Patent Law Blog (Patently-O)

On the Price Elasticity of Demand for Patents

In a recent working paper, two European economists studied the price elasticity of demand for patents based on data from past twenty-five years. Their empirical result – the demand for patents is responsive to price, but relatively inelastic. I have created the following table showing where their result fits in the overall elasticity schema of goods and services.

Good	Estimated Elasticity	Description
Salt	0.1	Highly Inelastic
Patents	0.4	Inelastic
Legal Services in General	0.4	Inelastic
Utilities	0.4	Inelastic
New Tires	1.0	Moderate
Restaurant Meals	2.3	Elastic
Chevrolet Automobiles	4.0	Elastic

Elasticity is simply a way to measure (or estimate) the how the demand for a good changes in response to a change in the price of that good. Their results essentially show that pricing mechanisms could be effective in shaping applicant behavior, but that a significant result would require a dramatic change in fees. From a historical perspective, the authors attribute at least part of the "boom" in patent filings to a relative fee reduction and generally "very inexpensive" fees. "Higher fees would … [help] reduce the upward trend in propensity to patent."

Notes:

• Read the paper: On the Price Elasticity of Demand for Patents by Gaetan de Rassenfosse and Bruno van Pottelsberghe de la Potterie. [LINK]
• Historical data is only available for a limited range of pricing schemes.  In his paper on Patent Demand Tim Wilson proposes raising the patent filing fee to $50,000 with the assumption that the demand for patents becomes more elastic as the price becomes dramatically higher.  

What Happens After the BPAI Reverses an Examiner Rejection

Even after the Board of Patent Appeals and Interferences (BPAI) reverses an examiner's rejection, the case is returned to the same examiner to ensure that the application is in condition for allowance. 37 CFR 41.54. At that point, the examiner is not allowed to make another search for prior art. However, the examiner may reopen prosecution and enter a new grounds for rejection "[i]f the examiner has specific knowledge of the existence of a particular reference or references which indicate nonpatentability of any of the appealed claims." MPEP §1214.04. According to the MPEP, reopening prosecution requires written approval of the Technology Center Director.

To get a sense of how this post-reversal process operates in practice, I looked at a set of 149 decisions from 2006 where the BPAI had reversed examiner rejections. In 80% of cases, the examiner accepted the BPAI decision and did not re-open prosecution. In these cases, a patent generally issued within nine-months of the BPAI decision (median of six months) unless the applicant caused some delay. A typical delay is seen in IBM's Application No. 10/047,116. After winning an appeal on nonobviousness grounds and receiving a notice of allowance, IBM failed to pay the issue fee in a timely fashion. The patent finally issued after the PTO granted a petition to revive.

In the remaining 20% of the reversals, the PTO re-opened prosecution by offering new grounds for rejection. Occasionally the new grounds are suggested by the BPAI but more often they come from the examiner and fall under §101, §103, or §112. The current status of those re-opened cases from my 2006 sample can roughly be broken into thirds: a third of the cases were eventually patented despite the new rejection; a third of the cases are still pending; and a third of the cases were abandoned after the PTO continued to press its case. A handful of the pending cases are on their way to the BPAI for a second go-round.

Notes:

• One PTO insider takes issue with my statement that after being reversed "the examiner is not allowed to make another search for prior art." The MPEP §1214.04 states that "[t]he examiner should never regard such a reversal as a challenge to make a new search to uncover other and better references." According to the insider, that statement is not a prohibition on making a new search, but only a "discouragement." In practice, new searches are conducted and, if new art is found the PTO will reopen prosecution.

Federal Circuit Transfers Case Out of Texas (Applying New Fifth Circuit Precedent)

In re TS Tech USA Corp. (Fed. Cir. 2008) (precedential order)

Responding to an interlocutory petition for a writ of mandamus, the Federal Circuit has ordered a patent case transferred from Judge Ward's courtroom in the Eastern District of Texas to the Southern District of Ohio. Both venues were "proper," but the appellate panel found the Ohio venue "far more convenient."

In 2007, Michigan based Lear Corp (not Lear Jets) sued TS Tech for infringing its patent covering a pivotable vehicle headrest. The accused TS headrest assemblies were supplied to Honda and used in the Civic and Accura RDX. TS is a Japanese company, but the defendants are TS's North American subsidiaries headquartered in Ohio and Canada.

In 2008, the Fifth Circuit (TX, LA, MS) decided another venue case on mandamus – finding that cases should be transferred from the Eastern District of Texas when the new venue is "clearly more convenient." In re VW (5^th Cir. 2008) (en banc)(cert petition pending). On mandamus, a lower court's refusal to transfer will only be reversed if it produces a "patently erroneous result."

Here, the lower court erred in its application of 5^th Circuit law in several ways:

• Plaintiff's Choice: The lower court gave too much ("inordinate") weight to the plaintiff's choice of venue.
• Distance from Home: When a defendant is more than 100 miles from home, "inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." Here, all the witnesses are in Michigan, Ohio, and Canada. All of those witnesses "would need to travel approximately 900 more miles to attend trial in Texas than in Ohio."
• Physical Evidence: "Because all of the physical evidence, including the headrests and the documentary evidence, are far more conveniently located near the Ohio venue, the district court erred in not weighing this factor in favor of transfer."
• Public Interest: Texas has no interest in handling this patent dispute since the only relevant connection to the venue is that some vehicles containing the accused headrest assembly were sold in the venue. "None of the companies have an office in the Eastern District of Texas; no identified witnesses reside in the Eastern District of Texas; and no evidence is located within the venue." Thus, the "citizens of the Eastern District of Texas have no more or less of a meaningful connection to this case than any other venue."

Patently erroneous: Although "patentably erroneous" is difficult to define, the Federal Circuit found the errors sufficient to grant the writ. They reasoned that the 5^th Circuit VW case – where mandamus was also granted – was based on essentially identical errors.

Transfer Ordered.

Tags: Venue

Patently-O Bits and Bytes No. 84

• USPTO News: Although the move has been in the works for some time, Raymond Chen is now Solicitor of the USPTO and Deputy General Counsel for Intellectual Property Law. Chen's JD is from NYU. He also has a BS in electrical engineering from the UCLA. Prior to joining the solicitor's office, Chen was a technical assistant at the United States Court of Appeals for the Federal Circuit. Chen's parents were both engineers as well.
• Voting: Patently-O is in second place in the ABA Blog championship. Vote for Patently-O here.
• Suing the Software Giants: In 1998 three central-Indiana inventors filed for patent protection iconic software. The claims – finally issued in 2008 – cover a method of using icons that look like the content of the files they represent. The first named inventor – Greg Swartz – moved to Arizona and has recently filed an infringement complaint in that state. Defendants include Google (Chrome Browser), Microsoft (Vista), and Apple (iPhone). (U.S. Patent No. 7,346,850; ArsTechnica). The Niro firm is representing the patent holder – Cygnus Systems. An additional continuation is pending. The complaint can be found through Stanford's LexMachina Database.

Gilbert Hyatt: BPAI Erred in Aggressive Grouping of Claims

Hyatt v. Dudas (Fed. Cir. 2008)

Gilbert Hyatt has been famous for his early microprocessor patents. This appeal "concerns the patentability of approximately 2,400 claims in twelve related patent applications … that claim priority … to the early 1980s or before." Since being filed, all twelve applications have also been "amended to add hundreds of claims that were not included in the original applications."

The PTO examiner rejected all the claims in all twelve applications – most commonly for lacking proper written description. On appeal, the BPAI refused to independently review each of Hyatt's claims, and instead only considered the twenty-one claims that he had discussed in the "Summary of the Invention" section of the BPAI briefs. Appealing that decision, Hyatt convinced the DC district court that the BPAI had improperly selected the representative claims. The PTO now appeals that district court decision.

On appeal, the Federal Circuit affirmed – finding that the BPAI cannot create a representative claim by simply grouping all claims rejected for lacking written description under the same "ground of rejection" "unless the claims share a common limitation that lacks written description support." 37 CFR 1.192(c)(7).

"[T]he applicant can waive appeal of a ground of rejection, and can waive the right to demand additional subgrouping of claims within a given appealed ground. But the applicant cannot waive the Board's obligation to select and consider at least one representative claim for each properly defined ground of rejection appealed."

Affirmed. On remand, the BPAI must consider "all grounds of rejection challenged by Hyatt. . . However, the Board is free on remand to apply the rule of waiver to any grounds of rejection not contested by Hyatt in his initial appeals to the Board, provided that such grounds do not become relevant on remand due to realignment of the representative claims or other aspects not previously at issue."

Notes:

• 2400 claiming priority thirty years back…

PTO must interpret claims in light of specification and as they would be interpreted by PHOSITA

In re Wheeler (Fed. Cir. 2008) (non-precedential).

Wheeler's patent application covers a fishing pole with an illuminated transparent rod. A light in the handle illuminates the whole rod. The BPAI found the invention anticipated by another illuminated fishing rod patent. On appeal, however, the Federal Circuit reversed.

The difference is one of claim construction. The BPAI held that the claim only required a portion of the rod be illuminated, but the Federal Circuit interpreted the claims to require that the entire rod be illuminated. Since the prior art only disclosed a partially illuminated rod, the question of anticipation turned on this claim construction issue.

PTO Claim Construction: As with district court decisions, BPAI claim construction decisions are reviewed de novo on appeal. However, the law of claim construction allows the PTO to construe claims much more broadly than would a district court. In particular, during prosecution, claims are given their "broadest reasonable interpretation to facilitate precision in claiming." Of course, even at the PTO "claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art."

Here, Wheeler's patent claims "an illuminated fishing pole…made from a transparent, flexible material." The specification also states that the entire fishing rod is transparent and lighted along its length. Applying its interpretation, the Federal Circuit found that the claim required that the entire rod be transparent and lit. Because that limitation was not found in the prior art, the claim is considered novel.

Chamber of Commerce Calls for Internal Changes at the PTO

The US Chamber of Commerce has released a set of recommendations for President Elect Obama in dealing with the USPTO. Some highlights below:

• Comparing the past twenty years:

   

Year	Budget (Mil)	Patent Examiners	New Apps	Total Backlog	Pendency (Months)
1988	$144	1,540	148,000	268,000	20
1998	$567	2590	240,000	481,000	24
2008	$1,915	5,960	463,700	750,600	32

    

• The PTO should use "fee and order of examination incentives" to encourage applicants to provide higher quality applications and information disclosures. Thus, instead of making a hard cut-off for RCE filings, the PTO should consider charging an "increasing fee for successive continuations or RCE filings."
• The PTO should allow oversight and transparency in its quality review process.
• The Second-Pair-of-Eyes Review program "seems to be breeding a negative attitude among examiners and many applicants. The concept of quality review is essential, but the focus needs to change so that poor, unjustified decisions are not made in the alleged interest of quality."
• The next PTO director should have experience in patent prosecution and litigation.
• Deferred Examination: "If the PTO cannot reduce its backlog through other means and the number of patent filings continues to increase, consideration should be given to allowing patent applicants to defer examination of their applications for perhaps up to three years."
• Key contributors to the report include Dana Colarulli (Legislative lead for the IPO); Q Todd Dickinson (former PTO director); Nicholas Godici (former PTO commissioner of patents); Esther Kepplinger (former director of patent operations at the PTO); Mike Kirk (former deputy commissioner of patents); Stephen Kunin (former director of patent examination policy for the PTO); Gerald Mossinghoff (former PTO director); Charles Van Horn; and Herb Wamsley (IPO) .
• Read the Report.

Patent Law School Exam: Essay No. 2

2. (25 POINTS) AlphaDog's US patent has one claim:

1. A method of paying a company executive comprising: Calculating a salary, wherein the salary is calculated by multiplying the average non-executive company employee income by an X-factor, wherein the X-factor is between 10 and 99; and Paying the executive the salary.

During examination, the claim was amended. As originally filed, the claimed X-factor range was "between 10 and 120." AlphaDog had amended the claim to avoid a prior art reference that discussed paying executives over 100-times the average employee salary. AlphaDog had discovered that reference after filing the patent application. The company amended the claims, but did not tell the patent office of the reference (believing that it was no longer relevant to the claimed invention).

BetaDog has two employees – the CEO and her secretary. BetaDog's CEO is paid 9-times the salary of the secretary. Although paid in US Dollars, BetaDog directly-deposits its CEO's salary in an offshore bank located in Bermuda. AlphaDog sues BetaDog and its CEO for patent infringement. Explain the relevant legal issues, and figure out who wins and loses.

Federal Circuit Affirms (Not) “Obvious to Try” Jury Instructions

Rentrop v. Spectranetics Corp. (Fed. Cir. 2008)

Dr. Rentrop is the chief of research at St. Vincent's Hospital in NYC. For several years Rentrop used Spectranetics optical catheters to deliver LASER treatment. The Spectranetics catheters came in various tip diameters ranging from 1.4 mm to 2 mm. Finding those diameters too inflexible, Rentrop had the idea of using a 0.9 mm tip. Rentrop told Spectranetics of his idea and help them to create a prototype. Eventually Spectranetics obtained FDA approval and began marketing. In the meantime, the parties began to dispute over financial issues. Rentrop wanted a cut of the profits and so he filed for patent protection and eventually sued Spectranetics for infringement. The jury awarded $500,000 in damages.

On appeal, the Federal Circuit quickly affirmed. The most interesting legal issue of the case involves the pre-KSR jury instructions. The first part focused on the teaching-suggestion-motiviation test:

"In evaluating the scope and content of the prior art, you should keep in mind that there must have been some suggestion for a person skilled in the art to make the combination covered by the claims of the patent in issue in order for the claims to have been obvious. In other words, a claim in a patent is not obvious and invalid, simply because the claim combines elements that can all be found among the prior art references. It must have been a motivation or a suggestion to combine the limits in a manner disclosed by the patent."

The Federal Circuit found this instruction proper – in context – because the instructions defined motivation as potentially arising "from common knowledge, or common sense of the person of ordinary skill in the art, without any specific hint or suggestion in a particular reference."

Obvious to Try: The jury instruction on obviousness also included the statement that a "the test for obviousness is not whether or not it would have been obvious to try to make the invention." The defendant argued that the instruction violates KSR. In KSR, the Supreme Court held that the Federal Circuit was in error to hold that a "patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try." The Federal Circuit, however, was able to logically reconcile the two statements – noting that the jury instruction "does not imply that a showing that the specific combination of elements was obvious to try is insufficient to find obviousness."

Notes:

• Northern District of California Chief Judge Vaughn Walker authored the opinion while sitting by designation on the Federal Circuit.
• Spectranetics recently filed for ex parte reexamination of two of Rentrop's patents. [LINK]

Federal Circuit Proposed Timing Rules

The Federal Circuit has proposed a couple of rule changes:

• Amicus Brief: Any amicus curiae brief or motion for leave to file the brief will now need to be filed within 14 calendar days from the filing of the petition or response that the amicus curiae supports. (When supporting neither party, the amicus brief or motion must be filed within 14 calendar days of the filing of the petition).
• Rehearing Timing: A petition for rehearing may be filed within 30 days after entry of judgment.

Any comments are due to the court clerk by January 16, 2008.

[Notice]

Patent Law School Exam: Essay No. 3

3. (15 POINTS) Under 35 U.S.C. § 112 patent claims may be invalidated as indefinite. The Federal Circuit has interpreted the law to invalidate patented claims only when those claims are "insolubly ambiguous." The insolubly ambiguous standard is a high standard, and patent claims are quite unlikely to be found invalid under that standard. More recently, policymakers have considered lowering the standard, but only for pre-issuance patent applications undergoing patent prosecution. Is this proposal a good idea? Why?

Federal Circuit Invalidates Immunization Patent for lack of Patentable Subject Matter

Classen Immunotherapies v. Biogen IDEC (Fed. Cir. 2008)(Nonprecedential)

Judge Moore penned the one-paragraph Classen decision:

"In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court's grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen's claims are neither "tied to a particular machine or apparatus" nor do they "transform[] a particular article into a different state or thing." Bilski, 545 F.3d at 954. Therefore we affirm."

Classen's claims focus on several methods for evaluating vaccine immunization schedules. Claim 1 of patent 5,723,283 is reproduced below:

A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, relative to a control group of mammals, which comprises: immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

The claims here are quite similar to those addressed in the ill-fated Metabolite Supreme Court case. That case was dismissed by the court prior to reaching a final decision based on procedural failures.

The question left in my mind is how the step of "immunizing mammals" is properly disqualified.

Notes:

• The panel consisted of Federal Circuit Judges Newman and Moore and District Court Judge Farnan sitting by designation from Delaware. Judge Farnan is a highly experienced patent law judge. The short opinion may well be the only consensus reached amongst the panel. I suspect that Judge Newman would write a much different "full" opinion on the case than would Judge Moore.
• The accused infringers here include Biogen IDEC, GlaxoSmithKline, Merck & Co, Chiron, and others. I am surprised that these companies – which rely heavily on treatment method patents – would have argued strongly that the "immunizing" step was not sufficient to overcome

Post Microsoft v. AT&T: 271(f) ExtraTerritorial Infringement Still Applies to Process Claims

Cardiac Pacemakers v. St. Jude Medical (Fed. Cir. 2008) (non-precedential)

35 U.S.C. § 271(f) defines a special cause of action for supplying components of a patented invention to be assembled abroad. 

In the 2005 Union Carbide case, the Federal Circuit seemingly expanded 271(f) to cover components used in a claimed method. Then, in the 2007 Microsoft v. AT&T decision, the Supreme Court found that 271(f) does not extend to cover foreign duplicated software.  Part of the Supreme Court’s justification for its narrow interpretation of 271(f) was based on the traditional presumption against extraterritorial application of US laws.

In this case, the asserted claims are method claims, and the accused infringer (St. Jude) argued that Union Carbide v. Shell Oil is so “flatly inconsistent” with the reasoning of Microsoft, that it too should be overturned

“The three decisions that the district court felt constrained to follow - Eolas, AT&T, and Shell Oil - have been overturned or disapproved by the Supreme Court.”

On appeal, however, the Federal Circuit simply found that “the Supreme Court’s decision does not alter [the] holding” that “271(f) applies to components used in the performance of patented methods and processes.”

As a panel, we cannot reverse the holding of another panel of this court. We thus affirm the district court’s decisions relating to damages.

BPAI: PTO Should Apply Broadest Reasonable Claim Interpretation to Section 101 Analysis

Ex parte Koo (BPAI 2008)

Acting sua sponte, a BPAI panel recently entered a new ground for rejection against an IBM patent application: That the claimed process is unpatentable subject matter based on the Federal Circuit's recent en banc decision in Bilski. The claim is directed to a method of optimizing relational database queries and appears to be specifically directed to speeding up queries where a table is joined to itself. Although the preamble does focus on a "relational database management system," the body of the claim does not refer to any specific machinery beyond queries, sub-expressions, rows, and sets.

The legal point to consider from this case is that the PTO will apply its "broadest reasonable" claim interpretation during its §101 analysis. Here, the BPAI panel found that the broadest reasonable interpretation of IBM's claim does not necessarily "require computer or machine implementation" and thus that the claim fails the "tied to a particular machine" prong of Bilski machine-transformation test.

"Claim 1 does not recite any steps that necessarily involve machine implementation. While the preamble of claim 1 recites a "system," the "system" of claim 1 is not recited in terms of hardware or tangible structural elements. Rather, the "system" could be a software system, where the elements of claim 1 are implemented solely in software or algorithms. Thus, the nominal recitation of a "system" in the preamble does not transform claim 1 into patentable subject matter under § 101."

The BPAI also found that the claim "does not call for any transformation of an article to a different state or thing, nor does it require any transformation of data or signals." Based on the claimed step of "reforming the query," I would argue that the claim does require a transformation, but that transformation does not satisfy Bilski because the thing transformed (the query) is not "representative of physical objects or substances."

Notes & Comment

• In the appeal, the BPAI overturned the examiner's obviousness rejection based on the absence of a "self join" in the cited prior art.
• The disputed claim:

1. A method for optimizing a query in a relational database management system, the method comprising: evaluating the query to determine whether a sub-expression of the query is being joined to itself and whether a predicate of the query comprises an equality test between a same column of the sub-expression; determining whether a first row set producible from a first set of references of the query to the sub-expression is subsumed by a second row set producible from a second set of references of the query to the subexpression; and reforming the query to eliminate the joining of the sub-expression to itself based on evaluation of the query and determination of whether the first row set is subsumed by the second row set.

CAFC Affirms PTO’s right to fire quality assurance specialist for 35%+ error rate.

Asokkumar Pal v. Department of Commerce (Fed. Cir. 2008)(nonprecedential)

Pal was a quality assurance specialist at the USPTO. His job was to review patent examiner decisions and determine whether the examiner made any 'errors' in either rejecting or allowing claims. In 2005 and 2006, the PTO reviewed 16 randomly selected cases from Pal's file to determine whether he was properly reviewing examiner decisions. They found he was not making the correct decisions – that he erred more than 35% of the time. (A 25% error rate would have been acceptable). Acting on the advice of Pal's supervisor and another SPE, Peggy Focarino decided to fire Pal. Focarino's decision was upheld by the Merit Systems Protection Board (MSPB). Pal then appealed to the Federal Circuit.

Standard of Review: The Federal Circuit has jurisdiction over MSPB appeals. Most MSPB appeals to the Federal Circuit are affirmed. This result can be explained by the "highly deferential standard of review" given to the board. The Federal Circuit will only overturn an MBPB decision that is "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." Factual determinations are only reviewed for "substantial evidence." Thus, "if the Board rests its decision on evidence that could lead a reasonable mind to reach the conclusion reached by the Board, we must accept the Board's decision.

On appeal, Pal argued that the PTO's judgment was faulty because it only looked at 16 cases in determining his error rate rather than his entire body of work (or his work spanning his probationary period). The Federal Circuit rejected that argument finding "no requirement that the agency must use any particular method for picking which work performed … will be subject to test." In addition, Focarino did not err in discussing the case with a SPE who was familiar with the technology.

Mr. Pal had been with the Patent Office for 25 years and had received 22 "outstanding" performance evaluations and two "commendable" performance evaluations. His performance evaluation of "unacceptable" was his last and led to this cause of action. During his years, Mr. Pal trained junior examiners, taught the MPEP, and is a registered patent agent. The MSPB had noted that "it is extremely unfortunate that the agency could not have found another position for the Appellant, who seems to have many talents and has been a successful Federal employee for most of his lengthy career." However, the decision to fire an employee versus demote an employee is within the discretion of the PTO.

In his brief, Mr. Pal argued that other similarly situated employees had mistake rates "as high as 45-50 percent" that "were never rated unacceptable." That argument was not addressed by the Federal Circuit.

Court Lacks Personal Jurisdiction over Foreign Patentee in Declaratory Judgment Action

Avocent Huntsville Corp. v. Aten Int'l (Fed. Cir. 2008)

Avocent (of Huntsville, Alabama) sued Aten (of Taiwan) for a declaratory judgment of non-infringement and invalidity. In a split appellate decision, the majority (Judges Schall and Linn) found that the district court lacked personal jurisdiction over Aten. The dissent (Judge Newman) would have allowed the Northern District of Alabama court to proceed with the declaratory judgment action.

Patent litigation follows the Supreme Court's well trod standards for determining whether a court has personal jurisdiction over the parties. Courts speak in the language of minimum contacts, purposeful availment, and traditional notions of fair play. At base, the facts of each case is individually assessed to determine whether those notions have been satisfied. For specific jurisdiction in the declaratory judgment setting, the courts must also determine whether the DJ claim "arises out of or relates to" the DJ defendant's contacts with the state.

The contacts here include (1) an infringement threat letter from Aten to Avocent mailed to Alabama and to Amazon.com; (2) distribution and sale of Aten products in Alabama through a subsidiary corporation; (3) Aten's previous patent enforcement litigation in Texas and the ITC.

The Federal Circuit has repeatedly held that a threat letter alone is insufficient to create personal jurisdiction. Rather, for specific personal jurisdiction, the threat letter must accompany other activities related to the DJ action. In that vein, the majority also held that Aten's "mere acts" of importing and selling products in the Alabama forum do not count as other activities because those sales do not "relate in any material way to the patent right that is at the center of any declaratory judgment claim." Finally, personal jurisdiction is examined on a state-by-state bases. Thus, the Aten's prior lawsuits in Texas and the ITC do not impact the issue of personal jurisdiction in Alabama. Open and shut.

In dissent, Judge Newman noted, inter alia, the lack of an alternative forum for the complaint and the existence of Alabama state law claims.

 

    

 

Means-Plus-Function Fools Gold

Welker Bearing v. PhD, Inc. (Fed. Cir. 2008)

Mechanism For: Welker's patent claims a clamping mechanism for holding parts in place when welding. The appeal focuses on construction of a "mechanism for moving said finger." Affirming a prior similar ruling, the Federal Circuit found that the claim structure "mechanism for [performing a function]" is presumptively interpreted as a means-plus-function claim element.

"The term 'mechanism' standing alone connotes no more structure than the term 'means.'" Quoting MIT v. Abacus Software, 462 F.3d 1344 (Fed. Cir. 2006).

Instead of claiming a "mechanism for moving said finger," the patentee could have claimed a "finger displacement mechanism." Opining on that counterfactual, the Federal Circuit noted that it would not have presumed a means-plus-function construction.

"If claim 1 … had recited, e.g., a "finger displacement mechanism," a "lateral projection/retraction mechanism," or even a "clamping finger actuator," this court could have inquired beyond the vague term "mechanism" to discern the understanding of one of skill in the art. If that artisan would have understood such language to include a structural component, this court's analysis may well have turned out differently. Instead the applicant chose to express this claim element as "a means or step for performing a specified function without the recital of structure, material, or acts in support thereof.""

A reminder here: means-plus-function language is akin to fools gold. Welker's "mechanism" claim appears broadly written until means claim interpretation doctrine limited to the particular structures disclosed in the specification that perform the claim function and structures that are only insubstantially different. Here, Welker described a linear finger movement which was considered substantially different from a rotational movement.

Means-Plus-Function Equivalents versus Doctrine of Equivalents: Means-plus-function claims are interpreted to cover only structures disclosed in the specification that perform the claimed function and, in addition, any equivalents of those disclosed structures.  On its face, this appears duplicative of the traditional doctrine of equivalents (DOE). In this case, the Federal Circuit spells out some differences between the two. Most notably, "an equivalent structure [for means-plus-function analysis] under § 112 ¶ 6 must have been available at the time of the issuance of the claim, whereas the doctrine of equivalents can capture after-arising technology developed after the issuance of the patent."  This statement by the court does not, however, precisely explain the distinction.  For means-plus-function claims, court precedent allows the doctrine of equivalents to only capture after-arising technology.  [Link] "Indeed this case does not present a case for equivalents under the doctrine of equivalents at all. This case presents only the question of structural equivalents under §112 ¶ 6."

Federal Circuit Affirms Nonobviousness of Plavix Isomer Patent

Sanofi Synthelabo v. Apotex (Fed. Cir. 2008)

In an opinion by Judge Newman, the Federal Circuit affirmed the validity of Sanofi's patent covering the blockbuster drug Plavix. The Plavix patent covers a dextrorotatory isomer. The validity question rises from the fact that the racemate of the compound was known and described in earlier Sanofi patents. For its obviousness argument, Apotex noted that separation of enantiomers is routine and that there are many examples of compounds that exhibit stereoselectivity. Thus – Apotex argued – there was both motivation and means for creating the Plavix compound from the known racemate that Sanofi had previously admitted was an important compound.

The Federal Circuit disagreed with Apotex – finding "no error in the district court's findings that, on the state of the prior art, a person of ordinary skill would not have had the expectation that separating the enantiomers would be likely to produce an isomer having absolute stereoselectivity as to both the favorable antiplatelet activity and the unfavorable neurotoxicity."

Notes

• This case falls in line with the Federal Circuit's 2006 decision on preliminary injunction in this case. [Link]
• In November 2008, the Canadian Supreme Court affirmed patentability of the Canadian patent on Plavix. [Link]

Enforcing Foreign Patents in the US: Distinguishing Voda

Fairchild Semiconductor v. Third Dimension (3D) (D.Maine 2008)

The dispute between Fairchild and 3D turns -- in-part -- on whether Fairchild's devices that it manufactures abroad are covered by 3D's Chinese patents. In a well written opinion, a Maine district court (J. Hornby) rejected 3D's motion to dismiss – finding that it has power to adjudge the conflict even though the analysis will almost certainly require determination of the scope of the Chinese patents.

Fairchild and 3D have an ongoing "worldwide" license agreement that allows Fairchild to use 3D's patented technology. The license specifically includes both the Chinese and US patents. For consideration, 3D receives a royalty payment for any Fairchild products "covered by" on or more claims of 3D's licensed patents. After analyzing 3D's patents, Fairchild stopped paying the royalty and also sued for a declaratory judgment that it owes no royalties and that its products are not covered by 3D's patents. The agreement also had a choice of forum (Maine or Texas courts) and choice of law (Maine or Texas law) that applied to the entire agreement. The case is in Federal Court based on diversity jurisdiction.

Courts normally enforce choice of forum & choice of law contractual provisions – especially when negotiated by two sophisticated parties. The catch for cases involving foreign patent rights is the Federal Circuit's strong aversion to allowing US courts to adjudge foreign patent rights. In the 2007 Voda case, for instance, the appellate court would almost always abuse its discretion by using its supplemental jurisdiction power to adjudge claims of foreign infringement.

Here, the district court distinguished Voda on a few grounds: First, this case reaches the court based on diversity jurisdiction rather than supplemental jurisdiction. Although diversity cases can be booted on convenience factors, diversity jurisdiction is not otherwise discretionary. Here, convenience factors favor Maine as a jurisdiction over China – in particular, both parties are in the US, one has its HQ in Maine, and both previously agreed to litigate in Maine. Second, this case is not a patent infringement case. Rather, it is a contract dispute that – as part of the dispute – questions the scope of a Chinese patent. Third, problems of international relations and comity are lessened because the Chinese patent issue only involves the scope of the Chinese patent and not its validity.

It is unclear whether the Federal Circuit will have jurisdiction over any subsequent appeal since the justification for federal jurisdiction is the diversity of parties rather than patent "arising under" jurisdiction.

 

Sullivan’s IP Law Outline

One great and free resource for patent attorneys is Michael Sullivan's IP Law Outline. The 1000+ page outline discusses Federal Circuit opinions and integrates them into a cohesive body. Great Work Michael! http://www.iplawoutline.com/

Another new IP blog. http://inventivestep.net/. The inventive step is written by Matthew Osenga.

Court: Parties Must Justify Need for Claim Construction

IP Cleaning v. Annovi Research (W.D. Wisc. 2008)

IPC has accused Annovi of infringing its patent covering a high-pressure washer. Although only a single claim is in dispute, both parties requested that the court construe several claim terms. In a recent order, however, the court denied both motions for claim construction because neither party had "persuade[d] the court that construction of each specified term is necessary to resolve a disputed issue concerning infringement or invalidity" beyond the generic statement of resolving issues of infringement and validity. According to the court, it will only resolve claim construction disputes where the parties have a "concrete dispute" that will impact the outcome.

"The reason for the order is not to require parties to parrot its language before the court construes claim terms; it is to avoid the devoting judicial resources to the issuance of advisory opinions on the construction of claim terms about which the parties have no concrete dispute. As much as the parties may hate to show their hands at this early stage, they must do so, if they hope to seek the benefit of claim construction before filing motions for summary judgment. Because the parties have disregarded the order and failed to demonstrate the basis for requesting construction of the terms they dispute, their motions requesting claim construction will be denied."

This decision is in tension with O2 Micro v. Beyond Innovation (Fed. Cir. 2008). In that case, the Federal Circuit found that the lower court had improperly refused to construe certain disputed terms. "When the parties raise an actual dispute regarding the proper scope of these claims, the court, not the jury, must resolve that dispute. . . . When the parties present a fundamental dispute regarding the scope of a claim term, it is the court's duty to resolve it." O2 Micro. The two cases may be distinguished on the ground that in IP Cleaning, the parties have not yet shown an "actual dispute regarding the proper scope" of the claims.

Federal Circuit Affirms Narrow Construction of “Internet Billing Method”

Netcraft Corp v. eBay and PayPal (Fed. Cir. 2008)

Netcraft sued eBay and PayPal for infringement of its patents that cover an "internet billing method." During claim construction, the Western District of Wisconsin found that the limitation of "providing a communications link through equipment of the third party" requires that an infringer "provid[e] customers with internet access." Of course, eBay and PayPal do not provide internet access.

On appeal, the Federal Circuit affirmed the claim construction and summary judgment of non-infringement.

Three reasons why the claim was narrowly construed:

1. In many cases, claim construction issues are won or lost in the process of defining which "term" is going to be construed. The patentee argued that the term "communications link" was broadly written and amenable to broad construction. The defendants argued that the element in question was actually the entire process of "providing a communications link through the equipment of the third party." That entire process is more amenable to a narrow interpretation."
2. The patentee did not help its cause by adding the "communications link" to the claims during prosecution. The term is not used anywhere in the specification – consequently, the patentee had little ammunition for arguing for a broad interpretation.
3. The specification declares several "objects of the present invention," including providing internet access. Also, the abstract includes a statement regarding an "agreement between an Internet access provider and a customer." And, there is no specific language indicating that these statements are directed at "alternative embodiments." [Note here, a distinction between alternative embodiments and optional functions.]

Affirmed.

Patently-O Bits and Bytes

• Model Jury Instructions: More on this in an upcoming post. At Judge Michel's request an all star cast of patent law experts have hammered out a set of model jury instructions for patent infringement actions. [Link][Comments welcome to PatentJuryInstructions@gmail.com]
• BPAI Appeal rules have been stayed – Most likely until after January 20.
• Two keen jobs:
  • Fellow at Berkeley Law School (Sponsored by Microsoft). Apply by February 1, 2009 [Link]
  • Appellate Litigator for the USPTO Solicitor's Office. Apply by January 9, 2009 [Link]
• Does stare decisis apply to a previous court's unappealed claim construction decision? See Shire v. Sandoz
• Donoghue: "Breach of Patent Settlement Does Not Create Federal Jurisdiction" [Link]
• Barkoff: "Federal Circuit Affirms $16.8 Million Award of Fees to Takeda in Pioglitazone Case" [Link]
• In house counsel Brian Schar writes the American Intellectual Property Abstract (American IPA)
• Mullin provides an update on the Troll Tracker defamation suit.
• The Trading Secrets blog has some useful information on protecting rights via employee agreements. [Link]

New Patent Appeals Rules: Delayed by Whitehouse OMB

Patent applicants appealing examiner decisions do not need to comply with the USPTO's new appeal brief rules that were set to become effective on December 10, 2008. According to the notice to be published tomorrow: The PTO "will notify the public when the revised effective and applicability dates are set. In the subsequent notification, the Office will provide at least a 30-day time period before the BPAI final rule 2008 becomes effective."

http://www.federalregister.gov/OFRUpload/OFRData/2008-29297_PI.pdf

As noted previously on Patently-O. David Boundy of CantorFitz has led the charge against implementation of these new rules. Boundy notes the fact that Jon Dudas signed the FR notice on December 5, but as of this writing (Dec 9 at 5:23pm), there is still no notice on the USPTO website.

Post-Reexamination Litigation Estoppel

Acco Brands, Inc. v. PC Guardian Anti-Theft Products, Inc., 3-04-cv-03526 (N.D.Cal., December 4, 2008).  

Infringers have long been reticent about filing for inter partes reexamination. One problem is the estoppel provision – 35 U.S.C. § 315(c) – that limits the claims that the third-party requester can later make in court. In particular, Section 315(c) is written to estop the third party requester from later asserting an invalidity defense in litigation if the third-party requester "raised or could have raised" the ground during the reexamination. (The estoppel provision only applies once the PTO determines that the challenged claim is valid).

35 U.S.C. §315(c): A third-party [inter partes] requester … is estopped from asserting at a later time, in any civil action … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

In this case, the PC Guardian had requested an inter partes reexamination based on several prior art references. However, upon consideration, the PTO confirmed that the claims were patentable.

In the ensuing infringement litigation, PC Guardian made an end-run around the estoppel argument. For its non-infringement contention, PC Guardian presented three 1980's Macintosh portable computers as prior art. According to the defendant's argument, the physical computers when seen in combination with the references considered by the PTO rendered ACCO's patent obvious.

Because reexaminations are restricted to considering only patents and printed publications, the district court agreed that Section 315 does not estop PC Guardian from asserting the combinations during litigation.

File Attachment: PCGuardian.pdf (84 KB)

During prosecution, claims are indefinite when amenable to multiple plausible constructions

Ex parte Miyazaki (BPAI Precedential 2008)

In a rare precedential opinion, the Board of Patent Appeals and Interferences (BPAI) has re-defined the standard for a §112 indefiniteness rejection during patent prosecution. The BPAI's definition for pre-issuance indefiniteness focuses on 'plausible' indefiniteness and varies dramatically from the Federal Circuit's standard of 'insolubly ambiguous.' The BPAI argues that a lower threshold of ambiguity is justified pre-issuance because it gives the PTO power to ensure that claims are "precise, clear, correct, and unambiguous."

As such, we employ a lower threshold of ambiguity when reviewing a pending claim for indefiniteness than those used by post-issuance reviewing courts. In particular, rather than requiring that the claims are insolubly ambiguous, we hold that if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.

The expanded indefiniteness examination runs parallel to the PTO's approach of broadly construing claims during prosecution. Both tactics are intended to better ensure that issued patents can be counted-on as being valid patents.

The Federal Circuit's insolubly ambiguous standard is premised on the strong presumption of validity associated with an issued patent. The BPAI grounds its lower threshold in the notion that patent applications have no presumption of validity.

Read the BPAI Miyazaki Opinion: http://www.uspto.gov/web/offices/dcom/bpai/prec/fd073300.pdf

Oral Arguments in Tafas v. Dudas

Tafas v. Dudas (Oral Arguments 2008)

Hear them here: http://oralarguments.cafc.uscourts.gov/mp3/2008-1352.mp3

Patently-O Bits and Bytes

• Law School Hiring: This year has been dismal for law student hiring. There are many 2Ls and 3Ls who are hopeful patent attorneys, but do not have jobs lined up yet or even serious prospects. In past years, those students would have been already snapped up by the big players. Contact me (dcrouch@patentlyo.com) if you are interested in looking at some Mizzou law resumes.
• Crocs: Helping keep the streets free of ugly shoes (as well as microscopic fungi), Sketchers has agreed to stop selling its molded footwear. Crocs had sued for design patent and trade dress infringement. Crocs, Inc. v. Skechers U.S.A., Inc., Case No: 1:08-cv-01450-RPM (D. Co 2008).
• Wall Street Journal Patent News:
  • Medicis Pharmaceuticals (NYSE) climbed 2.26, or 20%, to 13.38, as the Scottsdale, Ariz., skin-products maker agreed to settle a yearlong patent dispute with Impax Laboratories over a generic version of Medicis' acne drug Solodyn.
  • Falling 7.67, or 46%, to 8.95, Tessera Technologies, a San Jose, Calif., company specializing in semiconductor packaging, was handed a setback when an International Trade Commission judge said six big chip makers didn't infringe its patents.
• Future of the PTO: On December 11, 2008 in DC, Chris Katopis will moderate an historic panel of former PTO Leaders: Dickinson, Lehman, Mossinghoff, and Godici. Free Live or via Telephone. Details, RSVP, and call-in info from TLiszka@comptia.org.
• Santa Clara Computer and High Technology Law Journal's 25th Annual Symposium: January 30, 2009 in San Jose. I will be presenting some ideas on attorney ethics and inequitable conduct. Other topics include developments in non-practicing entity patent litigation and litigation before the ITC.

California’s One-Sided Patent Regime: Litigating With Immunity

Biomedical Patent Management Corp. (BPMC) v. California Department of Health Services (on petition for certiorari)

BPMC's patent infringement lawsuit against the California was dismissed after the state asserted immunity under the Eleventh Amendment of the US Constitution – a decision affirmed by the Federal Circuit. In its petition for certiorari, BPMC argues that the State has waived its immunity. BPMC presents two separate theories of waiver – one narrow and one broad. The narrow waiver theory focuses on the facts of this particular dispute – that California had previously voluntarily been a litigant in a case involving the same parties, same patent, and same infringing actions. The prior case was dismissed and then re-filed, but the state refused to participate in the second coming. The broader and more interesting waiver theory focuses on California's deep and continued involvement in the patent system as a patent applicant, patent holder, patent plaintiff, and patent licensor. Particularly notable for this case is California's extensive use of the Federal Courts to sue infringers. As posed by BPMC, the broad waiver question is: "Whether or in which circumstances a State may waive its Eleventh Amendment immunity in patent actions by regularly and voluntarily invoking federal jurisdiction to enforce its own patent rights."

Before granting certiorari in patent cases, the Court often asks the Solicitor General to provide the US Government's views on the petition. In a recent filing, the Solicitor General recommended that the petition for certiorari be denied. On the narrow waiver question, the Solicitor sees the facts as too narrow to warrant Supreme Court attention. The SG sees the broader question as "undeniably important." However, the Solicitor sees the proposed focus on whether a state has "regularly and voluntarily invoked federal jurisdiction to enforce its own patent rights" as "unworkable."

"Under petitioner's proposed rule, it is not clear at what point a State would be deemed to have voluntarily participated in enough federal court patent suits to have waived its Eleventh Amendment immunity from all such suits. Nor is it evident how a State would know in advance when it was poised to cross the waiver threshold."

The Solicitor also notes that most of the issues were resolved by Florida Prepaid cases. Although well written, the Solicitor's brief is just that – brief.

There are several reasons why I do not believe that the SG's opinion seriously diminishes the chances of being granted certiorari. First, [some]* patent cases in the past decade were granted certiorari despite a SG recommendation against the grant. Second, the Supreme Court has already shown interest in the case by asking for the SG's recommendation, and the SG recognizes that the issue is important. Third, the SG's arguments of unworkability and lack of clarity are rather weak. The brief is just that – brief – and does not address many underlying constitutional issues. Fourth, the Supreme Court has already focused on this issue and has experience. However – as the SG notes, the issue raised by BPMC is not directly covered by the court's prior rulings.

BPMC's counsel – Andrew Dhuey – indicated that the Supreme Court may consider the petition in its January 9^th Conference.

Notes:

• I've updated my previous statement to say "some" rather than "many" patent cases were granted cert despite an SG recommendation against the grant. Two such cases include JEM Ag. and LabCorp (which was subsequently DIG'd).
• File Attachment: SG Brief (100 KB)
• Cato Editorial
• Federal Circuit Decision
• Filings

  

Patent Practitioner Ethics Update

In a recent presentation, PTO Discipline Director Harry Moatz repeated his statements regarding a practitioner's duty to make reasonably inquiry prior to submitting any papers to the USPTO. "Practitioners submitting papers must read each paper submitted to the Office before it is submitted. Each submitted paper must be read in its entirety … regardless of the source of the paper." The duty of inquiry is codified in the Federal Regulations as 37 C.F.R. § 11.18(b). That section requires that submitted papers be submitted only for proper purposes and that any claims made be legally warranted. Section (b)(1) requires that all statement made be believed to be true and that no statement "covers up by any trick, scheme or device a material fact." Section (b)(2) goes on to require that the person filing the paper actually make "an inquiry reasonable under the circumstances" to ensure that the paper is not being presented for any improper purpose and that the contentions are "warranted by existing law or by a nonfrivolous argument [to change] existing law."

Mr. Moatz provides several examples that could be seen as failure to make a reasonable inquiry: (1) Filing an application with claims that are anticipated by at least one publication authored by one of the inventors. (2) Burying a reference material to patentability among a large number of cumulative references. (3) Filing an application with one or more claims unpatentable over a combination of prior art references cited by applicant in the specification.

37 CFR § 11.18 (b) By presenting to the Office or hearing officer in a disciplinary proceeding (whether by signing, filing, submitting, or later advocating) any paper, the party presenting such paper, whether a practitioner or non-practitioner, is certifying that— (1) All statements made therein of the party's own knowledge are true, all statements made therein on information and belief are believed to be true, and all statements made therein are made with the knowledge that whoever, in any matter within the jurisdiction of the Office, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or knowingly and willfully makes any false, fictitious, or fraudulent statements or representations, or knowingly and willfully makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 and any other applicable criminal statute, and violations of the provisions of this section may jeopardize the probative value of the paper; and (2) To the best of the party's knowledge, information and belief, formed after an inquiry reasonable under the circumstances, (i) The paper is not being presented for any improper purpose, such as to harass someone or to cause unnecessary delay or needless increase in the cost of any proceeding before the Office; (ii) The other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (iii) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and (iv) The denials of factual contentions are warranted on the evidence, or if specifically so identified, are reasonably based on a lack of information or belief.

In his presentation, Mr. Moatz listed the primary complaints that he receives against patent practitioners. They include:

• Neglect.
• Lack of candor (Either to client or the PTO).
• Failure to make reasonably inquiry.
• Failure or delay in filing application
• Failure to respond to OA (even when client has not paid)
• Misuse of the certificate of mailing
• Insufficient funds
• Failure to pay issue fee
• Failure to revive
• Failure to turn over files to new attorney
• Failure to communicate with client

Additional reasons for ethical sanction include DUIs; unauthorized taking of prescription meds; and disbarment.  Under the new ethics rules (Aug 2008), a practitioner must notify the OED Director within 30 days of being convicted of "any" crime. The PTO will then determine whether the conviction is serious enough to merit interim suspension. Practitioner must also give notice of disbarment within 30 days.  The new rules also provide for “disability inactive status” when a practitioner is judged legally incompetent.

Notes:

• File Attachment: moatz08.pdf (373 KB) 

Patently-O Bits and Bytes: Vote for Patently-O

The ABA is running its annual law blog popularity contest, and Patently-O again made the cut of top 100 legal blogs. Apparently, Patently-O is being voted on for the award of best "niche" blog. Unfortunately, I tend to avoid that word (niche) because I don't want to sound too French (neesh) or too rural (nitch).

Follow the link to Vote for Patently-O (towards the bottom of the ballet) http://www.abajournal.com/blawgs/blawg100_2008/niche. (Only one vote per computer).

Standard Setting and Waiver of Patent Rights

Qualcomm Inc. v. Broadcom Corp (Fed. Cir., Dec. 1, 2008)

"This patent infringement case involves the consequence of silence in the face of a duty to disclose patents in a standards-setting organization ("SSO")."

Qualcomm participated in the "Joint Video Team" to set standards for video compression technology. During those meetings, Qualcomm did not disclose that it held two patents that covered technologies required to comply with the standards being developed.

Under participant agreements, however, disclosure was required to help ensure "a simple royalty free baseline profile." And, under Rambus, even non-explicit disclosure requirements can create a duty to disclose patent rights during standard setting discussions.

Because the patentee intentionally failed to disclose its patents, the court agreed that the patents were unenforceable under the equitable doctrine of implied waiver. However, the court limited the scope of the waiver only to products that were compliant with the new (H.264) standard.

Notes:

• The court cites Mark Lemley's 2002 SSO paper

Constitutional Separation of Powers

The structure of the US Constitutional is designed to separate governmental powers. In patent law, separation of powers issues continue to arise – largely because the executive branch (PTO) and the judicial branch (Federal Courts)* decide many of the same patent law issues. Post-grant procedures such as reexamination and reissue complicate the scene because those avenues allow for parallel decisionmaking by the two bodies. Notably, most inter partes reexaminations involve parallel patent infringement litigation. Usually, a district court will reach its result before the PTO, and questions then arise as to the PTO's subsequent power to affirm or deny patentability.

Although it appears to be more of a statutory construction issue, BlackBoard recently sued the USPTO (Dudas) in a case involving these issues. Originally, BlackBoard sued Desire2Learn for patent infringement and Desire2Learn subsequently requested inter partes reexamination of the asserted patent. In February 2008, a Texas jury found the asserted claims valid** and infringed. (**i.e., not invalid). The District Court did not issue its final judgment until May 2008. That case is pending appeal at the Federal Circuit. In the meantime, in March 2008, the PTO issued an initial rejection of the claims and has, more recently, refused to end the reexamination.

Under 35 U.S.C. §317(b), an inter partes reexamination must be stopped by the PTO if the requestor's invalidity argument is rejected in a civil action and a "final decision has been entered."

FINAL DECISION - Once a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, that the party has not sustained its burden of proving the invalidity of any patent claim in suit … [then] an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings. 35 U.S.C. §317(b)

BlackBoard argues that the final decision by the Federal Court in Texas strips the PTO of authority to maintain the inter partes reexamination. The PTO, on the other hand, maintains that the litigation is not really final until Desire2Learn exhausts all appeals.

Notes:

• In addition to the PTO and Courts, the International Trade Commission (ITC) is a third decisionmaking body that is considered a quasi-judicial governmental agency. There are some cases where the same patent and same parties have been simultaneously involved in disputes in all three forums.
• BlackBoard complaint
• Desire2Learn Patent Infringement Blog
• As a work-around, Desire2Learn has its servers located Canada. The only valid BlackBoard claims are "method" claims, and, under RIM v. NTP, a method claim is only infringed if each step of the method is performed in the USA.