Patent Law Blog (Patently-O)

Accelerated Examination Case Study

The quickest patent issued in 2008: U.S. Patent No. 7,408,364 is assigned to Advanced Sensor Technologies, Inc. (King of Prussia, PA). When ASTi filed its application on a sensor for measuring moisture and salinity in May 2008, it included an accelerated examination petition, a statement of pre-examination search, and a set of examination support documents. Three weeks later, the PTO granted ASTi's petition for accelerated examination. On June 19, the Examiner began his examination, and issued a notice of allowance for the single claim on June 20. The patent issued on August 5, 2008 – 76 days after the application was originally filed. ASTi has filed multiple continuations – at least one of which has already issued. The patent was prosecuted by longtime patent attorney Mike Catania. The median pendency for the art unit (2831) during the past year was 2.2 years – more than ten-times longer than it took ASTi to get its patent. The median pendency for the primary examiner handling the case during the same period was 2.7 years.

ASTi’s examination support documents include a discussion of nine prior art references. Catania steps through each of the cited references and explains what claim elements are missing from the references. This discussion very much parallels what an attorney would have written in an office action response. The document also discusses nonobviousness and asserts that a prima facie case of obviousness cannot be made because several claim elements are not found in any of the cited prior art references. The document then goes through each claim element and points to particular disclosure in the specification that describes and/or enables the element.

Inequitable Conduct & Cost: The two knocks against the accelerated examination system are the potential for inequitable conduct and the cost of the procedure. I have heard patent attorneys say they would never use the process because of the inherent risk. Part of the vehement reaction is historic. Before the accelerated examination process was created in August 2006, it was much easier for an applicant to put an application on the accelerated examination track through the process then known only as a petition to make special.

Inequitable conduct fears are related to potential charges of failure to conduct a proper search or misrepresentation of the prior art. Both of those are legitimate. Here, however, Catania explained the exact search terms used and the databases searched. This organized and transparent approach coupled with a competent search is unlikely to create inequitable conduct. Regarding discussion of the prior art, Catania's write-up looks like a response to an office action. Almost every case includes at least one response to an obviousness rejection. Most cases include multiple such responses. It is difficult to tell how this strategy is more problematic than the standard approach. In fact, by providing the opening volley, Catania seems to have set the stage in a way that reduced further need to respond. The cost is certainly more because it requires a well done prior art search, search report and a discussion of the references in relation to the claims. The search & report should run under $1,000 and the discussion should be about the same cost as responding to a well reasoned office action. Although, the attorney will not need to step through the sometimes painful process of amending claims. Almost certainly, prosecution of this case was cheaper than the typical case that is allowed after an RCE and amendment. Of course, the process has a learning curve   [Mike - can you tell us how much did this cost here, and who did the search?].

What's the Benefit: The greatest benefit of accelerated examination practice is that the patent issues much more quickly. For some clients early issuance is strategically important. From anecdotal evidence - such as this case - it appears that the PTO is more willing to immediately allow cases rather than going through the rejection churn. I believe that the PTO is assigning accelerated examination cases to primary examiners who are already more likely to allow cases quickly, without amendment, and without the notice of allowance being withdrawn because of a second-pair-of-eyes review.

For some firms, there may also be a benefit of getting the work done and paid for up front when the client is excited about the technology and the inventor still works at the company - rather than three years later when the traditional response to an office action would be done.

Documents:

• File Attachment: Petition and Support Documents (1730 KB) (downloaded from PAIR)

Reinstating Patents After Failure to Pay Maintenance Fee

In a prior post, I discussed payment of maintenance fees. Ordinarily, three post-issuance maintenance fees must be paid in order to keep the patent in force for its entire term. A large entity pays $980 3.5 years after issuance; $2,480 7.5 years after issuance; and $4,110 11.5 after issuance. If the fee is not paid then the patent will expire at the next 4, 8, or 12 year mark. In that 6-month interim (e.g., between the 3.5 year due date and the 4 year expiration date), the fee can still be paid with a $130 surcharge. Once the patent expires, it can still be reinstated if the fee is paid along with an additional surcharge for either unavoidable failure to pay the fee ($700) or unintentional failure to pay the fee ($1,640). In addition, the Patent Office (PTO) must accept your explanation for the delay. Under 35 U.S.C. 41(c), revival for unintentional expiry is only available within two years of the expiration date. Later revival requires proof that the failure to pay the fee was unavoidable - a difficult standard to meet.

The PTO publishes reinstated patents each week in the Official Gazette. Using those publications, I compiled the following table showing the number of patents being reinstated each year. As the chart show, the number of reinstated patents has risen over time. The absolute number of issued patents is also rising, but at a slower rate. Thinking about this as an applicant's 'error rate' - for the past decade, about 2.5 percent of patents that expire due to non-payment of maintenance fees are later reinstated. This is an incredibly high error rate for a purely ministerial function of paying a fee.

I pulled Patent No. 6,798,824 from the list of reinstated patents that was published in the February 24, 2009 Official Gazette. That patent originally was assigned to InterDigital and is directed to a particular type of spread spectrum communications device. The patent issued on September 28, 2004 and expired four yeas later due to failure to pay the maintenance fees. Realizing its problem, the patent holder filed a petition to accept late payment of maintenance fees on December 19, 2008 and the petition was granted on January 30, 2009. (Note - the petition is not available in PAIR).

Note:

• Cite, Dennis Crouch, Reinstating Patents After Failure to Pay Maintenance Fee, Patently-O, http://www.patentlyo.com/patent/2009/02/reinstating-pat.html (Feb. 26, 2009). See also, Dennis Crouch, USPTO Maintenance Fees, Patently-O, http://www.patentlyo.com/patent/2009/02/uspto-maintenance-fees.html (Feb. 23, 2009); Dennis Crouch, Formalism at the Federal Circuit: Equitable Plea for Revival is Rejected, Patently-O, http://www.patentlyo.com/patent/2008/06/formalism-at-th.html (June 10, 2008) (discussing the Federal Circuit's decision in Burandt v. Dudas); Dennis Crouch, Unavoidable Delay: Ignorance as an Excuse?, Patently-O, http://www.patentlyo.com/patent/2007/08/unavoidable-del.html (Aug. 15, 2007) (discussing the FemSpec case where the DC district court refused to revive a patent - holding that the unavoidable delay standard has a due care element).

Examiner SlimThugS USPTO Rap

Workplace Caution - Link has Audio Profanity

Examiner SlimThugS has an amazingly bad - but funny - USPTO Rap with video posted to YouTube. The song is titled "Dangerous" and includes lots of profanity (repeated use of mf'n). Some classic lines include:

"This attorney, he stepped up to me. He tried to knock down my 103. But you aint gonna amend past me; Cause I shot him back with a 102(b)."

"Using databases west and east everybody knows I'm the database beast. You think you can get a patent with those claims. Girl you better think twice, those claims are so lame."

"I just found a 102(b) prior art, and now the beat down is gonna start. ... I hit them with the 102(b), yeah"

http://www.youtube.com/watch?v=9PBVG4a3wNI

Waiving Arguments at the Board of Patent Appeals

Pivonka v. Axelrod (Fed. Cir. 2009)(non-precedential)

In 2003, Axelrod asked the PTO to declare an interference against Pivonka’s patent which had issued the year prior. (Pat. No. 6,408,797). During the interference, the BPAI found Pivonka’s collapsible pet carrier claims to be unpatentable as obvious. [Link] On appeal, the Federal Circuit affirmed.

In reviewing a BPAI obviousness rejection, the Federal Circuit looks for “substantial evidence” to support any factual determinations, but reviews the ultimate question of obviousness de novo.

Here Pivonka pointed to three potential errors: (1) improperly saying that the invention has a “barn-like structure;” (2) failing to consider the patented claims individually; and (3) failing to appreciate the structural differences and functional benefits provided by the claimed invention as compared to the prior art.

The Federal Circuit dismissed these concerns in turn: (1) the reference to the barn was merely shorthand and not reversible error; (2) the applicant waived any right to have claims 2–9 considered separately by failing to make arguments on those claims earlier; and (3) the Board’s conclusion of obviousness was correct.

“Under KSR International Co. v. Teleflex, Inc. “[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” 550 U.S. 398, 1739 (2007). According to Dr. Shina’s unrebutted affidavit [Axelrod’s Expert], both the structural benefits and the way in which to build the container claimed by Pivonka were readily apparent to a person of ordinary skill in the art. Accordingly, we find no error in the Board’s conclusion that claims 1-9 are obvious.”

The Court also rejected an argument of improper procedure based on Pivonka’s waiver of the issue before the BPAI. One important take-away from this case is that the Federal Circuit generally treats the BPAI as it would a lower court in the sense that an issue must first be raised with the BPAI in order to be ripe for appeal to the Federal Circuit. If the issue is not raised at the lower level, then any appeal will be deemed waived.

Although not directly related, I enjoyed the following recent anonymous comment to another post:

Whoever said "necessity is the mother of invention" was wrong. According to KSR, "necessity is the mother of obviousness."

Underlying the interference is a patent infringement case between Pivonka and TFH Publications (Axelrod’s assignee). That case is also on appeal but will be heard by a different panel. Interestingly, after this favorable decision, TFH requested that the case be reassigned to the Axelrod panel. The Federal Circuit denied that motion. [Link]

Congress Looks to Review Patent Examiner Goals

The current pending omnibus appropriations bill would provide $2.01 billion to the PTO so long as all of that money is obtained by the PTO through fees. [LINK]. As Greg Aharonian noted in his PATNEWS, none of the $800 billion bailout money is being directed toward improving the patent system.

The bill includes a statement that Congress will hold back $5 million until the PTO completes "a comprehensive review of the assumptions behind the patent examiner expectancy goals and adopt[s] a revised set of expectancy goals for patent examination."

Today, many examiners operate well over their expectancy goals — earning overtime bonus for extra work. If the time allowed is increased without increasing demands on the examiners, the result may simply be that Examiner #6 operates at 140% of his expected goal rather than 120%. I.e., more pay for the examiner without changing the examiner behavior at all. Now, I’m not opposed to increasing the examiner payscale, but if we are hoping to improve the system, any review of expectancy goals need to be coupled with a review of examination standards.

Applying Supreme Court Precedent

Carlsbad Technology v. HIF Bio (Supreme Court 2009)

The Supreme Court held oral arguments in this case on February 24. In its opinion, the Federal Circuit held that it lacked appellate jurisdiction to review a district court order to remand a case back to state court. The Federal Circuit's decision goes against precedent set by the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits. And, the case appears in conflict with the Supreme court's Powerex v. Reliant (2007) decision.

During oral arguments the Justice Roberts was considering when lower courts follow Supreme Court holdings when he made the following statement:

CHIEF JUSTICE ROBERTS: Well, they don't have a choice, right? They can't say, I don't like the Supreme Court rule so I'm not going to apply it, other than the Federal Circuit.

(Laughter).

Federal Circuit Affirms District Court’s Extension of 30-Month FDA Stay

Eli Lilly v. Teva Pharmaceuticals (Fed. Cir. 2009)

Teva is hoping to make a generic version of Lilly's Evista brand raloxifene tablets that are used to help prevent postmenopausal osteoporosis. In May 2006, Teva filed an abbreviated new drug agreement (ANDA) and Lilly subsequently sued for patent infringement and to block the generic release. Under the law, after the patentee files suit, the FDA cannot then approve the generic for thirty months "unless the court has extended or reduced the period because of a failure of either [party] to cooperate reasonably in expediting the action." This is commonly known as the "thirty month stay."

In this case, the court originally set a trial date four months after the end of the thirty month period. In the months leading up to trial Teva altered its proposed generic formulation, which changed Lilly's litigation strategy. As a result, the district court ordered that the FDA thirty month stay be extended for four extra months – until May 2009. Teva filed an emergency appeal to lift the stay.

On appeal, a split Federal Circuit panel affirmed – finding that the district court acted within its discretion in extending the stay based on Teva's activity. "Trial courts, thus, may shorten or extend the thirty-month statutory period based on the parties' uncooperative discovery practices before the court." In its decision, the court distinguished the 2002 Andrx v. Bioval case. In Andrx, the Federal Circuit found that the district court had abused its discretion in shortening a thirty-month stay based on a party's "positions before the FDA." Rather, changes to the thirty-month period must be based on failure to cooperate court.

In dissent, Judge Prost argued that the majority misinterpreted the statute to grant too much deference to the district court in extending the stay. Rather, the statute requires that the stay should only be extended when a party fails "to cooperate reasonably in expediting the action." Here, Judge Prost argues, the lower court did not find that Teva failed to cooperate, but only that Lilly could use more time to respond. The statute is limited in a way that does not allow extension of the stay in that situation.

Notes:

• Judge Rader wrote the majority opinion and was joined by Chief Judge Michel.
• On the expedited schedule, Appellant filed its principle brief November 24, 2008; briefing was complete on December 30, 2008; Oral arguments were heard on January 14, 2009; and a decision rendered on February 24, 2009.

Patently-O Bits and Bytes

• New Commerce Secretary: Gary Locke. Former Washington State Governor, Partner at Davis Wright Tremaine. Gov. Locke is Chinese American and co-chairs the firm's China practice. He is also an Eagle Scout, a Yalie, and a Terrier.
• 
  USPTO Deferred Examination Comments Due February 26:
  
  
  • http://www.uspto.gov/main/homepagenews/2009feb09.htm
  • https://uspto.connectsolutions.com/p91717658/ (Watch the Roundtable discussion)
  
  
  
  
• 
  Cert Denied: The Supreme Court has denied certiorari in the following patent related cases.
  
  
  • Singleton v. Volkswagen (E.D. Texas Venue Case where 5^th Circuit ordered transfer).
  • Forest Labs v. Caraco (Declaratory Judgment standing).
  • FTC v. Rambus (Duties of a patent holder in standard setting negotiations).
  • Burandt v. Dudas (When is a failure to pay "unavoidable").
  • Apotex v. Roche (reverse doctrine of equivalents).
  
  
  
  
• 
  Judge Linn recently gave a Keynote address to the PTO examiner's corps. [Read it here]. Judge Linn started as a patent examiner in 1965. The following are some quotes from the full speech:
  
  
  • "Your job is much harder now than it was for me all those years ago. The technology of today's inventions is immensely more complex than ever before. The length and breadth of applications is greater. The volume of prior art is much larger. The legal issues are more intricate and harder to comprehend. And the law is in a continual state of change. Compounding all of this is the perception among some individuals that the work of the PTO in general, and the examiners in particular, is somehow of secondary importance and questionable quality. It is commonly said that the real action in patents is in private or corporate practice."
  • "Your job is to grant patents—valid patents. And that takes a combination of skills, reasoning and informed judgment. The Examiner's task is to assess the patentable merits of each invention, as presented, and to grant patents where patents are due. No applicant wants an invalid patent. Similarly, no examiner wants to grant an invalid patent. Thus, both the applicant and the examiner play parallel and complementary—not contradictory— roles in seeing to it that valid patents are issued."
  • "[R]eading legal decisions, particularly those of the Board and the Federal Circuit, is not only the best way to learn how to make the tough decisions you are regularly called upon to make, but also the best way to make your job easier and more enjoyable. You might ask, "why should I bother to read decisions of the Board and the Federal Circuit? After all, I have all the guidance I need in the MPEP, and I don't have time to spend reading other cases that have nothing to do with me." The answer is that the cases bring to life the statutes and rules you are required to apply and give you real world examples of how those statutes and rules apply in similar cases. The MPEP has some guidelines, but they are just a sampling and cannot possibly reflect the full range of claims and circumstances you face every day. Keeping up with the law by reading decisions of the Board and the Federal Circuit will allow you to master your craft and will result in your standing out from your peers."
  • "The last point I want to make is to not forget about §112. … [I]t is not correct to trivialize or ignore these kinds of Informalities [such as claims that are vague and indefinite or lacking in support in the written description]. Indeed, these kinds of problems affect not only the applicant but the public as well in a significant way. … In case after case before my court, the central debate revolves around the meaning of claims terms that, for example, were added during prosecution and do not appear anywhere in the written description. For those cases, the meaning of the claim limitation has to be inferred from other words, leaving the issue open to unnecessary dispute and leading frequently to protracted and costly litigation. You have the authority and the responsibility to not let that happen and to insist that applicants use words in the claims that find unambiguous and full support in the written description."
  
  
  
  

Merchants Warranty of Non-Infringement

Section 2-312 of the Uniform Commercial Code (UCC) discusses warranties of title against infringers. Unless disclaimed, a "merchant regularly dealing in goods of the kinds" automatically warrants to the buyer that the goods being sold are "free of the rightful claim of any third person by way of infringement or the like." The accompanying notes make clear that when goods are sold out of the seller's normal stock (rather than special ordered) "it is the seller's duty to see that no claim of infringement of a patent or trademark by a third party will impair the buyer's title." On the other hand, if the buyer makes a special order with its own specifications, any patent liability "will run from buyer to seller" and "the buyer is under an obligation in good faith to indemnify the seller for any loss suffered."

In the 2008 case of Pacific Sunware of California, Inc. v. Olaes Enterprises, Inc, the California Court of Appeals interpreted the parallel provision in the California Uniform Commercial Code. The court there -HISTORY focused on the phrase "rightful claim" and held that a "rightful claim" is not limited to winning claims. Rather, the seller is liable to defend the buyer against any "nonfrivolous claim of infringement that has any significant and adverse effect on the buyer's ability to make use of the purchased goods." (Reversing the lower court ruling).

In its analysis, the court relied upon Professor Hricik's 1997 Texas Tech Law Review article on how to "shift liability" for patent infringement. [link]

At this point, I will note that Patently-O hereby disclaims all warrantees – especially this one.

USPTO Maintenance Fees

A large portion of PTO revenue comes through applicant’s payment of maintenance fees. Under the current fee structure, three post-grant maintenance fees must be paid in order to keep a patent from prematurely expiring. A large entity pays $980 3.5 years after issuance; $2,480 7.5 years after issuance; and $4,110 11.5 after issuance. If the fee is not paid then the patent will expire at the next 4, 8, or 12 year mark. In FY08, the PTO reported over $500 million in revenue from maintenance fees.

I wanted to look at how maintenance fees are being paid, so I downloaded the past decade of OG Notices and parsed-out notices of patent expiration. The chart below shows some results.

The chart shows survival rates for the four (red), eight (blue), and twelve (green) year marks. Each datapoint represents the average survival rate for patents that would have expired on that date. For instance, of the 2229 utility patents that issued on December 31, 1996, the first fee was paid for 84% of the patents, the first two fees were paid for 63% of the patents, and all three fees were paied for 49% of the patents. (Note – I did not yet add-back cases that were revived due to unintentional abandonment.)

The median patent has an ordinary enforceable term of about 17 years. This is based on the twenty year term which begins at filing of the non-provisional application minus three years of prosecution. If prosecution takes longer than three years, then the term will likely be extended under the PTA provisions.

However, this data shows that the median patent term is actually cut short by about five years because applicants decide not to pay the large final fee.

A third feature to recognize from this chart is that the percentage of patents whose fees are being paid is increasing over time. However, the PTO has indicated that it expects a drop in maintenance fee payments due to the economic slump.

Judge Moore looked at expiration data for patents issued in 1991 in her paper on “Worthless Patents.” Her result is that patents were more likely to “survive” (i.e., have their maintenance fees paid) when they have more claims, more art cited, more related applications, and longer prosecution times. US corporate owners were more likely to pay the fees than individual or foreign owners. She also found that Semiconductor and Optics patents were the most likely to survive. Amusement patents were unlikely to survive.

Top Patent Blogs (according to links from other blogs)

Gene Quinn of IPWatchdog has complied the following ranking of "top patent blogs" based on their Technorati.com rating. Technorati rates blogs according to how many other blogs link-back. The actual ranking is not of much use (some of my favorites did not even make the list), but it is nice to have an updated list of sources. Thanks Gene.

1. Patently-O
2. Patent Baristas 
3. IPWatchdog 
4. Against Monopoly 
5. Patently Silly 
6. Chicago IP Litigation Blog 
7. PHOSITA 
8. Spicy IP 
9. PLI Patent Practice Center 
10. Duncan Bucknell Company's IP Think Tank 
11. Patent Prospector 
12. Securing Innovation 
13. Peter Zura's 271 Patent Blog 
14. The Invent Blog
15. Promote the Progress 
16. I/P Updates
17. IP NewsFlash 
18. Orange Book Blog 
19. The IP Factor 
20. Philip Brook's Patent Infringement Updates
21. Patent Docs 
22. Antiticpate This! 
23. Patent Fools 
24. Patentably Defined 
25. Steve van Dulken's Patent Blog 
26. IP Spotlight 

Provisional Patent Applications: Waiting to File Non-Provisionals

For better or worse, provisional patent applications have always been used as a way to delay patent prosecution. The procedure has become popular as a relatively cheap and informal mechanism for preserving priority of invention without losing patent term. Although a provisional application sets a priority date, the application does not even reach the examination queue until the full utility patent application is filed. Thus, on average, each day of delay in filing the utility patent application pushes the issue date back one day as well. However, provisional applications also serve as a mechanism for extending the tail end of the patent term because the twenty-year patent term does not begin to run until filing of the utility patent.

Provisional applications have become quite popular. In FY2007, for instance, over 132,000 provisional applications were filed and about 30% of recent patents assigned to US companies reference a provisional filing. [Link]

To see how provisional filings are being used, I compiled a set of 65,000 patents that issued sometime between Jan 2007 and Feb 2009 (inclusive). All the patents in the group share the common property of claiming priority only to one or more provisional applications. I additionally excluded patents that made other priority claims such as continuations, divisionals, and continuations-in-part. Once I formed the set of patents, I then looked at the filing date of the provisional application compared with the filing of the utility application to how applicants are using the extra year of deferred examination. For patents claiming priority to multiple provisional applications, I used the date of the earliest filed provisional application.

The graph below shows the result. The vast majority of applicants wait until the year is almost up before taking action and filing the non-provisional application. About two-thirds of the non-provisional applications were filed with less than ten days remaining in the one-year provisional pendency. In over ten percent of the cases, applicants properly filed the non-provisional more than 365 days after the original provisional filing because of weekends, holidays, and/or leap year.

Two weeks ago, I had a conversation with a patent litigator about the propensity of patent attorneys to barely meet deadlines. He was worried about the potential for malpractice claims against his firm. And, here, I found a surprising number of cases that appear to miss the deadline.

My lingering question for patent attorneys and applicants -- why delay so long? Is it simply a matter of doing work according to deadline? Does it matter that delaying filing the application also delays the eventual issuance of the patent?

References Cited

I compiled a list of the over five hundred thousand reference citations in the almost eighteen thousand utility patents issued in the past two months. (Jan 1, 2009 – Feb 18, 2009, excluding reissues and reexaminations). In this sample, the average patent issued with 31 cited references. This is a skewed average – the median patent only cites 15 references. The vast majority of references (77%) are introduced by the applicant during prosecution while less than a quarter (23%) are cited by the examiner.

Patent documents (including US & foreign issued patents and published applications) represent 82% of the cited documents while non-patent literature represents 18% of the total. As was noted in the comments regarding PTO search tools, PTO searches are overwhelmingly focused on patent documents. Thus, 95% of references cited by PTO examiners are patent documents. (See pie chart aside).

Although – on average – applicants submit most of the prior art, Applicants submitted absolutely no references (zero) 15% of the patents in my study, and the median number of references cited by the applicant is only 7. Applicants cite over 200 references in only 2% of cases. The PTO's stalled IDS rules give the applicant 20 'free' references that can be cited without payment of a fee or further description. About 23% of the issued patents in my sample include more than 20 references cited by the applicant. The chart below is a histogram of applicant submitted references. About 12% of patents are "off the chart." In those cases the applicant cited more than 40 references.

Take-away: First, the data shows that applicant submitted references are substantially different from those cited by examiners. Non-patent literature is an important category of prior art that is largely missed by examiners, and the current information disclosure system does a pretty good job of getting more of that type of art in front of the examiner than he or she would otherwise see. A second point is that most of the time, examiners are not being swamped by reference submissions. It is surprising that 15% of patented cases include absolutely no applicant cited references. On the other hand, folks who submit over 200 references are deliberately choosing to do so. Generally, the very large reference volume comes in cases where the applicant knows that the innovation is important and is looking for more assured protection. In those cases, I don't see the harm in making the applicant somehow pay for the additional resources required to review those references. [Of course, in that case, the PTO should allow more examination time as well]

The next graph shows the average number of applicant-cited references for various top-patenting companies. The size of the blue bar reflects the number of applicant cited reference on average, for that assignee's Jan-Feb 2009 patents. (Scale at bottom). The graph is sorted so that companies with the greatest average number of cites are shown at the top. Although this is not strictly true, the difference between companies is largely a difference in areas of technology. Thus, companies patenting electronics generally cite less prior art than others. You may also notice in this list that US based companies tend to cite more prior art. The final chart in the series shows that – on average, US assignees submit over three times as many prior art references as do their foreign counterparts or patents without an assignee.

Extending Patent Terms

I looked again at patent term adjustments (PTA) for US patents. 3294 utility patents were granted on February 17, 2009. Of those, 2467 (75%) included some patent term adjustment based on PTO delays in prosecution under 35 U.S.C. § 154(b). For each of these patents, some additional quantum of exclusivity is added to the end of the patent term so long as maintenance fees are paid.

The median adjustment was just over one year (376 days) with the average adjustment of 430 days. The longest adjustment in the group was over five years (1958 days). That patent (No. 7,490,438) is directed to an automobile door and is based on an application filed in 2000. In that case, the applicant appealed twice. The examiner was reversed both times. The applicant lost 11 potential PTA days for filing an IDS after the first office action.

Notes

• I upted the post to clarify that I am talking about Patent Term Adjustment here (PTA) available under 35 U.S.C. § 154(b). PTA applies to patents filed after May 2000.
• See also http://www.patentlyo.com/patent/2008/03/extending-the-p.html

Patent Attorney Argument as Inequitable Conduct

Rothman v. Target Corp. (Fed. Cir. 2009)

A New Jersey jury found Rothman's patent invalid, not infringed, and unenforceable due to inequitable conduct. (Pat No. 6,855,029). On appeal, the Federal Circuit reversed the inequitable conduct holding, but otherwise affirmed.

Obviousness: The asserted patent covers a breastfeeding shirt that includes a concealed, but fully supportive nursing bra. The original prototype was built by Ms. Rothman by sewing a Jockey brand tank-top together with an Olga brand nursing bra and some additional fabric. Thus, here we have a situation where the inventor took off the shelf items and took a few hours (a day into the night) to form them into a new combination. The appellate panel recognized that the particular manner in which an invention is actually made does not negate patentability. However, the appellate panel did see the simple inventive process as evidence of "the predictability and expectations in this field of art." Based on these facts, the court could find no reason to disturb the obviousness holding since a PHOSITA "would have been motivated to combine an existing tank top with an existing nursing bra to arrive at the claimed invention."

Inequitable Conduct: The Federal Circuit reversed the jury's finding of inequitable conduct. One point of interest involved the patent attorney argument that "nursing garments are highly specialized … as distinguished from maternity garments, [and] are not analogous prior art to women's garments in general…. Therefore, it is improper to combine a prior art reference from nursing garments with a prior art reference from garments generally, with no connection to nursing garments." It turned out that the patent attorney had no prior experience in nursing garment technology and did not consult any industry experts before making his claims regarding the 'highly specialized' nature of the art and the impropriety of combining prior art.

The Federal Circuit no problem with these attorney statements:

While the law prohibits genuine misrepresentations of material fact, a prosecuting attorney is free to present argument in favor of patentability without fear of committing inequitable conduct. . . . This court has little basis to find deceptive intent in the routine back and forth between examiner and applicant. Moreover, this court recognizes that the Patent Act gives the examiner the discretion to reject or accept an applicant's arguments based on the examiner's own conclusions regarding the prosecution record. [The attorney's] remarks show an effort to persuade that does not even approach an effort to deceive the PTO or abuse the prosecution process. … Appellees find fault with the final sentence from the excerpt above. However, [the attorney's] conclusion that it is "improper to combine a prior art reference from nursing garments with a prior art reference from garments generally, with no connection to nursing garments" is nothing more than attorney argument based on the foregoing facts … [derived] from his analysis that nursing garments are different from regular women's wear. … In any event, this type of conclusory analysis betrays no intent to deceive the PTO and obtain a patent with objectively false information. Rather, it is an attempt to characterize the prior art in a manner favorable to the attorney's client—far from deception. No reasonable jury could rely on Mr. Jacobson's statements as clear and convincing proof of inequitable conduct.

Attorneys should take this decision with a grain of salt based on the fact that Judge Rader authored the opinion and Judge Friedman was on the panel. Judge Rader is well known for his opinion that inequitable conduct is too liberally adjudged.

Federal Circuit Takings Case: Set Up for Supreme Court Review

Casitas Municipal Water v. US (Fed. Cir. 2009) (en banc denial) (MAYER, SCHALL , and MOORE*)

Casitas is not a patent case, it is a takings case involving regulatory restrictions on water use imposed by US Government. The Federal Circuit has jurisdiction over this takings claim against the US Government because it is on appeal from the Court of Federal Claims (CFC). Although the Federal Circuit has denied the Federal Government's motion for en banc rehearing, a set of diverging opinions sets this case in position for likely Supreme Court review.

History: The Ventura River Project provides water supply to Ventura County, California. In 1956, the US Government granted the local government the "perpetual right to use all water that becomes available through the construction and operation of the Project." Then, in 1997, steelhead trout living in the Project became an endangered species under the Endangered Species Act (ESA), and the US Government required that Casitas construct a fish ladder and divert water over the fish ladder. Casitas complied, but filed suit in the CFC alleging that the Federal Government had taken its property without just compensation (and also under breach of contract). The CFC classified the Government action as "regulatory" rather than a "physical." In takings law, compensation for regulatory takings is much more difficult to obtain, and Casitas admitted that it could not prove the required elements. This conclusion followed the Federal Government argument that "it did not seize, appropriate, divert, or impound any water, but merely required water to be left in the stream."

Appeal: On appeal, the Federal Circuit reversed. Writing for the majority, Judge Moore concluded "that the government physically appropriated water that Casitas held a usufructuary right in."

Here, the government admits for the purposes of summary judgment that it required Casitas to build the fish ladder facility, which is a man-made concrete structure that was not a portion of the existing … The government also admits that the operation of the fish ladder required water, which prior to the fish ladder's construction flowed into the Casitas Reservoir … Specifically, the government admits that the operation of the fish ladder includes closing the overshot gate …and that the closure of this gate causes water that would have gone into the Casitas Reservoir via the Robles-Casitas Canal to be diverted into the fish ladder. … These admissions make clear that the government did not merely require some water to remain in stream, but instead actively caused the physical diversion of water away from the Robles-Casitas Canal … and towards the fish ladder, thus reducing Casitas' water supply.

In dissent, Judge Mayer rejected the physical takings argument. At base, he argued, Casitas does not actually own the water. Rather, under California law, all water sources within California "belong to the public." Even if Casitas did own the water flow, Mayer would have seen the endangered species requirements as regulatory because the requirements simply force a specific use of the water rather than take it away.

En Banc Rehearing: In what looks like a 7-5 (or 6-6) vote, the Federal Circuit denied a rehearing en banc. Judge Moore wrote a new opinion defending her original approach in the original opinion. In particular, Judge Moore focused on the "facts as presented" in the case. "[T]he government conceded (1) that Casitas had a property right in the water diverted from the Ventura River, and (2) that the government required Casitas to build and operate the fish ladder in such a way as to permanently appropriate water in which Casitas had the conceded property right." Based on those two facts, the holding of a physical takings was easy.

Judge Gajarsa would have heard the case en banc. Gajarsa (joined by Chief Judge Michel and Judge Dyk) saw the taking as clearly regulatory in form because nothing had actually been taken by the US Government.

This denial implicates fundamental questions regarding takings law. The panel majority's opinion suggests that a government action can be construed to be a physical taking even if no physical proprietary interest has actually been taken by the United States. This is contrary to present Supreme Court law and contrary to our case law. Accepting this analysis of the panel majority eliminates the fine distinction and balance that has been established by the Supreme Court between physical and regulatory takings. Moreover, it eliminates the ability of the legislature to provide for limited and parsimonious legislation protecting endangered species.

Notes:

• Republican vs. Democrat: Moore's position is clearly one of stronger property rights while Gajarsa/Mayer's position is in favor of regulatory power of the government. It appears that this decision falls along political lines. Those thinking of the regulation as a physical taking (Moore, Schall, Rader, JJ) are all Republican appointees. Three of the five thinking of the regulation as regulatory in nature are Democratic appointees (Linn, Dyk, Gajarsa, JJ are all Clinton appointees; Michel, CJ, and Mayer, J, are Reagan appointees). At least three of the four other judges voted to deny a rehearing. Of those four, three are Republican appointees (Newman, Lourie, Prost, JJ, are all Republican appointees; Bryson, J, is a Clinton appointee). As you can see here, eight of the twelve active Federal Circuit judges are Republican appointees.
• En Banc Denial
• Original CAFC Opinion: Casitas Mun. Water Dist. v. United States, 543 F.3d 1276 (Fed. Cir. 2008).
• Original CFC Opinion

Patent Office is Looking for New Leadership

The PTO is not planning to wait until a new Director is appointed before filling other key management slots. Two positions are listed on the PTO job board: (1) Deputy Commissioner for Patent Examination Policy; and (2) Patent Examination Policy Advisor. I believe that the Deputy Commissioner position will fill the spot left by John Love who is reportedly retiring at the end of this month. Pay is between $117k and $177k. For the right person, I will also throw-in a few free favorable Patently-O posts. Seriously, this is one of the top non-political slots at the PTO and a true expert is needed. The Patent Examination Policy Advisor is slightly lower in rank, but will also serve an incredibly important role at the PTO in "providing professional leadership and direction" in the Office of Patent Legal Administration (OPLA). OPLA is the office where the MPEP is written and new rules are drafted.

Applications are due immediately:

• Deputy Commissioner Closes Feb. 24: http://jobsearch.usajobs.gov/getjob.asp?JobID=78943496
• Patent Examination Policy Advisor Closes Feb. 18: http://jobsearch.usajobs.gov/getjob.asp?JobID=78970534

Percent of Patents Discussing “Microsoft,” part II

In an earlier post, I introduced some data relating to patents that discuss Microsoft somewhere in the patent document. That post showed that almost 5% of newly issued patents refer to the software giant in some way. That data also showed a strong upward trend over time. The post received a few interesting comments as well as a few suggestions. [LINK] In response, I have added some additional data to the graphs. The first graph below shows the percent of patents that discuss Microsoft (in blue) and now also includes the percent of patents that are assigned to Microsoft (in red). Several years ago, Microsoft publicized their intention to obtain a large number of patents. That intention is becoming a reality, and Microsoft recently obtained its 10,000^th patent. However, only about 20% of patents that discuss Microsoft are actually assigned to the company.

The next graph compares the patents discussing "Microsoft" with other products/companies. Here, I include patents that discuss "Microsoft" (blue), "UNIX" (green), "LINUX" (red), and "Apple" (tan). UNIX has seen some growth, but not much since the mid 1990's. In the past couple of years, the number of LINUX patents have grown dramatically, but still pale in comparison to Microsoft patents. Although the absolute numbers for LINUX related patents are still small, they are surprisingly high based on the anti-patent lore of LINUX developers. Apple has remained steady over the years. Of course, my results for Apple should be tempered by the false positive results that actually refer to the fruit rather than the computer company or its products.

An issue in all these graphs is time lag. The time lag of issued patents may be easily seen by searching for patents that discuss "Google." – The result is only 1342 patents but 4682 published applications.

Brief post on the stimulus [updated]

To put $800 billion in perspective, I like to think in terms of households. In the US, there are around 115 million households with a little under three persons per household. Simple division gives us $7,000 per household. The median household income of Patently-O readers is at least two to three times greater than the national median of $50,000. The income-correlated cost will be at least proportional -- pushing $20,000 for Patently-O households.

A weak economy has little demand for patent attorneys. Patent attorneys make less money, clients disappear, and law firms close. Although patents can be countercyclic, on average they are not - especially in a sustained downturn.

In the 1990's, I taught high-school level math and physics as a Peace Corps volunteer in Ghana, West Africa. Many of my students were smarter and certainly harder working than their American counterparts. Yet, the Ghanaians have an expected per capita income of just under $1,000 per year. Those kids are a victim of circumstance. In the US, we reap the windfall of circumstance. Our individual income levels are within our control only to a certain extent.

The bottom line here is that this additional $20,000 cost is worth while ... if it works. I guess that we'll find out.

Obviousness; Scope and Content of the Prior Art; Secondary Considerations

Süd-Chemie v. Multisorb Technologies (Fed. Cir. 2009)

Süd-Chemie holds a patent covering a desiccant container for keeping products dry in shipment. In an infringement action, the Kentucky district court found the patent invalid as obvious. On appeal, the Federal Circuit vacated - holding that the lower court had erred in its analysis of the scope and content of the prior art. There are two primary take-away points from Sud-Chemie. First, obviousness jurisprudence continues to require detailed analysis of the claims and the prior art. I.e., KSR did not suddenly allow handwaving as a substitute for evidence and clear argument. Second, well presented secondary indicia of nonobviousness continue to be important in rebutting obviousness allegations.

Here, the claimed patent required the use of "compatible polymeric materials" used in a laminate seal. The prior art disclosed the use of laminate materials taken from the same general class of materials. However, the Federal Circuit recognized that the prior art did not specify that the selected materials be "compatible" in a way to allow for a proper laminate seal.

This is a case where a definition of the claim term in the specification greatly aided the patentee. The specification defined "compatible" materials as those that "mix on a molecular scale and will crystallize homogeneously." The prior art reference did not teach this form of compatibility. In fact, the prior art appeared to teach "incompatible" materials.  

Multisorb ignores the fact that while the ’942 patent requires the inner surfaces of the laminate and microporous films to have similar softening points, Komatsu [the prior art] requires the films to have dissimilar softening points. Komatsu thus does not teach the use of a microporous film that is compatible with the inner surface of the laminate film.

Looking at secondary considerations, the Federal Circuit instructed district courts to "attend carefully to any evidence of ... secondary considerations of nonobviousness." Here, the focus is on the surprising and unexpected result that compatible materials formed stronger bonds even without adhesive.

The Federal Circuit did not apply these findings to form a conclusion on the issue of obviousness. Rather, the court remanded for further development of the facts.

[NOTE- This decision is from January 2009]

Federal Circuit Finds DJ Jurisdiction Even After Time-Limited Covenant Not To Sue

Revolution Eyewear v. Aspex Eyewear (Fed. Cir. 2009)

After several years of litigation, the patentee-plaintiff Revolution delivered a covenant not to sue to Aspex. The covenant was limited to the asserted patent and to activities prior to dismissal of the action. The district court dismissed the case, but Aspex did not let go. The accused infringer wanted assurances that it could continue selling the accused version of its eyeglass design without worrying about future charges of infringement.

In the appeal, Judge Newman agreed that a case or controversy continues to exist and that under MedImmune, the district court still retains jurisdiction. In the backdrop, the Newman was careful to differentiate this case from those where an accused defendant may be hoping to seek a speculative judicial opinion on future product lines:

This case is of larger substance than merely a would-be competitor seeking to test the waters by way of an advisory judicial opinion on an adverse patent....These parties are already in infringement litigation initiated by the patentee, the case has been pending since 2003, and already has produced a summary judgment of invalidity (which was later vacated by this court, 175 Fed. Appx. 350); the patentee filed its covenant in 2007, after four years of litigation, on the eve of trial of the question of enforceability. Throughout this period the accused eyewear were removed from the market by Aspex, and would not be shielded by the covenant should it be returned to the market, as Aspex states is its intention. Aspex states, and Revolution agreed at the argument of this appeal, that it is reasonable to believe that Revolution will again file suit should Aspex return to this market with the same product as it previously sold. By now barring the counterclaims that have been pending since 2003, Aspex states that this court would enable the “scare-the-customer-and-run” tactics that were deplored in Arrowhead.

Dismissal Reversed. On remand, the lower court retains subject matter jurisdiction over the declaratory judgment counterclaims.

Percent of Patents Discussing “Microsoft”

I looked at all patents that include the word "Microsoft" somewhere within the patent document. These include patents assigned to the company as well as well as patents that simply refer to Microsoft in the specification or list of cited references. That almost 5% of new all patents refer to the software giant is a sign that the company's technology serves as a creative platform for ongoing developments.

Survey Results: Next PTO Director

The Patent Bar has spoken – overwhelmingly choosing Todd Dickinson as the choice for the next director of the US Patent and Trademark Office. Dickinson is now leading the AIPLA after leaving his post as IP Director of GE. Previously, he was PTO director under Clinton and a partner at the Howrey firm.

In the survey, I asked "Who should be nominated as the next director of the USPTO?" Survey takers were required to select only one choice from the list given. Results from 973 responses are shown below:

Candidate	Percent Selection
Todd Dickinson	36%
Judge Rader	18%
John Whealan	11%
Other	9%
Mark Lemley	8%
Nathan Myhrvold	5%
Jim Pooley	5%
David Kappos	5%
Susan Davies	2%

Of these, I suspect that only Jim Pooley, David Kappos, and perhaps Todd Dickinson would be ready to take on the role. Judge Rader is set to become Chief Judge of the Federal Circuit in 2011, John Whealan is a law professor at GWU and Lemley is a law professor at Stanford. Both have been mentioned as likely Federal Circuit judges. Susan Davies is a White House counsel. In the "other" category, readers suggested several Patently-O contributors including David Boundy (Cantor Fitz), Ati Rai (Duke), Kevin Noonan (MBHB) and the anonymous JAOI (?). Additional suggestions included John Doll (PTO), Mike Kirk (PTO & Former AIPLA director), & Chip Lutton (Apple). Apparently as a joke, several comments also added Dennis Crouch to the list.

My prediction is that the next director did not even make this list…

In Search of a Commerce Secretary

According to news reports, Senator Gregg (R-NH) has withdrawn his nomination as Secretary of Commerce after indicating that he could not fully support President Obama's initiatives. I expect that a permanent PTO Director will not be nominated until the Commerce post is filled. President Bush did not nominate his first PTO Director (Jim Rogan) until May of his first year in office (2001). Clinton nominated Bruce Lehman in April 1993.

Deferred Examination: PTO Roundtable

Today in the PTO roundtable on deferred examination, several important points have been made (some of which directly relate to deferred examination):  

• Gordon Arnold made a compelling point regarding harmonization: "The world's largest economy may be an economy that should have a system that is different from the rest of the economies." Mr. Arnold then focused on patent quality: "The lack of quality of patents is due to failure [of the examining corps]. . . English as a second language is a problem [and] many of the office actions are not excellent. . . . We see RCE's because the applicants feel that they have not had a good examination the first time around."
• Arti Rai: Athough I do not have an exact quote, Professor Rai focused on the notion that the PTO may well not have authority to structure fees for the purposes of modifying applicant behavior rather than to "reasonably compensate" the office.
• Ken Patel from P&G reported that their experience with deferred examination - especially in Japan - has not been good. They face lots of infringement actions against P&G products that have been on the market for five or more years.
• Hans Sauer from BIO reported the result of a survey of BIO members. BIO members use the deferred examination system wherever it is available. The members do not believe that it negatively impacts patent quality or certainty in those systems. BIO members report that they do not use the US system available under 37 CFR 103(d) because it forfeits any patent term adjustments.
• John Doll: I only saw a small portion of Director Doll's presentation. He was open to discussion. He noted that the poor economy is having a substantial downward pressure on PTO fee receipts. At the same time, a slowdown in filings will have the benefit of helping reduce the backlog. In his statements, Doll continued the facade that requests for continued examination somehow create a new application for statistical purposes. The office is expecting 17% more RCE filings in FY2009 than they saw in FY2008.

Patent Searching Tools

Question for Examiners and Patent Searchers: Are the search tools available to PTO examiners better than those used by professional searchers? What about European examiners?

Orion and Taurus: NPEs at the Federal Circuit

Erich Spangenberg has at least two pending appeals at the Federal Circuit: Taurus IP v. Daimlerchrysler (and Hyundai) and Orion IP v. Hyundai Motor. In the Taurus case, the Wisconsin District Court found the asserted patent (6,141,658) invalid and also asserted jurisdiction over Spangenberg and Orion IP via a veil-piercing theory. In a recent order, the Federal Circuit properly refused to allow Chrysler and Mercedes to present argument and documents "in camera" in that case. [Link] In the Orion case, a Texas court found Hyundai liable for infringement of the asserted patent (5,367,627) and awarded $34 million in damages. Hyundai has posted $25 million bond to stay the full payment until the appeal is concluded. [LINK ]. The general rule is that money damages will be stayed pending appeals if bond is posted, and that injunctive relief might be stayed.

The '627 patent is patent reformer's poster child for damages reform. The patent covers a method that helps a sales clerk properly order the parts that match a customer's needs. It is hard to know what the value of the incremental invention as compared with the prior art back in 1989 when the original application was filed. I will note that the $34 million patent has only 15 claims and includes means-plus-function language in the claims. Claim 1 of the patent is reproduced below:

1. A computerized method of selling parts for particular equipment specified by a customer, comprising the steps of: a) receiving information identifying a customer's parts requirements for the equipment, comprising the step of receiving equipment application information, comprising an identification of the equipment with which one or more parts are to be used; b) electronically specifying information identifying a plurality of parts and specifications for the parts; c) gathering parts-related information for one or more parts within the plurality of parts which meets the customer's requirements, comprising the step of electronically associating at least one of the parts within the plurality of parts with the received equipment application information; and d) receiving the gathered parts-related information and compiling the parts-related information into a proposal meeting the customer's requirements.

Although the '658 patent does not claim priority to the earlier '627 patent, it does have one overlapping inventor and a large amount of overlapping scope.

USPTO News

Two items of USPTO News:

• Deferred Examination Roundtable Webcast is Thursday Morning [Link]
• E-OFFICE ACTION: After a successful pilot, the PTO is starting an e-Office Action program. Applicants to decide to use the program will receive e-mail notifications of PTO correspondence rather than waiting for hardcopy to arrive in the mail. Program participants will not receive a hardcopy. The program is expected to begin in March 2009. Contact pair@uspto.gov

Law Firms That Appeal

A patent applicant has several options after receiving a final rejection from a patent examiner. "After final" practice is a matter of strategy, tactics, and art. The primary approaches are (1) abandon the application; (2) appeal to the Board of Patent Appeals and Interferences (BPAI); (3) file a request for continued examination (RCE) arguing against the rejection; or (4) concede scope and narrow the application (probably through an RCE). Each of these approaches differs in cost, timing, and likelihood of success. Of course, success may depend upon whether broad claims are important. And, in the background, applicants know that alternate claims can later be pursued in continuation applications (for a fee).

BPAI Appeals are generally thought to have a higher up-front cost – both in terms of PTO fees and attorney costs. However, if you win, appeals have the benefit of dramatically changing the course of the examination. Often, an applicant's successful appeal results in an issued patent soon thereafter.

In this study, I looked at law firms involved in ex parte appeals to the BPAI that were decided in the calendar year 2008. Of the 4000+ decisions, only about 75% of the decisions mentioned the law firm name in the case caption. Using those names, I constructed the following table of the firms associated with the most decisions during 2008. It is interesting to compare Oblon Spivak and Sughrue Mion – both firms handle over 3000 patents each year - many of them involving electronics owned by non-US entities. Oblon, however, appears to have taken the strategy of appealing while Sughrue may be using alternate strategies. Foley & Lardner is regularly listed in the top-ten firms in terms of the number of patent grants – however, that firm does not make the list of having the most appeal decisions.

Some words of caution on the numbers game: (1) These are ordinarily dominated by lower cost electronics and software patents. (2) Some clients request that docketing go through their office – in those cases, the firm name would not show up here. (3) Focusing on appeals, it may be that some firms not on the list actually filed more appeal briefs. It turns out that in most cases, examiners withdraw their final rejections in the face of a high quality appeal brief.

2008 Rank	Law Firm	Number of BPAI Decisions	Primary Location
1	OBLON SPIVAK	62	VA
2	FISH & RICHARDSON	46	MA
3	NIXON & VANDERHYE	42	VA
4	KENYON & KENYON	38	NY
5	TROP PRUNER	38	TX
6	GREENBLUM & BERNSTEIN	36	VA
7	CARLSON GASKEY	35	MI
8	FINNEGAN HENDERSON	34	DC
9	GIFFORD KRASS	33	MI
10	SUGHRUE MION	32	DC
11	BROOKS KUSHMAN	29	MI
12	TOWNSEND	29	CA
13	SCHWEGMAN	28	MN
14	HARNESS DICKEY	27	MI
15	PATTERSON & SHERIDAN	27	NJ
16	ARMSTRONG TEASDALE	23	MO
17	BAYER MATERIAL SCIENCE	22	PA
18	RYAN MASON	22	CT
19	FULBRIGHT JAWORSKI	21	TX
20	ALSTON & BIRD	19	NC
21	BARNES & THORNBURG	19	IN
22	WILLIAMS MORGAN	19	TX
23	BIRCH STEWART	18	VA
24	BLAKELY SOKOLOFF	18	CA
25	CAREY RODRIGUEZ	18	FL

Looking Ahead: Preclusive Effect of Prior Claim Construction

Shire v. Sandoz, M-893 (Fed. Cir. 2009)

In a recent order, the Federal Circuit agreed to hear an interlocutory appeal considering the issue preclusive effect of a prior claim construction decision. The patent in suit has been construed at least twice before, but the lower court here "refused to give preclusive effect" to either prior ruling. This will be an interesting case to follow.

2009-M893.2-6-09.1.PDF

Survey: Next Patent & Trademark Office Director

Although listed above, Susan Davies is a more likely candidate for the next Intellectual Property Enforcement Coordinator or "IP CZAR" - a role created by the 2008 PRO-IP Act.

Article One Partners Pays First Patent Slayer Prize of $50,000

I spoke with Ricky Roberson today. Roberson is an Alabama based aerospace engineer who read about Article One on slashdot and was interested in their offer of $50,000 for invalidating prior art.

Roberson focused on Pat. No. 6,784,873 which covers a touch screen personal navigation device — a patent that he called “low hanging fruit” compared with other Article One subjects such as the multiple Rambus patents being litigated or a pharmacuetical formulation such as rosuvastatin calcium (Crestor).

The ‘843 case is important because the patentee (SPT) has accused Garmin of infringement. Roberson primarily used Google Scholar & Google Patents to search for prior art patents. He had never worked with patents before, but also found the WIPO, EPO, & JPO search engines useful.

In the end, the folks at Article One awarded two winners: Roberson’s submission (WO 91/12578 A1) and an anonymous contribution of a 1998 Microsoft CE programming guide. Roberson will receive $35,000 and the anonymous contributor will receive $15,000.

Article One indicated its belief that the two references would invalidate the ‘843 patent, however, they company is quick to note that “only a U.S. federal court or the U.S. Patent Office can invalidate a U.S. patent.”

Notes:

• Read Ricky’s forum post

Patently-O Bits and Bytes

• Statistics on the Use of Means Plus Function Language: Thus far in 2009 (1/1/2009 – 2/8/2009) the PTO has issued 17,206 patents. Of those, only 12% (2060) have a “means for” clause in the claim language.  Looking back one decade, 24% of patents issued in January 1999 included a “means for” clause in the claim language. Looking back two decades, 34% of patents issued in January 1989 included a “means for” clause in the claim language. Looking back three decades, 40% of patents issued in January 1979 included a “means for” clause in the claim language.
• New Funny Blog: http://courtoons.wordpress.com/ by appellate attorney David Mills
• Watch The Symposium: The hardworking folks at Santa Clara’s Computer & High Technology Law Journal (CHTLJ) have posted materials and video from their conference two weeks ago. Those of you who have practiced before Judges Whyte or Ware will certainly enjoy the tribute video. [LINK] [The best portion begins at 11:20 in the Whyte video].
• PTO Transparancy: Readers submitted two additional suggestions for PTO Transparancy
• • The PTO should calculate and publish the expiration date of each patent.
  • The PTO should publish reexamination certificates so that they are searchable. [Via NIPPER]

Federal Circuit Applies KSR - Finding Combination Claims Obvious

Ball Aerosol v. Limited Brands, Bath & Body Works, etc. (Fed. Cir. 2009)

Ball’s patent covers a candle tin with a removable lid. The lid is designed to fit under the candle to help avoid scorching the underlying surface. According to the claims, the candle tin also has legs or “protrusions” that rest upon the cover.

On summary judgment, a Northern District of Illinois court found Ball’s patent valid as a matter of law. On appeal the Federal Circuit flipped the decision — finding the asserted claims invalid as a matter of law.

Here, it was undisputed that all of the elements of the claims can be found in the combination of two prior art references. In addition, the problem of candle-tin scorching was well known in the art. Finally, it is undisputed that the technology is “simple and easily understandable.”

This case falls squarely under the rule of law expounded by KSR where the Supreme Court held that “[i]f a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability.” Here, one prior art reference (Marchi) taught the candle with a cover that could be used as a base. The other reference (Wright) taught a candle with “bumps” on the bottom to avoid scorching the surface. In considering these two references, the Federal Circuit determined that the combination was obvious:

“The combination of a cover-stand and feet on the bottom of the candle holder was obvious to try in an effort to minimize scorching, as the combination would further raise the bottom of the candle holder above the supporting surface. The resulting, and desired, decreased heat transfer between the candle holder and the supporting surface from the combination would have been entirely predictable and grounded in common sense.”

Explicit Motivation: In KSR, the Supreme Court indicated that the reasons for combining prior art references “should be made explicit.” Here, the Federal Circuit clarified that statement – holding that the motivation need not be explicit in any prior art. Rather, the Supreme Court is referring “to the court’s analysis.” In other words, a court must explain its motivation in combining two or more references to invalidate a patent for obviousness.

Commercial Success: Even those who believe in objective indicia of nonobviousness admit that commercial success is one of the weakest forms. The problem is the general difficulty in tying the success of the product to the invention itself. Here, the Federal Circuit found that the “minimal indications of commercial success … do not outweigh the clear indication of obviousness apparent from the prior art.”

Holding: Judgment Reversed, Claims are invalid as obvious

Notes: I have pasted figures from the two prior art references. One shows a candle with “protrusions” on the bottom the other shows a candle using the lid as a base. At least one of the references specifically discussed object of creating space between the candle and the surface to avoid scorching problems. Neither reference was cited by the patentee during prosecution.

Federal Circuit Disposition Statistics

The Federal Circuit had done a nice job summarizing their outcomes for the past year. Looking at cases decided on the merits, patent cases arising from district court were affirmed 55% of the time; affirmed-in-part 24% of the time; and reversed 19% of the time.

Federal Circuit Statistics Page

No No Words: What Words do you Avoid in Patent Applications

I'm planning to do a quick study of "no no words" in patent applications and how their use has changed over time. Examples include "objects of the invention," the "present invention," "must," "prior art," "limitation," ...

Are there other phrases or words that I should include in the study?

Patent Reform in the House of Representatives

Tech Law Reporter Andrew Noyes has indicated that 2009 will likely see a repeat of the same patent reform measures of 2008. [LINK]. I thought it would be important to look at a few faces that might ordinarily be behind the scenes in the legislation process.

Dr. Christal Sheppard will be the House staffer leading the charge on Patent Reform from within the House Judiciary Committee. Sheppard is a patent attorney and has been working on the Hill since 2003. Her official title is Chief Counsel for the Subcommittee on Courts and Competition Policy (there is no IP subcommittee). Sheppard holds a PhD with a focus on molecular biology from the University of Michigan and has remained active in the patent bar. Other patent attorneys in the House include Garg Sampak (committee on rules) and Jonathan Pawlow (assistant to Rep. Adam Smith (D-Wa)). Susan Davies - who was the staffer in charge of patent reform at the Senate under Senator Leahy has moved to the White House. Davies is a resume superstar -- a University of Chicago Law School graduate who clerked for both Justices Kennedy and Breyer. Aaron Cooper (formerly of the Covington firm) has apparently replaced Davies in the Senate.

The Judiciary Committee is headed by Representative Conyers of Michigan. Members include Berman (D-Cal), Boucher (D-Va), Smith (R-Tex), and Issa (R-Cal).

Inter Partes Reexamination Estoppel and ITC Proceedings

One knock against the inter partes reexamination system is that it creates an estoppel. Under 35 USC 315(c), a third-party of requester is estopped from later asserting that a claim is invalid based on grounds that were "raised or could have been raised" during the reexamination. The 315(c) estoppel, however, is specifically limited to "civil action[s]" arising from 28 USC 1338 – i.e., those brought in district court. Similarly, under Section 371(b), an accused infringer cannot request an inter partes reexamination after losing a final decision in district court on any validity issues that the party "raised or could have raised" in the civil action.

In an e-mail earlier this week, Scott Kamholz of Foley Hoag raised the idea that the inter partes reexamination estoppel provisions do not apply to Section 337 investigations through the ITC. I believe Kamholz is correct. Thus, an ITC finding of validity does not estop the losing defendant from later requesting inter partes reexamination on the same grounds. Likewise, a defendant may raise invalidity issues in an ITC investigation that were previously addressed by an inter partes reexamination involving the same parties. Of course, the proceedings in the ITC and PTO are quite different and could readily lead to different outcomes. Perhaps most notably, patents are given a strong presumption of validity in ITC proceedings but are not presumed valid during reexamination.

Federal Circuit Begins Publishing Orders on Motions

The Federal Circuit has taken another valuable step toward transparency in its operations. Notably, the court has begun to post electronic versions of orders resolving motions that are processed through its Senior Staff Attorney. Publication began on January 30, 2009. I have sought some clarification from the Court on its statement that "certain orders are not posted on this page."

The outcomes of motions are important to the parties involved as well as amicus filers. There have also been occasions when the outcome of a motion impacts stock prices. Perhaps the most common stock-swinging issue involves the Federal Circuit's decision on whether to stay injunctive relief pending appeal. Previously, these orders were difficult to obtain electronically or remotely.

Certain motions may be decided by the Clerk – especially when a motion is unopposed. Others go to a Federal Circuit judge assigned to handle motions that month. My understanding is that the Senior Staff Attorney will ordinarily present the motion (and response) to the judge with a potential order as well. If a case is already scheduled on the hearing calendar, motions will be transmitted to the panel for adjudication.

Most of the orders are mundane. Here is a sample from last week:

• IGT v. Alliance Gaming: Denying motion to dismiss on for lack of subject matter jurisdiction (no final order).
• Blackboard v. Desire2Learn: Granted motion to remove protective order covering the E.D. Tex. supplemental claim construction judgment.
• Garber v. CME: Extension of time granted.
• The Forrest Group v. Bon Tool: Motion granted to allow Paul Hletko to file an amicus brief. Forrest Group had opposed.
• Excel Innovations v. Indivos Corp: Motion granted to allow Mark Davies to take over as principal counsel.

Links:

• Search for CAFC Orders [LINK]
• CAFC Guide to Motion Practice [LINK]
• Top 10 easy-to-fix problems with motions [LINK]

Cardiac Pacemaker v. Jude: Challenging 271(f) Liability for Components of a Method

Cardiac Pacemakers v. St. Jude Medical (On motion for en banc rehearing)

35 U.S.C. § 271 defines various types of patent infringement including direct infringement and contributory infringement. Section 271(f) details a special cause of action that captures some transnational activities. In particular, Section 271(f) creates a cause of action for supplying components of a patented invention to be assembled abroad.

In 2007, the Supreme Court ruled on a 271(f) case -- finding that software per se cannot be considered a "component" under the statute. Microsoft v AT&T, 550 U.S. 437 (2007). In December 2008, the Federal Circuit decided Cardiac Pacemaker and held that the Microsoft v. AT&T did not overrule a prior precedential ruling that Section 271(f) does extend to cover components of a claimed method. “[T]he Supreme Court’s decision does not alter [the] holding” that “271(f) applies to components used in the performance of patented methods and processes.” The precedent in question is Union Carbide v. Shell. Although the Federal Circuit denied a request to rehear the Union Carbide case, Judges Lourie, Michel, and Linn, argued then that the issue was ready for en banc review. Judge Dyk also dissent from the en banc denial in Union Carbide.

In their decision, the panel (Judges Newman, Mayer, & Lourie) practically begged for en banc rehearing: "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." [Link] Of course, Judge Mayer signed-on to Judge Rader's original Union Carbide opinion.

Now, the defendant (St. Jude) has asked for a rehearing en banc. If unsuccessful, we can expect a petition for a writ of certiorari. The FCBA and AIPLA joined forces in an amicus brief supporting the rehearing en banc and for a reversal of the Union Carbide analysis. Writing on behalf of Cisco, Intel, Microsoft, Oracle, and Symantec, Ed Reines also argues that the rule should be overturned. The tech companies argue in particular that the limit on exports creates major adverse economic incentives.

"A very common business arrangement is for United States companies to export instructions, materials, recipes, and other knowledge-exports to Asian and other off-shore locations where manufacturing processes takes place. An overbroad extraterritorial interpretation of § 271(f) to apply to process patents creates potential worldwide liability for companies based in the United States that export anything that can properly be considered a process step. Yet, if their competitors exist outside the United States, they are not exposed to liability for United States patent infringement for supporting foreign manufacturing processes."

A good handful of judges have at least loosely indicated that they would support an en banc rehearing -- making this a very likely candidate.

Notes:

• Discussion of the December 2008 Cardiac decision
• Read the December 2008 Cardiac decision

Briefs:

• Petition for Rehearing En Banc.pdf
• FCBA-AIPLA Amicus Brief.PDF
• Cardiac TechCo Amicus Brief.pdf

Next Secretary of Commerce: Senator Gregg?

Republican Senator Judd Gregg appears poised to be nominated as the next Secretary of Commerce. The PTO reports to Commerce, and the next Secretary will likely play an important role in selecting the next PTO directors and in directing PTO policy.

As it turns out, one of Senator Gregg's more controversial actions involves patent issues. In 2000, Gregg's alma mater Columbia University convinced Greg to insert a patent extension provision into an ag spending bill. If it had passed, the extension would have given new life to Columbia's about-to-expire patents that were earning $100 million annually through licensing agreements. [NYTimes][Quinn].

In the past, Senator Gregg has sponsored legislation for rapid approval of generic biosimilars after expiration of the original patents and legislation to extend patents that help support the war on terror. For years, Senator Gregg has also been deeply involved in appropriations.

Federal Split Decision Highlights Unpredictability of Claim Construction (Once Again)

Kinetic Concepts v. Blue Sky Medical Group (Fed. Cir. 2009)

Virtually every theory or defense in patent law requires claim construction before coming to a final conclusion. This case focused on obviousness and considered how the results turn on the construction of the claim term "treating a wound." A two-member majority (Judges Prost and Bryson) narrowly construed the term to only include treatment of surface wounds (instead of internal organs) and affirmed a nonobviousness holding. The dissent (Judge Dyk) saw a broader definition leading him to a conclusion that the claims were obvious in light of the prior art.

Hal Wegner aptly notes that it would be "difficult without an intensive study of the record to determine whether the majority or the dissent has properly construed the claims under Federal Circuit precedent: Indeed, it is possible that both constructions are acceptable. Kinetic Concepts thus once again points to the continued imperative of statutory claim construction reform."

As per usual, Judge Dyk's dissent is sharp - finding that the majority erred first by finding that the term should be limited to the disclosed embodiments and erred again by narrowly misreading the scope of the disclosed embodiments:

"In my view, the majority improperly holds that the claim term “wound” can be limited to the disclosed embodiments in the specification, and, having done so, then misreads the specification as showing only embodiments treating harm to the surface of the body or skin wounds. Under the correct construction of this claim term, the asserted claims of U.S. Patent Nos. 5,636,643 (“’643 Patent”) and 5,645,081 (“’081 Patent”) would have been obvious."

Notes: Read the decision 07-1340.pdf.

Classen v. Biogen: Request for Rehearing

In Classen v. Biogen, the Federal Circuit issued a one paragraph non-precedential opinion rejecting Dr. Classen's claimed method for evaluating a vaccine immunization schedule. The problem with the claims stems from the Bilsmane or transformation test. The appellate panel found that "the 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."

Now, Classen has filed its request for a rehearing en banc and is looking for further amicus support. The brief cites only one case -- Bilski -- and argues the facts: that at least the claim limitation of "immunizing mammals" is a qualifying transformation of matter.

Notes:

• Patently-O Discusses Classen v. Biogen
• classenrehearing.pdf
• Prometheus
• Prof. Holman

USPTO Director Jon Dudas has Joined Foley’s DC Office

Jon Dudas served as USPTO director for almost five years. He was appointed by President George W. Bush and left office as President Obama entered. The Foley firm today announced that Mr. Dudas has joined the firm as a partner in their DC office. He will work in their international enforcement practice. Anyone who has met Mr. Dudas knows that he will be very successful in his move to private practice. Best of luck!

Notes:

• Tech Daily (Andrew Noyes) has more [LINK]
• 
  
  
  To avoid any confusion the "Foley" firm is Foley & Lardner, not Foley Hoag.