Patent Law Blog (Patently-O)

“Indefiniteness is a Matter of Claim Construction”

Praxair v. ATMI (Fed. Cir. 2008)

Praxair's patents cover pressurized storage containers for potentially hazardous gasses. The patents teach safety mechanisms to help prevent accidental rapid discharge. Of the three patents asserted against ATMI, the Delaware district court found two unenforceable due to inequitable conduct during prosecution. The asserted claims of the third patent were held invalid as indefinite under 35 U.S.C. §112¶2. On appeal, the Federal Circuit reversed-in-part.

Inequitable Conduct: Each patent applicant has a duty to act with "candor, good faith, and honesty" when prosecuting patent applications. Material breach of this duty can result in any resulting patents being held unenforceable due to inequitable conduct. Proof of inequitable conduct has been divided into two parts – requiring "clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO]." Quoting Cargill v. Canbra Foods, Ltd., 476 F.3d 1359 (Fed. Cir. 2007).

Direct evidence is rarely available to prove intent to deceive the PTO when the patent applicant is accused of withholding material information. Rather, the intent element is typically inferred by the proof that the material withheld was highly material; that the applicant knew (or should have known) of the materiality; and that the applicant has no credible excuse for withholding information.

Highly Material Based on Statements in Prosecution: Looking at Praxair's '115 patent, the court did not see the withheld prior art as highly material on its own. However, the reference became highly material based on Praxair's statements during prosecution. Specifically, the reference became highly material when Praxair told the PTO that the prior art does not teach the elements found in the withheld art. Testimony of the inventors proved that they knew that those elements were, in fact, in the prior art.

Because those same prosecution statements were not submitted during prosecution of Praxair's '609 patent, the Federal Circuit held that the withheld references could not be considered highly materiality.

"At the time the four statements discussed were made during the prosecution of the '115 patent, there had already been a notice of allowability indicating that all claims of the '609 patent would be issued. ATMI has not established, or even asserted, that the statements in the prosecution of the '115 patent somehow infected the prosecution of the '609 patent. Absent the four statements, the district court did not make any finding of intent with respect to the withholding of RFO art during the prosecution of the '609 patent."

Thus, the Federal Circuit affirmed the unenforceability holding as to the '115 patent, but reversed as to the '609 patent. On remand, the lower court will reconsider infringement of the '609 patent based on a claim construction error.

Indefinite Claims:

"Indefiniteness is a matter of claim construction, and the same principles that generally govern claim construction are applicable to determining whether allegedly indefinite claim language is subject to construction. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1348 (Fed. Cir. 2005). Indefiniteness, like claim construction, is a question of law, and we review a district court's entry of summary judgment on the issue of indefiniteness de novo."

Claims are generally only found indefinite if they are "insolubly ambiguous, and no narrowing construction can properly be adopted." Here, the district court found the claim term "port body" of the third patent to be indefinite because it was "not described, labeled, or coherently discussed in the patent." On appeal, however, the Federal Circuit reversed that finding – holding instead that the patent's specification was adequate although not eloquent.

"Although the discussion of the port body in the '895 patent's specification may not be a model of clarity, the specification adequately explains that the port body is a housing that sealingly engages the outlet of the cylinder and defines the fluid discharge path."

Extrinsic evidence: As with claim construction, the use of extrinsic evidence in determining definiteness is only secondary if applicable at all. In this case, the patentee's expert was unable to point to any specific portion of the structure that could be considered the "port body." On appeal, the Federal Circuit rejected that factual element as lacking impact on the legal question of indefiniteness.

"Even if we were to agree that Dr. Fronczak was unable to reach a single consistent construction of the port body, such extrinsic evidence would not prove the '895 patent invalid, since indefiniteness is a legal rather than a factual question."

Indefiniteness holding reversed.

Dissenting in part, Judge Lourie saw no inequitable conduct with either patent. In particular, Judge Lourie noted that the evidence of intent to deceive the PTO was quite weak.

"While a smoking gun may not be needed to show an intent to deceive, more is needed than materiality of a reference. The district court did not find anything further here. In addition, the court did not engage in any balancing of materiality and intent as is required by our precedent."

Tafas v. Dudas: Appellate Briefs

Tafas v. Dudas (pending before the Federal Circuit)

GSK and Tafas have filed their appellee briefs in the landmark battle over whether the US Patent Office has the power to implement limitations on continuation applications or the number of claims requested in each application.

"The Final Rules [spurn the limits set by Congress] by, among other things, limiting the number of continuing applications, requests for continued examination ("RCEs"), and claims that an applicant may file. In issuing these rules, the PTO makes an unprecedented and unlawful grab for power that threatens both incentives to innovate as well as the authority of this Court, the Supreme Court, and Congress. Indeed, by enacting the Final Rules, the PTO attempts to grant itself the authority to do exactly what this Court and its predecessor court have repeatedly told the PTO it lacks the power to do."

Document:

• File Attachment: GSK.FedCir.pdf (482 KB)
• File Attachment: tafasbrf.pdf (6191 KB)

Combining References in Novelty; Slack in New Matter; No Decision on Injunction for NPE

CSIRO v. Buffalo Technology (Fed. Cir. 2008)

CSIRO is a nonpractising patent holder. It is also an arm of the Australian government. After winning an infringement suit against Buffalo Tech, CSIRO was awarded permanent injunctive relief to protect its spread spectrum WLAN technology.

On appeal, more than a half-dozen amici filed briefs arguing for and against injunctive relief in this situation. On appeal, however, the Federal Circuit vacated the infringement holding – leaving the discussion of injunctive relief for another day. The vacatur came from the district court’s pre-KSR strict requirement for a motivation to combine references.

Combining References For Novelty: On novelty, Buffalo asked the court to combine two references in its analysis because one of the reference cites the other in a footnote. The Federal Circuit rejected that argument — finding that the footnote discussion was insufficient to concatenate the two references. “In particular, the reference to Bingham does not ‘identify with detailed particularity what specific material it incorporates and clearly indicate where that material is found in the various documents.’ Advanced Display Systems, (Fed. Cir. 2000).”

New Matter: 35 USC 132 bars an applicant from presenting new matter once a patent application has been filed.  In litigation, the written description requirement of Section 112 serves as the basis for invalidating patents with added new matter.  The new matter limitation is not strict. Rather, when the claims are amended, the patent will only be invalidated if the original specification is not “sufficient to allow persons of ordinary skill in the art to recognize that the inventor invented the subject matter that is claimed in the asserted claims.”  Further, the PTO’s decision to allow an amendment provides a patent with “an especially weighty presumption of correctness.”

Here, CSIRO changed its claim limitation from “frequencies in excess of 10 GHz” to simply “radio frequencies.”  On appeal, the Federal Circuit affirmed the lower court’s factual finding that the amendment did not impermissibly add new matter. (No clear error). In particular, neither party suggested a technical distinction between handling lower frequencies. Further, the court found that the original specification was not limited to frequencies in excess of 10 GHz.

On remand, the lower court will reevaluate obviousness.

Federal Circuit Affirms that Lucent’s $1.5B Patent Victory is Gone

Lucent v. Gateway, Dell, & Microsoft (Fed. Cir. 2008)

Lucent's two patents cover a compression method for MP3 digital audio files. The case originally resulted in a $1.5 billion jury award for Lucent. The district court, however set aside the jury verdict. That decision is affirmed here on appeal. Lucent's problems stem from (1) joint ownership of its '080 patent and (2) failure to provide even one specific instance when the Microsoft's encoder actually infringed the '457 patent.

"Lucent has failed to provide sufficient evidence to establish that the High Quality encoder actually runs on Windows Media Player and thus it would be too speculative to conclude that Windows Media Player necessarily infringes the '457 patent."

This case provides important lessons for both inventorship and proving infringement. More to come.

Federal Circuit: Failure to Obtain Non-Infringement Opinion May Serve As Evidence of Intent to Induce Infringement

Broadcom v. Qualcomm (Fed. Cir. 2008)

A California jury found Qualcomm liable for infringing or inducing infringement of three Broadcom patents covering 3G mobile phone technology. (US Pat. Nos. 6,847,686, 5,657,317, and 6,389,010). On appeal, the Federal Circuit has invalidated one of the patents, but left the judgment and injunction standing.

Seagate and Inducement: Like willfulness, inducing infringement requires proof of culpability. In Seagate, the Federal Circuit altered the standard for willful infringement – making it more difficult for a patentee to obtain treble damages. Consequently, in the willfulness context, there is no longer an "affirmative duty of due care" to avoid infringement. Here, Qualcomm argued (unsuccessfully) that the evidence available to prove inducement should be changed as well.

More generally, the defendant argued that it could not be liable for inducement if it was not liable for willfulness because the specific intent standard for inducement is greater than the recklessness associated with willful infringement. On appeal, the Federal Circuit rejected these arguments – finding the inducement standards unchanged and finding that inducement may be found even when willfulness is absent. The crux of the holding may be that the "specific intent" requirement of inducement is not so specific. Under the leading inducement case DSU v. JMS, proof of inducing infringement requires evidence that the accused "intended to cause the acts that constitute the direct infringement," and that the accused "kn[ew] or should have known [that] its action would cause the direct infringement."

The evidentiary argument was whether – for its inducement decision – the jury could consider Qualcomm's decision to seek advice of counsel as circumstantial evidence of intent. The appellate panel saw such evidence as fair game.

"Because opinion-of-counsel evidence, along with other factors, may reflect whether the accused infringer "knew or should have known" that its actions would cause another to directly infringe, we hold that such evidence remains relevant to the second prong of the intent analysis. Moreover, we disagree with Qualcomm's argument and further hold that the failure to procure such an opinion may be probative of intent in this context. It would be manifestly unfair to allow opinion-of-counsel evidence to serve an exculpatory function, as was the case in DSU itself, see 471 F.3d at 1307, and yet not permit patentees to identify failures to procure such advice as circumstantial evidence of intent to infringe. Accordingly, we find no legal error in the district court's jury instructions as they relate to inducement."

Too Broad: Prosecutors are typically careful to ensure that claims will be given a broad interpretation during litigation. If the claim is too broad, however, it will likely be found invalid. Here, Broadcom's '686 patent digital video signal processor. The district court found that a 'global controller' was required for operation of the processor, but the Federal Circuit could not find that limitation in the claims or any justification from the specification. Without that limitation, the claim was invalid as anticipated.

Broadcom's argument for a narrow interpretation was based on its discussion of prior art admissions in the specification – arguing that its admitted prior art would invalidate a broad claim. The Federal Circuit did not reject that contention per se. Rather, the court rejected Broadcom's version because the company had failed to show that its admitted prior art would actually anticipate the broad claim. "Because Broadcom has not demonstrated that "every limitation" of claim 1 is found in this reference, its self-invalidating argument must fail."

Late Claim Construction: Claim construction can happen at any stage of a case. Here, however, Qualcomm did not request a construction of the "network" term found in the '317 patent until after the jury had returned its verdict. On appeal, the Federal Circuit agreed with the lower court that Qualcomm had waived its right to demand construction of that term. "We agree that Qualcomm cannot be allowed to create a new claim construction dispute following the close of the jury trial."

'Qualcomm's eleventh-hour attempt to litigate a newly minted claim construction controversy falls squarely within our holding in Eli Lilly & Company v. Aradigm Corporation, where a party "never requested that the district court construe any terms in [the relevant claim] and never offered a construction of [that claim]," but rather "[o]nly after the presentation of all of the evidence to the jury . . . even suggest[ed] that claim construction might be helpful to determine the proper scope of the claimed invention." 376 F.3d 1352, 1360 (Fed. Cir. 2004).'

Injunctions: District courts issue injunctions while sitting 'in equity.' This typically gives the court discretionary power to shape and craft relief in a way that best achieves the right result. Here, the district court pushed enforcement of the injunction back to January 31, 2009. In the meantime, Qualcomm pays mandatory damages and Broadcom has now power to stop continued infringement in this period.

In the appeal, Broadcom argued that, under eBay, no permanent injunction should be awarded. In particular, Qualcomm had licensed its patents to Verizon for money – indicating that monetary relief is adequate and because the injunction will disrupt (non-Verizon) CDMA carriers (hardship) and will also be tough on the public. On appeal, the appellate panel rejected those arguments and instead found that the district court acted within its proper discretion by issuing the injunction order. (more to come on injunction order)

Notes:

• In the parallel Broadcom v. ITC, last week the Federal Circuit vacated the ITC's non-infringement finding of another Broadcom patent. The ITC will reconsider that issue.

A third parallel case, Kyocera v. ITC, is pending appeal at the Federal Circuit. In that case, the cell phone companies are appealing the ITC's exclusion order regarding yet another Broadcom patent.

Patently-O Bits and Bytes No. 66

• After Aristocrat, is nonstatutory double patenting off the table as an invalidity defense in an infringement action? (Hat tip to Chico Gholz).
• Vanderbilt Law School's Journal of Entertainment & Technology Law (JETL) has a new blog focusing on timely legal issues: Jetlaw. [Read Jetlaw][Read JETL]
• Ten great new jobs on the Patently-O job board. Tell them you found it on Patently-O:
  • Professor of Law - Franklin Pierce Law - Concord, N.H.
  • Professor of Law - Franklin Pierce Law - Concord, N.H.
  • Patent Attorney - Small Corporation - Bellevue, Wash.
  • Patent Agent - Law Firm - Irvine, Calif.
  • Patent Attorney - Small Corporation - San Francisco, Calif.
  • Patent Attorney - Law Firm - Syracuse, N.Y.
  • Patent Agent - Law Firm - Kansas City / St. Louis, Mo.
  • Electrical Engineering Attorney - Law Firm - Alexandria, Va.
  • IP Litigation Associate - Law Firm - Palo Alto, Calif.
  • Patent Attorney/Agent - Law Firm - Provo, Utah
• QUERY: Can someone point me (and our readers) to a somewhat comprehensive breakdown which issues are issues of law versus issues of fact in patent cases?

En Banc Federal Circuit Revives Design Patent Law

Egyptian Goddess v. Swisa (Fed. Cir 2008, en banc)

In a rare unanimous en banc opinion, the Court of Appeals for the Federal Circuit has revived the value of design patent protection by loosening the standard for infringement. The opinion – penned by Judge Bryson – rejects the "point of novelty" test as a requirement to prove infringement of a design patent. Instead, the judges agree that the 1871 Gorham "ordinary observer" test is the "sole test for determining whether a design patent has been infringed."

The focus of the Gorham test is to look for substantial similarity between the patented design and the accused design. It is called the ordinary observer test because the similarity is considered from the perspective of an ordinary observer who is familiar with the art. Although Gorham only requires a comparison between the patented and accused designs, prior art designs will generally be useful for highlighting differences. A second pro-patentee rule that emerges from this case is that the burden of production of prior art designs will fall on the accused infringer. On claim construction, the Federal Circuit agreed that a 'verbal description' of the diagrams is not required, but will not – by itself – be reversible error.

Ordinary Observer With a Tight Focus: Although the patentee was able to change the law, it actually lost the day. In the appeal, the CAFC concluded that even under the ordinary observer test, "no reasonable fact finder could find that EGI met its burden of showing, by a preponderance of the evidence, that an ordinary observer, taking into account the prior art, would believe the accused design to be the same as the patented design."

The courts application of the law shows that proving infringement under the ordinary observer test will not be a walk in the park for design patent holders. Many cases will likely still turn on technical points of similarity rather than simply a broader totality of similarity. Yet, despite the potential difficulties, the situation is vastly improved from the hardships imposed by the point of novelty test.

More to come…

Erroneous Revival by PTO is not a Cognizable Defense in an Infringement Action

Aristocrat Technologies Australia v. International Game Technologies (IGT) (Fed. Cir. 2008)

'The district court concluded that the U.S. Patent and Trademark Office "improperly revived" U.S. Patent No. 7,056,215 after it was abandoned during prosecution, and therefore held it (and the continuation patent that followed it) invalid on summary judgment. We conclude that "improper revival" is not a cognizable defense in an action involving the validity or infringement of a patent. Thus, we reverse the district court's grant of summary judgment and remand for proceedings consistent with this opinion.'

ATA missed its US national stage filing by one day. The PTO granted ATA's petition to revive the application based on the applicant's seemingly legitimate claim that the "entire delay" in filing the appropriate papers "was unintentional." The district court, however, found the patent invalid based on the PTO's "improper revival" of the application. In particular, the district court found that the PTO lacked authority to revive unintentionally late national stage applications.  Rather, according to the court, the PTO can only revive such applications when the cause of delay meets the much higher standard of being unavoidable. The Court found its statutory support from 35 USC 371, which requires the PTO to hold late national stage applications as abandoned unless "such failure to comply was unavoidable."

On appeal, the Federal Circuit panel (Judges Newman, Bryson, and Linn) reversed – finding that "improper revival" is not a proper invalidity defense in a patent infringement action.

The court's surprising conclusion is based on its interpretation of 35 U.S.C. §282. That statute lists the defenses available to charges of patent infringement. Those include:

(1) Noninfringement …,

(2) Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability,

(3) Invalidity of the patent or any claim in suit for failure to comply with any requirement of sections 112 or 251 of this title.

(4) Any other fact or act made a defense by this title.

Conditions for Patentability: In the appeal, the Federal Circuit saw the term "condition for patentability" of ¶2 above as a term of art and gave it a narrow interpretation: "While there are most certainly other factors that bear on the validity or the enforceability of a patent, utility and eligibility, novelty, and nonobviousness are the only so-called conditions for patentability." Thus, complying with the timing requirements is not a condition of patentability.

Made a Defense: Taking a similarly hard stand, the appellate panel found that ¶4 above would only apply when another act had explicitly been 'made a defense' by the words of the patent act.

"Congress made it clear in various provisions of the statute when it intended to create a defense of invalidity or noninfringement, but indicated no such intention in the statutes pertaining to revival of abandoned applications. For example, 35 U.S.C. § 273 is entitled "Defense to infringement based on earliest inventor" and expressly provides that the provision "shall be a defense to an action for infringement."… Because the proper revival of an abandoned application is neither a fact or act made a defense by title 35 nor a ground specified in part II of title 35 as a condition for patentability, we hold that improper revival may not be asserted as a defense in an action involving the validity or infringement of a patent."

On several occasions, the court has allowed an invalidity finding when the cause of invalidity did not reach one of the Section 282 categories. In the 1995 Quantum case, for instance, the court invalidated a patent based on improperly expanding its scope during prosecution. Here, the court pushed Quantum aside finding it irrelevant or "inapposite." On the policy side, the court noted that this case is a one-off and is unlikely to encourage bad applicant behavior.

What result: The result of this case is that an accused infringer has no recourse to invalidate a patent that was issued as a result of procedural lapses during prosecution. Absent proof of inequitable conduct, there may be no recourse at all. In this respect, the Federal Circuit quoted its own 1997 Magnivision decision:

"Procedural lapses during examination, should they occur, do not provide grounds of invalidity. Absent proof of inequitable conduct, the examiner's or the applicant's absolute compliance with the internal rules of patent examination becomes irrelevant after the patent has issued."

Notes:

• If you have not chosen a case note yet, this is the one…
• CAFC to Decide Important Revival Case: Aristocrat v. IGT

Patently-O Bits and Bytes

• The Federal Circuit: Earlier this week, the IPO sent out a flyer demanding more respect for the Court of Appeals for the Federal Circuit. In particular, the organization noted that the court should be referred to as the "Federal Circuit" not the CAFC. IPO pointed out that acronyms are for lower courts such as the BPAI, ITC, CIT, CCPA, etc. I agree with the push for respect. My problem with the "Federal Circuit," however is that it is a poor trademark. It turns out that all appellate courts are "federal circuit courts."
• Hal Wegner at the Federal Circuit: Wegner is returning to the Federal Circuit on October 9 to argue against the PTO's product-by-process double patenting rejection of a Takeda patent in reexamination. The identical claims were argued in the 1995 case In re Ochiai (PTO reversed). The patent (No. 5,583,216) claims priority back to an original 1975 application. The issue is the timing of judging product-by-processing double patenting. [Calendar]
• Distance Collaboration: Patent No 7,343,719 is interesting to me because it list 30 different US inventors coming from nine different US states: Illinois, California, Tennessee, Connecticut, Texas, Massachusetts, New Hampshire, Wisconsin, and Florida. Have the tools of modern communication changed the nature of invention? The patent covers a machine that cooks and packages French fries.
• The Internet: The chart below shows the percent of issued patents that refer to the "internet."

 

Federal Circuit Finds Personal Jurisdiction Over Declaratory Judgment Defendant

Campbell Pet Co. v. Theresa Miale & Ty-Lift Ent. (Fed. Cir. 2008)

Ms. Miale holds two patents relating to stretchers for carrying injured animals her company (a partnership with her mother) sells products based on the patents.

The issue in the case is one of personal jurisdiction – whether the Federal Court sitting in Washington State has sufficient power over the patentee and her company to adjudge Campbell’s declaratory judgment action.

The facts are that Ty-Lift sold several thousand dollars worth of equipment to Washington residents, opened its internet website to Washington residents, and Ms. Miale even demonstrated the product at a Convention in the state.  While there, Miale and her mother “confronted several Campbell employees” and accused them of infringing Miale’s patents.  They also allegedly asked the convention director to remove the Campbell products and told customers of the infringement.

The district court originally dismissed the case – finding that Miale’s contacts were not sufficient for either general jurisdiction or specific jurisdiction.  

“[T]he [district] court found that the defendants had purposely engaged in transactions in Washington during the three-day convention in June 2007, and the court found that the cause of action for a declaratory judgment of patent noninfringement and invalidity arose from or was connected with those transactions. However, relying on our decision in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 2003), the court found that due process considerations barred the court from exercising personal jurisdiction over the defendants based on the activities at the June 2007 convention in Seattle.

The district court noted that the notion of “fair play and substantial justice” should “afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.”

On appeal, the Court of Appeals for the Federal Circuit reversed – finding that constitutional due process considerations of International Shoe do not bar the suit.  For the Federal Circuit, “sending letters to another state” is not sufficient to satisfy the requirements of due process and thus personal jurisdiction – even if those letters threaten litigation.  Here, the facts asserted show more than simply “attempts to inform.”

“Of critical importance to the issue of personal jurisdiction, Ms. Miale’s attempts at “extra-judicial patent enforcement” were targeted at Campbell’s business activities in Washington and can fairly be characterized as attempts to limit competition from Campbell at the Seattle convention.”

Reversed: The district court does have the power to hear this case.

 

 

Information Disclosure: Less is More for PTO?

The PTO hopes to change the disclosure requirement of Rule 56. The PTO does not want more references – it already has millions stored in its electronic databases. Rather, the PTO wants practitioners to perform a preliminary search and distinctly point out the closest features of the prior art. In tension with the PTO's desires are the multiple cases finding patents unenforceable due to applicants failure to submit relevant prior art to the PTO. Based on those cases and on the increased potential value of patent rights, patent applicants have dramatically increased the number of references cited in each application. (See first chart on right showing rise of references over time). In my sample of 500,000+ patents issued 1971-2008, the average number of references cited on the face of patents rose five-fold – from fewer than five in 1971 to more than twenty-five in 2008. On the other hand, it seems that the increase of prior art is largely due to patent applicant activity. In particular, on their own, examiners only discover [cite] around six or seven references – even when the applicant submits no prior art at all.

This result is shown in the second chart which compares the number of references cited in issued patents from 2006-2007 where the applicant filed an information disclosure statement (IDS) versus those where no IDS was filed.

I don't have the answer, but I do know that virtually no one reads all the references when more than thirty are submitted (except in litigation down the line).

Patently-O Bits and Bytes

• SanDisk and Samsung are in merger talks. One of the driving 'synergies' is that Samsung lays out "several million dollars" annually for flash-memory patent licenses.
• WSJ says Intellectual Ventures now holds over 20,000 patents. So far, IV had not filed any lawsuits.
• Patents are not helping Lehman in its collapse. The company employed 20,000+ but only holds 10 issued patents. (It did hold several others as collateral). [After I wrote this I saw two other comments on the same topic Zura BM]
• Stents: After a new trial, Cordis again won its patent infringement suit against Boston Scientific and Medtronic. Now, Judge Robinson will reinstate the $600 million in damages plus interest from the original 2002 verdict.
• No Subject Matter Jurisdiction: In ExcelStor v. Papst, the CAFC held that it does not have appellate subject matter jurisdiction over claims of patent licensee fraud or breach of contract.
• Strike: EPO examiners are scheduled to go on strike tomorrow – but just for one day. They want better patent quality. "Constant decisions in favour of quantity damage the quality of the patents."
• Jones Day Hates The WWW? The Cleveland based mega-firm has sued the operator of BlockShopper.com for announcing that two Jones Day associates had purchased expensive homes. BlockShopper apparently crossed the line when it added a link to the firm's website. [Hricik][Ambrogi][Randazza, who, by the way is a great writer][Levy].
• Risperdal: Last week, the CAFC held that Apotex could not challenge Janssen's patent if the purpose was simply to prevent the exclusive generic from potentially extending the start of its 180 days of exclusivity. In a parallel decision, the DC Circuit has held that TEVA has no right to be the exclusive generic. Although no written decision has issued, the court apparently decided that TEVA's paragraph IV certification was not sufficient because it challenged a patent that had already been de-listed from the orange book by the patentee. Other generics should be on the market very shortly.

 

Percentage of Patents Where Applicants Filed Disclosure Statements

I looked at a sample of 100,000 patents that issued in 2006 and 2007 to see what proportion of them include at least one applicant filed information disclosure statement (IDS) in the electronic file wrapper found in PAIR. About 83% of these recently issued patents include an IDS. The graph below breaks-up results roughly according to Art Unit at the PTO and sorts results according to the percentage patents that include an IDS in the file wrapper.

Because most of these categories include well over 1000 patents, the difference between individual groups is statistically significant (.99 CI) whenever the actual difference between two groups is at least four percentage points.

In re Swanson: CAFC Allows Reexamination Based on Reference Previously Considered by PTO and Courts

In re Swanson (Fed. Cir. 2008)

Back in 1984, the patent examiner rejected Swanson's claim based on U.S. Patent No. 4,094,647 ("Deutsch"). The claims were then amended and the patent allowed. Later, in an infringement action involving the patent, the Federal Circuit affirmed a judgment that "Deutsch did not anticipate the asserted claims." Abbott v. Syntron, 334 F.3d 1343 (Fed. Cir. 2003). Surmodics is the patent owner, and the patent is licensed to Abbott.

After losing at the CAFC, Syntron filed for ex parte reexamination of the patent – asserting again that the claims were anticipated by Deutsch. As per usual, the PTO agreed to reexamine the patent – based on a "substantial new question of patentability." 35 USC §303. On appeal, Swanson argues that the Deutsch reference was considered in both the initial examination and the litigation – and thus cannot serve as the "new" basis for reexamination.

Third-party filed reexaminations provide a check on PTO power, but the SNQ requirement is designed to protect patentees from harassment.

This 'substantial new question' requirement would protect patentees from having to respond to, or participate in unjustified reexaminations. Further, it would act to bar reconsideration of any argument already decided by the Office, whether during the original examination or an earlier reexamination. House Report 96-1307, 96th Cong., 2d Sess. (1980).

In its 1997 Portola Packaging case, the CAFC gave teeth to the SNQ requirement – finding that a new question could not be presented by "prior art previously considered by the PTO in relation to the same or broader claims." Reacting to that decision, in 2002 Congress amended Section 303 and to ensure that a new question may be raised by prior art that was previously considered by the examiner:

35 USC §303 "The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office."

Pointedly, the House Report accompanying the 2002 legislation found that "the Federal Circuit incorrectly interpreted Congress' original intent." According to the House Report, "the appropriate test to determine whether a 'substantial new question of patentability' exists should not merely look at the number of references or whether they were previously considered or cited but their combination in the appropriate context of a new light as it bears on the question of the validity of the patent."

SNQ = Reference Never Considered by the PTO for the Particular Purpose: Based on the statutory change, the appellate panel found that a substantial new question is simply one that has never been considered by the PTO. Here, the record shows that the original examiner relied upon Deutsch only as a secondary reference in an obviousness rejection of a broader claim.

"In light of the extremely limited purpose for which the examiner considered Deutsch in the initial examination, the Board is correct that the issue of whether Deutsch anticipates the method disclosed in claims 22, 23, and 25 was a substantial new question of patentability, never before addressed by the PTO"

SNQ Relation to Court Proceedings: In court, the parties had battled out the exact anticipation argument presented in the reexamination. On appeal, the CAFC panel found that "the determination of a substantial new question is unaffected by these court decisions." According to the court this makes sense because "the two forums [Courts and the PTO] take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions" based on the burden of proof. Quoting Ethicon (Fed. Cir. 1988).

Affirmed

Notes:

• Judges Gajarsa (Author), Lourie, & Bryson.
• This opinion gives further strength to ex parte reexamination requests.
• The CAFC has consistently required that a patent's presumption of validity be negated by "clear and convincing evidence." Here, the court made a minor slip by calling the standard 'statutory.'

"In civil litigation, a challenger who attacks the validity of patent claims must overcome the presumption of validity with clear and convincing evidence that the patent is invalid. 35 U.S.C. § 282. If this statutory burden is not met, "[c]ourts do not find patents 'valid,' only that the patent challenger did not carry the 'burden of establishing invalidity in the particular case before the court.'" Ethicon, 849 F.2d at n.3 (internal citations omitted) (emphasis in original)."

Thanks to Paul Morgan for noting this issue.

Ron Slusky: Five Prescriptions for Broader Claims

Ron Slusky is back with more insight from his 2007 book Invention Analysis and Claiming: A Patent Lawyer's Guide (ABA). This fall, Slusky will be hosting a series of two-day claim drafting seminars. See www.sluskyseminars.com. The following are five of Slusky's "Prescriptions for Drafting Broader Claims."

1. Define, Don't Explain

Patent attorneys love to explain things. This is a valuable trait when writing the specification. But it can get in the way when drafting claims. It is hard to resist the urge to liven up a claim's dull litany of elements by explaining that the claimed subject matter is an automobile floor mat; or an optical system with improved output efficiency...That urge to explain must be resisted nonetheless.

A claim's function is to define the boundaries of the parcel of intellectual property being sought—not to explain or to help readers to understand something. An explanatory-type limitation may seem harmless enough, but every extra word in a claim is a potential loophole for infringers to exploit.

Limitations should be suspected of explaining rather than defining if they recite:

• The advantage of the invention or what it is "good for;"
• How the recited combination can integrate with the external environment;
• Motivations (e.g., for doing a particular step or including a particular element);
• How to carry out a recited function where the recitation of the function itself imbues the claim with patentability;
• How inputs get generated;
• The source of something that the claimed method or apparatus works on.

A limitation that meets any of these criteria should be scrutinized as a candidate for deletion. If the claim distinguishes over the prior art without the limitation, the claim is probably well rid of it.

2. Scrutinize Every Modifier

Beware the insidious modifier, particularly adjectives. Most of them are unnecessary in a broad claim, serving to explain rather than to define. Each modifier in a claim should be scrutinized to see if the claim will support patentability without it.

Here are some examples: automobile floor mat; very-large-scale integration; high-resolution filter; decoding a transmitted video signal by…; rapidly removable label; block copolymer. (As to the latter, see Phillips Petroleum Co. v. Huntsman Polymers Corp., 157 F.3d 866 (Fed. Cir. 1998) (affirmed summary judgment of non-infringement).)

Another potential problem with certain modifiers is their potential for being declared indefinite. The terms "very-large-scale," "high-resolution" and "rapidly" in the above examples are problematic in this sense.

3. Assume That Input Signals and Data/Parameter Values Are Already In Hand—Don't Generate Them in the Claim

A method or apparatus often operates on input signals and/or may use data values, parameters or counts of things. When claiming the broad invention, it is usually desirable to treat such things as already existing rather than explicitly generating them within the claim.

For example, suppose the invention is the idea of adjusting the output rate of a widget-manufacturing process once the number of widgets produced within the previous hour reaches a certain limit. The invention could be defined in two steps—a counting step and an adjusting step:

1. A method for use in a machine that manufactures widgets, the method comprising counting the number of widgets manufactured in an hour's time, and adjusting the output rate of said machine when the count reaches a predefined limit.

However, it is irrelevant to the inventive concept how the number of widgets manufactured in an hour is determined. Indeed, the potential infringer might use the cumulative weight of an hour's output to determine how many widgets were produced and, in so doing, avoid a literal infringement of this claim

By assuming that the widget count is already known—handed to us by a genie, perhaps—and available to the adjusting step, the entire counting step can be eliminated:

2. A method for use in a machine that manufactures widgets, the method comprising adjusting the output rate of said machine when the number of widgets manufactured within an hour's time reaches a predefined limit.

4. Write the Claim Out of Your Head, Not Off the Drawing

Looking at the drawings is useful when intermediate- or narrow-scope claims are being drafted since such claims intentionally incorporate certain embodiment details.

However, the drawings may interfere with the conceptual thinking that is so desirable when reaching for breadth. It is all too easy for the drawings to draw our attention away from the abstract, exposing us to the siren song of the embodiment and its tangible details—details that can unduly narrow a claim.

It is much harder to be attracted to embodiment details when they are not staring up at us from the drawing. Thus the broadest claims should be written directly out of the claim drafter's head. The mind's eye should be able to so clearly see those few functionalities and interrelationships that define the broad invention as to make it unnecessary to look at the drawings.

If we find ourselves unable to write the claim with the drawings put away, it may be time to stop and re-engage the invention conceptually, returning to the claim drafting only when a crystal-clear answer to the question What is the Invention? is fully in hand.

5. Strive for Simplicity

Simplicity is a key to clarity. Convoluted interrelationships or claim language that is difficult to read through can signal that the invention has not been captured at its essence. Often buried in such a claim are ambiguities or unduly limiting recitations that aren't necessary to the invention.

The architectural philosophy of form follows function applies here. A claim whose form is clean and simple is more likely to serve the function of defining the invention cleanly and simply (read "broadly"). The hallmark of a well written claim is one that an inventor can understand without a lot of attorney explanation.

Once it becomes apparent that a claim-in-progress is evolving into an awkward mess, it is best to stop and rethink the approach. Often the culprit is that the limitations are introduced in a less-than-optimal order. Indeed, limitations that had seemed so necessary may fall away completely once the claim elements are rearranged. Or certain limitations in the preamble might be better put into the body of the claim or vice versa.

There is little point in fighting a recalcitrant claim. Better to look for some underlying assumption about the claim structure that is getting in the way and to start over. It can be hard to put on the brakes and abandon a claim in which a lot of time has already been invested. It's good, then, to stay alert to the possibility that things are beginning to deteriorate and to regroup sooner rather than later.

Copyright © 2007-2008 American Bar Association. All rights reserved. Adapted with permission.

 

Evidence Based Prosecution: More Claims Filed Equates with Longer Time in Prosecution

I am looking generally at how the contents of a patent application may impact the prosecution process. In this study, I looked at a sample of 50,000 original patent applications (excluding continuations) that have issued as patents in the past few years. This first graph shows the average time in prosecution (filing to issue) as a function of the total number of claims in the original patent application. The result is that the claim count positively correlates with time in prosecution. This correlation is strongest when the claim count is less than 30. As an example, patent applications with 30 claims took about 33% longer to issue than those with only 2 claims. The correlation makes sense: more claims would generally mean more work for the PTO to reject each claim, and more work for the applicant to respond in kind.

The second graph shows a similar pattern for independent claims.

Patently-O Bits and Bytes

• Bilski is coming (OCTOBER LIKELY)
  • Chief Judge Michel is quoted: "One of the most important cases pending with the [Federal Circuit] today is In re Bilski…. 'It's a very interesting case and I thought all the judges worked very hard on it,' says [Chief Judge] Michel. He adds: 'I think it will be a very significant decision. It probably will have broader scope than either In re Comiskey or In re Nuijten"
• FEES: I'm looking for the PTO fee schedule (filing fees, exra claim fees, extension fees, appeal fees, etc.) for the past decade.
• PTO Allowance Rate – depends on whether the PTO counts an RCE as an abandoned application. (which it should not…). The chart below is from a presentation by the PTO's General Counsel James Toupin. Greg A posted a link to the whole file: www.bustpatents.com/toupin.pdf.

Potential of Extending Exclusive Generic Period by Delaying Generic Launch Does Not Create Actionable Harm

Janssen Pharmaceutica v. Apotex, Inc (Fed. Cir. 2008)

Like most of today's pioneer-generic drug patent battles, this case involves multiple parties all looking for some advantage in the end-game battle over exclusivity.

Three JANSSEN patents are listed in the FDA orange book as covering its blockbuster anti-psychotic drug sold under the name Risperdal. ($2.5 billion in 2007 sales). TEVA was the first to challenge the patents and receives the Hatch-Waxman 180 days of generic market exclusivity. APOTEX came later and hoped to shorten TEVA's clock by invalidating the patents. The Federal Circuit, however, rejected APOTEX case – finding no declaratory judgment jurisdiction. In particular, the court saw no case or controversy between APOTEX and JANSSEN. (APOTEX wanted to shorten TEVA's rights).

TEVA had challenged only two of the three JANSSEN patents. On June 29, 2008, the unchallenged patent expired and the next day the FDA approved TEVA's generic application. To date, however, the generic company has apparently not yet launched. TEVA's 180 day clock will not be triggered until either (1) it launches its generic alternative or (2) the other two patents are found invalid by a court. If the court invalidates the JANSSEN patents, then TEVA's 180 days will end sooner – allowing APOTEX to enter the market at an earlier date. (TEVA's 180 days would have been triggered even earlier if APOTEX had successfully challenged the third patent (the '663 patent). It instead agreed that the '663 patent was valid.). To get out of the case, JANSSEN promised not to sue APOTEX on the other two patents.

On appeal, the three judge panel (CJ Michel, J Moore, and J Rader) recognized the harm APOTEX was feeling – but decided that the harm was not sufficient for declaratory judgment jurisdiction.

"[W]e conclude that the harm that has continuously existed in the present case—Apotex's inability to launch its generic product immediately upon the expiration of the '663 patent—is not sufficient to give rise to declaratory judgment jurisdiction."

What are they talking about?: This decision involves a multi-billion dollar drug and APOTEX – a leading generic provider – would be in a position to obtain at least millions in generic sales by launching sooner. Furthermore, the harm to APOTEX is not just waiting more than the 180 days, but also in giving TEVA more time to solidify its generic market position down the road. YET, the court concludes that the harm is "not sufficient to give rise to declaratory judgment jurisdiction."

Head in the Sand: It turns out that the court based its ruling on facts developed before we knew that TEVA would delay its launch:

"We heard oral arguments in this case on July 7, 2008, approximately a week after Teva could have launched its generic product. However, we are not deciding whether the facts alleged on July 7, 2008—the date we heard oral arguments—give rise to a justiciable Article III case or controversy. We hold that at the time when the district court entered final judgment in this case, Apotex's alleged harm of indefinite delay of approval was too speculative to create an actual controversy to warrant the issuance of a declaratory judgment"

The CAFC is probably correct that when the lower court made its decision months ago, the harm – TEVA's potential delayed marketing after expiration – was too speculative to support DJ jurisdiction.

Now that TEVA's delay is no longer speculative, APOTEX may well be able bring suit to invalidate the JANSSEN patents. However, that result is merely my own speculation.

Examination Query: Parallel Examination

Lots of times, examiners look at cases in parallel – especially when two cases are filed around the same time by the same applicant and cover similar inventions. The two patents will often issue on the same date with consecutive patent numbers. Are there any special rules, procedures, or counts that apply to this type of parallel examination?

CAFC: Deadlines Stick

Hildebrand v. Steck Mfg. (Fed. Cir. 2008) (nonprecedential)

Hildebrand's invention looks pretty cool – a device for removing bolts when the head is inaccessible or damaged. (U.S. Patent No. 5,737,981).

Hildebrand won at trial and was awarded $74,863 in lost profits from Steck. Hildebrand failed to request costs & fees within the 10-day time period (under Colorado local rules) and appealed for relief to the CAFC. On appeal, the court affirmed – finding that "the district court properly concluded that his application was untimely."

This case gives further creedence to the CAFC’s general operating procedure of giving no benefit to a party simply because the party is appealing pro se or with inadequate counsel.

Venue: East Coast Wins

Third Dimension v. Fairchild (E.D. Tex. 2008)

• Third Dimension sued Infineon in the E.D. Texas for infringement of U.S. Patent No. 5,216,275, et al.
• One month later, Fairchild filed a declaratory judgment action against Third Dimension in D. Maine on the same patents.
• Later that same day, Third Dimension sued Fairchild for infringement in the E.D. Texas on the same patents.

Holding: The first case stays in Texas. The second two cases are consolidated in Maine. "Third Dimension argues that the Maine case should be denied first-filed status because it filed an earlier case against Infineon involving the same patent as this case. . . . While this case and the Infineon case involve the same patent, that is the extent of the similarity."

Time Zone Problem: An interesting aspect of this case is the inherent time-zone problem. Fairchild filed its action in Maine at 12:01 a.m. EST on May 17. Third Dimension at 12:00 a.m. CST on the same day. Fairchild wins because it filed on the East Coast. Can that be right? (This conflict usually arises when a right is cemented on a particular day — such as a patent issuing.)

Appellate Decisionmaking: Unanimity or Dissent

The graph above is based on a review of almost 400 CAFC patent decisions that include a dissent. To calculate the percent of patent decisions that include a dissent, I pulled each decision associated with each judge and then added up the number of decisions that involved a dissent (regardless of whether the judge in question dissented). I am confident in these results, but a little more work is needed to handle the en banc decisions (which are more likely to involve a dissent). My RA Ryan Starnes helped in compiling the data.

NYTimes: Universities, Patents, & Profits

The New York Times today published an editorial about the problems created by the Bayh-Dole Act that promotes the patenting and licensing of university inventions that arise from federally supported research. [Read the editorial] The author - Janet Rae-Dupree – is concerned that the focusing on patenting and business development has "distorted the fundamental mission of universities."

'In the past, discovery for its own sake provided academic motivation, but today's universities function more like corporate research laboratories. Rather than freely sharing techniques and results, researchers increasingly keep new findings under wraps to maintain a competitive edge. What used to be peer-reviewed is now proprietary. "Share and share alike" has devolved into "every laboratory for itself."'

Dupree's recollection of the golden era where labs shared everything is admittedly wrong. As she explains: "When James Watson and Francis Crick were homing in on DNA's double-helix structure in the 1950s, they zealously guarded their work from prying eyes until they could publish their findings, to be certain that they would get the credit for making the discovery."

The important bit of truth comes from Jennifer Washburn's findings that most university technology transfer offices lose money:

"To date, Ms. Washburn says, data gathered by the Association of University Technology Managers, a trade group, show that fewer than half of the 300 research universities actively seeking patents have managed to break even from technology transfer efforts. Instead, two-thirds of the revenue tracked by the association has gone to only 13 institutions."

This problem may well be the result of growing pains – it is expensive to start from scratch and build a patent and licensing department. Many universities are actually turning to other directions: finding that local economic development – regardless of immediate licensing returns – is one of the most effective ways to ensure a continued supply of future research funding.

Notes:

• Read Kevin Noonan's take [LINK]
• The NYTimes note that many corporations are beginning to cooperate with foreign universities – essentially because US schools have become too complex and greedy.

CAFC Applies Lilly to Invalidate Carnegie Mellon’s Plasmid Claims

Carnegie Mellon University v. Hoffman-La Roche (Fed. Cir. 2008)

Carnegie Mellon's patents cover recombinant plasmids used to enhance expression of an DNA polymerase. On appeal, the CAFC affirmed the lower court holding that the patent claims fail to meet the written description requirement under Lilly.

35 U.S.C. §112 requires that the patent document "contain a written description of the invention and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

The written description requirement is used to make sure that the patentee only claims what has been invented. The public gets a "meaningful disclosure in exchange for being excluded from practicing the invention for a limited period of time." Quoting Enzo Biochem (Fed. Cir. 2002).

A common written description argument is that the claims have not been disclosed to their full scope. In the Lilly case, for instance, the CAFC found that a generic claim directed to "any vertebrate and mammalian cDNA" were not supported by a specification that only discussed one species – rat cDNA.

To be clear, written description is not about enablement. Patent claims may well be enabled based on PHOSITA's knowledge of the art, but still fail the written description requirement because the patentee did not disclose the entire scope of its invention.

A representative claim from Carnegie's patents reads as follows:

1. A recombinant plasmid containing a cloned complete structural gene coding region isolated from a bacterial source for the expression of DNA polymerase I, under operable control of a conditionally controllable foreign promoter functionally linked to said structural gene coding region, said foreign promoter being functional to express said DNA polymerase I in a suitable bacterial or yeast host system.

In reviewing the claim, the CAFC noted that the DNA coding sequence is "broadly defined … only by its function of encoding DNA polymerase I" and that the claims are not limited to any particular bacterial or yeast species.

The specification only discloses one operative gene – the E. coli polA gene. And at the time of the patent, only three polA genes had been cloned (out of thousands of bacteria strains). "[W]ith regard to the promoter, the patents fail to disclose the nucleotide sequence or other descriptive features for a polA gene (including the promoter sequence) from any bacterial source other than E. coli."

"To satisfy the written description requirement in the case of a chemical or biotechnological genus, more than a statement of the genus is normally required. One must show that one has possession, as described in the application, of sufficient species to show that he or she invented and disclosed the totality of the genus. . . . [W]e conclude that that requirement was not met here.

Gentry Gallery: The district court also applied Gentry Gallery to invalidate other claims. In Gentry, the CAFC found a patent claim invalid because the claim failed to recite an "essential element" of the invention. Here, Roche argued that the patents were directed to avoiding the problem of lethality to host cells, but that the claims did not include that limitation. As it has done repeatedly, the CAFC rejected the idea that Gentry Gallery created an essential element test. (The claims remain invalid under the Lilly analysis.).

Provisional Rights II: Substantially Identical Claims

Pandora Jewelry, LLC v. Chamilia, LLC, 2008 U.S. Dist. LEXIS 61064 (D. Md., August 8, 2008)

The provisional rights statute 35 U.S.C. §154(d) creates the potential that a patentee may collect damages for would-be infringing activities that occurred even before the patent issued. To recover, the statute requires that the invention claimed in the published patent application be "substantially identical" to those found in the issued patent.

35 U.S.C. §154(d)(2): The [provisional rights] shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.

The language found in Section 154(d) runs parallel to that found in 35 U.S.C. §252. Section 252 allows a reissue patent to have retrospective power when the reissued claims are "substantially identical" to those in the original patent.

In the present case, Pandora sued Chamilia for infringement of its patent covering necklace keeper attachments. Chamilia moved for summary judgment on several issues – Pandora's claim of provisional rights under §154(d).

The primary issue before the court was whether the patented claims were "substantially identical" to those in the published application. Like most patent applicants, Pandora had amended its claims during prosecution.

As a starting point, the court and parties agreed that the 'substantially identical' requirement of §154(d) was the same as that found in §252. This made analysis easier because the CAFC has interpreted §252's "substantially identical" requirement on several occasions. In particular, the appellate court circularly noted that a "substantially identical" claim is one that is "without substantive change." Laitram Corp (Fed. Cir. 1998). In that case, the court went on to provide a narrow interpretation – finding that "it is difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantially changed by the amendment."

"Under § 252, amended patent claims are "substantially identical" to the original claims "if they are without substantive change." Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998) (internal quotations omitted). "[I]n determining whether substantive changes have been made, [a court] must discern whether the scope of the claims are identical, not merely whether different words are used." Id. (citing Slimfold Mfg. Co. v. Kinkead Indus., 810 F.2d 1113, 1115 (Fed. Cir. 1987)). Although not a per se rule, "it is difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment." Id. at 1348. Where a substantive change has been made to a claim, the allegedly harmed party has no provisional rights to assert."

In Laitram, the CAFC also made clear that even purely narrowing amendments will violate the "substantially identical" requirement.

Pandora's published patent application claimed a reversibly attached band. During prosecution, however, the applicant amended that element to be a "fixedly attached band." According to the district court in its Markman hearing, this was done "in order to overcome the PTO's rejection based on the prior art."

Based the amendment from a reversible band to a fixed band, the court concluded that Pandora had "substantively amended the scope of the claim." And thus, the patentee has no claim for any provisional rights. "Here, Pandora substantively altered the scope of the claim when it amended the patent to require a permanently fixed band. Because the issued patent is not substantially identical to the published patent application, Pandora has no provisional rights to assert."

PAIR Offline

The USPTO's PAIR site has been offline since Friday. The reason that this is a major problem is that the PTO has refused to allow anyone else (such as Lexis, Derwent, or Google) to build a parallel database of PAIR data.

Provisional Rights I: Calculating a reasonable royalty

Parker-Hannifin Corp. v. Champion Labs., 2008 U.S. Dist. LEXIS 61108 (N.D. Ohio 2008)

Champion admitted that its oil filter infringed Parker's Patent No. 6,983,851 and also admitted that it owed a "reasonable royalty" to the patentee for pre-issuance sales based on the provisional rights of 35 U.S.C. 154(d).

35 U.S.C. §154(d) (1) In addition to other rights provided by this section, a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application … (A) (i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application …; and (B) had actual notice of the published patent application. (2) RIGHT BASED ON SUBSTANTIALLY IDENTICAL INVENTIONS.- The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.

Because of the admission, the Parker-Hannifin court was left only to consider the amount of damages to assess. Traditionally, under 35 U.S.C. §284, a 'reasonable royalty' is set as a floor in the calculation of compensatory damages. When lost profits are calculated, damage figures often rise well above what would have been a reasonable royalty figure. However, damages for violation of provisional rights are limited to the reasonable royalty as a maximum without any requirement that the rate be sufficient to compensate the patent holder. Here, the court found the reasonable royalty to be $2.00 per unit by applying the Georgia Pacific and creating a 'hypothetical negotiation." In deciding to the royalty amount, the court noted that under Mars, it is "wrong as a matter of law" to cap reasonable royalties "at the cost of implementing the cheapest available acceptable, noninfringing alternative."

Missing from the court's analysis is any consideration of how the hypothetical negotiation is altered based on the fact that the right infringed was only 'provisional.'

Notes: This case is interesting as one of the first discussing liability for infringement of a patentee's provisional rights.

Claim Construction: “The” condylar element does not mean “each and every” condylar element

Introduction: The claim construction issues here are interesting, include the question of how attorney-inventor communications impact claim construction. In addition the court takes a surprising approach to limit the scope of a prior settlement agreement.

HowMedica Osteonics v. Wright Medical (Fed. Cir. 2008)

Howmedica's U.S. Patent No. 5,824,100 claims artificial knee prosthesis. After a claim construction decision, Howmedica admitted that it could not prove infringement and appealed. Wright cross-appealed – arguing that the case was moot based on a prior settlement agreement and "release" between the parties.

In a 2-1 majority opinion Judge Dyk found that the lower court erred in its claim construction. This is a case where de novo review impacts the result. As Judge Dyk states, "[a]lthough this is a close case, we disagree." With de novo review, simple disagreement leads to reversal.

The claim introduced a "femoral component including at least one condylar element." The claim also required "the condylar element" have certain geometric limitations. The issue for claim construction is whether each and every condylar element must have those geometric limitations. The lower court said yes, Judge Dyk said no. In dissent, Judge Prost points out that it would have been quite easy for the patent applicant to clarify its intent.

Patent Attorney Communications: As part of its claim construction argument, Wright presented the contents of an e-mail between the patent prosecution attorney and the patent applicant considering potential limitations in the claims. The majority rejected that document as merely extrinsic evidence to be used only to "help educate the court regarding the field of the invention and can help the court determine what a person of ordinary skill in the art would understand claim terms to mean." Quoting Phillips.

The letter Wright relies on, reporting to the inventor on the results of an examiner interview, achieves neither of these objectives and is of no value to the construction of the disputed claim language.

Intent of the Release: A second issue on appeal was the impact of a prior settlement agreement between the parties. A plain meaning of the agreement released Wright from all future patent claims. In particular, the agreement released the defendant from "any and all manner of claims . . . that Howmedica . . . has, ha[s] had, or may have against Wright Medical . . . including, but not limited to, any and all claims and counterclaims that were or could have been asserted." Both the district and appellate courts, however, found that the plain meaning should not apply because neither party intended the release be so broad. As evidence, the court relied on a parallel agreement that was much narrower.

Patently-O Bits and Bytes

• Preference Prediction Patent for sale on eBay (LINK).
• Google has released a new browser known as "CHROME." Law firms and others should take care to ensure that their websites display properly. [LINK]
• The Wolf Greenfield firm is hosting a Webinar on Sept 25 on "The Real Impact of Ebay, KSR, MedImmune, Seagate and Translogic" [Free]
• The PTO is now considering Jan Buck's "Method of operationalizing a venture fund vehicle" by "creating a governing operating business plan, commercializing early stage academic science, generating operating revenue from more than one commercialization vehicle, using generated revenue to invest in new projects and/or ventures to achieve liquidity thereby generating cash for further investment in projects and/or ventures." No assignee is listed. [LINK]

CAFC Flips Call Routing Decision

800 Adept v. Murex Securities & Targus (Fed. Cir. 2008)

Adept and Targus both hold patents covering systems and methods for routing 1-800 calls to local franchises. In a multi-patent battle, the Orlando Florida jury found Targus liable for infringing the Adept patents and that the Targus patents were invalid.

Claim Construction: The Adept patents include the step of assigning the telephone number of each potential caller to a particular service location or franchise. The claims require that the assignment take place prior to the call being received, but there was a dispute as to whether the assignment can be stored as an algorithm rather than as a full database record-set. On appeal, the CAFC found that the patents focus on storing the assignment information in a database precludes the awkward twist that would all "assignment" to mean "implementing an algorithm to do the assignment."

As summarized in the abstract, the patents make clear that assignment of service location telephone numbers to potential callers must be completed before a telephone call is ever placed: "Once all such assignments have been made, a database is assembled to be used by a long distance carrier for direct routing of telephone calls."

Prosecution history: The prosecution history also supported this limited definition of assignment. Notably, the appellate panel agreed that the prosecution history was likely not clear enough for "prosecution disclaimer" but that it could still be used "as support for the construction already discerned from the claim language and confirmed by the written description."

Because the Targus operation uses an on-the-fly algorithm to associate callers with franchises, it cannot infringe as a matter of law. Reversed.

All Claims Invalid: The jury found that all claims of the Targus patents were invalid. On appeal, the CAFC limited that holding to only the three claims that were actually included in the pretrial statement.

"Adept's argument that it was unnecessary for its validity expert to put forth a claim-by-claim analysis of the unasserted claims is simply incorrect. Under the patent statute, the validity of each claim must be considered separately. … In this case, it is clear from the parties' pretrial statement and from the trial proceedings that the unasserted claims were neither litigated nor placed in issue during the trial. We therefore reverse the trial court's judgment of invalidity with respect to the unasserted claims."

Expert Mistake = New Trial: Adept's expert, Dr. Brody, made a few mistaken comments about scope of the company's patent disclosure. According to the court, this was the "primary if not the entire evidence" that the jury could have used in its invalidity decision. New trial ordered on the claims affected.

Tortious Interference: Targus sent infringement allegations to Adept clients, and the jury found tortious interference with business relations. On appeal, the CAFC reversed.

"State tort claims against a patent holder, including tortious interference claims, based on enforcing a patent in the marketplace, are "preempted" by federal patent laws, unless the claimant can show that the patent holder acted in "bad faith" in the publication or enforcement of its patent.… As the Supreme Court said long ago, "Patents would be of little value if infringers of them could not be notified of the consequences of infringement, or proceeded against in the courts. Such action, considered by itself, cannot be said to be illegal." Virtue v. Creamery Package (1913)"

In these cases, it is quite difficult to prove 'bad faith' because the claims of patent infringement must be objectively baseless. On appeal, the CAFC found that standard was not met because "Targus [could have had] a reasonable basis for believing that the patent was valid when it asserted the patent against Adept's customers."

Notes:

• Adept has also sued various Targus customers in the E.D.Texas, including Federal Express, Enterprise Rent-A-Car, and Domino's Pizza. Barnes & Thornburg, who represented Targus at trial, is representing the defendants in that case.

Evidence Based Prosecution: Why are Deadlines Driving Response Timing?

• I have compiled some data on the timing of initial non-final office action and the ensuing response for 400,000+ patents with patent numbers ranging from 5,800,000 – 7,100,000.  The graphs below show that office action responses are strongly deadline driven. About 60% of responses are filed by the initial three month deadline. However, 2/3 of those early responses are filed within only a couple days of the three month deadline. Similar "rushes" are seen to meet the four, five, and finally the six month date.

PTO Fees are the explanation for the deadline push. Missing the initial three month deadline requires payment of a  $120 fee – not a steep fine – but something that some clients are now refusing to pay. Subsequent monthly surcharges rise more dramatically: first $460 then $1050.  For clients on more of a fixed prosecution budget, attorneys would rather money go toward their fees rather than to the PTO.  Of course, the six month date has the significant legal ramification of abandonment.

The  immediacy of the deadlines hides an important fact in today's prosecution: Each day of by the practitioner results in one less day that the patent is in force.  The fact that very few responses come quickly (apart from the deadline) indicates a latent demand for delayed prosecution — It seems that most clients do not care whether the patent issues now or six-months from now. Why not eliminate these deadlines or push them back considerably? Applicants with important or easily patentable inventions would continue to respond quickly.  Those who could care less or who need time to build a patenability case could wait. 

Now, there are several reasons to strive for compact prosecution timing. Perhaps most importantly is the notion that both the applicant and examiner will work better and more efficiently if they have seen the case recently.  The tradeoff, however, is that applications sit much longer awaiting initial consideration.

A note about the data below: Responses that appear below to be just after a three, four, five, or six month deadline are typically 'on time.' My measurement is from the date the OA is entered in PAIR to the date the response is entered in PAIR (not the mailing dates). This typically adds an extra week or so.

Notes:

• Jeff Steck, a patent attorney at MBHB LLP, examined the small 'ripple' in the histogram and explains that it can be explained by the fact that (most) OA's are sent out on weekdays and responses are received on weekdays. This 'weekend effect' causes the ripple overlay. My original postulation that the ripple is caused by the PTO's bi-weekly counts is not sufficient since the ripple clearly has a one-week wavelength.