Patent Law Blog (Patently-O)

BPAI Again Rejects System Claims under Bilski

Ex parte Atkins (BPAI 2009)

The BPAI has again raised the issue of Post-Bilski patentable subject matter sua sponte. Like most claims challenged under Section101, Atkins claims also have serious nonobvousness and indefiniteness problems.

Atkins claims a method of "converting a unidirectional domain name to a bidirectional domain name." In reviewing the claim under Bilski, the BPAI noted that the claims do not "recite any machine or apparatus or call for transforming an article into a different state or thing. A domain name is simply a series of characters representing the address of a resource, such as a server, on the World Wide Web. All of the steps are data manipulation steps."

Atkins also claims a parallel "system" for converting the domain name. The BPAI rejected the system claims under Bilski since "those claims encompass any and all structures for performing the recited functions. As a result, [the system claims] are at least as broad as method claims ... which we have determined recite patent ineligible subject matter under Bilski."

• Ex parte Atkin.pdf

Sarnoff: The Patent Act's Mention of Business Method Patents Does Not Mean that Section 101 Should Extend to Cover Business Methods

Section 273 of the Patent Act mentions the possibility of a patent covering “a method of doing or conducting business.” Part of Bilski’s petition for certiorari relies on that section as an argument that Congress intended for Section 101 to cover business methods. That argument is a red herring -- The Federal Circuit's Bilski decision did not eliminate business method patents. Rather, the decision only requires that any claimed process meet the machine-or-transformation test.

In his Federal Circuit amicus brief, professor Joshua Sarnoff wholly rejected the implication that Section 273 proves that Congress intended the Patent Act to extend coverage to novel business methods. He argues as follows:

Sarnoff: … [T]he State Street Bank decision did not motivate the enactment of Section 273’s prior user rights provision. Rather, it motivated restriction of that provision to business methods from an earlier and broader proposal.[2] Congress did not approve of this Court’s decision, but focused on business methods because it felt that the strongest fairness arguments for a prior user defense existed in regard to the newly patentable subject matter.[3] As stated by Senator Schumer, Section 273 “should be viewed as just the first step in defining the appropriate limits and boundaries of the State Street decision…. I believe that it is time for Congress to take a closer look at the potentially broad and, perhaps, adverse consequences of the State Street decision.”[4]

Ratification should not be found here, given that Congress did not amend Section 101 or otherwise specifically address patent eligibility.[5] Instead, Congress created only an isolated change to the law that responded to specific concerns raised by this Court’s changed interpretation of Section 101. See, e.g., Alexander v. Sandoval, 532 U.S. 275, 292 (2001) (“when, as here, Congress has not comprehensively revised a statutory scheme but has made only isolated amendments, we have spoken more bluntly: ‘It is “impossible to assert with any degree of assurance that congressional failure to act represents” affirmative congressional approval of the Court's statutory interpretation.’”) (citations omitted). Similarly, ratification should not be found here, given that the State Street Bank holding was a significant change to the law and conflicted with binding Supreme Court precedent. See, e.g., Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 185 (1994) (ratification is implied when Congress “reenact[s] statutory language that has been given a consistent judicial construction”).[6] Had Congress thought that adopting a new defense to liability might affect subsequent interpretation of Section 101, it could have expressed its intent either to alter or to preserve earlier law – as it did with regard to Sections 102 and 103. See 35 U.S.C. § 273(b)(9) (2000).[7]

Moreover, ratification of the “useful, concrete, and tangible result” test as applied in State Street Bank would pose serious constitutional concerns by authorizing patents for claims reflecting only insignificant post-solution activity. The test would thereby encroach on permissible public uses of categorically excluded public domain information, potentially extending protection beyond any inventive concept properly attributable to the applicant and retarding rather than promoting sequential innovation. It would require patents for non-technological inventive concepts, extending protection to activities that may not be within the useful arts (however broadly or narrowly that category is construed).

Given the reasonable alternative interpretation discussed above, this Court should not construe Section 273 to have ratified the “useful, concrete, and tangible result” test as applied in State Street Bank. See, e.g., Gomez v. United States, 490 U.S. 858, 864 (1989) (describing “settled policy to avoid an interpretation of a federal statute that engenders constitutional issues if a reasonable alternative interpretation poses no constitutional question”); Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 346-48 (Brandeis, J., concurring) (establishing the policy). Finding such ratification would force the Court to decide whether Section 101 (at least since 1999) is constitutional. Cf. Richardson v. United States, 526 U.S. 813, 820 (1999) (“We have no reason to believe that Congress intended to come close to, or to test, those constitutional limits when it wrote this statute”). Without ratification, the binding Diehr-Flook precedent remains the law and avoids any such constitutional concerns.

---

[1] See, e.g., H.R. Rep. 106-464, 121 (1999) (Conf. Rep.) (“business methods and processes, many of which until recently were thought not to be patentable”); id. at 122 (the “1998 opinion … in State Street Bank … which held that methods of doing business are patentable, has added urgency to the issue.… [T]housands of methods and processes used internally are now being patented.”). See also H.R. Rep. 106-287, 45-46 (1999) (“many businesses … thought secrecy was the only protection available,” and such methods “previously had been thought to be unpatentable”); Cong. Rec. E1789 (Aug. 5, 1999) (speech of Rep. Coble) (same); Cong. Rec. S13259 (Oct. 27, 1999) (statement of Sen. Hatch) (same).

[2] See, e.g., Cong. Rec. H6944 (Aug. 3, 1999) (statement of Rep. Rohrbacher). Cf. H.R. Rep. 106-464, 121 (noting importance of the “earlier-invention defense” to “any business that relies on innovative business processes and methods”).

[3] See, e.g., Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer) (the “decision has raised questions about what types of business methods may now be eligible for patent protection…. It has created doubt regarding whether or not particular business methods … might now suddenly become subject to new claims under the patent law.”); Cong. Rec. H6947 (Aug. 3, 1999) (statement of Rep. Manzullo) (Congress “felt that those who kept their business practices secret had an equitable cause not to be stopped by someone who subsequently reinvented the method”). Congress limited the defense to business methods because it believed that the law had been changed only in regard to such methods. See id.

[4] Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer)

[5] Congress expressly acknowledged that State Street Bank altered the law in regard both to “the business method exception” and to “the essential question of whether the invention produced a ‘useful, concrete, and tangible result.’” H.R. Rep. 106-464, 122.   However, Congress did not approve of that result. Rather, it noted only that the new defense applied to systems as well as to processes. See id. at 123.

[6] Cf. Food and Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 157 (2000) (finding effective ratification from enactment of a specific set of separate regulatory provisions, at a time when the agency’s interpretation had historic “consistency”); Brown v. Gardner, 513 U.S. 115, 121 (1994) (“‘[w]here the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.’”) (citation omitted); Fogerty v. Fantasy, 510 U.S. 517, 532 (1994) (rejecting effective ratification and noting that “this is hardly the sort of uniform construction that Congress might have endorsed.”).

[7] See also H.R. Rep. 106-464, 124-25; H.R. Rep. 106-287, 49.

Aventis Files for Certiorari: Challenging Federal Circuit's Low Standard for Intent to Deceive in Inequitable Conduct Proceedings

Aventis Pharma v. Amphastar Pharmaceuticals and Teva (on petition for a writ of certiorari)

In a split 2008 decision, the Federal Circuit affirmed a lower court decision holding two Aventis patents unenforceable due to inequitable conduct. The patents cover a low molecular weight form of the blood thinner heparin and is marketed under the Lovenox brand. The alleged offense involved an Aventis failure to report that its tests showing improved drug half-life used a different dosage than the tests on prior-art compound. Inequitable conduct requires proof of both materiality and intent to deceive. Here, the intent was shown only through circumstantial evidence.

In a strongly worded dissent, Judge Rader argued that inequitable conduct law should be restricted to "only the most extreme cases of fraud and deception." Rader also discusses how past inequitable conduct should be correctable.

Now, Aventis has hired Supreme Court powerhouse (and champion of the Federalist Society) Ted Olson and has asked the Supreme Court for its view. Aventis posits as an extension of Judge Rader's dissent - arguing that inequitable conduct should not be a viable cause of action when the mens rea evidence only rises to gross negligence. The question presented:

Under the judge-made doctrine of “inequitable conduct,” a federal court may decline to enforce an otherwise valid patent that was procured through fraud or deceit. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945). As befits the punitive nature of the doctrine, this Court has invoked it only in extreme circumstances involving “deliberate,” “corrupt,” “sordid” and “highly reprehensible” misconduct. Some panels of the Federal Circuit have similarly limited the inequitable conduct doctrine to deliberately planned and carefully executed schemes to defraud, but other Federal Circuit panels—including the majority in this case— have adopted a “sliding scale” under which “less intent” is required as the materiality of an omission or misrepresentation increases. The question presented is:

Whether a court may refuse to enforce an otherwise valid patent on the basis of an inequitable conduct determination premised on a sliding scale between intent and materiality, effectively permitting a finding of fraudulent intent to be predicated on gross negligence.

Aventis has written a strong petition, amici briefs in support of the Aventis position would be due by February 25.

Notes:

• Aventis Petition for Certiorari
• Inequitable Conduct: Failure to Submit Full Experimental Details
• Patently-O: Split over Inequitable Conduct

The Exodus: Following TS Tech, Patent Lawsuit Transferred from E.D. Texas to Oregon

A few days ago I was discussing TS Tech with a patent law guru. I suggested that TS Tech would not have a major impact on the location of patent cases - largely because local judges still retain a large amount of discretion in determining whether another venue is more convenient. . . . What do I know.

Odom v. Microsoft (E.D. Tex, Jan 30 2009)

Famed patent blogger Gary Odom sued Microsoft in the Eastern District of Texas - alleging that the Office 07 toolbar infringes Odom's software patent. Judge Love was assigned the case -- but now he has granted Microsoft's motion to transfer the case to Oregon. You see, Odom is located in Oregon, Microsoft in Washington, the Klarquist firm (who once worked with both Odom and Microsoft) is in Oregon.

Judge Love relied on the Federal Circuit's TS Tech (J. Rader) opinion and the 5th Circuit's VW opinion (en banc) in determining that the suit should continue in the Northwest rather than Texas.

Under the circumstances presented here, the convenience of witnesses and localized interests weigh in favor of transfer with the other factors neutral or weighing slightly in favor of transfer. This is a case that is significantly localized in the Northwest. Both parties are residents of the Northwest, and Microsoft’s equitable defenses all arise out of conduct and contracts in the Northwest. No Texas resident is a party to this litigation, nor is any Texas state law cause of action asserted. All identified witnesses—with the possible exception of one—are located in the Northwest. This is not a case where witnesses are expected to be traveling from all over the country or world. In summary, there is little convenience to the parties for this case to remain in Texas, while there are several reasons why it would be more convenient for the parties to litigate this case in Oregon.

Case transferred.

Notes:

• Order to transfer order to transfer from texas
• E.D. Texas Blogger Michael Smith has more details
• It remains to be seen if Judges Ward and Davis follow suit.
• In the opinion, Judge Love did distinguish some portions of TS Tech. Importantly, much of the likely evidence is in electronic form. The court found that the physical location of the servers holding that electronic evidence did not impact the inconvenient forum analysis.

Deferred Examination: PTO to Hold Roundtable Discussion

It is clear that acting USPTO director John Doll has ideas for improving the patent system and that he is prepared to move the ball forward while he has the floor. Next on the order of business -- deferred examination. On February 12, 2009, the USPTO will hold a preliminary discussion on the potential for expanding the deferred examination system. Requests to participate should be sent to Robert Bahr (robert.bahr@uspto.gov). You may send comments to AC6comments@uspto.gov. Although attendance is open to the public, you must be pre-approved to 'participate.'

The PTO currently has an "optional deferred examination procedure" that allows deferral of examination for up to three years from the priority date after a petition and payment of a fee. According to the PTO, this procedure has been used "fewer than two hundred" times since it was created in 2000. 37 C.F.R. 1.103(d). In other countries, deferred examination is much more popular. In those countries, the applicant can delay payment of some examination fees during the deferral period. However, seems unlikely that the delay in paying fees (saving a couple hundred dollars) would explain the difference in popularity of the systems. An alternative explanation may be inertia. In Japan, for instance, the applicant must take some action to end the deferral period; while in the US, the applicant must take some action to start the deferral period. These different energy barriers might explain some of the difference in the use of deferral. The best explanation might stem from the backlog of US patent applications which prevents most cases from being examined in the first three years. Under the current system, a deferral in the US does nothing to slow the examination process if the examination backlog is already more than three years.

Deferred prosecution does have some possible negative issues. These negatives include the potential for submarining and shifting claim scope to encompass market changes. These problems could largely be limited through early publication of deferred applications as well as continued enforcement of the written description and enablement requirements. In addition, the patent term should continue to run during the deferral period.

There are two main benefits of deferred examination: (1) delaying spending fees could have a great cost savings if the delay allows companies to figure out that a significant number of applications are no longer worth pursuing; (2) non-deferred cases should move more quickly through the system.

In a 2008 letter to Congress, then PTO director Jon Dudas suggested three possible additions to the US system: (1) a 14-month extendible period for responding to a notice of missing parts; (2) a tiered payment structure that allows the "examination fee" to be paid later; and (3) allow applicants to claim priority to a provisional application for up to five years.

Notes:

• Deferred Examination Announcement

Bilski Petitions the Supreme Court to Decide Issues of Patentable Subject Matter

Bilski v. Doll (on petition for certiorari)

In Bilski, the Court of Appeals for the Federal Circuit applied the “machine-or-transformation test” as the only test to be used in determining whether a claimed process is eligible for patenting under § 101. The decision holds that a claimed process either (1) be tied to a particular machine or apparatus or (2) transform a particular article into a different state or thing.

Bilski’s claimed method of hedging the risk of bad weather through commodities trading had been rejected by the USPTO as lacking patentable subject matter. On appeal, the Federal Circuit affirmed – finding that the method failed the machine-or-transformation test.

Now, Bilski has petitioned the Supreme Court for a writ of certiorari — asking the high court to determine whether the new test of patentable subject matter is the correct test.

The petition asks two questions:

Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing … despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

Under Supreme Court rules, any amici brief in support of the petitioner (Bilski) would be due within thirty days (Feb 27). Those in support of the respondent (PTO) would be due the dame day, but the PTO will likely seek an extension.

Notes

• File Attachment: Bilski Petition for Certiorari (665 KB)
• Federal Circuit Decision in Bilski
• The BPAI and the Machine or Transformation test of Bilski
• Should Patent Practitioners Support the Bilski Petition?
• Prometheus v. Mayo: Limits of Patentable Subject Matter in Medical Treatment and Diagnosis
• Drafting Software Patents Under Bilski
• Professor Collins: In re Bilski: Tangibility Gone “Meta”

The BPAI and the Machine or Transformation test of Bilski

In three recent cases, the BPAI has continued its trend of applying the Federal Circuit's en banc Bilski decision to reject software-style method claims as lacking patentable subject matter. The BPAI is not asserting that software is unpatentable -- the Board is simply failing to find ties to a particular machine; transformation of a physical object; or transformation of articles "representative of physical objects." In two of the cases, the BPAI applied its power to issue new grounds of rejection -- raising the Section 101 issue sua sponte.

In ex parte Gutta (BPAI 2009), Gutta (Philips) claimed a "computerized method performed by a data processor." The claims include elements such as "a history;" "a plurality of clusters;" a "target user;" and "preferences of a third party." The final step in the method involved "displaying" a score. In Bilski, the Federal Circuit found that the transformation of data into a visual depiction could render a claimed method patentable. Here, however, the generically worded step was merely "post-solution activity [insufficient] to impart patentability to a claim involving the solving of a mathematical algorithm."

In ex parte Barnes (BPAI 2009), Barnes (Landmark Graphics) claimed a "fault identification method" that obtains seismic data and determines "a planarity value for discontinuities" in each "analysis window" in the seismic data. In this case, the BPAI entered a new ground of rejection under Section 101. The BPAI recognized that the claim called for both gathering and analyzing data, but those steps - without explicit limitations of how they are done - are insufficient to render the claim patentable.

In ex parte Becker (BPAI 2009), Becker and his fourteen co-inventors (Siemens) claimed a "method for maintaining a user profile." As in Barnes, the BPAI entered a new ground of rejection under Section 101 -- finding again that the method claims failed to satisfy the machine or transformation test.

Read the Opinions

• Ex parte Gutta (BPAI 2009)
• Ex parte Barnes (BPAI 2009)
• Ex parte Becker (BPAI 2009)
• Ex parte Cornea-Hasegan (BPAI 2009)
  
• Ex parte Bo Li (BPAI 2008)

Note: This was originally posted on Jan 26, but was inadvertently un-published. I this version is slightly modified to take-into account an insightful comment regarding the transformation of data into a visual depiction.

Bilski at the Supreme Court

Bernard Bilski's petition for certiorari is due within days (unless an extension is granted). I think that there is a real question of whether (and how) the patent community should react to presentation of the case. Should the patent community support this case for Supreme Court review, wait for a better situated case, or sit content with the machine-or-transformation test outlined by the Federal Circuit in the en banc Bilski decision? Each position has its merits.

The case is well developed, parties and amici have already invested time standing behind the case. Yet, the underlying invention is not compelling (a method of hedging the risk of bad weather by using commodities trading) and issues of obviousness would almost certainly cloud the issues. There are many other potential cases in the pipeline, and the Supreme Court may properly wait to see how the new Bilski rule develops before weighing-in.

Peer-to-Patent Project Begins Post-Issue Review

The Electronic Frontier Foundation (EFF) and Public Patent Foundation (PubPat) started the ball rolling with public interest challenges to patents via reexamination. Now the Center for Patent Innovations at NYLS have set their sights on post grant reviews. By leveraging their peer-to-patent system, the group hopes to help discover prior art that will invalidate issued claims. "Our citizen-experts have already found a number of items of prior art relevant to patents being asserted againt Microsoft, Google, and Facebook." (Post-Issue) The project is looking for law students to help. Not relying on altruism -- Article One Partners has offered $50,000 for helping invalidate several Rambus patents. "If one or more references show a patent to be invalid, the first respondent who found the research earns the reward." (Article One) If you do find the Rambus prior art, please post a note here first so that we can all sell short.

* Note -- I am an Advisory Board Member of the Center for Patent Innovations (although I did not know about this recent development until it had already been released).

Prometheus v. Mayo:

In Prometheus Labs. v. Mayo, the patentee's claim focuses on a method of "optimizing therapeutic efficacy" by first administering a particular drug to a subject and then using the subject's metabolite level to adjust future drug doses. The district court found the claims invalid as lacking patentable subject matter under 35 U.S.C. 101. On appeal Prometheus has asked the Federal Circuit to restore its patent rights. (U.S. Patent No. 6,680,302).

In an amicus brief, the AIPLA has also asked the appellate court to uphold the patent rights. The bar association argues that (1) the requite Bilski transformation can be found in the subject's transformation of the drug into metabolites in the body and (2) that no weight should be given to the dissent from denial of certiorari in LabCorp. Other briefs are expected, including several arguing that the method should not be considered patentable.

Notes:

• AIPLA Brief: prometheusmayo.aipla.pdf
• Discussion by Matt Osenga [LINK]
• Prometheus is parallel to the Classen case.
• PATracer has further background
• Chris Holman discussed the case earlier on Patently-O.

Upcoming Events & New Blogs

Upcoming Events

• January 30, 2009: Santa Clara Computer & High Tech Law Journal will host its conference on Shifting Strategies in Patent Law. Judge Rader will present the keynote address. I will be part of a panel on inequitable conduct and will specifically talk about the PTO's role in determining inequitable conduct issues. [LINK].
• February 6, 2009: Texas IP Law Journal is hosting its 10th annual symposium at the University of Texas. The title of my talk is Evidence Based Prosecution: Empirical Results from the Prosecution Files of One Million Recently Issued Patents. [LINK]
• February 6, 2009: Duke IP Law Symposium. Carl Horton (Chief IP Counsel for GE) will deliver the keynote at this great annual event. [LINK].
• March 17-19, 2009: The IP Law Summit in Ponte Vedra, Florida at the Sawgrass Marriot will be a nice spot. [LINK].

New Blogs:

• My law school classmate Jeremy Grushcow (along with Dani Peters) has begun the Cross Border Biotech blog that focuses on biotech law issues as they relate to US & Canadian biotech issues. http://crossborderbiotech.ca.
• Clifford Hyra is now writing Patents 101: http://patents101.com.

Sasha and Malia Dolls: Legal Remedies for the Obamas

by Mark Goldstein

We’ve seen that Ty is selling Sasha and Malia dolls. Can the Obamas do anything to stop this? They have a couple of options.

The Obamas could sue Ty for under the federal law of false endorsement as well as for infringing their common law and statutory rights of publicity based on state law. However, there is no federal law that protects the right of publicity. A First Amendment defense of artistic expression can likely be brought in response to a state claim of right of publicity.

A federal false endorsement claim may be based on the unauthorized use of a celebrity’s identity when the use of the identity is likely to confuse consumers to believe that the celebrity sponsored or approved the product of another.   Sasha and Malia may be able to bring a claims for false endorsement against Ty as their name and likeness is being used to sell the dolls.

The right of publicity protects the commercial value of an individual in the commercial use of that person’s identity. Many states protect the right of publicity with regard to name, voice, signature, photograph, and likeness. Some states provide more expansive protection that protects the image, distinctive appearance, gestures and mannerisms of a person.

For example, in California, statutory protection is limited to appropriation of the actual photograph or likeness. For a likeness to be appropriated under California statutory right of publicity, the doll would need to clearly show features of a celebrity. Although the dolls do not have the precise features of the Obama girls on which they are based, the girls have a case because elements evocative of the girls are included in the dolls.

In response, Ty could assert a First Amendment defense. The California Supreme Court stated that there is “a balancing test between the First Amendment and the right of publicity based on whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation.” To prevail with a First Amendment defense, Ty must successfully show that “the value of the work does not derive primarily from the celebrity’s fame.” This seems to be near impossible here.

So, Malia and Sasha could take action in federal or state court to have the sale of the dolls stopped.   This leaves us with two questions – First, what was Ty thinking when they did this? Don’t they have lawyers on retainer? Second, will the Obamas take action against Ty? Or will Ty stop on their own? We’ll have to wait and see.

Patently-O Bits and Bytes No. 90

• Patent Reform I: In a recent article, DC insider Hal Wegner noted that there is "reason for optimism that patents will not be put on the back burner by the new President." Wegner pointed to the President's pro-reform start and to the President's Technology Agendy that calls for: (1) ensuring that American IP is protected abroad and (2) reforming the patent and copyright systems "while ensuring that intellectual property owners are fairly treated." The agenda speaks specifically to patent reform: "Reform the Patent System: Ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration. Give the Patent and Trademark Office (PTO) the resources to improve patent quality and open up the patent process to citizen review to help foster an environment that encourages innovation. Reduce uncertainty and wasteful litigation that is currently a significant drag on innovation." [Read the Technology Agenda]
• Patent Reform II: Although Wegner noted "optimism," many patent industry insiders may be pessimistic that there is a high likelihood of patent reform. In particular, the technology agenda statements, coupled with Professors Sprigman and Rai as advisors, further coupled with the rumored appointment of John Thompson as Secretary of Commerce point toward legislative patent reforms being along the same lines as eBay (weakening injunctions), KSR (making it easier to find patents obvious); VW (weakening plaintiff's choice of forum); Bilski (limiting patentable subject matter); and Seagate (limiting damage awards).
• Patent Reform III: On the other hand, Professors Rai and Sunstein are both major administrative reformers. There is hope that their style of internal PTO reforms - made through rule changes and standard operating procedures – could dramatically change the PTO for the better.
• Role of the Secretary of Commerce: 35 USC 1(a) establishes the Patent Office (PTO) within the Department of Commerce. However, the statute is clear that the PTO has some power independent of the larger department: "The [PTO] is established as an agency of the United States, within the Department of Commerce. In carrying out its functions, the [PTO] shall be subject to the policy direction of the Secretary of Commerce, but otherwise shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law."

Six Easy Suggestions for Improving Patent Office Transparency

For a government agency, the USPTO (PTO) is fairly transparent to non-parties hoping to learn about the patent system and about specific patent cases. The PTO website receives millions of visits to access patents, published patent applications documents, and prosecution history files. In promoting the new rule changes, the PTO also offered up a number of metrics to prove its case. While that information was useful, its reliability was generally impossible to independently verify because the underlying data was not publicly available. The truth is that the PTO still has a long way to go before we can consider it a transparent operation.

Why this is important: Part of the need for more information involves public accountability so that we can ensure that the PTO is efficiently and accurately carrying out its role in the patent system. Independent verification is especially important now when various factions (including the PTO's own lobbying arms) are calling for various reforms of patent laws and the rules of patent procedure. However, the call for transparency at the PTO is at least equally focused on the business need of understanding how the patent system works and how competitors are using the patent system.

I have created a short list of "easy" suggestions for improving transparency at the Patent Office. I call it an easy list, because these steps really just involve taking information that is already at the fingertips of PTO insiders and making the information accessible to those on the outside. Following these steps may be a quick and easy way for career office officials to quickly win favor with the new Obama administration.

1. Make petitions decisions available. Challenges to certain decisions by patent examiners and PTO officers go through a petition process to the Commissioner of Patents rather than through the Board of Patent Appeals and Interferences (BPAI). These cases include disputes involving revival, patent term extension, patent term adjustment, patent term restoration, reexamination petitions, petitions involving filing dates, petitions involving disclaimer of scope, refund petitions. Since January 1, 2005, the PTO has not posted any petitions decisions to its website. Thus - unless a party knows the specific case number and obtains it through the Image File Wrapper in the Patent Application Information Retrieval (PAIR) system - the petitions are inaccessible. Conventional wisdom is that petitions practice can be something of a black hole -- unless the PTO decides to act quickly. This is only conventional wisdom, because the actual practice of the office is hidden. It would be an easy change to start publishing all petitions decisions as they are released in once convenient location on the PTO website.
2. Make public PAIR information available for automated download -- either through the PTO website or through a third party willing to make the information publicly available. The PAIR system is amazing in the information that it provides. However, it is clunky and wastes a tremendous amount of time to access each individual case. File history information is important because claim construction decisions now rely on that information in interpreting the claims. In addition, file histories are an important source of prior art - especially in the way that the documents can provide contextual information on how different elements may fit together. Yet, PAIR is not generally searchable and data cannot be obtained in any bulk way. This must change. I will be more than willing to work with PTO to and others to create a system that works. Although I am not wedded to this approach, I would favor a system that embraces the possibility that individuals and companies will take-hold of the data stream and use it in creative ways.
3. Publish the standard metrics used by PTO executives to measure the process flow and quality. Of course, this should be done in a way that maintains some semblance of privacy for PTO employees, but I doubt that the executive-level charts include specific names of the 6,000 examiners. Of course, I don't know because these items are not publicly available.
4. Allow search engines to crawl through the PTO web-servers. Matt Buchanan wrote an interesting post on President Obama's new ROBOT.TXT file for the whitehouse.gov website. [LINK] Obama has apparently opened the site to allow it to be crawled by any search engine. The PTO should follow suit so that documents posted to the website can be found through Google, Yahoo, CURL, Alexa, etc. Remember, the touchstone of publication is whether it is accessible to the public. Many documents on the USPTO.gov website are worthless because they are too difficult to find through the locked-down search procedures available on the current website. This is an extremely easy change. It took the White House a few minutes to make the change, the PTO could be done in the same way. Kudos to the PTO -- After I wrote a first post on this issue, two PTO officials contacted me to indicate that they were working on resolving the issue.
5. Use PDF format to allow download of patents and patent applications in their "Standard" form. This would be a bonus, but it is not required since there are low coast ways to obtain this result through an outside vendor. One problem with using an outside source, however, is the possibility that search information may be stored and used against the searcher at some point.
6. Openly respond and post all responses to freedom of information act (FOIA) requests on the PTO website. The PTO has created a FOIA website that is hardly searchable. And, most FOIA documents are not placed on the FOIA website. Any response to a FOIA request should be automatically and immediately uploaded to the FOIA website so that it is accessible to the public at large rather than to only the one person who requested the information. As a teacher, I have learned that if one person asks a question, it is likely that other folks had the same question. In most cases, the PTO could upload the documents and save mailing costs by simply providing a link. President Obama has ordered all executive agencies to "adopt a presumption in favor" of FOIA requests, and this change would fall in line with the spirit of that request.

I have eliminated other potential projects and changes that might be considered "hard" for the PTO to complete. These are easy and should be done. This is a draft of ideas -- add yours below. Also, please let me know if there is already a good way to access the information that I discussed above.

President Obama and Cass Sunstein to take Hard Look at Proposed Rules

In one of his first official actions, President Obama (through Rahm Emanuel) has ordered that new federal rulemaking cease until the White house Office of Information and Regulatory Affairs (OIRA) can review the rules.  At this point, it is unclear how this will impact any of the already-finalized rules (Continuations, Claims, Appeals). It will further delay finalization of the expected forthcoming rules on IDS limitations and Markush claim limitations.

As a side-note, the new director of the OIRA is expected to be University of Chicago Law Professor Cass Sunstein.  Sunstein is one of the most well known law professors in the country.  While the OIRA position is normally quite obscure, I suspect that it will not be obscure for long.  Sunstein written extensively on using regulations to shape behavior

Notes:

• Emanuel Memo

Obama’s Beginning

Listening to Obama's inauguration speech today, I noted two portions that could relate to patent law and innovation policy. In thinking about governmental offices and programs, Obama is looking to (1) consider whether programs work and (2) change (or eliminate programs that don't work). Along this same line, government programs should be prepared to act transparently:

The question we ask today is not whether our government is too big or too small, but whether it works. . . . Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public's dollars will be held to account - to spend wisely, reform bad habits, and do our business in the light of day - because only then can we restore the vital trust between a people and their government.

Of course, the patent office remains in need of both a dramatic increase in transparency and focused reform in a few key areas.

As Lincoln did, Obama also recognized the value of the spirit of invention as one of the key and ongoing strengths of the American people:

Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions - that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.

Testing

This is a test post using my new blogging software...

Bits and Bytes No. 89

• Patent Case Management: Professor Peter Menell (Berkeley) has been working with several top patent litigators to develop a "comprehensive patent case management guide" for federal judges. The almost-final draft is available online. The manuscript will very likely become a desk reference for district court judges and their clerks once it is published by the Federal Judicial Center in the next couple of months. In some ways, the 500+ page manuscript is a patent doctrine encyclopedia as well as a judicial form book.
• [UPDATE] Secretary of Commerce: In a prior post, I wrote about the potential John Thompson, CEO of Symantec may be appointed as the next Secretary of Commerce. As noted in the comments, I failed to mention the fact that Symantec is a leading member of the "Coalition for Patent Fairness." The Coalition is a lobbying group pushing for reduced patent damages awards, reduced ability to forum shop, and an invigorated system for post-grant challenges to asserted patents. [LINK] Previously, the Coalition also supported eBay and reduced willfulness findings. Each of these changes reduce the potential power individual patents.
• Query: Assume you have a popular product covered by a pending patent. Is there a way to mark the patent pending good in a way so that an infringer will be considered on notice of the patent as soon as the patent issues (so that you can collect past damages).

Bits and Bytes NO. 88

• New PTO Director: The USPTO will be closed on Monday and Tuesday (Jan. 19-20). When it reopens, John Doll will be the Acting Director of the USPTO. Doll is a career PTO official and already fully understands the system and the role of the PTO director. Because Doll has had considerable influence while working under Jon Dudas, we can expect that there will be few immediate or dramatic changes. In part because of the absence of a Commerce Secretary, I expect that Doll's tenure will likely last for several months.
• Secretary of Commerce: While on the topic, I heard this morning that John Thompson, CEO of Symantec may be named appointed as the next Secretary of Commerce. If appointed, Thompson may play an important role in some patentability disputes. Symantec has been directly involved in a number of patent litigation disputes – both as a plaintiff and as a defendant. Symantec is the assignee of hundreds of patents. I cannot say, however, whether Thompson feels scorned or empowered by the current patent system.
• Chief Judge Michel & Professor Lichtman: Professor Doug Lichtman has introduced his most recent guest on the "IP Colloquium" – Chief Judge Paul Michel of the Court of Appeals for the Federal Circuit. In an hour-long discussion, the pair discuss common deficiencies in appellate advocacy; the important value of amicus briefs at the rehearing stage; Section 101 post-Bilski; and the lost doctrine of equivalents. Professor Lichtman has configured the system so that you can also easily claim free CLE credit in California, Illinois, NY, Texas, or Washington State. Excellent work!
• ABA Top Legal Blogs: For two years in a row, the ABA Journal has chosen Patently-O as one of the top 100 legal blogs. (Only 50 blogs made the cut both years). In addition, Patently-O has been honored in 2008 as the top legal blog focusing on a niche area of law. Thank you to everyone who voted during this process! In time for Patently-O's fifth anniversary in April, I expect that the website will record its ten-millionth visit in addition to the 16,000+ readers who receive their updates via the daily e-mail feed.
• Patent agent Brian Galvin has started a new blog, in a recent post, he discusses the BPAI's Cornea-Hasegan Opinion. His analogy is interesting: "[The current state] of statutory eligibility … reminds me of … Ptolemaic astronomy just before Galileo, Kepler and Copernicus. The more wheels we add, the more untenable the whole structure." [LINK]

Federal Circuit Finds Stent Patent Obvious by Combining Embodiments in a Single Prior Art Reference

Boston Scientific v. Cordis (Fed. Cir. 2009)

In 2003, Boston Scientific sued Cordis for infringement of its drug-eluting, non-thrombogenic, expandable stent. (Patent No. 6,120,536). The stent, thus has a metal core surrounded by a drugged layer that is then surrounded by a non-thrombogenic layer. A jury found the asserted claims infringed and not obvious. The district court accepted the jury verdict and denied the Cordis motions for JMOL and a new trial. On appeal, the Federal Circuit reversed – finding the patent obvious as a matter of law.

Cordis pointed to another Medtronic patent ("Wolff") as prior art that – by itself – renders the claims invalid. Wolff discloses two separate embodiments: (Fig 4) a metallic core with a drug-eluting coating and (Fig 3B) a drug-eluting core with a non-thombogenic coating. Thus, Wolff "teaches all of the [claimed] limitations. . . . The only qualification to this statement of fact is that all of the limitations are found in two separate embodiments pictured side by side in the patent, not in one embodiment."

Applying KSR, the Federal Circuit found that it would have been obvious to combine the two embodiments since the combination was simply a "predictable variation."

"Combining two embodiments disclosed adjacent to each other in a prior art patent does not require a leap of inventiveness."

Holding: The asserted claim "would have been obvious in view of Wolff."

Note: The Cordis brief used a particularly effective strategy of including the two embodiments to be combined followed by a demonstrative drawing of how they would have been combined. Here, they used the same drawing style and also used the same figure numbering.

Should the Supreme Court Grant Cert in Rambus?

This post was written by Professor Josh Wright. Wright is a professor at George Mason University Law School, but is visiting this semester at the University of Texas Law School in Austin. This post was originally published on the blog Truth on the Market.

As noted, the FTC has exercised its right under 15 USC 56(a)(3) to petition for a writ of certiorari to review the judgment of the D.C. Circuit in its FTC v. Rambus. The FTC press release is here. The petition is here. The questions presented, as framed by the Commission are:

1. Whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly power violates Section 2 of the Sherman Act.

2. Whether deceptive conduct that distorts the competitive process in a market, with the effect of avoiding the imposition of pricing constraints that would otherwise exist because of that process, is anticompetitive under Section 2 of the Sherman Act.

I do not believe the FTC has presented a convincing case for granting cert. Further, I don’t think the Supreme Court should grant cert in Rambus for reasons I’ll discuss in the post. For a more detailed exposition on some of the issues touched upon by this post, see my article with Bruce Kobayashi, Federalism, Substantive Preemption and Limits on Antitrust: An Application to Patent Holdup (forthcoming in the Journal of Competition Law and Economics).

The FTC lists what I count as five separate reasons to grant the petition:

(1) the D.C. Circuit applied an overly restrictive “but-for” causation standard that would require the Commission to show that Rambus’s conduct was anticompetitive (”the court of appeals erred in supposing that a Section 2 tribunal must identify a particular anticompetitive effect in order to find liability”);

(2) the court erred in its application of NYNEX v. Discon, Inc. to Rambus to conclude that the loss of an opportunity for the SSO (JEDEC) to obtain a RAND commitment from Rambus was not an anticompetitive effect under the antitrust laws;

(3) the Supreme Court should grant the petition to clarify “the governing standards of causation in Section 2 cases”;

(4) the D.C. Circuit decision is at odds with the Third Circuit’s Broadcom decision which held that the loss of a RAND commitment due to deception is a proper basis for Section 2 liability; and

(5) the set “inconsistent set of rules” creates a conflict that “threatens confusion regarding the conduct of participants in industry-wide standard setting,” “will discourage participation in standard setting proceedings,” and “ultimately harm consumers.”

I want to examine some of those issues more closely, sketching out reasons why I do not believe that they warrant cert, and also highlight some issues the FTC did not but should have addressed in its brief to make the case more compelling. All of that below the fold.

The Rambus Certiorari Petition: Causation, Competition, and Standard-Setting Organizations

This post was written by Michael A. Carrier. Carrier is a Law Professor at Rutgers University School of Law in Camden.

In December 2008, the Federal Trade Commission (FTC) filed a petition for certiorari in the Rambus case. There are two central issues in the petition. First, what is the standard of causation needed to connect deceptive conduct with the acquisition of monopoly power? And second, do higher prices in standard-setting organizations (SSOs) present competitive harm?

As the D.C. Circuit articulated the facts in In re Rambus, 522 F.3d 456, Rambus developed and licensed computer memory technologies. Between 1991 and 1996, the company participated in the Joint Electron Device Engineering Council (JEDEC), a semiconductor engineering SSO. In 1993 and 1999, respectively, JEDEC approved a synchronous dynamic random access memory (SDRAM) standard and a double data rate (DDR) SDRAM standard that included technologies over which Rambus asserted patent rights. In 1999, Rambus informed DRAM and chipset manufacturers that it held patent rights over technologies included in the standards and that the continued manufacture, use, or sale of the products constituted infringement.

BPAI Applies Bilski to Deny Patentability of Machine Claim

Ex parte Cornea-Hasegan (BPAI 2009)(non-precedential)

I have been following the BPAI's response in the wake of the Federal Circuit's series of patentable subject matter cases that culminated with In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc). In Bilski, the full appellate court held that to be patentable, a process claim must either be "tied to a particular machine or apparatus" or transform "a particular article into a different state or thing." Bilski explicitly focuses only on process (or method) claim, and practitioners have been left to question its impact on other claim forms.

In Cornea-Hasegan, Intel is attempting to obtain a patent on a short-cut method of performing mathematical calculations when the outcome is likely "tiny." According to the claim, when the mathematical result is likely tiny, then software is used to calculate the result; otherwise, hardware is used to calculate the result. The application claims both "a method" and "a computer readable media including program instructions which when executed by a processor case the processor to perform" the method. The body of both claims are essentially identical, and neither discuss particular machinery beyond "a processor," "software," and "floating-point hardware."

Processor Insufficient: A claim will be considered to cover patentable subject matter if it is tied to a particular machine. Here, however, the BPAI found that requiring "a processor" is not a "particular" machine.

The recitation of a "processor" performing various functions fails to impose any meaningful limits on the claim's scope. The recitation of a "processor" performing various functions is nothing more than a general purpose computer that has been programmed in an unspecified manner to implement the functional steps recited in the claims. The recitation of a processor in combination with purely functional recitations of method steps, where the functions are implemented using an unspecified algorithm, is insufficient the recitation of a processor does not limit the process steps to any specific machine or apparatus.

Post-Solution Activity: Although the claimed "floating-point hardware" may be a particular machine, the BPAI disregarded that element as "insignificant extra-solution activity … 'that will not transform an unpatentable principle into a patentable process.'" (Quoting Bilski).

Transforming Data: A claim will be considered to cover patentable subject matter if it transforms a particular article into a different state or thing. However, the transformation of abstract data or abstract data structures will not be sufficient to render the claim patentable. Here, the only arguable transformation is of data that has no direct physical world corollary.

Non-Method Claims: Some of Intel's claims are directed to a "computer readable media" rather than a method or process. Intel argued that Bilski should not apply to those "manufacture claims" because Bilski's sole focus was method claims. Rejecting that argument, the BPAI panel determined that the Section 101 analysis is the same – regardless of whether the subject is a "manufacture" claim or a "process" claim. (Citing AT&T v. Excel (Fed. Cir. 1999)(abrogated by Bilski)). Remember here that the State Street case – which released the business method rush – determined the patentability of a "data processing system."

Applying Bilski to the "computer readable media" claim, the BPAI found that the claimed invention was unpatentable because it did not require transformation of any article nor was it tied to any particular machine. Although the claim recites a "computer readable media" and "hardware," those elements were seen as insignificant extra-solution activities.

Limiting the claim to computer readable media does not add any practical limitation to the scope of the claim. Such a field-of-use limitation is insufficient to render an otherwise ineligible claim patent eligible.

Quoting the Supreme Court in Diehr (1981), the BPAI noted that Section 101 eligibility "cannot be circumvented by attempting to limit the use of the formula to a particular technological environment."

Rejection of all claims under Section 101 affirmed.

Notes:

• In Ex parte Bo Li, the BPAI reversed the rejection of a claim written in similar Beauregard format. That case could be distinguished by additional links to a machine or apparatus found in Bo Li's claims. In particular, Bo Li's claim "presents a number of software components, such as the claimed logic processing module, configuration file processing module, data organization module, and data display organization module, that are embodied upon a computer readable medium." [Link]
• In Comiskey (Revised opinion 2009), the Federal Circuit issued a remand order to the BPAI to consider whether Comiskey's claims of a "system for mandatory arbitration" are directed to statutory subject matter under Section 101.
• The BPAI opinion here relies on the following statement from the original Comiskey opinion: "the mere use of the machine to collect data necessary for application of the mental process may not make the claim patentable subject matter." Comiskey (Fed. Cir. 2007). That statement was deleted from the revised Comiskey opinion.

Patently-O Bits and Bytes No. 87

• For the first time in history, fewer than 50% of US patents issued in the past year originated from US applicants. [Zura] IBM received 4,000+ patents in 2008.
• In 2007, I asked the question: How will the US patent lobbying change when most new patents are held by foreign companies?
• Brian Moriarty and Deirdre Sanders (Massachusetts patent litigators) discuss the combination of the Texas Venue problems (TS Tech, VW) and new D.Ma. local patent rules. Their conclusion: "Patent Suits – Massachusetts In, Texas Out." [LINK]
• More Patent Jobs:
  
  
  • Godfrey & Kahn (Milwaukee) needs an "IP Generalist" with "excellent academic credentials" to help with litigation, trademarks, patent prosecution, and transactions. [Link]
  • Baker & Daniels (Indy) needs a MechE (or mechanically inclined equivalent) associate to handle patent prosecution. [Link]
  
  
  
  

Federal Circuit Revises (Muzzles) Comiskey

In re Comiskey (Fed. Cir. 2009) (Revised Panel Opinion)(En Banc Order)

After a request for en banc rehearing, the original Federal Circuit panel has revised its decision in Comsikey – erasing the "misunderstood" phrases of the original opinion linking Sections 101 (subject matter) and 103 (nonobviousness). The original opinion implicitly held that any portion of an invention that would constitute nonstatutory subject matter would be considered de facto obvious. [Link]

The new opinion finds that Comiskey's method claims do not present patentable subject matter and remanded the case to the PTO to determine the subject matter eligibility of the system claims. The Federal Circuit refused to consider nonobviousness issues – even though nonobviousness was the sole issue presented in the original appeal. Subject matter eligibility had been raised sua sponte by the panel.

Judges Moore and Newman each dissented from the en banc order. Judge Moore argued that the decision violates the court's "well established precedent that this court will not consider new grounds of rejecting patent claims on appeal."

Patently-O Bits and Bytes No. 86

• Supreme Court Petitions Pending:
  
  
  • FTC v. Rambus: Duties of a patent holder in standard setting negotiations. (To be discussed in more detail this week.)
  • Apotex Corp. v. AstraZeneca AB: This case involves a burden of proof. Should an accused product be found non-infringing if the accused demonstrates that it merely practiced the prior art. Non-infringement is proven by a preponderance of the evidence rather than clear and convincing evidence.
  • MuniAuction v. Thomson Corp.: Challenges the Federal Circuit's single actor requirement for patent infringement.
  • Forest Labs. v. Caraco Pharmaceutical: Whether DJ jurisdiction can exist after the patentee has granted an ANDA applicant a covenant not to sue.
  • Burandt v. Dudas: When is a failure to pay "unavoidable"
  • Apotex v. Roche: Is there any meat in the reverse doctrine of equivalents.
  • Energizer v. ITC: How should a court conduct claim construction?
  • 800 Adept, Inc. v. Murex Securities: De novo review of claim construction.
  
  
  
  
• New Patent Law Jobs:
  
  
  • Monsanto in Mystic, Connecticut
  • Oblon Spivak next door to the PTO
  • US Patent Attorney in Japan
  • Dolby Labs in San Francisco
  • Warner Norcross firm in Grand Rapids
  
  
  
  
• Leonard Hope is giving up blogging and is looking for a buyer for his domain patentprosecutionblog.com. Let me know if you restart the site.

Supreme Court Patent Update

Completed Cases: The Supreme Court has denied certiorari of two pending appeals: BPMC v. California and Rattler Tools v. Bilco. In BPMC, the patentee had challenged the Western state’s defense of sovereign immunity. In Rattler Tools, the appeal challenged a non-precedential claim construction opinion.

Upcoming Case: In a recently filed petition, 800 Adept has asked the Supreme Court to build on its 1995 Markman decision and consider “whether a district judge’s construction of a patent claim is ever entitled to deference upon appellate review, or, instead, are all such claim constructions reviewable only de novo, as the Federal Circuit has, over many dissenting opinions, held?” In this case, the Federal Circuit had reversed the lower court’s claim construction and – as a consequence – also reversed the jury verdict of infringement. [Link]. FTC v. Rambus is the most likely candidate of patent cases in the petition stage. That case involves the activities of a patentee during a standard setting process. In a related case, well respected Federal Judge Sue Robinson held that Rambus could not enforce twelve of its patents against Micron as a penalty for litigation misconduct. [Link]

The Soaring Rate of BPAI Appeals

In two earlier posts, I discussed the BPAI reversal rate (link) and the reopening of prosecution after a reversal (link). In the reversal rate, I also looked at the historic jump in the absolute number of BPAI appeals filed. In FY2008 (ending Sept 30, 2008), the BPAI received over 6,000 ex parte appeals– concluding two consecutive years of over 35% annual growth rate in appeal filings.

Although dramatic, the reported filing increases pale in comparison to those seen in the past four months. The BPAI reports that in the period of Sept-Dec 2008, it received an average of 954 ex parte appeal cases per month. That value is well more than double the monthly average for the same span in 2007.

At this rate, the number of BPAI appeals would easily reach 10,000 in FY2009.

The planned BPAI rule changes may explain at least part of the sudden jump. In a recent presentation, William Smith of Woodcock Washburn stated that the new rules are "onerous and will significantly increase the cost of preparing an Appeal Brief." [Link]. I have spoken with several patent attorneys who intentionally filed appeal briefs early in order to beat the December 10 deadline. That deadline has now been postponed. If the rules truly are onerous, then we may see a drop in appeals once they become effective.

Federal Circuit Denies Declaratory Jurisdiction When Patentee had not “Seen or Evaluated” Product

Panavise Products v. National Products (Fed. Cir. 2009)(nonprecedential)

Panavise and NPI are competitors in the suction-cup market. NPI owns US Patent No. 6,666,420 and has attempted to enforce its patent via litigation against various entities, including Tomtom, Tesla, JVC, Vision Tech, and others.

Although NPI had not directed any communication toward Panavise, the manufacturer still wanted to clear any potential cloud over its products. As such, Panavise sued NPI for a declaratory judgment that the patent was invalid, unenforceable, and not infringed. The California district court, however, dismissed the case – finding no case or controversy.

On appeal, the Federal Circuit reviewed the issue de novo, but easily affirmed. Quoting its own recent decision in Prasco v. Medicis, the court noted that the "controversy must be based on a real and immediate injury or threat of future injury that is caused by the defendants." (emphasis in original).

Here, NPI indicated that it had not "seen or evaluated" the Panavise product prior to the lawsuit and there was no evidence that the patent in any way "restrained" the activities of Panavise. "Under settled law, Panavise must present factual proof that such threat is real and immediate. Panavise failed to meet this threshold burden."

The Court was careful to avoid additional bright-line rules (that would be proscribed by MedImmune). Thus, the opinion notes that declaratory judgment jurisdiction could exist – in certain circumstances - even when there is no direct communication between the patentee and a DJ plaintiff.

PTO Director Jon Dudas Announces Resignation

On January 12, 2009, Jon Dudas will complete four years as Director of the U.S. Patent and Trademark Office. Prior to that, Director Dudas spent two years as the USPTO's Deputy Director. Under his directorship, the PTO has focused on "Quality" and reducing pendency of applications. Successes including (1) hiring many more examiners and (2) boosting the PTO budget to $ 2 billion.  The electronic filing system for patents has turned out to be an excellent system that works well and is reliable.

In an internal USPTO e-mail, Director Dudas has announced that he will leave the USPTO in mid-January. 

Muddling Through Claim Construction

Vehicle IP v. General Motors Corp. and OnStar (Fed. Cir. 2009)(Nonprecedential)

VIP's patent covers a vehicle navigation system. After construing the asserted claims, the W.D. Wisc. court granted summary judgment of non-infringement. This appeal focuses on construction of the phrase "a notification region defined by a plurality of notification coordinates."

The infringing systems use scalars – such as a distance – and the debate is whether those scalars fit the claimed "coordinates" limitation. The majority opinion (Prost & Bryson, JJ) held that the "plain language of the claims precludes the possibility that a coordinate can be a scalar." According to the claim, the location of the device must "substantially corresponds to a notification coordinate," and a bare distance does not correlate to a location. The majority also found suggestions in the prosecution history supporting a narrow construction of coordinate.

In dissent, Judge Mayer would not have limited the coordinate to "a longitude latitude pair."

"In mathematics, there are many types of coordinate systems and the common ground is that they all define a point. For instance, in a curvilinear system, coordinates are defined with a fixed origin point, and a scalar distance offset from that point along a known curve, such as a section of road. A distance offset necessarily has a "partner" to define a point, as offsets are necessarily set off from another known point. A coordinate should not be construed to exclude defining a point by an offset from another point along a known path."

In Hal Wegner's words, this decision "demonstrates the different views that can be reached by reasonable minds on claim construction issues which, due to appellate de novo review, creates the opportunities for so much judicial uncertainty." And, as suggested by dissenting judges in Phillips v. AWH, that en banc decision did little to create predictability in claim construction.

Patent Docs: Top Biotech and Pharma Patent Stories of 2008

The Patent Docs of MBHB have created an excellent set of posts on the top biotech and pharma patent stories of 2008:

1. Continuation and Claims Rules Enjoined in GSK/Tafas v. Dudas; USPTO Appeals Injunction
2. The Rise and Fall of Other USPTO Rules Packages
3. Patent Reform Stalls in the Senate
4. New Written Description Guidelines Issued
5. Examination of Obviousness in Group 1600
6. The USPTO Comes under Attack
7. Follow-on Biologics Debate Continues
8. Impact of Presidential Election on U.S. Patent Practice
9. The USPTO Tightens Its Grip on Practitioners
10. USPTO's PTA Calculations Called into Question
11. Greater Cooperation between Patent Offices
12. International Enforcement of Drug Patents
13. Pharma Patent Injunctions in View of Amgen v. F. Hoffmann-La Roche

Read the reviews:

• #1 to #5
• #6 to #9
• #10 to #13

Jury verdict forms

Agere Systems v. Sony Corp (E.D. Tex. 2008).

In November 2008, a jury returned a verdict finding that Sony had induced infringement of Agere's patent by marketing and selling its PlayStation Portable (PSP) game. It is interesting to look at the simplicity of the jury form:

Post-verdict motions are still pending in the Sony case, but an appeal is expected.

In Spine Solutions v. Medtronic (D.Del. 2008), the jury found that the asserted claims were non-obvious and that the patentee was entitled to lost profit damages.

Some of the damages were also awarded based on a "reasonable royalty" of 18%.

Patently-O Bits and Bytes No. 85

• BPAI Plummeting Reversal Rate. [LINK]
• Accessing Patently-O: I have set up several ways to access Patently-O depending upon your preferences:
  • Via the Website;
  • Via daily Email Digest;
  • Via Full Content RSS Feed;
  • Via RSS Squib.
• Obama's original selection for Secretary of Commerce – Bill Richardson – will not pan out. Richardson has decided to withdraw his nomination. Although we rarely see the Secretary of Commerce directly shaping USPTO policy, the Office is still part of the Department of Commerce and the USPTO Director reports directly to the Secretary of Commerce. The greatest impact of the Secretary of Commerce may be on the selection of high-level PTO officials (including the Director).
• The Patent Troll Tracker debacle made the ABA Journal's list of the top ten legal stories of 2008. (The only IP related issue to make the list). [Link]
• Patently-O Jobs:
  • Microsoft (Redmond, WA) needs a patent portfolio manager (at least 5 years exp.) [LINK]
  • Google (Mountain View, CA) needs an IP litigation counsel (at least 3 years exp.) [LINK]
  • Amin Hallihan (Chicago) focuses on IP & FDA issues. The firm is looking one or more experienced patent attorneys to join their ranks. [LINK]
• Phama Law: Pozen's migraine drug (Treximet) is special because it combines two types of migraine treatments into one pill: naproxen sodium (Aleve) and sumatriptan (Imitrex). Alphapharm (Mylan) filed an abbreviated new drug application (ANDA) to begin marketing a generic version of the drug – arguing that the patent is invalid. On January 2, Pozen sued Alphapharm for infringement in the Eastern District of Texas. Claim 1 of the asserted patent reads as follows:
  • 1. In a method for treating a migraine patient by administering a 5-HT agonist [Imitrex], the improvement which comprises: concomitantly administering to said patient a long-acting, non-steroidal, anti-inflammatory drug (LA-NSAID) [Aleve] in an amount that, together with said 5-HT agonist, is effective to reduce migraine relapse or produce longer lasting efficacy compared to the administration of said 5-HT agonist in the absence of said LA-NSAID.

BPAI Appeal Statistics: The Plummeting Reversal Rate

In an earlier post, I examined what happens to patent applications after the BPAI reverses an examiner rejection. [LINK] This next post looks at the BPAI reversal rate itself. Here, I define the reversal rate as the percentage of cases where the Examiner rejections are completely reversed (as opposed to partial reversals).

Over the past several years, the BPAI reversal rate has dropped dramatically. From FY1999-FY2005, the reversal rate remained relatively steady between 35% and 40%. Then, in FY2006 we began to see a smaller proportion of reversals. By the first two months of FY2009, the reversal rate had dropped to 20%. Part of the drop is likely attributable to new filtering mechanisms that keep low-quality rejections from reaching the Board. The pre-appeal brief conference program started in 2005 and allows a patent applicant to request an internal review of the examiner's final rejection at the Tech Center (TC) level before an appeal brief is filed. Even if no pre-appeal brief conference request is made, the examiner's case for a rejection is usually reviewed at the TC level before the examiner is allowed to file a responsive brief.

In recent years, these filters have operated to weed-out 80% of the cases where an appeal brief or pre-appeal brief conference request had been filed. Prior to implementation of these filters, the majority of appeal briefs led to BPAI decisions. [See Katznelson, Slide 15]

When the low quality rejections are eliminated from consideration, we should expect that the BPAI reversal rate would drop – as it has. The BPAI is no longer seeing many of the easy reversal cases where the examiner made a clear legal error. Rather, today's cases before the board tend to be more focused on arguable issues involving obviousness, enablement, and patentable subject matter.

The filters only tell part of the story, and the reversal rate masks the fact that - in absolute numbers - the Board is reversing more cases than ever. Over this same period, the number of appeals filed has increased dramatically. And, although the BPAI has increased its throughput, the backlog has grown five-fold since 2005. These pendency pressures give the Board an incentive to make appeals less hospitable – as we saw with the new (not-yet-final) BPAI appeal rules.

Notes:

• Prior Patently-O Posts: How long does a BPAI Appeal take; BPAI Appeal Statistics; BPAI Patent Judges

Federal Circuit affirms permanent injunction in face of prior license agreements

Acumed LLC v. Stryker Corp. (Fed. Cir. 2008)

In 2004, Acumed sued Stryker for infringing a patent covering an orthopedic nail used in reconstructing humerus fractures.  After a jury verdict of infringement, the district court ordered a permanent injunction. That pre-eBay ruling was subsequently vacated by the Federal Circuit because the lower court did not specifically consider the traditional four-factor test for injunctive relief. On remand, the district court again granted the permanent injunction.  That permanent injunction is affirmed here on appeal.

In eBay, the Supreme Court held that the traditional four factors of equitable relief must be considered before granting injunctive relief in a patent infringement case.  However, if a district court considers the requisite factors, the Federal Circuit will only vacate if they find an “abuse of discretion.” 

Irreparable Harm and Lack of Remedy at Law: The first two factors of (1) irreparable harm caused by continued infringement and (2) inadequate remedies available at law almost entirely overlap. The court easily considered those factors together. 

Acumed had previously licensed the patents to other manufacturers — perhaps indicating that money could be sufficient to compensate for the infringement. However, the district court distinguished the prior licenses based on the identities of the past licensees and Acumed’s more recent “experience in the market.”  The Federal Circuit found no abuse of discretion — noting that “[a] plaintiff’s past willingness to license its patent is not sufficient per se to establish lack of irreparable harm if a new infringer were licensed.” 

The Jury had awarded lost profit damages, and Acumed suggested that fact indicates that future harms would cause irreparable harm (or at least more than what would be compensated by a reasonable royalty).  On appeal, the Federal Circuit did not dispute (or explicitly affirm) this argument. However the court did note that “[t]he essential attribute of a patent grant is that it provides a right to exclude competitors from infringing the patent.”

Balance of Hardships: For the third factor – balancing the hardships – Stryker argued that its customers (who need their arms fixed) would suffer under an injunction. On appeal, the Federal Circuit rejected that argument as a matter of law — holding that the balancing factor “is only between a plaintiff and a defendant, and thus the effect on customers and patients alleged by Stryker is irrelevant.”  Under this construct of the balancing factor, the patentee will usually win — especially when applying the Windsurfing holding that “One who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected.”

Public Interest: The patentee must show that the public interest is “not dissereved by an injunction.”  Here, Stryker argued that the Acumed product was lower quality and that the arm bone repair would lead to increased morbidity. The district court did not find that public health argument persuasive and the Federal Circuit agreed that “the court was within its discretion to conclude that the public interest was not disserved by an injunction.”

Permanent Injunction Affirmed

Notes:

• The Jury found the infringement “willful.” That fact was not discussed in the eBay analysis.
• This case follows the conventional wisdom that the courts will continue to grant permanent injunctions against competitors who infringe.

Federal Circuit Rejects Patent Attorney Expert Testimony; Finds Patent Obvious

Sundance v. Demonte Fabricating (Fed. Cir. 2008)

Sundance sued Demonte for infringing its patent on a retractable truck tarp. A jury found the patent infringed but obvious. In a post-verdict judgment, the Judge vacated the jury's obviousness determination – finding the patent not invalid.

Patent Attorney Expert Testimony: On appeal, the Federal Circuit found that the Michigan district court erred by allowing a patent attorney - Dan Bliss – to testify as an expert witness on the issues of infringement and validity on behalf of Demonte. At least some of his testimony focused on issues "exclusively determined from the perspective of ordinary skill in the art" even though he was not qualified as an expert in the art of tarp-making.

"Mr. Bliss is not "qualified as an expert by knowledge, skill, experience, training, or education" in the pertinent art; we therefore fail to see how he could "assist the trier of fact to understand the evidence or to determine a fact in issue." Fed. R. Evid. 702. …. Admitting testimony from a person such as Mr. Bliss, with no skill in the pertinent art, serves only to cause mischief and confuse the factfinder. Unless a patent lawyer is also a qualified technical expert, his testimony on these kinds of technical issues is improper and thus inadmissible." …. We hold that it is an abuse of discretion to permit a witness to testify as an expert on the issues of noninfringement or invalidity unless that witness is qualified as an expert in the pertinent art. Testimony proffered by a witness lacking the relevant technical expertise fails the standard of admissibility under Fed. R. Evid. 702. Indeed, where an issue calls for consideration of evidence from the perspective of one of ordinary skill in the art, it is contradictory to Rule 702 to allow a witness to testify on the issue who is not qualified as a technical expert in that art. We understand that patent lawyers are often qualified to testify as technical experts, but such a qualification must derive from a lawyer's technical qualifications in the pertinent art.

With Mr. Bliss's testimony excluded, the Federal Circuit was left with no expert testimony supporting the jury's obviousness holding. However, following the Supreme Court's lead in KSR v. Teleflex, the Federal Circuit still felt competent to determine the obviousness on its own. Explaining the appellate court's competence, the opinion noted that the "technology is simple."

Holding: Reversed – Claim 1 is invalid as obvious.

Note:

• Way back when: Peggy Focarino was the primary examiner of the patent at issue. Patent No. 5,026,109.