Patent Law Blog (Patently-O)

I almost cut my hair: Haircut Property

In teaching my 1L property course, I only spend about two hours focusing on intellectual property issues.  Today's class corresponded with a bit of insomnia last night and I decided to try my hand at the GEICO advertising challenge -- to make a short video in only 15 minutes. Here is my first entry: 

 

Query: Can someone point me to attempts to protect a haircut or hairstyle with intellectual property? 

Here is my other video for the property course(it took about an hour to create):

 

These videos are intended for entertainment and discussion rather for any clear statements of black letter law. 

Patent Suit Filings for 2010 Show a Slight Rise

By Jason Rantanen

Patstats.org, coordinated by Professor Paul Janicke of the University of Houston Law Center, recently released its analysis of patent suit filings for calendar year 2010.  Patstats reports that although the total number of patent cases filed in 2010 was 3,605 - significantly higher than the 2,744 cases filed in 2009 - much of that increase can explained by the 752 false marking cases filed in 2010.  If the false marking cases are excluded, the increase is closer to 4%.  Professor Janicke was kind enough to provide a set of historical data for context, which I used as the basis for the below graph.

Note that this chart only shows false marking cases for 2010, and thus assumes that there were not high numbers of false marking cases in previous years (for support of this assumption, see http://www.grayonclaims.com/false-marking-case-information/).  For additional analysis of patent suit filing data, as well as other interesting and useful statistics relating to patent litigation, see www.patstats.org.

Patently-O Bits and Bytes*

Upcoming Events:

• 2011 AIPLA Mid-Winter Institute will be held in Orlando from February 2-5. [Link]
• Duke University School of Law will hold its Annual Hot Topics in Intellectual Property Symposium on February 11^th. Speakers include Margo Bagley, Hans Sauer (BIO), and John Conley. [Link]
• The Missouri Law Review is hosting a Symposium on February 25th in Columbia Missouri about the patent jurisprudence of the Court of Appeals for the Federal Circuit. We'll have a number of great speakers, including USPTO Director David Kappos. [Link] (Free event and free CLE).
• Northwestern Journal of Technology and Intellectual Property will hold its annual Symposium on Friday March 4^th from 9:00am-4:30pm. [Link] (Free Event, however CLE credit available for $200)
• IBC Legal Conferences is holding its annual Biotech & Pharmaceutical Patenting Conference February 16-17 in Munich, Germany. Patently-O readers get a discount of 10% by using this code: KW8113PTLL. [Link]

Congressional Action on Patent Reform

• Senator Leahy has posted a statement on his website discussing the reintroduction of the Patent Reform Act of 2011 [Link]. The Act focuses on 3 main issues:
  • Implementing a first-to-file system.
  • Constraints on infringement damage awards.
  • Rules intended to speed the application process for inventors.

USPTO News

• On January 25^th the PTO's Director David Kappos, addressed a House subcommittee and urged Congress to pass the President's FY 2011 Budget Request, which would allow PTO to spend all the fees they collect and also impose a 15% surcharge on patent fees.

Kodak shares tumble

• Kodak filed complaints with the US International Trade Commission claiming Apple and Rim smartphone's infringed on their patent. The International Trade Commission Judge held that the patent wasn't infringed and held the suit invalid. As a result Kodak shares slumped over 25%.  Kodak has lost most of its business share over the years and its patent rights have saved its business model -- up to now. The final decision is expected sometime in May.

Twitter sued for Patent Infringement

• Twitter has been accused of violating patent # 6,408,309, which claims a method of creating an interactive virtual community of famous people.

Patent Jobs:

• Allergan, a multi-specialty health care company, is seeking an experienced patent agent. [Link]
• Lee & Hayes, a nationally known intellectual property (IP) law firm, is seeking a lateral experienced patent attorney. [Link]
• Morgan Lewis, an international law firm, is seeking a Junior/Mid-Level associate for its Philadelphia office. [Link]
• Ice Miller is seeking a patent attorney with an engineering background and 2-4 years of experience. [Link]

* Lawrence Higgins, a 2L here at Mizzou and future patent attorney will be writing these bits and bytes for the next couple of month. -- DC

Arlington Industries v. Bridgeport Fittings: "The specification is the heart of the patent"

By Jason Rantanen

Arlington Indus., Inc. v. Bridgeport Fittings, Inc. (Fed. Cir. 2011)
Panel: Rader (author) Lourie (concurring in part and dissenting in part), Moore

At first glance, Arlington v. Bridgeport presents a seemingly typical claim construction opinion, as the majority opinion reads like any another decision addressing the perpetual question of whether the district court improperly imported a limitation from the specification or instead correctly interpreted the claims in light of the specification and prosecution history.  In an eloquent dissent, however, Judge Lourie reveals his deepest beliefs as to what patents should really be about: permitting the patent holder to claim what is disclosed in the specification - and nothing more.

 
Background
The claim construction issue in this appeal involved the term "spring metal adaptor," a key component in the invention: a new fitting for an electrical junction box.  Prior to the invention of Patent No. 5,266,050, held by Arlington, most junction box connectors used a threaded nut that was screwed into the junction box - a tricky operation.  The '050 patent solved this problem by using a fitting with a spring metal adaptor (20) containing two types of outward pointing tangs (22 and 23).  The new fitting could simply be snapped into place rather than needing to be screwed.

During the district court proceedings, the court construed the claim term "spring metal adaptor" to mean a "*split* spring adaptor," commenting that "a necessary feature of the "spring" metal adaptor is that it is 'split.'  Without the split, it would not spring."  Summary judgment of non-infringement was granted in Bridgeport's favor based on this construction.

Majority: The District Court Imported a Limitation from the Specification
Treating the appeal as a standard question of claim construction, Judge Rader, writing for the majority, held that the district court erred by importing a "split" limitation into its constructions of "spring steel adaptor."  The majority first dismissed Bridgeport's argument that "spring" should be construed to mean that the metal adaptor performs a "springing" function, and instead held that it refers to the type of steel used in the adaptor. It then rejected the argument that "spring metal adaptor" should be defined by implication to require a split, considering both the specification and prosecution history, as well as the doctrine of claim differentiation, before concluding that the intrinsic evidence "reveals no intent to lit the term 'spring metal adaptor' by using it in a manner that excludes unsplit adaptors."  Slip Op. at 15.

Judge Lourie's Dissent: "The specification is the heart of the patent"
Bringing to the boil an ideological disagreement that last eruped in Ariad, Judge Lourie's dissent takes issue less with the outcome of this particular appeal than with the CAFC's entire approach to claim construction.  Expanding upon his discussion of claim construction in Phillips v. AWH Corp., 415 F.3d 1303, 1328 (Fed. Cir. 2005) and before, Judge Lourie writes: "the basic mandate is for claims to be interpreted in light of the specification of which they are a part because the specification describes what the inventors invented….The specification is the heart of the patent.  In colloquial terms, you should get what you disclose."  Arlington dissent at 2 (internal citation omitted).  In his view, the problem is that the CAFC has gotten bogged down in its "focus on our muddy, conflicting, and overly formulaic rules…when the real task of claim interpretation is to read the specification and determine what the inventors meant when they used the language they did." Id. (internal citation omitted).

"Obviously the claims define the scope of protection accorded the owners of a patent. Phillips, 415 F.3d at 1312. But in construing the claims we should avail ourselves of the knowledge we glean from the patent specification to see what the inventors disclosed as their invention. The bottom line of claim construction should be that the claims should not mean more than what the specification indicates, in one way or another, the inventors invented."

Id. Thus, Judge Lourie would have ruled differently:

"In this case, the inventors made clear in the specification of the ‘050 patent that the spring metal adapters in their invention have an opening that prevents the adap-tors from forming a complete circle. The result that the panel majority arrives at here, on remand, could be that Bridgeport might be held to be an infringer of a patent that clearly indicates that there is a split in the adaptor, by making or selling an adaptor lacking such a split. That is not a result that the patent law ought to protect."

Id. (emphasis added).

Judge Lourie's articulated ideology of claim construction offers a window into a deeper worldview: that fundamentally, patents should be narrow, limited to only that which the inventor actually contemplated at the time of filing.  If an inventor invents a circular tanged clip with a slot, the inventor should not be able to claim circular tanged clips that lack slots, period.  Following Judge Lourie's reasoning a bit further, if an inventor contemplates a circular tanged clip made out of steel, the inventor should not be able to claim circular tanged clips made out of aluminum.  Perhaps aluminum clips might be held to infringe under the doctrine of equivalents, but they are not within the literal claim scope.

This view has merit.  By placing a heavy onus on the patent applicant to think of all the possible permutations of the invention, applicants would need to think more carefully about their disclosures and patent scope would be limited to only present ideas.  Of course, inventors would necessarily be penalized because it may be impossible to imagine all permutations, especially those that rely on not-yet-envisioned technologies.   But Judge Lourie seems willing to pay this cost because of the greater certainty and narrower scope that he believes flows from limiting the inventor to only what he or she invented.   

Procedural note: There were actually two separate district court proceedings at issue, both arising in the same district.  In the first proceeding, the district court declined to adopt a "split" construction and Bridgeport was found to infringe; that appeal was stayed while the appeal of the second proceeding (in which the court did adopt a "split" construction) was pending.  The second proceeding also involved a related patent, No. 6,521,831, that contained an essentially identical term ("spring steel adapter").  The CAFC reversed the district court's construction of that term as well, a ruling Judge Lourie joined because the district court relied only on its construction of the term in the '050 patent and did not separately construe the term of the '831 in light of that specification.

Additional Commentary: In a recent article on IP Frontline, Hal Wagner offers a perspective on the ongoing discussion between Chief Judge Rader and Judge Lourie about the proper scope of claim construction.  See Wagner, "Arlington Indus. v. Bridgeport Fittings: The 20 Year Claim Construction Debate."

 

Centillion Data v. Qwest Communications: Getting Around Joint Infringement Problems

By Jason Rantanen

Centillion Data Systems, LLC v. Qwest Communications International, Inc. (Fed. Cir. 2011)
Panel: Lourie, Linn, Moore (author)

Joint patent infringement remains a hot topic as the Federal Circuit continues to tinker with the doctrine.  Centillion Data v Qwest adds a new twist, allowing joint infringement issues to be avoided altogether when dealing with system claims if a customer "puts the system as a whole into service, i.e., controls the system and obtains benefit from it" - even if the customer does not physically possess or own elements of the system.

Background
Centillion Data Systems sued Qwest for infringement of Patent No. 5,287,270, which relates to a system for collecting, processing, and delivering information from a service provider to a customer.  As described by the CAFC, claim 1 requires:

“a system for presenting information . . . to a user . . . com-
prising:” 1) storage means for storing transaction records, 2) data processing means for generating summary reports as specified by a user from the transaction records, 3) transferring means for transferring the transaction records and summary reports to a user, and 4) personal computer data processing means adapted to perform additional processing on the transaction records.

Slip Op. at 2-3.  Centillion conceded that the claim concludes both components maintained by the service provider (elements 1-3) and an element maintained by an end user (element 4), but contended that Qwest's billing systems (which contain two parts: the "back office" systems and front-end client applications) nevertheless infringe the '270 patent. 

On Qwest's motion, the trial court granted summary judgment of noninfringement, concluding that under BMC Resources Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) and Cross Medical Products v. Medtronic Sofamor Danek, Inc. 424 F.3d 1293 (Fed. Cir. 2005), Qwest could not be liable for infringement because it did not "use" every element of the claim, nor did it direct or control the fourth element.  The trial court also held that Qwest's customers did not "use" the system, nor did they direct or control elements 1-3.

Meaning of "use"
On appeal, the CAFC focused on the meaning of the word "use" in the context of a system claim, concluding that under NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), Qwest's customers "use" the system as required under 271(a).  In reaching its conclusion, the court drew upon its definition of the term in NTP.  Based on that prior definition, the CAFC held that "to 'use' a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it."  Slip Op. at 8.  While the district court correctly recognized that this was the proper definition to apply, it erred "by holding that in order to 'use' a system under § 271(a), a party must exercise physical or direct control over each individual element of the system. The 'control' contemplated in NTP is the ability to place the system as a whole into service." Id.

Applying this rule, the CAFC concluded that although Qwest itself does not "use" the system, its customers do.  Those customers put the system into operation by initiating a demand for the service that causes the back-end system to generate the requested reports.  "This is 'use' because, but for the customer's actions, the entire system would never have been put into service."  Id. at 11. On the other hand, Qwest does not "use" the system because it never "puts into service the personal computer data processing means.  Supplying the software for the customer to use is not the same as using the system."  Id. at 13.

Comment: Dennis predicted this outcome a year ago.

Whither BMC?
While both the district court and Qwest relied heavily on BMC and Cross Medical, any substantive discussion of those cases, or joint infringement theory more generally, is conspicuously absent from the CAFC's ruling concerning Qwest's customers.  Rather, underlying the court's analysis is the conclusion that BMC and Cross Medical are irrelevant to primary issue before the court: the meaning of the term "use" in 271(a).  This court thus relegates BMC and Cross to the limited context of vicarious liability analyses.  "The customer is a single “user” of the system and because there is a single user, there is no need for the vicarious liability analysis from BMC or Cross Medical."  Slip. Op. at 10.  Of course, the court's ruling is limited to system claims; method claims (the type of claims at issue in BMC) might produce a different result.

Other holdings:
The CAFC addressed two other issues in its opinion, first concluding that Qwest does not "make" the infringing system because it does not provide the "personal computer data processing means" or install the client software, and then ruling that summary judgment of no anticipation was improper due to the existence of disputed issues of fact.

Reissue Patent Pendency

The reissue process has continued to rise in popularity. At the same time, the process has continued to remain slow — with an average reissue pendency of just under 5 years.

A patent holder can initiate the reissue process in order to correct a defect in an issued patent. 35 USC 251 indicates that the types of defects that may be corrected include defects in the specification; defects in the drawings; errors in claiming too much; and errors in claiming too little. A major statutory limit on the reissue process is that "[n]o reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent." The limit on improper broadening of reissues is strict and applies when claims are "broader in any respect." Predicate Logic, Inc. v. Distributive Software, Inc., 544 F.3d 1298 (Fed. Cir. 2008).

Since 2006, the prosecution pendency of reissue applications has hovered at an average of around 5 years based upon an analysis of all reissues issued each year. 

.

I looked particularly at a sample of 439 recently completed reissue applications.  In that sample, 88% received an initial non-final rejection; 46% then received a final rejection; 23% filed a request for continued examination (RCE); and only 1% completed the BPAI appeal process. As you might expect, each layer of processing added additional time to the prosecution. Thus, for example, applications with a notice-of-appeal in the file history had an average pendency of well over 8 years.

There is remarkably little variation in pendency across technology areas. Over the past five years, reissues in Technology Center 1600 (Biotechnology and Organic Chemistry) took an average of 4.92 years to complete while those in Technology Center 2800 (Semiconductors, Electrical and Optical Systems)  took 4.86 years.  The slowest Technology Center was 2600 (Communications) where reissue prosecution took 5.14 years on average.  Of those applications with an initial rejection, the first rejection was mailed 1.8 years (on average) after the reissue request was filed (median of 1.5 years after filing). The relative parity (in terms of prosecution pendency) amongst the various technology centers suggests that the reissue prosecution timeline is driven by an overarching USPTO approach to reissue examination.

In 2010, the USPTO reissued 947 patents — more patents than any year in history.  The prior records were established in 2008 (647 reissues) and 1875 (630 reissues). In 1875, 630 reissued patents represented about 5% of all patents issued that year. However, the 2010 record represents fewer than one-half of one percent. Although long application pendency is usually a two-way street — caused by both the USPTO and applicant delays, the relatively small reissue docket suggests that the PTO could be doing much more to speed the process.

 

Notes:

• The Patent Post Grant blog, run by the Oblon firm, has several interesting posts on reissue practice. [Link]
• In an e-mail, Hal Wegner noted that the recent rise in the number of reissue patents can be attributed to the efforts by Director Kappos in “removing internal bottlenecks to grant deserving reissues.”

Accessing Brand-Generic Settlement Data

FTC v. Cephalon (E.D. Pa. 2010)

Peter Loftus at the Wall Street Journal has written a short article titled “Drug Firms Want Patent Documents Kept Secret.”  At issue is a large cache of brand-generic settlement data held by the FTC and DOJ. 

In 2008, the FTC sued Cephalon alleging antitrust violations based on a set of reverse-payment settlements to generic manufacturers companies. The settlements meant that Cephalon could retain market exclusivity for its major drug Provigil until 2012.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) requires pharmaceutical companies to submit (to the FTC and DOJ) most major pharmaceutical patent settlements; brand-generic marketing or licensing agreements; and generic-generic agreements regarding the 180 day exclusivity.  Up to now (and according to law), the US government has kept those settlements secret except for (1) times when it challenges a settlement as anticompetitive and (2) aggregate settlement data released in FTC reports.

In its lawsuit, Cephalon has asked the District Court to compel disclosure of the underlying settlement information. According to the defendant, the FTC has repeatedly cited its own analysis of the settlement data, and Cephalon is requesting the source materials “in order to be in a position to respond to any use of the studies in motion practice and to be able to cross-examine experts or other witnesses relying upon them.”  In response, the FTC argued that its studies should be available to the court even if it does not reveal the underlying data because “reliance on extra-record empirical studies for … facts that have relevance to legal reasoning, is a well-established practice in federal courts.”  Of course, the problem here is that the FTC is both the plaintiff and the creator of the empirical study.  In addition to the FTC, a group of 35+ pharmaceutical companies also filed a brief — arguing that the disclosure would be highly prejudicial to their interests in keeping the information secret.   (The pharma brief may have been quite expensive to draft — it was signed by lawyers from 21 different major law firms).

The MMA includes some secrecy language preventing the government from disclosing the submissions “except as may be relevant to any administrative or judicial action or proceeding.”

• File Attachment: Cephalon's Motion to Compel
• File Attachment: Pharma Response
• File Attachment: FTC Response
• WSJ Article
• FTC 2010 Study on Pay-for-Delay Drug Settlements

Sometimes a Pig is Just a Pig

Moody v. Morris, PBS, et al. (Fed. Cir. 2010)

In 1993 and 1994 Kyle Morris and William Kirksley filed several patent applications all directed toward animated captioning “coordinated with oral-word utterances.”  The idea was to actually see the words coming from the mouth of the speaker in a movie or television program. The patents were assigned to their new company ReadSpeak.   Morris brought-in Don Moody to help develop a new children's television show. However, after a falling-out, Moody left and started the successful Word World show that was broadcast on PBS beginning in 2007.  Word World does not use captions streaming from the mouths of actors. Rather, objects and characters in the television show are made-up of word-objects.  As the district court explained “in the Word World universe, a 'bee' consists of the word 'bee' shaped like the object that it names; the character 'CAT' is made up of the letters 'C-A-T.'”  The image below shows an ear of corn, a pie, a pot, and a pig.

In the lawsuit, Morris alleged both patent and copyright infringement. The district court rejected both allegations on a 12(b)(6) motion-to-dismiss. 

On patents, the court held that the word-objects found in Word World could not satisfy “word utterance” limitation of the patent claims.

On copyright, Morris argued that he owned a copyright on the phrase “where words come alive” that Word World uses as its slogan as well as a copyright in the “teaching methodology” that he had developed. The district court rejected both of these arguments: first holding that the phrase “where words come alive” could not be protected by copyright because it is merely a short phrase or slogan; then holding that the “teaching methodology” could not be protected by copyright because copyright does not “extend to any idea, procedure, process, system, [or] method of operation . . . regardless of the form in which it is described, explained, illustrated, or embodied . . . “ 17 U.S.C. § 102(b).

On appeal, the Federal Circuit affirmed without opinion. 

The most interesting aspect of the appeal was lead-in by Judge Gajarsa where he warned the lawyers to remain civil:

The court has a few words to say on civility in the courtroom.  I think that it is very very important for attorneys who happen to be officers of the court to conduct themselves in such a manner that at least the record would reflect that they accept each other in the courtroom and outside of the courtroom. A confrontational basis should not exist and should not be part of the record. And, if we read this record, there are a number of issues that could be confrontational and very much out of order with respect to the treatment of the attorneys with each other. You can represent your clients to the best of your abilities . . . . but you don't have to have difficulties among yourselves. I think that it is very very important to maintain civility in our practices.  Especially since lawyers are officers of the court.

Documents:

• Oral Arguments
• CAFC Decision (No opinion)
• District Court Opinion.pdf (160 KB)

A Poor Man's Tale of a Patent

John Smith's book got me thinking about the Charles Dickens 1850 essay titled “A Poor Man's Tale of a Patent.”  The essay — much like Smith's book — derides difficulty of obtaining a patent. In Dickens world, the patent applicant was forced to walk through 35–stages and spend the equivalent of $15,000 in order to obtain a patent. 

But I put this: Is it reasonable to make a man feel as if, in inventing an ingenious improvement meant to do good, he had done something wrong? How else can a man feel, when he is met by such difficulties at every turn? All inventors taking out a Patent MUST feel so. And look at the expense. How hard on me, and how hard on the country if there's any merit in me (and my invention is took up now, I am thankful to say, and doing well), to put me to all that expense before I can move a finger! Make the addition yourself, and it'll come to ninety-six pound, seven, and eightpence. No more, and no less. . . .

Look at the Home Secretary, the Attorney-General, the Patent Office, the Engrossing Clerk, the Lord Chancellor, the Privy Seal, the Clerk of the Patents, the Lord Chancellor's Purse-bearer, the Clerk of the Hanaper, the Deputy Clerk of the Hanaper, the Deputy Sealer, and the Deputy Chaff-wax. No man in England could get a Patent for an Indian-rubber band, or an iron-hoop, without feeing all of them. Some of them, over and over again. I went through thirty-five stages. I began with the Queen upon the Throne. I ended with the Deputy Chaff-wax. . . .

I will now conclude with Thomas Joy. Thomas said to me, when we parted, 'John, if the laws of this country were as honest as they ought to be, you would have come to London - registered an exact description and drawing of your invention - paid half-a-crown or so for doing of it - and therein and thereby have got your Patent.' My opinion is the same as Thomas Joy.

The British government was apparently quite moved by the essay and quickly passed the Patent Law Admendment Act of 1852 that established a single office to control patenting. It was not until 1883 that the British Patent Office began a limited examination of the patents — although even at that time the concern was only whether the specification sufficiently described the invention.  As you might expect, Dickens tale was an exaggeration.  The UKIPO reports that in 1850, a patent applicant only needed to visit seven offices (paying the appropriate fee at each).

In a recent essay, Professor Scott Kieff uses Dickens to argue against further layers of post-grant opposition procedures — writing that “[t]oday's patent system already too closely resembles the burdensome and byzantine procedures described in Dickens' A Poor Man's Tale of a Patent. Adding subsequent windows of administrative review will only make matters worse. A better direction is to strip away the range of inter partes administrative procedures and adopt the set of changes to court litigation that are proposed below.” Kief's proposed changes include “easier access to enhanced damages” and a reduction of the presumption of validity. F. Scott Kieff, The Case For Preferring Patent-Validity Litigation Over Second-Window Review And Gold-Plated Patents: When One Size Doesn't Fit All, How Could Two Do The Trick?, 157 U. PA. L. REV. 1937 (2009).

• Read the full Dickens essay
• Steinbeck on Patents

 

 

Don’t File a Patent: A Book by John Smith

John Smith starts his book thanking "Examiner Ms. E.P." of the USPTO for giving him inspiration for his book. "Without your three absurd Office Action rejections, this book would not have been possible." Smith's book is titled Don't File a Patent with the headline caption "the book that the Patent Office doesn't want you to read." Smith is not a lawyer, but rather an entrepreneur and inventor. Smith had no trouble obtaining two patents that covered his relatively worthless invention (designer wheel covers). Then, for his invention with real market value (hurricane window protectors), the PTO refused to issue a patent. (Smith apparently gave-up after three rejections.)

The book is directed toward individual inventors and small companies with little or no budget for intellectual property or litigation. Although the book takes an overly-extreme position, Smith suggests the valid argument that the limited resources of a small entity is often better spent on other business development activities. His "Reason #5 not to file a patent" explains this point:

The patent process costs tens of thousands of dollars. This is a waste of your money. A better investment is making your product first in the mind of your customer. . . . Back in 2005 when I filed my original patent application, I didn't have all this knowledge. At the time, some attorneys suggested that inventors "should wait and not market your product until you have a patent." I'm glad I never listened to that advice. Good thing I started marketing Storm Stoppers right away! Had I waited until getting a patent, I'd have nothing now. No awesome name brand, no millions of dollars in past sales, no thousands of customers, no appearances on CNBC & CNN, no Goodwill donation trips to the Bahamas and no learning and improving my product. Marketing your product right away is the only way to demonstrate that you have a good product.

About one-half of the book is dedicated to explaining why patenting is a waste of time and money for folks in his situation. The other half is devoted to providing some guidance on marketing and manufacturing.

At times throughout the book, Mr. Smith appears so burned by his past experience that he is blinded to the potential that patents can add in certain situations. With that major caveat, I think that the book is a good read and could be a useful tool for containing over-exuberance of innovators.

• John Smith's Website (Where you can buy the book)
• Patent Holder and Satirist Gary Odom Discusses the book here.
• Patrick Anderson discusses the book on his blog Gametime IP.

 

 

Survey on Willful Infringement

Prof. David C. Berry (Cooley) is researching how In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007)(en banc) has altered the practical landscape of willful patent infringement. One goal of the project is to collect data from persons with recent experience evaluating whether an organization's activities create a risk of patent infringement, and deciding how to respond to that risk. Current or recent in-house counsel interested in participating in the research project are invited to complete a confidential, on-line survey at: http://www.novisystems.com/NoviSurvey/n/risksurvey.aspx.

The survey was developed in conjunction with the ABA Section of Intellectual Property Law, Special Committee on Patent Analysis and Opinions of Counsel Post-Seagate. It has approximately 30 questions, and can be completed in less than 15 minutes. The survey link will be open for responses until February 15, 2011.

Patents From Hollywood to Cincinnati

Here are the opening lines of the new NBC show "Harry's Law.”

Partner: In less than a month, you have gone from being one of the best patent lawyers in the country, much less Cincinnati. And now... What the hell has happened?

Harry: Well, what's happened is that after 32 years of dedicated practice, I have come to the unfortunate if not altogether surprising conclusion that patent law is as boring as a big bowl of steam dog sh__.  It's dull Robert, I lead a dull life, with dull partners. I'd sooner look into a mirror and watch my teeth rot than do one more case involving patent law.

Partner: I'm afraid this is the end, Harry... You're fired.

http://www.hulu.com/watch/207640/harrys-law-pilot.

The show was created by David E. Kelley. Kelley is a co-inventor on Patent No. 6,039,710 that claims an “apparatus for providing facial support” in order to reduce “sagging of the cheeks.”

Clearly, the firing partner is channeling Cincinnati patent lawyer Stephen Albainy-Jenei. My question is, which Frost-Brown-Todd attorney served as the model for the show's lead?

 

 

USPTO Patent Grants: A Second Perspective

In yesterday's post, I wrote that the USPTO had granted more utility patents in 2010 than in any other year in history – 31% more than in 2009. The ramp-up is not due to increased hiring of examiners. (The USPTO was in the midst of a hiring freeze for much of 2010). Likewise, the ramp-up is not explained by increased patent application filings. (Although there has been a small increase in filings, the large backlog buffers the output rate from input fluctuations). I suspect that the ramp-up is largely due to changes implemented by USPTO director David Kappos and Patent Commissioner Robert Stoll after the departure of former PTO Director John Dudas and Interim Director John Doll. The former regime focused on the PTO's role of denying "bad" patents from issuance. The new regime has modified that approach and instead looks to issue right-sized patents.

Although 2010 saw more issued patents than ever before in-history, the chart below provides some evidence that the rise in patent grants is not an historical anomaly. The chart shows the number of patents issued per examiner over the course of the past decade. The chart suggests that the 2010 rise is more of a return to the grant rates of the first-half of the past decade. The anomaly – at least from this perspective – is the 2007-2009 period where the grant rate dropped so precipitously.

USPTO Patent Grants

The USPTO issued more utility patents in calendar year 2010 than in any year in history. The 2010 total – just shy of 220,000 issued patents – is a 31% increase over 2009. The previous record was set in 2006 with about 173,000 issued utility patents.  The dramatic rise in issuance rate is not tied directly to an increase in filings (although there has been a small increase in new application filings).  Rather, the increase appears to be the result of administrative changes instituted by USPTO Director David Kappos who took office mid-year 2009 after being nominated by President Barack Obama.

The high disposal rate appears likely to continue and perhaps increase in velocity. During the last three weeks (Dec 25, 2010 – Jan 14, 2011), the USPTO has issued more patents than in any three-week period on record.

The increased number of issuances raises some concern that the PTO has lowered its standard for patentability.  It is true, that a higher percentage of applications are resulting in issued patents. However, the PTO is also rejecting more applications than ever before. It is probably time for a quality study comparing patents issued late-2008 to those issued in late-2010.

Legal Malpractice in Federal Courts

Warrior Sports v. Dickinson Wright and John Artz (Fed. Cir. 2010)

Warrior Sports makes lacrosse equipment and hired John Artz's firm to handle patent prosecution.  Artz later merged his firm with Dickinson Wright and brought his clients into the crease.  One case that Artz worked-on was Reissue No. 38,216.  In that case, the Artz firm failed to pay the maintenance fee — allowing the patent to lapse.  In their petition for revival, Artz explained that the docketing clerk charged with paying the fee had suddenly died of an unexplained brain infection and that she had been suffering from the malady during the time that the fee was due. Unfortunately, the clerk had kept her illness secret and the firm learned only later that the condition had impacted her performance.

When Warrior sued STX for patent infringement, the defendant argued that the patent had lapsed because of failure to pay the maintenance fee and – in addition –  that the patent was unenforceable due to inequitable conduct during prosecution. (The inequitable conduct charge was based upon an argument that Artz had mischaracterized prior art). Rather than lose the infringement case, Warrior settled with STX (on allegedly unfavorable terms) and then sued Artz & Dickinson Wright for legal malpractice. 

Federal Court Jurisdiction over Malpractice Claims: Malpractice is a state law claim and is usually handled by state courts (absent federal diversity jurisdiction). However, when the malpractice charge would necessarily require “resolution of a substantial question of federal patent law” a federal question is raised that allows-for (requires?) federal court jurisdiction.  Christianson v. Colt Industries, 486 US 800 (1988).

District Court Dismissal: Both plaintiff and defendants agreed that the case should be heard in federal court. Nonetheless, the district court dismissed the case for lack of jurisdiction over the malpractice question.

Holding on Appeal: On appeal, the Federal Circuit vacated the dismissal — holding that the Michigan malpractice claim arises under patent law and therefore should be heard in Federal Court. 

Malpractice Elements: In Michigan, legal malpractice has four elements: (1) the existence of an attorney-client relationship; (2) negligence by the attorney in the legal representation; (3) actual injury; and (4) that the negligence be the proximate cause of of the injury.

Case within a Case: Classic patent prosecution malpractice requires a “case within a case” where, in order to prove actual injury, the malpractice plaintiff must show that someone would have infringed a properly obtained patent.  “That is, to prove the proximate cause and injury elements of its tort claim, Michigan law requires Warrior to show that it would have prevailed on its infringement claim against STX and would have been entitled to an award of damages as a result.”

Since at least one of the plaintiffs malpractice theories requires proof of infringement, the case raises a “substantial question of patent law conferring § 1338 jurisdiction.” Here, it was important that the court in the infringement case had not decided the infringement issue (it had decided claim construction).

Dismissal Vacated and Remanded.

iLOR v. Google: Rejected Claim Construction Does Not Render Case "Objectively Baseless"

By Jason Rantanen

iLOR, LLC v. Google, Inc. (Fed. Cir. 2011)
Panel: Rader, Linn, Dyk (author)

This case involved a district court exceptional case determination based a finding that the suit was objectively baseless and brought in bad faith.  iLOR, the assignee of Patent No. 7,206,839, sued Google for infringement of the '839 patent by Google's Notebook product.  In denying iLOR's request for a preliminary injunction, the district court rejected iLOR's proposed construction of the only claim term in dispute, subsequently granting summary judgment of noninfringement.  The Federal Circuit affirmed the district court's denial of the preliminary injunction, agreeing that the language of the claim, the specification and the prosecution history supported the district court's construction.  See iLOR, LLC v. Google, Inc., 550 F.3d 1067 (Fed. Cir. 2008).  Following the Federal Circuit's disposition of that appeal, the district court granted Google's request to recover its attorneys' fees and costs and expenses, finding the case exceptional on the ground that it was "not close" on the merits (i.e.: ("objectively baseless") and iLOR had acted in subjective bad faith.  iLOR appealed.

In reversing the district court, the CAFC first likened the exceptional case standard for a suit brought by a patent plaintiff (absent misconduct during patent prosecution or litigation) to that of willful infringement.  "The objective baselessness standard for enhanced damages and attorneys’ fees against a non-prevailing plaintiff under Brooks Furniture is identical to the objective recklessness standard for enhanced damages and attorneys’ fees against an accused infringer for § 284 willful infringement actions under In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc)."  Slip Op. at 8-9.  Thus, just as willfulness requires an assessment of both objective and "subjective" (i.e.: known or so obvious that it should have been known) prongs, so too does the exceptional case determination. And just as for willfulness, the objective assessment "is to be determined based on the record ultimately made in the infringement proceedings."  Id. at 10.

Comment: At some points, the Federal Circuit's opinion is confusingly imprecise in its usage of "objective baselessness."  Although in some instances it refers to the "objective baselessness" standard as being identical to the overall objective recklessness standard for willfulness (which includes, according to the court, both objective and subjective elements), at other times it treats it as being identical to only the "objective" prong of the analysis.  The only reading that makes sense is that when the court indicates that "objective baselessness" is identical to the willfulness "objective recklessness" standard, what it is really referring to is the overall standard for an exceptional case determination based on a meritless case theory, while when it compares it to the "objective" prong of the willfulness analysis, it really is referring to "objective baselessness."

Applying this framework, the CAFC concluded that iLOR's claim construction was not objectively baseless, and thus it was unnecessary to consider the issue of subjective bad faith.  The CAFC pointed to iLOR's arguments supporting its proposed construction, which - although the court disagreed with them - had some merit.  The CAFC also commented on the difficulty of claim construction, "in which the issues are often complex and the resolutions not always predictable."  Id. at 13.  And the court noted that the fact that it "held oral argument and issued a precedential written opinion in the first appeal suggests that we did not regard the case as frivolous."  Id. at 13-14.  In short, "simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless."  Id. at 14.

Global-Tech v. SEB: Respondent and Additional Amicus Briefs

By Jason Rantanen

In Global-Tech v. SEB, the Supreme Court is addressing the state of mind requirement for inducement of infringement.  The petitioner, along with several amicus briefs filed in support, argues that inducement should require that the accused intend to infringe the patent, and that the accused infringer must know of the patent being infringed.  Earlier Patently-O discussions of those briefs are available here and here.

Last week, the respondent (SEB) filed its briefs.  SEB argues that there is no basis for requiring evidence that the accused party possess actual knowledge of the patent; rather, inducement must require a lower state of mind standard than both 35 U.S.C. § 271(c) (contributory infringement) and willful infringement, a standard that is met by Pentalpha's conduct.  In the alternative, SEB argues that Pentalpha's conduct constituted willful blindness, which SEB contends is a form of constructive knowledge and thus is sufficient for inducement.  In addition, SEB argues that the Court should affirm because all the damages were attributable to Pentalpha's direct infringement and because, through it's finding of willful infringement, the jury necessarily found that Pentalpha had actual knowledge of the patent.

Several amicus curiae have also filed briefs in support of the respondent, all arguing that inducement should require only intent to cause the acts as opposed to some form of scienter with respect to whether those acts infringe a patent.  Among these is the brief of a group of law professors led by Professor Ted Sichelman, argues that inducement should require only specific intent to cause the infringing acts - not some form of scienter with respect to whether the acts infringed a patent.  The brief supports this argument by looking to tort and criminal law, pointing out that in those contexts it is not necessary for the accused to know that that the acts violate a legal duty - only that the accused intend to cause the acts themselves. It also argues that prior to the 1952 Patent Act, no court (with one exception as dicta), held that indirect infringement required knowledge of the patent.  Thus, the brief argues, while inducement of infringement should require specific intent to further the acts of direct infringement, it did not traditionally - and should not - require any form of knowledge of whether those acts infringe a patent. 

Oral Argument is set for Wednesday, February 23, 2011.

SEB's Brief:

• Brief for Respondent SEB S.A.

Amicus Briefs in Support of Respondent:

• Brief for the American Intellectual Property Law Association in Support of Respondent
• Brief for the William Mitchell College of Law Intellectual Property Institute in Support of Respondent
• Brief for Law Professors in Support of Respondent

Note: I understand additional briefs may have been filed, including one on behalf of several companies and PhRMA, that do not appear on the ABA site.  This post will be updated when those briefs are available.

The Use of Online Databases for Legal Scholarship

By Jason Rantanen

Many empirical studies of Federal Circuit jurisprudence rely on searches of one of the leading legal databases such as Westlaw or Lexis.¹ Relying on a search of a single database is potentially problematic, however, if the substantive content of the databases is not identical - in other words, if Lexis and Westlaw don't contain the same universe of cases, any claims about the results are necessarily limited by the dataset being used. 

In order to avoid this problem in connection with an empirical study of inequitable conduct that I'm working on, I recently performed a comparison of results obtained by a keyword search on Westlaw versus an identical search on Lexis.  This comparison revealed that although the data obtained from the two sources is largely comparable, small differences do exist that certain types of searchers may want to take into account.

The chart below shows the results, by year, produced by searching for the term "inequitable conduct" in the Federal Circuit databases for Lexis and Westlaw.^2,3  In large part, the results suggest that there is relatively little variation between the two databases: in the context of this analysis, only 30 out of 681 (4.4%) Westlaw opinions were not found in Lexis and only 6 out of 657 (0.9%) Lexis opinions were not found in Westlaw.  Furthermore, in no instance did a precedential opinion appear in one database but not another.  Rather, all of the single-database hits were nonprecedential opinions.  In addition, nearly all of the nonprecedential opinions appearing in only a single database issued prior to 1991.   That said, there is a significant difference with respect to nonprecedential opinions for the period prior to 1991: nearly all the nonprecedential opinions from this time period are found in only one database.⁴  Thus, while it may not be efficient for most practitioners to run keyword searches on multiple databases, scholars conducting empirical research on Federal Circuit decisions, or individuals searching for older party-specific nonprecedential opinions, may want to be sensitive to the differences between the two databases.

Figure 1: Hits Resulting from Search Term "Inequitable Conduct" in Lexis and Westlaw⁵

 


¹ See, e.g., Christopher A. Cotropia, "Determining Uniformity Within the Federal Circuit By Measuring Dissent and En Banc Review," 43 LOY. L.A. L. REV. 801, 811 (2010); Christian E. Mammen, Controlling the "Plague": Reforming the Doctrine of Inequitable Conduct,24 BERKELEY TECH. L.J. 1329, 1348 (2009);  Craig Allen Nard, Toward a Cautious Approach to Obeisance: The Role of Scholarship in Federal Circuit Patent Law Jurisprudence, 39 HOUS. L. REV. 667, 678 fn 40 (2002); Christian A. Chu, Empirical Analysis of The Federal Circuit's Claim Construction Trends, 16 BERK. TECH. L.J. 1075, 1092 (2001); but see R. Polk Wagner and Lee Petherbridge, Is the Federal Circuit Succeeding? An Empirical Assessment of Judicial Performance, 152 U. PA. L. REV. 1105, 1145 (2004) (using results from both Lexis and Westlaw).  In addition, some early empirical studies used the United States Patent Quarterly as their source (see, e.g., John R. Allison & Mark A. Lemley, How Federal Circuit Judges Vote in Patent Validity Cases, 10 FED. CIR. B.J. 435, 436 (2001)), which apparently contains some, but not all, nonprecedential patent decisions.  See e.g., Wirco, Inc. v. Rolock, Inc., 17 U.S.P.Q.2d 1084, 1990 WL 12901 (Fed. Cir. Feb. 14, 1990) as opposed to Mechanical Plastics Corp. v. Unifast Industries, Inc., 1988 WL 25422 (Fed. Cir. March 28, 1988).

²  For purposes of creating this chart, I used the additional limitation "CO(c.a.fed.)" to exclude CCPA and Court of Claims decisions, some of which are included in Westlaw's "ctaf" database.  In addition, I separately compared the results from a keyword search of the entire "ctaf" database to the results from the Lexis search in order to identify any Lexis-only hits that might have been excluded by the Westlaw court limiter.  This process did not reveal any such hits.

³ These results include every search hit that contained the term "inequitable conduct," regardless of the context.  It thus should not be viewed as reflecting any measure of substantive inequitable conduct determinations.  In addition, hits resulting from search terms appearing only in the database-specific casenotes were excluded, as were instances where the database contained duplicate entries of the case opinion or included a copy of a withdrawn opinion.   For more substantive analyses of inequitable conduct jurisprudence, see Lee Petherbridge, Jason Rantanen & Ali Mojibi, The Federal Circuit and Inequitable Conduct: An Empirical Assessment, ssrn id 1686102; Mammen, supra note 1.

⁴ In addition to double-checking the single-database cases against the search results of the other database, I also spot-checked several decisions against the Lexis/Westlaw case database as a whole by using terms from the parties' names and the Federal Reporter citation, where available.  Although in some instances this resulted in a hit, the contents of those hits were blank.  See, e.g., Air Products & Chemicals, Inc. v. Tanner, 738 F.2d 454 (1984) (nonprecedential) (no opinion in Westlaw; opinion in Lexis).

⁴ Although the results for 1997 appear equal, each database contained one opinion for that year that is not in the other database.

Reverse Payment Settlements Return to the Supreme Court

Louisiana Wholesale Drug Co. v. Bayer AG (On Petition for a Writ of Certiorari 2011)

Ordinarily, a patent is valuable when it offers some degree of market exclusivity. Over the past decade, we have seen a number of examples where a patent holder felt it necessary to take some additional steps to secure a term of exclusivity – namely paying would-be competitors to (1) not enter the market; (2) not challenge the patent's validity, enforceability, or scope; and/or (3) delay market entry. This situation most often emerges in the pharmaceutical market between innovator companies and generic manufacturers. In several cases, the innovator company (patentee) has paid a generic challenger to give up or delay market entry. This situation is often termed a "reverse payment settlement" because the settlement payment flows in the opposite direction of what we ordinarily expect in patent litigation. (Ordinarily, to settle a patent case, an accused infringer pays a dollar amount to the patentee. In these cases, the patentee is paying a dollar amount to the accused infringer). Intricacies of the Hatch-Waxman Act provides some incentive for the reverse payment settlements. See, Christopher Holman, Do Reverse Payment Settlements Violate the Antitrust Laws?, 23 Santa Clara Computer and High Technology L.J. 489 (2007).

In this case, reverse payment settlements are being challenged as unlawful under the Sherman Act. Although paying a competitor not-to-compete would normally be seen as an antitrust violation, patentee's argue that reverse settlements are per se lawful's so long as they are closely related to the exclusionary potential of the patent.

The question now presented to the Supreme Court is:

Whether an agreement by a patent owner to pay a potential competitor not to enter the market is legal per se, as the Second and Federal Circuits have held, to be treated under the rule of reason, as the Eleventh Circuit has held, or illegal per se, as the Sixth Circuit has held?

In a friend-of-the-court brief filed by Stanford Prof. Mark Lemley, a group of 80+ professors argue that the Supreme Court should certainly hear the case and that the 2nd Circuit rule of per se legality is wrong. The professors write:

This rule [of per se legality] is based on the mistaken premise that (absent a fraudulent procurement) a patent grants full immunity from antitrust scrutiny for any and all anti-competitive effects within the exclusionary power of the patent.

A large group of state attorneys general also filed a friend-of-the-court brief arguing that a "surge in reverse payment agreements is threatening the existence of generic competition and the availability of affordable drugs to the states and their citizens."

Documents:

• Kurt Karst from the FDA Law Blog
• Law Professor Brief

 

Patent Law Exam 2010: Part II

For the past several decades, an accused infringer wanting to challenge a patent's validity in court has been required to provide clear-and-convincing evidence of invalidity. In Microsoft v. i4i, the Supreme Court is considering whether the standard should be lowered to a preponderance-of-the-evidence – especially in situations where the invalidity argument was not considered by the patent examiner during the original prosecution of the patent application.

a)    From a policy perspective, how should the Supreme Court rule?

b)    Does it make a difference that third-parties can request reexamination of an issued patent?

Guest Post: Microsoft v. i4i - Is the Sky Really Falling?

By Paul F. Morgan

The forthcoming Supreme Court decision in Microsoft v. i4i, case number 10-290, seems likely to eliminate the Federal Circuit's judicially imposed "clear & convincing evidence" requirement for invalidating patents, and thus jury instructions thereon, at least for prior art not of record in the patent application file. 

Typical of some of the frightening projections is the January 1, 2011 "Law360" article in which Matthew M. Wolf, a Howrey LLP partner, is quoted as saying that: "it will radically alter the nature of trials in the patent world and will apply to every patent case" and that "if juries are told that the standards are the same for invalidating patents as for infringing patents, there will be a lot more defence verdicts and we are going to see fewer defendants desirous of settlement."

That is, it is argued that this result would flow from patent invalidity challenges having the same "preponderance of the evidence" standard as for proving patent infringement.  Technically, that might become the case.  But how significant would this change be in reality?  

First, more than 97% of patent suits are settled before trial with no judicial validity test.  Of the small percentage of patent cases that do go to trial, the vast majority are decided or settled there or on appeal on non-infringement, not on invalidity.  Considering the many good reasons why the vast majority of accused or actual defendants are willing to settle rather than risk the very high costs and uncertainties of patent litigation, even against numerous dubious troll suits, how much is this one forthcoming change likely to affect patent litigation and settlements overall?

The test is, would this change really dramatically affect anticipated jury decision-making reality?  [Because patent invalidity is rarely decided other than by juries, such as on summary judgment motions, in view of disputed facts.  USPTO patent reexamination standards would not be affected at all by this decision, and are usually delayed too long by the USPTO to be helpful anyway.] 

Removing this higher evidentiary burden might indeed affect some unknown relatively small number of future post-trial JMOL and Fed. Cir. decisions.  But note the relatively small percentage of those based on invalidity as opposed to non-infringement.

So, what is the basis for projecting that the very small percentage of patents now being held invalid by juries would somehow greatly increase due to this one potential change in jury instructions?   [Even if one really believes that juries really do pay close attention to, and fully understand, the typical lengthy jury instructions in a patent infringement suit and are willing split hairs over those instructions.   See, e.g., the length of the  AIPLA model jury instructions.]  Has anyone done a mock jury study to see if leaving out the present jury instruction for "clear and convincing evidence" dramatically changes outcomes?

Could contesting patent validity before a jury realistically become equated to contesting infringement, as alleged?   Attacking the validity of a patent is attacking something granted by the United States Government, while deciding infringement is just considering one private company's arguments against another.  Furthermore, the jury can be shown for emphasis the Government gold seal and blue ribbon on the patent.  Even if the statutory presumption of patent validity could technically be overcome by a mere preponderance of evidence for prior art not of record, the patent owner should be entitled to a jury instruction on the statutory presumption of patent validity.  [Which could be contrasted to no such instruction for deciding infringement].   For example, as indicated Section 5.1 of the June 23, 2009 "National Patent Jury Instructions" and its "Committee Note," presently courts may optionally combine the two existing defense burdens into a single jury instruction that the accused infringer "bears the burden of proving that it is highly probable that the claims are invalid." [Likewise, some other model patent jury instructions.]  However, the express "Committee Note" rationale for that is a presumption that "instructing the jury on the presumption in addition to informing it of the highly probable burden of proof may cause jury confusion as to its role in deciding invalidity. This single instruction therefore omits any reference to the presumption of validity. Some courts, however, follow the more traditional approach, and instruct the jury on the presumption. Both approaches appear consistent with Federal Circuit law."  Thus, if the "clear and convincing evidence" burden is removed, this "highly probable" instruction would have to be removed, and this present rationale for not instructing a jury on the statutory presumption of patent validity would seem to disappear?  

The other public scare story is that this decision will lead to a flood of additional prior art citations in patent applications.  That also lacks factual credibility.  The already-existing fear of personal "inequitable conduct" accusations is far more motivating than the mere possibility getting a slightly better jury instruction.  Furthermore, few applicants would be willing to pay for a much more costly prior art search to add much more art to an IDS just for that remote reason, and also to risk being accused of not having actually read that art in making assertions in claim prosecution.

Whether as a matter of public policy this anticipated change is good or bad for patent law and technical or economic progress is not the subject here.  Even if the extent of the potential impact were factually supported, it may not be very relevant to this Supreme Court decision.   As understood, this case is being contested primarily on to whether or not there is a proper legal basis and/or precedent for the Federal Circuit to have imposed this additional, non-statutory, evidentiary burden for patent litigation.  It is argued that that is inconsistent with modern Supreme Court evidentiary rules for civil cases in general and inconsistent with the evidentiary rules for pre-Federal-Circuit patent suits in the other federal circuits when they were deciding patent cases.  [So it is surprising that this issue has not been this contested before.  Presumably due to most defendants waiving it by failing to object to this jury instruction?]  

The recent decisions controlling the evidence for and/or reducing patent infringement damages recoveries seem to me far more likely to impact patent licensing and settlement negotiations than Microsoft v. i4i.  See Uniloc USA, Inc. v. Microsoft Corp., (Fed. Cir. Jan. 4, 2011),  Lucent v. Gateway (Fed. Cir. 2009), the two E.D. TX D.C. decisions in which Judge Randall Rader sat by designation, Cornell v. HP (March 2009) and IP Innovation v. Red Hat and Novell (March 2010), and Judge Ward's reduction of a jury award of $52 million in LaserDynamics v. Asus Computer International  down to only $6.2 million.

Tracing the Quote: Everything that can be Invented has been Invented

Charles H. Duell was the Commissioner of US patent office in 1899. Mr. Deull's most famous attributed utterance is that "everything that can be invented has been invented." Most patent attorneys have also heard that the quote is apocryphal.

In his 1989 article, Samuel Sass traced the quote back to 1981 book titled "The Book of Facts and Fallacies" by Chris Morgan and David Langford. Sass did his work well before Gore created the Internets, so I decided to take a fresh look at the research using Google. The following chart was created based on Google's electronic compilation of 12 million books. The chart shows the frequency that the phrase "everything that can be invented" shows up in the corpus, grouped by the year of publication of each book. The chart shows that Mr. Sass is largely correct in his assessment. Google has no reference to the quote prior to 1980 in its ngram database.

However, with a bit more searching, I came across an 1899 edition of Punch Magazine that had been donated to Harvard University by the Pulitzer family. In that edition, the comedy magazine offered a look at the "coming century." In colloquy, a genius asked "isn't there a clerk who can examine patents?" A boy replied "Quite unnecessary, Sir. Everything that can be invented has been invented."

I suspect that 1899 joke is the origin of the expression. Of course, there is still Ecclesiastes.

In re Glatt Air Techniques, Inc.: Single Embodiment Commercial Success

By Jason Rantanen

In re Glatt Air Techniques, Inc. (Fed. Cir. 2011)
Panel: Newman, Prost (author), Moore

Glatt Air Techniques involves the reexamination of Patent No. 5,236,503, relating to an improvement to an apparatus known as a Wurster coater used to coat particles such as pharmaceutical ingredients.  The improvement comprises a shield means, such as a physical shield or air wall, positioned adjacent the spray nozzle that prevents particles from prematurely entering the stream of the coating spray before the spray pattern has fully developed, thus causing blockages in the apparatus.  During reexamination, the examiner rejected the claim at issue as obvious in light of the prior art, a determination that was upheld by the Board of Patent Appeals and Interferences.  In reaching its conclusion, the Board also rejected Glatt's commercial success evidence because it related only to a single embodiment - a physical shield - and the claim also covered the use of an air wall.  Thus, the Board concluded, the evidence was not commensurate in scope with the claim.

On appeal, the CAFC first found that the Board had failed to establish a prima facie case of obviousness.  It also disagreed with the Board's rejection of Glatt's evidence of commercial success, expanding on its past holding that "commensurate" does not mean "every" embodiment.   "The fact that Glatt’s commercial products only contain one type of shielding means does not make its commercial success evidence irrelevant. Under the PTO’s logic, there would never be commercial success evidence for a claim that covers more than one embodiment."  Slip Op. at 10.  Citing past precedent, the CAFC went on to state that "we have consistently held that a patent applicant “need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success.” Id. (quoting In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008).  Thus, "commercial success evidence should be considered should be considered 'so long as what was sold was within the scope of the claims.'” Id.

Comment: Note that simply being commensurate with the scope of the claim does not necessarily satisfy the nexus requirement, as illustrated by the outcome of In re DBC.

Update: PharmaPatents Blog provides a detailed discussion of the CAFC's reversal of the Board's prima facie case of obviusness, asking whether there was anything else the applicant could have done to avoid a rejection by the examiner and Board.   

Judge Moore Weighs In on Vacatur of Invalidity Opinions

By Jason Rantanen

The Ohio Willow Wood Company v. Thermo-Ply, Inc. (Fed. Cir. Order 2011)
Panel: Rader (author), Newman (additional views), Moore (concurrence)

When a patentee is faced with an judgment of invalidity or inequitable conduct, it is a relatively common tactic to settle with the accused infringer who, as a condition of the settlement agreement, then joins the patentee in a joint motion for vacatur of the adverse decision.  Although vacatur requires exceptional circumstances, it is sometimes granted by the district court.  See e.g., Gracenote, Inc. v. MusicMatch, Inc.; Block Financial v. LendingTree; New Medium v. Barco.

The situation becomes more complex, however, when settlement occurs while the case is on appeal. Willow Wood involves an appeal of an Eastern District of Texas judgment invalidating the asserted claims of Patent No. 7,291,182.  While the appeal was pending, the parties settled and filed a motion for remand to the district court for consideration of a motion for vacatur.  In July 2010, the CAFC issued an order pointing out the high standard for vacatur and ordered the parties to explain what extraordinary circumstances would be presented to the district court that would justify vacatur.  Ohio Willow Wood Co. v. Thermo-Ply, Inc., (Fed. Cir. Order July 29, 2010) (nonprecedential). 

After considering the parties' response, along with an intervention request by a third party also being sued for infringement of the patent, the panel granted the request for "the limited purpose of the district court's consideration of the parties' motion for vacatur."  Ohio Willow Wood Co. v. Thermo-Play, Inc. (Fed. Cir. Order 2011) (Willow Wood II). The CAFC retained jurisdiction, however, "so that any of the parties may seek appellate review by notifying the Clerk of the Court within thirty days of entry of the district court’s decision on remand."  Id. at 3.

Concerned about the remand's potential imprimatur on the joint vacatur motion, Judge Moore, writing in concurrence, expressed the opinion that vacatur of existing invalidity opinions should be a rare and disfavored event, particularly in the patent context.  Citing U.S. Bancorp Mortgate Co. v. Bonner Mall Partnership, 513 U.S. 18, 29 (1994), the judge reiterated the high threshold for justifying vacatur following settlement: "[o]nly in 'exceptional circumstances' should a district court grant vacatur at the request of the litigants."  Willow Wood II concurrence at 2.  This is particularly true with respect to patents:

In this case, for example, the patentee has already sued another party on the patent in question. If the decision that invalidated the patent at issue is not vacated, then the patentee will be collaterally estopped from asserting this patent in this and other suits, thereby saving courts and litigants the time and money it takes to proceed with patent litigation. Patent litigations are among the longest, most time-consuming types of civil actions. As of 2009, 384 patent cases had been pending in the district courts for three years or more. 2009 Admin. Off. U.S. Cts. Ann. Rep., at Table S-11. Moreover, the costs of patent litigation are enormous with an average patent case costing upwards of $3 million for each side. See American Intellectual Property Law Association, Report of the Economic Survey 2009 I-129 (2009). If the district court vacates its invalidity judgment then other defendants and other district courts will be forced to proceed with infringement suits, as there would likely be no collateral estoppel. Even if there were no other suits pending, these concerns should still weigh heavily against vacatur, as the only reason the patentee would want an invalidity judgment vacated is to potentially enforce the patent against others.

Concurrence at 3-4.

Judge Moore's decision to weigh in on the merits of the vacatur issue was criticized by Judge Newman, however, who wrote separately "to point out that the views of our colleague in separate concurrence are not the court’s remand order." Willow Wood II, additional views at 2.  Although favoring the remand on the basis that the district court is in the better position to rule on the issue of vacatur, Judge Newman declined to endorse Judge Moore's proffer of judicial advice, commenting that "[o]ur remand should be unencumbered by even the appearance of prejudgment or of the weight to be given to various considerations. Indeed, the issues on which our colleague in concurrence offers judicial advice are more complex than is here recognized."  Id.

In re Microsoft: Presence Created Solely for Purposes of Litigation Does Not Support Venue

By Jason Rantanen

In re Microsoft Corporation (Fed. Cir. Order 2011)
Panel: Newman, Friedman, Laurie (per curium)

The Federal Circuit's decision in In re Microsoft, which granted Microsoft's request for a writ of mandamus ordering the Eastern District of Texas to transfer the case to Washington State, originally issued as a nonprecedential order in early November; the CAFC reissued it as precedential today.  The order adds another piece to the now fairly substantial body of law surrounding review of denials of requests to transfer venue.  Allvoice Develop-ments, a company operated from the United Kingdom, sued Microsoft in the Eastern District of Texas for infringing Patent No. 5,799,273.  Microsoft, which is headquartered in the Western District of Washington (where a substantial portion of its employees and operations are located), requested a transfer of venue to Washington State. 

In denying Microsoft's motion to transfer venue, the district court relied on the existence of a local Allvoice office in Tyler, as well as Allvoice's incorporation under the laws of Texas.  The court also weighed the witness factor against transfer because Allvoice had identified potential non-party witnesses in New York, Massachusetts and Florida who, the court found, would find Texas more convenient for trial.  Although the court found that the sources of proof factor weighed in favor of transfer, it did so only slightly because Allvoice said that its documents were maintained in its office in the E.D. Texas. 

On appeal, the Federal Circuit granted Microsoft's request for a writ, likening this case to In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009), and concluding that the district court abused its discretion by denying transfer.  The CAFC first noted that there was a vast disparity with respect to the convenience of witnesses: all individuals identified by Microsoft as having material information relating to the patents reside within 100 miles of the W.D. Wash.; all but two of the witnesses identified by Allvoice reside outside Texas, and even those two witnesses appear to be relatively peripheral.

Particularly notable, however, was the CAFC's refusal to consider Allvoice's presence in the E.D. Texas.  "Allvoice’s argument … rests on a fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose of making that forum appear convenient."  Slip Op. at 5.  Thus, just as transferring thousands of pages of relevant documents to the offices of litigation counsel in Texas in order to assert that the location of those documents favored non-transfer was entitled to no weight in In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009), so too is the existence of an office created solely for the purpose of manipulating venue a meaningless fact for the venue analysis.  Nor did the CAFC ascribe any weight to extra step of incorporating under the laws of Texas, noting that it was done sixteen days before filing suit.

Uniloc v. Microsoft: The CAFC Rejects the 25 Percent Rule

By Jason Rantanen

Uniloc USA, Inc. v. Microsoft Corp. (Fed. Cir. 2011)
Panel: Rader, Linn (author), Moore

Uniloc v. Microsoft involves a host of issues, although one stands out as particularly noteworthy.  While  "passively tolerat[ing]" the 25 percent 'rule of thumb' (a method for calculating a reasonable royalty for purposes of infringement damages) in past cases, the CAFC held today that the rule "is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation," thus precluding its use for damages calculations.

Uniloc is the owner of Patent No. 5,490,216, an early patent covering a mechanism for combating "casual copying" of software, where users install copies of a software program on multiple computers in violation of applicable software licenses.  In general terms, the patented invention involves the creation of a registration number generated by the software on the user's computer.  The number is sent to the vendor's system, which uses an identical algorithm to create a remote license ID.  If the numbers match when the application boots, the program enters a "use mode;" if they do not, it enters a "demo mode."

In the suit against Microsoft, Uniloc alleged that the Product Activation feature for Microsoft's Word XP, Word 2003, and Windows XP software programs infringed the '216 patent.  A jury agreed, finding that Microsoft not only infringed the patent, but did so willfully.  The jury also rejected Microsoft's invalidity defenses and awarded Uniloc $388 million in damages.  Following the trial, the district court granted Microsoft's motion for JMOL of noninfringement and lack of willfulness (and in the alternative, ordered a new trial on these issues), but denied its request for a JMOL on invalidity.  The court also ordered a new trial on the issue of damages.  On appeal, Uniloc challenged the district court's noninfringement, willfulness, and damages rulings, while Microsoft cross-appealed the denial of its JMOL on invalidity.  The Federal Circuit affirmed the district judge's rulings on willfulness, damages and invalidity, but reversed on the question of infringement, both with respect to JMOL and the grant of a new trial.

Damages
The damages section of the opinion is by far the most significant portion.  At trial, the jury awarded Uniloc $388 million in damages, relying on the testimony of Uniloc's expert, who opined that damages should be $564,946,803 based on a hypothetical negotiation between Uniloc and Microsoft and the Georgia-Pacific factors.  Using an internal Microsoft document relating to the value of product keys, the expert applied the 25 percent "rule of thumb" to the minimum value reported ($10 each), obtaining a value of $2.50 per key.  After applying the Georgia-Pacific factors, which he concluded did not modify the base rate, he multiplied it by the number of new licenses to Office and Windows products, producing the $565 million value.  He confirmed his valuation by "checking" it against the total market value of sales of the Microsoft products (approximately $19 billion, noting that it represented only 2.9% of the gross revenue of the products.   

The 25 Percent Rule: On appeal, the CAFC first rejected the use of the 25 percent rule to calculate patent damages.  "The 25 percent rule of thumb is a tool that has been used to approximate the reasonable royalty rate that the manufacturer of a patented product would be willing to offer to pay to the patentee during a hypothetical negotiation." Slip Op. at 36, citing Robert Goldscheider, John Jarosz and Carla Mulhern, USE OF THE 25 PER CENT RULE IN VALUING IP, 37 les Nouvelles 123, 123 (Dec. 2002).  Under the rule, "licensees pay a royalty rate equivalent to 25 per cent of its expected profits for the product that incorporates the IP at issue." Id., quoting Goldscheider et al. Included in the court's discussion of the rule is an extensive survey of the relevant literature (covering no less than nine articles), as well as an acknowledgement that the "court has passively tolerated its use where its acceptability has not been the focus of the case." Slip Op. at 39.  However, the court recognized that it  never squarely addressed the use of the rule.

Treating the issue as one of first principles, and after considering the relevant Supreme Court caselaw, the CAFC concluded that, as an abstract theory untied to particular factual circumstances of a given case, the 25 percent rule simply cannot be used for damages calculations: 

This court now holds as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.

Slip Op. at 41.  The court based its reasoning on the Daubert standard for expert testimony, concluding that general theories are only permissible if the expert adequately ties the theory to the specific facts of the case.  Under Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) and General Electric Co. v. Joiner, 522 US 136 (1997), "one major determinant of whether an expert should be excluded under Daubert is whether he has justified the application of a general theory to the facts of the case."  Slip Op. at 43.

Applying this principle, the CAFC criticized the application of the 25 percent rule because there was no link between the rule and the specific case:

The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement. The rule does not say anything about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party.

Slip Op. at 45. In addition, the court pointed to the lack of testimony by Uniloc's expert suggesting that the starting point of a 25 percent royalty had any relation to the facts of the case, and thus the use of the rule was "arbitrary, unreliable, and irrelevant," failing to pass muster under Daubert and tainting the jury's damages calculation.  Id. at 47.

Entire Market Value Rule: The CAFC also rejected the expert's application of the entire market value rule, which he used as a check on the total damages.  "The entire market value rule allows a patentee to assess damages based on the entire market value of the accused product only where the patented feature creates the 'basis for customer demand' or 'substantially create[s] the value of the component parts.'"  Slip Op. at 48.  Here, however, there was no evidence that the patented component created the basis for customer demand, as required by the rule: "This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand."  Slip Op. at 51.

Infringement
In opposing Uniloc's challenge on the issue of infringement, Microsoft argued that several grounds supported affirmance of the district court's grant of JMOL of noninfringement.  The CAFC rejected each argument in turn, concluding that substantial evidence supported the jury's finding of infringement. 

Standard of Review: One issue that sophisticated parties often dispute is the relevant standard that applies when reviewing jury verdicts. This appeal was no different - Microsoft contended that the jury verdict should be reviewed de novo, while Uniloc argued that it should be reviewed for substantial evidence.  The CAFC responded by distinguishing situations where "the parties conceded that under one claim construction there was infringement and under the other there was none, and were arguing only over which claim construction was appropriate." Slip Op. at 15.  In these cases, de novo review applies.  On the other hand, where "the claim construction itself is not contested, but the application of that claim construction to the accused device is," the court applies the substantial evidence standard. Id.

Comment: This distinction reinforces a basic principle of Federal Circuit appellate practice: Parties challenging a jury verdict on the issue of infringement will likely want to frame the dispute on appeal as a question of claim construction; parties defending the verdict will likely want to frame it as a question of application of an accepted construction to the accused product or method.  Of course, whether a party will be able to frame the question in a particular way depends largely on how the issue was set up in the district court - which itself is ideally part of counsel's long term strategic thinking.

Applying this standard, the Federal Circuit concluded that the jury's verdict of infringement was supported by substantial evidence, rejecting Microsoft's arguments to the contrary.  The court also rejected Microsoft's argument that a critical "means-plus-function" limitation should be read narrowly.  To the contrary, the court held, it should be read broadly, applying language from IMS Tech., Inc. v. Haas Automation, Inc., 206 F.3d 1422, 1436 (Fed. Cir. 2000) stating that "when in a claimed 'means' limitation the disclosed physical structure is of little or no importance to the claimed invention, there may be a broader range of equivalent structures than if the physical characteristics of the structure are critical in performing the claimed function." 

Expert Testimony, redux: Also of note is the court's ruling with respect to expert testimony as it pertains to infringment.  Although the district court rejected the testimony of Uniloc's expert as "incomplete, oversimplified and frankly inappropriate," the CAFC concluded that this rejection was improper because the district court had already fulfilled its gatekeeping function under Daubert when it explicitly noted that the expert was "qualified."  Thus, it was up to the jury "to evaluate the weight to be given to the testimony of dueling qualified experts."  This application of Daubert seems to be somewhat in tension with the court's treatment of expert testimony in the damages context, which focused on the content of the testimony, not the qualifications of the person giving it.

Joint Infringement: The CAFC also rejected Microsoft's joint infringement argument.  Rather than implicating joint conduct, the court ruled, Uniloc's claim was structured so as to capture infringement by a single party by focusing on one entity.  "That other parties are necessary to complete the environment in which the claimed element functions does not necessarily divide the infringement between the necessary parties. For example, a claim that reads “An algorithm incorporating means for receiving e-mails” may require two parties to function, but could nevertheless be infringed by the single party who uses an algorithm that receives e-mails."  Slip Op. at 29.

Willful Infringement: On the issue of willfulness, the CAFC continued to apply its objective super-threshold for proving willfulness.  "If the accused infringer's position is susceptible to a reasonable conclusion of no infringement, the first prong of Seagate cannot be met." Slip Op. at 32.  Particularly obtuse is the court's triple-negative articulation of the factual holding: "Uniloc has not presented any evidence at trial or on appeal showing why Microsoft, at the time it began infringement, could not have reasonably determined that [Microsoft's algorithms] did not meet the “licensee unique ID generating means,” “licensee unique ID,” or “registration system”/“mode switching means” limitations."

Presumption of Validity: in addressing Microsoft's cross-appeal of the denial of its motion for JMOL and a new trial on invalidity, the court declined to back away from the "clear and convincing" standard for invalidity.  Rejecting Microsoft's argument that its burden was to show invalidity simply by a preponderance of the evidence - as opposed to clear and convincing evidence - because the prior art reference was not before the PTO, the court continued to apply the higher standard.  "Until changed by the Supreme Court or this court sitting en ban, this is still the law."  Slip Op. at 55.  Applying this standard, the court rejected Microsoft's argument that it was simply practicing the prior art, and thus a finding of infringement necessitated a finding of invalidity. 

Patent Law Final Exam - Part 1

Question 1.

On May 1, 2005, Mr. Suresh received an e-mail from a friend warning against eating with disposable bamboo chopsticks. The problem, according to the e-mail, was that bamboo chopsticks were saturated with cariogenic chemicals to preserve and whiten the material. A solution to the problem immediately came to Suresh based on his job as a dental hygienist using UV LASER technology to whiten and preserve teeth. Suresh surmised that bombarding raw bamboo sticks with a high-intensity UV LASER could accomplish the preservation and whitening goals without the use of problematic chemicals. The next evening, Suresh tested his ideas using the UV LASER at his employer's office (the dentist). That evening, Suresh made six sets of prototype LASER irradiated chopsticks and placed them on a shelf in the employee break-room. Over the next six-months, Suresh would occasionally test the prototypes to see if they retained their color and germ resistance. On a couple of occasions during that time, he even used the prototypes at a Chinese restaurant downtown. His interest then waned in the project for several months.

In December 2006, Suresh was fired. He then decided to move forward with his chopstick business. Unfortunately, by that time, someone else (StickCo) had separately invented the same thing and already had a product on the market (with considerable commercial success). Suresh quickly filed for patent protection and in April 2008, the PTO granted Suresh a utility patent with claims directed to both "a product comprising a UV LASER treated bamboo chopstick" and also "a method comprising treating raw bamboo with a UV LASER in a manner sufficient to whiten and preserve the material". Suresh then sued StickCo for patent infringement.

In the end, it turned out that the e-mail scare was a hoax. Ordinary chopsticks are actually cheaper to produce and safer to use than Suresh's irradiated chopsticks.

1. Did Suresh's post-invention activities trigger the statutory bar under 35 U.S.C. §102(b) and render the patented claims invalid?
2. Based on the prior state-of-the-art discussed, is Suresh's invention nonobvious?
3. Does Suresh's former employer have any claim to rights in the invention?
4. Assume that StickCo can prove an invention date of January 1, 2006. Does StickCo have a credible argument under 35 U.S.C. §102(g) that Suresh's patent is invalid?
5. Assuming that StickCo's version of the chopsticks infringe Suresh's patent, but that StickCo does not have enough money to pay the damages. What other parties could be held liable for the infringement?
6. Two other similar products were recently released by another manufacturer: (i) A UV LASER treated chopstick that is dark brown in color and that is also chemically treated; (ii) a chopstick that is treated with a BLUE-VIOLET LASER rather than an ULTRA-VIOLET (UV) LASER. Do either of these infringe Suresh's patent?
7. Patent Office rules require inventors to provide the USPTO with "all information known to be material to patentability." 37 C.F.R. § 1.56. Did Suresh make a mistake by failing to tell the PTO how he came-up with his invention?
8. When Suresh filed his patent application, the only LASER he had used was the UV LASER from his dentist's office. However, he was confident that other LASERs would probably work just as well, if not better. (i) In the patent application should he have discussed the dentistry LASER? (ii) What about the other (untested) LASERs? (iii) Could Suresh broadly patent "the use of UV LASER radiation to treat an eating utensil, without being limited to the specific machinery or parts of machinery described in the foregoing specification?"
9. We often think of patents as intended to encourage innovation. Does the granting of patent rights in situations like this (serendipitous invention) do anything to encourage innovation? You might distinguish between this case and one where the patentee conducted an expensive research and development program before inventing.
10. Are there other patent law issues that should concern Suresh? (Limit your discussion to at-most two additional issues)?

Happy New Year!

By Jason Rantanen

The coming year is certain to bring a host of interesting and important changes to patent law that we will continue to write about, and I wish all of Patently-O's readers a prosperous, rewarding, and enjoyable 2011.  Not to be overlooked, though, are a few events that occurred during the past few weeks:

Judge Kathleen O'Malley joins the Federal Circuit: Just a few days after the Senate confirmed her nomination, former Northern District of Ohio Judge Kathleen O'Malley was sworn in by Chief Judge Rader.  She becomes the tenth active non-senior judge on the court.  As an experienced jurist, she will likely have an immediate impact on the court's jurisprudence, although presumably she will not participate in the two currently-pending en banc appeals, TheraSense v. Becton Dickinson and Tivo v. Echostar.

Changes to Federal Rules of Appellate Procedure: On December 1, 2010, three changes to the Federal Rules of Appellate Procedure went into effect.  These changes consisted of adding a definition of the term "state" that includes the District of Columbia and United States commonwealths and territories (Fed. R. App. P. 1) and modifying several rules that referred to Federal Rule of Civil Procedure 58(a)(1).  These rules now refer to Federal Rule of Civil Procedure 58(a) (the separate document judgment rule) in its entirety.   In addition, Fed. R. App. P. 29 now requires more information about who assisted with an amicus brief, including whether a party's counsel authored the brief in whole or in part, whether a party or its counsel contributed money intended to fund preparing or submitting the brief, and the identity of any persons other than the amicus curiae, its members, or its counsel who contributed money that was intended to fund preparing or submitting the brief.  The complete list of changes is available in a letter from Jan Horbaly, the CAFC Clerk of Court.

USPTO Opens Detroit Office: As Dennis predicted earlier, on December 16, Director Kappos announced plans to open the first USPTO satellite office in Detroit, Michigan.  The office will open in 2011, and represents an effort to broaden the PTO's workforce through geographic diversity.  Depending on the success of the Detroit office, the PTO will consider opening additional satellite offices. 

Patent Pilot Program for U.S. District Courts: On December 17, Congress gave its final stamp of approval to H.R. 628, which establishes a pilot program to encourage the enhancement of patent case expertise among district court judges.  Under the Act, at least six district courts will be designated for the program.  Judges in these districts will be able to request to hear cases involving patent issues, although patent cases will still be randomly assigned regardless of whether a judge is so designated.  However, non-designated judges may decline to accept a patent case if it is assigned to them, and should this occur the case will be re-assigned to a designated judge.  In effect, this program will hopefully provide a slight push towards some judges hearing more patent cases than others (and thus developing more expertise in that area), but stops well short of creating a specialized court of trial judges who hear only patent cases (and, unlike the original bill, in the final version there is no money appropriated for specialized training or clerks for designated judges).  The Act also requires periodic reporting of comparison data between designated judges and non-designated judges on issues such as their respective reversal rates by the CAFC.