakley in his role as Cyclops. What damages if they had been fakes?

Absolute Novelty, First-to-File, and Foreign Bias

The comments to my recent post on the First-to-File legislation raised several important issues that need some unpacking. 

Separating First-to-File from Absolute Novelty: There is a tendency to conflate a first-to-file system with a system requiring absolute novelty.  At the surface, these two systems may appear linked — Both rules shift the legal inquiry from the date of invention to the date of application filing.  This natural linkage has been reflected in the various patent laws: first-to-file countries generally also require absolute novelty, while the US (the first-to-invent country) allows a grace period. 

Despite their usual link, the two policies are separable. We could implement a first-to-file system that conclusively determines competing priority claims by looking only to effective filing dates but, at the same time, allow a one-year grace period when judging novelty and nonobviousness.  From my experience, the concerns of most patent applicants are more focused on the problem of novelty rather than rare interference issues.

As Mark Lemley has noted the current legislation already does this in two ways: (1) granting a grace period for inventor-originated disclosures; and (2) providing that the first-to-file system will only be implemented after the rest of the world adopts the grace period (in House bill only).

When you try to help, you actually harm: One of our European readers commented that the American grace period is essentially a subsidy to the rest of the world.  According to the story, the grace period lulls American inventors into disclosing prior to filing for protection.  Those inventors can still pursue US patent applications, but will be unable to obtain patents elsewhere. The quote: “Thank goodness USA perseveres with the grace period. Otherwise ROW really would be dominated by US IPR.”

Rule 131 Declarations: How weak does your patent become after filing a Rule 131 declaration? If you received an office action rejection and had solid arguments of both (1) your prior invention and (2) nonobviousness.  Would you rather (1) file a Rule 131 declaration and avoid characterizing the reference and your invention; (2) explain why the claimed invention is not obvious even in light of the asserted art; or (3) both.

Tags: Lemley, First+to+file, first+to+invent, Europe, Rule+131

Ex Parte Bilski: Briefing Round I

As requested by the CAFC, both the PTO and Bilski’s attorneys (the Webb Firm) simultaneously filed briefs addressing the en banc that probe the scope of patent-eligible subject under 35 U.S.C. § 101. The Bilski facts focus on the patentability of a method of managing risk that is not tied to any particular form of technology. More generally, the CAFC appears prepared to reevaluate its decade-old State Street Bank decision.

A bevy of amici briefs are expected to be filed in early April.

• BILSKI Brief en banc
• USPTO Brief en banc
• Patently-O discussing en banc hearing

Patently-O Bits and Bytes No. 24

• Using Prosecution Histories: I’m going to do a survey next week on how prosecution history is used in practice, but I would like some reader input to help me create the survey. What are some examples of times when you look at the prosecution history of an application?  This survey will span prosecution, litigation, licensing, FTO, patent families and related applications, and will also touch on the cost associated with reviewing a prosecution history. [Comment or e-mail]
• Call for Papers: Seton Hall Law Review asked that I post a call for papers for their October symposium titled: Preparing for a Pharmaceutical Response to Pandemic Influenza.  If you would like to participate, submit a 200 word abstract by tax day: April 15. [LINK]
• A Sad Comment on Comments: Reader comments are very useful in providing additional analysis; anecdotes; pointing out my own biases and typos; etc. However, I want to keep this blog on the topic of patent law — not random constitutional and gun control theory; not clothing choices of other readers; no defamation; and not personal attacks against other posters.
• Appointing CAFC Judges: For at least the second time in the past two months, a Federal Circuit judge has publicly discussed the fact that eight of the current twelve CAFC judges will be up for “senior status” within the next two years. The Honorable Kimberly Moore discussed this issue at a recent IPO conference in DC. The next President can expect to shape the face of Patent Law through these appointments.

In Defiance of Kinik: 271(e)(1) Safeharbor Applies to ITC Action Against Importation of Product Made by Patented Process

Amgen v. ITC and Roche Diagnostics (Fed. Cir. 2008)

Majority Opinion by Judge Newman: In a Section 337 action, the International Trade Commission (ITC) sided with the accused infringer Roche — finding that Roche’s (proposed) importation of recombinant human erythropoietin (EPO) were exempt from charges of infringement under the safeharbor of 35 USC Section 271(e)(1). Amgen had alleged that the importation violated Section 337’s prohibition on importing products made by a patented process.

On appeal, Amgen argues that the 271(e)(1) safeharbor does not apply to process patent liability in Section 337 Tariff Act actions.

This case relates to Kinik, where the CAFC held that the limitations of 271(g)(1) do not apply to ITC actions. In that case, however, the 271(g)(1) limitations were specifically linked to infringement under 271(g) and not tied to infringement in general.

By its terms, 271(e)(1) is not expressly limited to the Patent Act. Amgen argues, however, that the 271(e)(1) exceptions should not apply to excuse importation of a product made by a patented process. Rather, patent holder claims that the statute should only apply to accused infringers who “make, use, offer to sell, or sell within the United States or import into the United States a patented invention.” (quoting 271(e)(1)). And, as an extension, the exception does not apply to infringing actions not listed in the exception — here that infringement is importation of a product made by a patented process.

The Federal Circuit Found that the Exception Should Receive an Expansive Reading: In two cases, the Supreme Court has held that the 271(e)(1) exception should be broadly interpreted.

In both Merck and Eli Lilly the [Supreme] Court stressed the congressional purpose of removing patent-based barriers to proceeding with federal regulatory approval of medical products. This purpose and its application in precedent weigh heavily against selectively withholding the '271(e)(1) exemption depending on whether the infringement action is in the district court or the International Trade Commission. We thus affirm the Commission's ruling that the safe harbor statute applies to process patents in actions under Section 337, when the imported product is used for the exempt purposes of '271(e)(1).

Thus, this case creates an internal split with the authors of Kinik.

Each Use Must Be Analyzed: Amgen did win on another point — that the 271(e)(1) exception does not excuse all activities while a defendant is seeking FDA approval. Rather a court (or Commission) must “consider the exempt status of each study [or use] for which question has reasonably been raised.”

In Dissent, Judge Linn stated the situation clearly. Congress likely intended for the safe harbor to include ITC actions, but the safe harbor statute does not – by its terms – actually extend that far.

The thrust of the majority’s position is that Congress probably intended § 271(e)(1) to apply in section 337 proceedings the same way it applies in patent infringement litigation under Title 35.  While I agree that it would make sense for section 337 to apply that way, the problem remains that if that is what Congress intended, it is not what Congress unambiguously said. . . .

Indeed, it is worth noting that there are also potential policy arguments in support of the textual reading of the statute. Congress may not have intended to extend the same benefits of § 271(e)(1) to foreign pharmaceutical companies as it extended to domestic ones, or it may have intended to discourage the importation of pharmaceuticals that have not yet been approved by the FDA.

 

Moving to First-to-File

The potential move to a first-to-file system has received little attention — it is certainly not the most controversial in the current package of patent reforms.  Of course, this says more about the Patent Reform proposal than about the potential impact of the first-to-file change. Although not receiving the most press, in the end, this change would have the most impact on the reform package.

The entirely re-written Section 102 would create a bar to patentability if “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” prior to the filing of the patent application (the ‘effective date’).  [Use Thomas to obtain the most recent version.] The rule would also encompass 102(e) prior art, so long as the prior art filing was prior to the effective date.  A one-year grace period would remain in place, but only for public disclosures released by the inventors, the assignee, or a signatory to a joint research agreement.  

The first-to-file rule can be thought of as a “race to the courthouse” recording statute.  In the world of first-to-file, it does not matter who invented first, only who is the first to file the patent application.  A perhaps more salient way to think of the shift is that it primarily operates by shifting the ‘critical date’ of 102(b) to the filing date, thus creating a whole new set of prior art that can be asserted against an applicant.

Apart from whether a first-to-file system is a better system, the legislation itself has problems. Most critical is the inclusion of the ill defined clause “otherwise available to the public.” This clause could easily swallow the entire list of prior art types, except perhaps “on sale.” (patented, printed publication, and public use are all available to the public). We’re left wondering what additional activities will be encompassed by subsequent CAFC decisions. 

This amendment would greatly increase the value of creating a joint-research-agreement any time any research or information is shared between parties. In addition, some companies will increase their provisional application filing as a way to ensure that the invention is on file at the PTO ASAP.  Of course, this change will have negative little impact on foreign companies seeking US patents or US companies already filing patents internationally because these rules closely mirror the requirements already in place around the world.

The benefits of first to file:

1. Encourages inventors to quickly file for patent rights;
2. We avoid the potential for fraud in swearing-behind references;
3. Interferences are gone (but derivation litigation is in);
4. A patent would be more difficult to obtain – especially when the invention is easily conceived by another; and
5. Global harmony .

Patently-O Bits and Bytes No. 23

• Chicago Lawyers' Committee for Civil Rights v. Craigslist, Inc., 2008 WL 681168 (7th Cir. March 14, 2008) (“Using the remarkably candid postings on Craigslist, the Lawyers’ Committee can identify many targets to investigate. It can dispatch testers and collect damages from any landlord or owner who engages in discrimination. . . . It can assemble a list of names to send to the Attorney General for prosecution. But given §230(c)(1) it cannot sue the messenger just because the message reveals a third party’s plan to engage in unlawful discrimination.”
• Chicago Lawyers v. Craigslist: The point for Patently-O is that this case allows our comment lines to stay open without fear of substantial legal retribution. [Goldman has more]
• International Aid (Through Technical Assistance): Prof Sokol recently analyzed how “donor countries” (such as the US) have increasingly been providing extensive technical assistance to other countries to help with antitrust law issues. Is there a similar need in the IP world?
• Cited Prior Art: JAMES TOUPIN (PTO GC) makes the following statement: more than 50% of new patent applicants either cite no prior art references or cite more than 20 references.  The PTO Solution: require searches and penalize for too much cited art.
• Abandonments are up: Former PTO power player Bruce Stoner presents data showing that both the number and proportion of of cases being abandoned is on the rise. [LINK]

The Costs and Benefits of Patents to Innovators

by James Bessen and Michael J. Meurer

Do patents encourage economic growth, stimulate R&D investment, or deliver wealth to innovators? In our previous post we reviewed the empirical research in economics and we could not find consistently positive evidence about the performance of patents.

In this post we narrow our focus. We ask whether the modern American patent system encourages innovation by large (publicly traded) American firms. We answer this question with empirical research that is presented in chapters 5 and 6 of our book Patent Failure. We find that the patent system discourages investment in innovation by the average publicly traded American firm. Although the patent system provides positive incentives in some industries like pharmaceuticals, it provides negative incentives in most industries. Further, the performance has deteriorated over time.

Our conclusion is based on separate estimates of the benefits and costs of patents to innovative firms. We use two different techniques to estimate the value of patents to their owners.

Patent Litigation Statistics: Number of Patents Being Litigated

Over the past two decades, the number of patents being litigated has risen dramatically. More complaints are being filed and more patents are being asserted with each complaint. Since 2004, however, the numbers have been steady. A third factor, not shown in this graph, is an increasing trend to include more defendants in a single complaint. As a point of reference, in 2006, almost 200,000 patents issued.

Patently-O Bits and Bytes No. 22

• Question on Patent Issuance: I know that I have read this before — Is there a standard time that patents issue?  E.g., is it proper to file a patent infringement case at 12:01 am on the day that the patent is scheduled to issue? What if the PTO’s website is delayed in its update? What about filing at 12:00:01 am?
• Ward v. Troll Tracker – Now its a Federal Case: As an interesting litigation strategy, John Ward Jr. has also sued Frenkel & Cisco in Federal Court in the Western District of Arkansas (Texarkana). [Complaint] This filing has a hand-stamped date and hand-written time. (Filed March 13, 2008 at 10:45 am.) [Thanks to Ozark Patent Lawyer Brent Capehart for the tip]
• More on Ward v. PTT: E.D.Tex. blogger and patent litigator Michael C. Smith provides his comments on the case.
• Patent Reform: I’m working on a comprehensive patent reform post. However, Zura has some news on amendments to the Senate bill. [LINK]

Extending the Patent Term: Most Patents Are Extended Due to PTO Delay

35 U.S.C. 154(b) provides for an adjustment of the standard patent term in cases where a patent’s issuance is delayed because of delay at the U.S. patent and Trademark Office.

I looked at all 6155 original utility patents issued between March 1 and March 13, 2008 to see how often patent terms are adjusted. In this sample, the vast majority of issued patents have an extended patent term due to Patent Office delay. Specifically, 72% of the issued patents include at least some 154(b) extended patent term. Among those with an extended term, the average extension is 392 days. A few patents from the group have very long extensions that approach five years. These are generally explained by (1) secrecy orders and (2) BPAI reversals. (See Patent Nos. 7,342,534 and 7,339,604). 

The first chart below is a histogram of the the patent extensions. As can be deduced from above, 28% of the issued patents have no extension. Slightly over 10% of the issued patents were granted an extension of three months (0.25 years) or less. A cumulative frequency chart of this same data would show that just over 50% of all the issued patents have a term extension lasting more than six months.

Of course, the extension term is correlated with the length of time in prosecution. The following scatter plot shows this relationship quite well. The demarcated boundary on the plot is an indication of the potential extension when the entire delay is attributable to the PTO.

Other studies show that primary examiners are “quicker” — i.e., that patents examined by a primary examiner issue more quickly and with fewer amendments than those examined by assistant examiners.   Here, I also found a difference between the type of examiner.  As may be guessed, issued patents associated with an “assistant examiner” are much more likely to have an extension. (78% of patents with assistant examiner have extension compared with 69% of patents examined only by a primary examiner). It appears that at least some of the quickness is due to the examiner actually acting more quickly (rather than merely compromising more easily).  Similarly, continuations are much less likely to receive extensions than patents without any ancestral history.  (78% of patents with no ancestry have extension compared with only 61% of patents that reference one or more parent).  That result is explained by the PTO’s procedure of reviewing continuation applications on a priority basis.  Combining these numbers, I find a recipe for delay: In this study a patent with no ancestry that is examined by an assistant examiner has an 83% chance of received extensions due to PTO delay.

As with every measure of patents, the results vary dramatically according to the area of technology. Here, we see that Computer & Communication related patents (according to classification) are much more likely to receive a term extension due to PTO delay and, when an extension is proper, those same patents have a much higher expected extension duration.

Category	Percent Receiving Extension	Count of Patents	Average Extension (Days)
Chemical	73%	606	343
Computers & Communications	82%	1690	544
Drugs & Medical	74%	536	387
Electrical & Electronic	64%	1369	270
Mechanical	67%	900	268
Others	65%	713	297

There are several potential practical implications of these findings: (1) a prosecuting attorney should be careful to avoid delay because applicant delay will naturally push-back the issue date and additionally reduce the eventual patent term; (2) In many cases, quicker issuance is preferable to an equivalent extension. However, it is important to consider whether delay is preferable for your case. (Of course taking affirmative steps to increase delay could be interpreted as a form of laches.

Patently-O Bits and Bytes No. 21

• Disclose Disclose Disclose: APJ Richard Lebovitz argues (on his own) that scientific researchers should be required to disclose potential patent rights prior to publication of related research as part of the conflict-of-interest review. [6 Nw. J. of Tech. & Intell. Prop. 36].  In his study of Science and Nature articles, Lebovitz found that “almost one-third” of the research articles were associated with one or more patent filings.
• Compulsory Licenses: Thailand plans to continue its plan of paying low compulsory license rates for patents covering important cancer drugs. In response, Novartis has proposed to offer Gleevec for free, but only to Thai patients that qualify as poor. [Noonan]
• More Like Property: A major point of the Bessen & Meurer book is that the patent system can be improved by making patents work more like property. Should we work toward a system where patent rights are more predictably valid; where patent scope is more easily discernable; and where fragmented ownership of overlapping patent rights does not block further development?
• Patent Reform: IPO reports that the “massive” Patent Reform Act of 2007 will likely receive senate floor attention in April or May.  According to the organization: “Patrick Leahy (D-Vermont) appears intent on moving the bill ahead even though it is unclear whether enough Senators will support it to break holds placed on it by some Senators.  Claims made every day by lobbyists that Leahy has or does not have the 60 votes required to cut off debate and pass an amended bill are speculation, because the amendments are not known.  Pronouncements that the bill is dead this year are premature.”

Do Patents Stimulate R&D Investment and Promote Growth?

James Bessen and Michael J. Meurer have authored a new book presenting a careful empirical analysis of whether patent rights encourage innovation. Their conclusion: for the most part, today's patent system does not achieve its stated goal. I asked them to provide Patently-O readers with a cut from their analysis. The following post is the first in a series of four by the authors. The book is titled: Patent Failure and published by Princeton [Web Link]. The analysis done in this book put Bessen and Meurer at the forefront of leaders in economic analysis of patent laws. I suspect that their results will become the talking points of the next round of patent reform discussions. A live symposium will be held at UGA Law School on March 29 focusing on the book and its results. [LINK]

==========

by James Bessen and Michael J. Meurer

As background material, this post reviews the sizable body of empirical research analyzing the impact of patents on R&D investment and economic growth. Three future posts will present new empirical research featured in our book Patent Failure. The theme across all four posts is that patents often fail to perform effectively as property rights. [DDC: To work well as property, the right should be predictably valid; have discernible boundaries; and not have an overly fragmented ownership scheme.]

Economists cherish property rights that provide strong incentives for investment and trade, and that thereby contribute to economic growth. Potentially, patent rights could accomplish these three goals, and surely they sometimes do. Apparently though, it is hard to set up and maintain a patent system that works as property.

The rise of new market economies and strengthening of property rights around the globe in the last two decades provides economists with "natural experiments" that help us evaluate whether and how much property rights contribute to investment and growth. The empirical results are impressive. Countries that expanded the role of markets and strengthened property rights have prospered from these choices. Economic historians find the same results hold going back to the Industrial Revolution.

Comparable studies of patent systems are discouraging. The evidence certainly is consistent with the notion that patents encourage American pharmaceutical R&D. But otherwise, it is hard to find evidence suggesting patents are a major factor spurring R&D investment, that patents contribute to economic growth, or even that the patent system is a source of great wealth to important inventors and innovators (outside of a few industries like pharmaceuticals).

Troll Tracker, Defamation, and Splitting the Bar

Rick Frenkel – who until recently was known only as the Patent Troll Tracker – has now been sued for defamation by two Eastern District of Texas lawyers: Johnny Ward, Jr. and Eric Albritton.  Frenkel recently revealed himself as an IP Director at Cisco Systems. Cisco is also a named defendant in the lawsuit. Ward has represented many plaintiffs in E.D. Texas patent cases and is the son of Federal Judge John Ward of the Eastern District of Texas.

The whole case seemingly stems from a Patently-O posting on October 16, 2007. That post, titled “Patent Office Has Stopped Examining Patents with 25+ Claims,” included a short blurb about a seeming “preemptive strike” by the patent holder ESN:

From Patently-O: In another preemptive strike, on October 15^th, ESN sued Cisco for infringing Patent No. 7,283,519.  Unfortunately, the patent did not issue until the 16^th of October. [Link] 

Of course, a patentee has no standing to sue until after the patent issues, even if you know that the patent will issue the next day. The Patently-O post included a link to ESN’s complaint that had an October 15 electronic time-stamp and a civil cover sheet dated October 15.  Ward and Albritton were involved in this case, apparently serving as local counsel for the McAndrews firm.

By October 18, the PACER filing information still reflected that the case had been originally filed on the 15th, but the PACER complaint filing date now indicated October 16. (See thumbnail screenshots.)  This date became potentially important because, in the meantime, Cisco had filed a declaratory judgment action against ESN in Connecticut.  (First-to-file with standing usually wins venue.)

On October 18, the Troll Tracker posted what are seemingly his most pointed comments about the case:

“I got a couple of anonymous emails this morning, pointing out that the docket in ESN v. Cisco . . . had been altered. One email suggested that ESN’s local counsel called the EDTX court clerk and convinced him/her to change the docket to reflect an October 16 filing date, rather than the October 15 filing date. I checked, and sure enough, that’s exactly what happened – the docket was altered to reflect an October 16 filing date and the complaint was altered to change the filing date stamp from October 15 to October 16. Only the EDTX Court Clerk could have made such changes. . . . This is yet another example of the abusive nature of litigating patent cases in the Banana Republic of East Texas.”

In a different post, PTT mentioned that Ward and Albritton represented ESN and that they might not “play well” in a Connecticut court.

Moot Point?: Since then, ESN v. Cisco has been dismissed by agreement of the parties, and the original filing dates have become meaningless and moot. However, Ward and Albritton remembered Frenkel’s comments. Within three days of Frenkel’s “outing” a defamation lawsuit had been filed in Texas state court. At this point, none of the parties are discussing either case in public except that Cisco “continue[s] to have high regard for the judiciary of the Eastern District of Texas and confidence in the integrity of its judges." 

Seeing an opportunity, the Howrey firm has now declared that it “absolutely won't represent trolls.”  Is the patent bar in the midst of a split? [Joe Mullin has the Howrey Advert]

Documents:

File Attachment: Defamation Complaint filed by WARD (383 KB)

File Attachment: Defamation Complaint filed by ALBRITTON (452 KB)

Original ESN v. CISCO complaint 

Notes:

• Although I have not always agreed with Frenkel’s opinions, he has been a great addition to the public debate over patents and patent reforms. His analysis has always been fresh. On several occasions, I double-checked the factual basis of his reports, and each time found them spot-on.  I do hope that he’ll be back with more caustic analysis. I’ve been sitting on this story for a while now. Although not a named party, my name appears in the filings. Craig Anderson (DailyJournal) apparently broke the story in a hardcopy version.


• This case may serve as a caution to Patently-O “anonymous” commentors. A defamed individual may have ways to figure out your identity.


• ESN has explained that it actually filed the complaint at 12:01 am on October 16.


• A couple of days after posting the comment above, PTT deleted the above quoted material and replaced it with the following: “You can’t change history, and it’s outrageous that the Eastern District of Texas may have, wittingly or unwittingly, helped a non-practicing entity to try to manufacture subject matter jurisdiction. Even if this was a "mistake," which I can't see how it could be, given that someone emailed me a printout of the docket from Monday showing the case, the proper course of action should be a motion to correct the docket. (n.b.: don’t be surprised if the docket changes back once the higher-ups in the Court get wind of this, making this post completely irrelevant). EDIT: You can't change history, but you can change a blog entry based on information emailed to you from a helpful reader.” [Mullin]


• Reporter, Joe Mullin has more background — According to his report, Ward filed the complaint in November and had been in the process of unmasking the troll.  


• Joe Mullin Reports on the Case


• Legal Blog Watch


• Legal Pad reports on the Case


• Forbes has a quite flippant view


• Zura Reports


• Mark Randazza


• Robert Ambrogi

Patently-O Bits and Bytes No. 20

• SurveyMonkey: I am conducting an anonymous FOUR MINUTE readership survey.  Please help me to figure out who reads Patently-O and how you read Patently-O.  In a future survey, I’ll get your help improving the site. [Please Take the Survey]
• 3/11/08 11:00 am: Over 1000 folks have submitted to the survey. Major comments (1) need a better way to forward interesting posts; (2) Need threaded and rated comments. 65% of readers have more than five years of IP law experience.
• Bye Bye Markush: The USPTO has published its “Initial Regulatory Flexibility Analysis” of the proposed changes to Markush Claims. [IRFA][Proposed Rules]. According to the PTO, about 22% of all patent applications contain affected claims, with the highest percentages in Biotech and Chemical cases. The proposed rules would limit Markush alternatives only to those that are not overlapping and that do not make the claim difficult to construe. There is still some time to comment on the changes.

Pharma Prosecution: CIP Breaks Priority for Restricted Claims

Pfizer v. Teva (Fed. Cir. 2008)

A family of three Pfizer patents covers aspects of the bestselling drug Celebrex. Seeing some possible holes* in the patents, Teva field an Abbreviated New Drug Application (ANDA) with the FDA with a Paragraph IV certification challenging the patents as invalid and unenforceable.

Continuation-in-Part After Restriction: 35 USC 121 blocks the use of a parent application “as a reference … against a divisional application” if the divisional was the result of a restriction requirement. 

One of the Pfizer patents (the ‘068) is a continuation-in-part (CIP) filed after a restriction requirement. On appeal, the CAFC confirmed that Section 121 does not apply to CIPs: “a divisional application contains an identical disclosure to its parent application, but a CIP introduces new matter. . . . [T]he protection afforded by section 121 . . . is limited to divisional applications.”

Thus, the parent application of a CIP will potentially be used for an obviousness-type double patenting rejection. Here, the CAFC held that the CIP claims were indeed obvious when compared to the parent application.

Pfizer’s Strategy: From Dan Feigelson’s comment below:

Pfizer could have cured the problem with the '068 patent - even during the trial or the appeal - by filing a terminal disclaimer in that patent. I'm guessing they chose not to b/c they had nothing to lose and everything to gain by having the court adjudicate the question of 35 USC 121 to CIPs.

Best Mode: A patent is invalid when the applicant fails to satisfy the best mode requirement of Section 112. The requirement can be broken down into two elements:

1. Whether the applicant subjectively “possessed” a best mode for practicing the invention at the time the application was filed; and, if so,
2. Whether the disclosure would objectively enable a PHOSITA to practise the best mode.

Like other invalidity issues, best mode is determined on a claim-by-claim basis.  There was no real question here that the COX-specific claims did satisfy the best mode requirement. The appellate panel refused to speculate further on the moot issue of how the best mode requirement is met for claims covering a larger class of compounds.

Note:

• * The post was updated to ensure that Patently-O remains non-controversial (See comments below).

Using Preliminary Injunction Decisions to Seek Immediate Appeal

University of California v. Dakocytomation California (Dako) (Fed. Cir. 2008)

Plaintiffs UC and Abbott are the owner and licensee of a set of patents covering methods of identifying chromosomal abnormalities.  On appeal, the parties question whether the lower court improperly denied preliminary relief joined with an interlocutory appeal of summary judgment of non-infringement of some claims. 

As in the recent Chamberlain Group decision, the appeal of preliminary relief offered a method for the parties to obtain an interlocutory judgment on claim construction.

District Court Obviousness Trouble: On two separate occasions, the district court denied preliminary relief to the patent holder based on the likely invalidity of the asserted patents. First, the district court held that the patent was likely invalid based because the parent application was invalidating prior art. The court withdrew that analysis after realizing that the asserted patent claimed priority to the filing date of the parent. Next, the district court found the patent likely invalid for obviousness-type double patenting. That reasoning was also withdrawn by the district court after realizing that the patentee’s terminal disclaimer cured the double patenting defect.

Nonetheless, the lower court’s decision in favor of the defendant stuck because the CAFC found that the prosecution history warranted a construction of the claims that was narrow enough to allow Dako to avoid infringement.

Doctrine of Equivalents: In a decision to be contemplated further, the CAFC also decided that a narrowing amendment made during prosecution does not preclude application of the doctrine of equivalents because “the narrowing amendment was only tangential to the accused [] equivalent.”

Judge Prost dissented from the DOE holding and argued that the amendment was absolutely related to the accused equivalent.

Patently-O Bits and Bytes

• March 6, 2008, I will be the keynote speaker at the Missouri Inventor of the Year award program sponsored by the Bar Association of Metro St. Louis (BAMSL).  I look forward to seeing my fellow Missourians there. 6:00 PM in Forest Park [LINK]
• April 11–13, 2008, I will be part of the annual Oregon/Washington Patent Conference — This year at the Salishan Resort on the Oregon coast. The speaker list is stacked, including John Duffy on Obviousness, Ken Port on Trademark Extortion, Paul Janicke with a ‘top ten’ list, Lisa Dolak on Inequitable Conduct, and others. I’ll be speaking about forward looking damages and injunctive relief.

Board of Patent Appeals and Interferences (BPAI)

Eight Reasons: I am undergoing a project to better understand the role of the Board of Patent Appeals and Interferences (BPAI).  There are several reasons why BPAI is now receiving more limelight than ever. Here are eight such reasons: (1) every proposed patent reform bill includes an expanded role for a patent administrative court, such as the BPAI; (2) as various technology centers make patents more difficult to obtain, more cases are appealed to the administrative court; (3) under the proposed rule changes to limit continuation applications, more cases will likely be appealed; (4) as the value of patent rights continue to grow, important cases will continue to be challenged; (5) the publication of patent applications means that BPAI decisions can now also be immediately published; (6) the current large batch of examiners without much experience requires a serious check on potential abuses of naiveté; (7) under Judge Fleming, the BPAI has begun to open up to more public input and scrutiny; and (8) BPAI decisions are now available via Google search and Westlaw search.

BPAI is a Busy Court: It is important to recognize that the BPAI is deciding 3,500 cases every year. Thousands more are ‘settled’ prior to a BPAI decision either because the patent examiner withdrew a rejection (and likely re-opened prosecution) or the patent applicant filed a continuing application or abandoned the case. The BPAI usually sits in three-member panels, although there are occasionally ‘stacked’ panels for important cases such as Lundgren or Bilski.  In my one-year sample, over seventy different Administrative Patent Judges (APJs) authored opinions. 

As part of my initial study, this week, I created a database of information on recent BPAI decisions and coded them by issues discussed.  My database is derived from decisions available on Westlaw. Consequently, it is missing some decisions. In particular, Westlaw decisions do not include appeals associated with unpublished patent applications.

The table below looks at board decisions for each technology center. The relative numbers are interesting — showing a low affirmance rate for rejection of business method cases (TC 3600) and a high affirmance rate for chemistry cases (TC 1700). The BPAI offers its own calculation of these numbers based on all of its decisions that are roughly parallel. [LINK]
(Note, the table does not add-up to 100% because I excluded decisions to remand and deny rehearing).

Independence of the BPAI: One serious question about the competence of an internal patent appeal board is whether that body can act independently from the examining corps. Most of the BPAI judges are former examiners and they all work for the PTO Director. Although not conclusive, the above numbers give me some cause for hope that the BPAI does act independently. Over the past several years, many of the art units of TC 3600 has been notoriously difficult on applicants (especially e-commerce and business method groups). The BPAI’s low affirmance of rejections from that technology center may indicate that the Board has taken an independent stand against overzealous rejection practice.  There are many other explanations, including some selection bias or difference in quality of attorneys. In addition, there is a skew of judges — i.e., Judges with a technical background related to a particular technology center are more likely to judge cases from that technology center. The BPAI rightfully does this to ensure that every case has at least one administrative patent judge (APJ) who is prepared to understand the technology at issue.

Issues on Appeal: Far and away the most decided issue is that of nonobviousness. Almost 80% of decisions involved a discussion of nonobviousness and 30 U.S.C. 103(a).  Unfortunately for patent applicants, nonobviousness decisions were also the most difficult for applicants to win. In my study, decisions involving Section 103(a) were affirmed 63% of the time; decisions involving anticipation under Section 102 were affirmed 55% of the time; and decisions involving Section 112 were affirmed 52% of the time. As more issues are added to an appeal, the chance of affirmance goes down, and the chance of a split (reverse-in-part) decision goes up.

As might be expected, split decisions tend to be longer than others: 4500 words for split decision vs. 3500 words other decisions.  If a short decision arrives at your desk, you may assume it is a remand.

Notes:

• BPAI Website
• Patently-O: BPAI Informative Opinions
• Patently-O: How long does a BPAI appeal take?
• Patently-O: BPAI Appeal Statistics
• Patently-O: Pre-Appeal-Brief Conference 

Declaratory Judgment Jurisdiction: Later Filed Lawsuit by Patentee Serves as Admission that an Actual Controversy Exists

Micron v. Mosaid (Fed. Cir. 2008)

Of the four major DRAM manufacturers. MOSAID first sued Samsung. On the day that MOSAID settled with Samsung, the patent holder sued Hynix, then sued Infineon and settled. After a series of communications, Micron began to understand MOSAID’s unstated assertion of patent infringement.

Not wanting to be sued next, Micron (the fourth major DRAM manufacturer) filed a declaratory judgment action, asking the N.D. Cal. federal court to find the patent not-infringed. A day later, MOSAID sued in E.D. Tex.

On appeal, the CAFC found that the lower court had improperly dismissed Micron’s DJ action — noting again that a DJ Plaintiff is not required to show any apprehension of suit in order to request declaratory action. Rather, the Supreme Court’s MedImmune test only requires that the controversy be definite, concrete, real, substantial, and have some specific relief that is possible.

Here, it is clear that there is an actual controversy between the parties based on communications between the parties and MOSAID’s actions against all manufacturers who could potentially be accused of infringement. MOSAID’s annual report promising “aggressive” enforcement of its patents also helps Micron’s cause.

What is most interesting here, is the fact that MOSAID’s lawsuit, filed the next day in Texas, also serves as evidence of a controversy.  By filing suit, MOSAID admits that there is an actual controversy between the parties.

Indeed, that suit, filed only one day later, was actually pending in Texas at the time that the California district court made its ruling. Thus, the parties in this dispute are really just contesting the location and right to choose the forum for their inevitable suit.

In a foray into policy grounds, Judge Rader’s opinion notes that the “more lenient” MedImmune standards for declaratory judgment jurisdiction will likely lead to “forum-seeking race[s].” Judge Rader suggests that district courts (and litigants) may need to change their focus from jurisdiction (which will now almost always exist) to the convenience factors of 28 USC 1404(a).

Moving to the CAFC role as a district court, the panel then found that the more convenient forum is the Northern District of California. In particular, the court relied on the fact that (1) the California case was first filed and (2) MOSAID’s US home office is in California. The fact that the Eastern District of Texas had previously seen and decided cases involving the identical patents in suit was discounted because the record did not show any ‘ongoing litigation’ in that locale. Because of no ongoing litigation, the CAFC found that the prior litigation “does not suggest a better forum in Texas.”

Applying these factors, the panel unanimously agreed that “it would be an abuse of discretion to transfer the action.”

Reversed and Remanded

Notes

• In what looks like a subtle jab at the Eastern District of Texas, the appellate court discussed the district as the “well-known patent forum.”
• Judge Rader took a hard stance against using related litigation in another district as a factor in making a transfer decision. The implication from the opinion is that related litigation should only be considered as a factor if it “ongoing litigation requiring consolidation.”

Claim Construction Reversal Rates III – Additional Measures of Experience and Some Possible Explanations

By David Schwartz

How do district court judges with varying levels of experience perform on claim construction?  Are judges more likely to have their decisions affirmed when they have previous claim construction experience?  Previously here and here I provided some background on the large database I compiled and some of the results.  A draft of the paper, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, can be downloaded here.

Today’s post provides an analysis of the data based upon two measures of district court judge experience: (1) the size of the district court judge’s total patent docket over an eleven year period; and (2) the performance after a first reversal by the Federal Circuit.  As for the first measure, I determined the reversal rate (as measured by cases in which an incorrect claim construction required the case to be reversed or vacated) based upon the number of patent lawsuits a district court judge was assigned.  Figure X below illustrates the results.

Figure X shows that the claim construction reversal rate varies little with the total number of patent lawsuits handled. The reversal rate was between 26.7% and 34.1%.

I turn now to the second measure of experience. It may be that a district court judge pays little attention to a Federal Circuit opinion if the case was affirmed. In contrast, when the result of a case is affected, the district court judge takes note. A remanded case is often returned to the same district court judge for further proceedings. As these further proceedings are time-consuming, the district court judge likely will remember the opinion remanding a patent lawsuit to his or her docket. Figure N below illustrates the reversal rate on all subsequent claim construction appeals after a particular district court judge has been reversed or vacated at least once due to an erroneous claim construction.

Figure N shows that the first reversal does not have a significant effect on the future performance of the district court judges, with the rate the varying from 25.0% and 44.4% for reversals, and from 31.4% and 44.4% for errors. The percentages in this breakdown vary to a greater degree than the percentages based upon number of prior appeals (reported yesterday).  However, the trend is not linear and the differences among the judges illustrated in Figure N are not statistically significant. 

 

The data illustrated above and described yesterday do not suggest that district court judges learn from having their claim construction rulings appealed.  As I explain in more detail in the paper, there are many possible explanations for the surprising results.  Three likely explanations are (i) that claim construction is inherently indeterminate; (ii) that district court judges are incapable of or not interested in learning how to perform claim construction; and (iii) that the Federal Circuit decisions do a poor job of teaching district court judges how to construe claims.  (Another possible explanation is that limitations in the data, as described in detail in the paper, affect the results.)  If the indeterminacy explanation is correct, then it will be difficult to lower the claim construction reversal rate, especially as long as those decisions are reviewed de novo.  If the district court judge explanation is correct, then a primary rationale for adopting the Issa patent pilot program is likely faulty.  In other words, if district court judges cannot learn how to perform claim construction, creating quasi-specialized patent judges is unlikely to reduce the reversal rate.  If the Federal Circuit explanation is correct, then the Federal Circuit must redouble its efforts to create a uniform body of claim construction case law.

For those who are interested, the paper also analyzes the data based upon various other characteristics of the district court judges including age and years of judicial experience.

I’d like to thank Dennis for permitting me to share my results with the readers of Patently-O.  I’d like to also thank the readers of Patently-O for their comments.