Patent Law Blog (Patently-O)

CAFC Declines to Take Prosecution Laches En Banc

By Jason Rantanen

Cancer Research Technology Ltd. v. Barr Laboratories, Inc. (Fed. Cir. 2011) (Precedential Order) Download 10-1204 enbanc order

This morning the CAFC denied Barr Laboratories' request for rehearing en banc.  Review was barely denied: the judges split 5-5, just short of the 6-judge majority currently required for rehearing en banc.  Dissenting from the denial, both Judges Prost and Dyk expressed opinions on the issue of prosecution laches.

I previously wrote about Cancer Research Technology here.  In a nutshell, the panel majority reversed the district court's finding of prosecution laches on the ground that no prejudice was shown due to the lack of any evidence of intervening rights arising during the prosecution period.  Judge Prost dissented from that ruling, rejecting the idea that prosecution laches requires either prejudice or intervening rights. 

Judge Prost's dissent from the denial of rehearing en banc, joined by Judges Gajarsa, Moore, and O'Malley, reiterates and bolsters that view.  Drawing on Supreme Court precedent, Judge Prost again argues that the Supreme Court's test for prosecution laches does not require evidence of intervening rights:

This narrowing of the doctrine is not only unnecessary, it is contrary to Supreme Court precedent.  It is true that in both Woodbridge and Webster the Court refused to enforce the patent where both unreasonable delay and intervening rights existed. Woodbridge, 263 U.S. at 53, 56-57; Webster, 264 U.S. at 465-66. In each of these cases, however, the Court made clear that both unreasonable delay and intervening rights were not required to support a finding of prosecution laches.

Prost dissent at 3-4.  In Judge Prost's view, this precedent instead requires the court to favor flexibility over rigidity as the Supreme Court instructed in decisions such as Bilski, KSR, and eBay.

Judge Dyk wrote separately, commenting that while he agrees with Judge Prost that evidence of intervening rights should not be required, he disagrees with the use of a "totality of the circumstances" test, "which is really no test at all." Dyk dissent at 1.

Is Woodridge Applicable? In his IP newsletter, Hal Wegner takes issue with Judge Prost's characterization of a Supreme Court "doctrine" of prosecution laches based on Woodridge, pointing out that the case had nothing to do with a granted patent.  As explained in an amicus brief filed in Symbol Technologies:

Woodbridge v. United States, 263 U.S. 50 (1923), does not provide any guidance regarding prosecution laches because Woodbridge never received a patent. Rather, the Woodbridge case involved a statutory compensation act for private relief for an unpatented invention of Woodbridge. Woodbridge, 263 U.S. at 51. The statute's language required the trial court to deny relief to Woodbridge because there had been laches in his patent procurement process. Id. This statutory laches in a private law therefore had nothing to do with laches in the patent law.

In contrast, Webster Elec. Co. v. Splitdorf Elec. Co., 264 U.S. 463 (1924), did include a discussion of prosecution laches. An examination of the facts in that case, however, reveals that the key issue involved what today would be inequitable conduct. Accordingly, Webster hardly shapes the contours for a well-formed ‘doctrine.’”

Hal Wegner, quoting Symbol Technologies, Inc. v. Lemelson Medical, Educ. & Research Foundation, 422 F.3d 1378 (Fed. Cir. 2005), Brief Amicus Curiae of Takeda Pharmaceutical Co., 2004 Westlaw 3335267, p. 4 (2004)(original emphasis).

Guest Post: Centocor, the Antibody Exception, and Claiming Only What was Invented

By Oskar Liivak
Assistant Professor, Cornell Law School

As Jason Rantanen’s post describes, Centocor claimed but failed to disclose any fully humanized antibodies.  Abbott consistently pushed this argument and they won.  It was the simplest and most direct way to dispose of the case.  This approach necessarily left other important issues undecided, however.  Both Eli Lilly and I separately filed amicus briefs in favor of Abbott and we both argued for a decidedly more aggressive, alternative argument for written description invalidity.  As the Court in Centocor disposed of this case by simpler means, clear judicial resolution of our arguments will have to wait for another day.

This post highlights those remaining issues, why we should still care about them, and how they are tied to a much larger ongoing struggle in patent law – can a patent claim cover more than what was actually invented (i.e. conceived and disclosed) by the inventor?  I think the answer is clear – it cannot – but not every patent attorney or CAFC judge agrees.  I think this is perhaps the most important ongoing debate in patent law.  § 112 as applied to antibodies is but one battlefront in this larger fight. 

ABANDONING THE ANTIBODY EXCEPTION
The arguments in both of our briefs would have resolved the case in favor of Abbott but would have also resolved a very problematic ambiguity relating to the written description for antibodies generally – the so-called ‘antibody exception.’  The PTO’s written description guidelines seem to suggest that disclosure of an antigen alone can provide § 112 support for any antibody that binds to that antigen.  See U.S.P.T.O., Written Description Training Materials Revision 1 March 25, 2008 at 45-46.  Cases like Noelle v. Lederman, 355 F.3d 1343 (Fed. Cir. 2004), have cited these guidelines but the guidelines have yet to be really at the center of a case – even here in Centocor the CAFC distinguishes them.  The trouble is that those PTO guidelines are in tension if not complete conflict with written description as described in Ariad v. Eli Lilly, 598 F.3d 1336, 1354 (Fed. Cir. 2010) (en banc).  With the rapid growth of and enormous revenues associated with antibody related therapies, patent law must clarify this issue.

The crux of the argument is simple.  I believe that the disclosure requirements of § 112 limit claims to the subject matter actually invented by the inventor and disclosed by the specification.  Ariad at 1351.  If we consistently applied this rule for disclosure in light of today’s understanding of protein structure, disclosure of a well characterized antigen alone would not provide support for an antibody that binds to that antigen.  And disclosure of one actual antibody provides § 112 support only for that antibody—not the entire genus of antibodies that binds to the antigen.  This view is in direct conflict with the antibody exception.  Here is the argument.    

Ariad reaffirmed that § 112 “requires … that the specification must … show that the inventor actually invented the invention claimed.” Id.  As best I can surmise, to invent something a person must conceive it.  Conception is how patent law decides when something is invented; conception is how patent law decides who invents something; and it should be the way patent law determines what the something is that was invented.  From the perspective of conception (namely a “definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice”) the antibody exception and the broad claims it would allow start to look totally absurd. 

The problem is, as put by Eli Lilly in their amicus brief, “[e]ven with today's most advanced scientific tools, it is impossible to predict the actual structure … of a not-yet-known antibody based on the structure of an antigen or even the structure of another antibody that binds that same antigen.”  Though my own scientific background was not in immunology (it was in the more general field of three dimensional protein structure determination) I agree with Eli Lilly.  Even given the three dimensional structure of an antigen, no person today can conceive (without actually going into the lab and making one) an antibody that will bind to that antigen.  Furthermore, even once we make one antibody that does bind to an antigen, that alone does not allow for the conception of any other antibodies (much less every antibody) that will also bind to that antigen.

As the Federal Circuit determined, Centocor’s “application only provides amino acid sequence information … for a single mouse variable region.”  Slip Op. at 14.  That meager though still useful (see http://en.wikipedia.org/wiki/Infliximab) disclosure pales in comparison to the broad genus of variable regions that were claimed.  Asserted claims 2 and 3 covered any antibody with a human constant region and a human variable region that binds and neutralizes TNFα in a similar location as the deposited antibody.  There is nothing in the specification that evidences conception of any other variable regions beyond the one deposited variable region.  That disparity between the solutions disclosed versus the solutions claimed is why I viewed this case as being nearly identical to the over-reaching patentees in The Incandescent Lamp case, 159 U.S. 465 (1895).  Where a solution to a technical problem is found through trial and error (even sophisticated, elegant trial and error like for antibodies) without further discovering how to extrapolate to other solutions from the one found solution, then claims cannot exceed that one particular solution.  See id. at 472.  As a result I argued that the asserted claims are invalid under § 112 because they claim variable regions (whether humanized or not) that Centocor certainly did not invent or disclose.

From a policy perspective some might worry that this will provide incredibly narrow and worthless claims in a rapidly growing and important field.  I am not so sure.  It will certainly allow others to produce their own antibodies to the same antigen as the other antibodies will likely differ in actual variable region structure.  The narrow claims still prevent outright piracy and copying of your particular antibody but they also leave room for competition.  With tens of thousands of dollars a year for treatment for these drugs, a little fair competition doesn’t sound bad.  Lastly, the big question is the ability for generic biologic producers to piggy back on the testing data for the initial biologic.  I don’t see a problem from narrow claim scope in this regard either.  Though it depends on the details of the generic approval process for biologics, roughly speaking I wouldn’t want safety and efficacy data from one antibody to be used to confirm the safety and efficacy of structurally different antibodies even if they bind to the same antigen.

When § 112 and its usage of ‘the invention’ is rightfully tied to the subject matter actually invented (i.e. conceived and disclosed), then the shortcomings of the antibody exception become quite apparent.  In fact, when viewed in that light (which I think is the only way to interpret the statute) I cannot fathom a scenario by which the PTO could have possibly drafted the antibody related written description guidelines that have led to the antibody exception.

THE INVENTION AS THE EMBODIMENTS CONCEIVED AND DISCLOSED
But therein lies the problem: not everyone in patent law thinks about the statutory appearances of the invention in § 102, § 112, and more importantly § 271, as tied to the subject matter actually invented (i.e. conceived and disclosed).  For some the invention is just a short-hand reference for whatever subject matter the applicant claims because “the claims … define the invention….”  Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1115 (Fed. Cir. 2004).  The difference between these two views is critically important yet patent law has never confronted this confusion directly.  In fact, ask yourself, how do you conceptually and practically define the ‘invention’ in 35 U.S.C.?  I think some of our most pressing debates are fueled by talking past each other.  We are often thinking differently about the invention without actually being aware of the disagreement. 

The fight over the disclosure requirements evidenced in Ariad and Centocor is just one visible battle between these two world views.  Another important flashpoint is claim interpretation.  Just a month ago on Jan. 24 (as noted here on Patently-O) in IP Frontline, Hal Wegner described the ongoing problems with claim interpretation.  Discussing Arlington Indus. v. Bridgeport Fittings he pointed to the “festering sore” in Federal Circuit jurisprudence over the proper conceptual relationship between the claims and the specification.  He noted that “[u]ntil there is a final resolution of this debate there will never be clarity in claim construction at the Federal Circuit.”  That festering sore is another important instance of this broader fight over the proper conceptual relationship between claims, the invention, and the specification.  In a recent article, I further detail this controversy and its proper resolution.  For those interested in that broader discussion see Oskar Liivak, Rescuing the Invention from the Cult of the Claim (http://ssrn.com/abstract=1769270).

I thank Kevin E. Collins and Jason Rantanen for very helpful and insightful comments.

Centocor v. Abbott: Written Description and Antibody Claims

By Jason Rantanen

Centocor Ortho Biotech, Inc. v. Abbott Laboratories (Fed. Cir. 2011) Download 10-1144
Panel: Bryson, Clevenger, Prost (author)

Centocor, the holder of Patent No. 7,070,775, which claims fully human antibodies to human necrosis factor α ("TNF-α"), sued Abbott for infringement by the therapeutic antibody Humira®.  A jury rejected Abbott's defenses and awarded Centocor $1.67 billion in damages.  After the district court granted Abbott's JMOL of no willful infringement, but denied JMOL on invalidity, noninfringement and damages, Abbott appealed. 

Later Added Claims Lacked Written Description
On appeal, the CAFC reversed, focusing solely on the issue of written description.  In many ways this is a prototypical written description case.  Centocor's approach to developing a TNF-α antibody involved first identifying a mouse antibody to human TNF-α, then changing the less critical portions of the antibody to make it more human - thus producing a chimeric antibody.  Abbott followed a different path, setting out from the start to develop a fully human antibody, a process that ultimately led to Humira®.  Both Centocor and Abbott obtained patents on their antibodies.

In 2002, after Abbott obtained regulatory approval to market Humira®, Centocor filed claims to fully human antibodies as part of an ongoing continuation of the chimeric antibody patent family. These claims later issued as part of the '775 patent.  In responding to Abbott's argument that the fully human antibody claims lacked adequate written description, Centocor relied on a 1994 CIP in the chain that predated the 1996 filing date of Abbott's patent application.

In its opinion, the CAFC honed in on the lack of disclosure of any human variable regions (the portion of the antibody that binds to TNF-α) in the 1994 CIP.  Examining the "four corners" of the 1994 CIP application, the court concluded that "[t]here is nothing in the specification that conveys to one of skillin the art that Centocor possessed fully-human antibodies or human variable regions that fall within the boundaries of the asserted claims."

"while the patent broadly claims a class of antibodies that contain human variable regions, the specification does not describe a single antibody that satisfies the claim limitations. See Eli Lilly, 119 F.3d at 1566-69. It does not disclose any relevant identifying characteristics for such fully-human antibodies or even a single human variable region. See id. Nor does it disclose any relationship between the human TNF-α protein, the known mouse variable region that satisfies the critical claim limitations, and potential human variable regions that will satisfy the claim limitations."

Slip Op. at 16-17.  Essentially, the claims constituted a wish list of properties for a fully-human, therapeutic TNF-α antibody would possess - but a mere wish or plan for obtaining the invention is not sufficient to satisfy the written description requirement. 

Disclosure of a Protein Does Not Necessarily Suffice to Support Claims to All Associated Antibodies
Centocor also suggested that it satisfied the written description requirement by fully disclosing the human TNF-α protein.   It based that suggestion on the current PTO written description guidelines, together with Noelle v. Lederman, 355 F.3d 1343 (Fed. Cir. 2004).  One example in the PTO guidelines indicates that "'an isolated antibody capable of bding to [protein] X' is adequately described where the specification fully characterizes protein X-even if there are no working or detailed prophetic examples of actual antibodies that bind to protein X."  Slip Op. at 17-18.  In other words, simply disclosing the "lock" is suffient to support a claim to the key fitting into that lock.  This view was reinforced by Noelle, in which the CAFC held that:

"as long as an applicant has disclosed a “ fully characterized antigen,” either by its structure, formula, chemical name, or physical properties, or by depositing the protein in a public depository, the applicant can then claim an antibody by its binding affinity to that described antigen."

Noelle, 355 F.3d at 1349. 

Accepting that while this may be true in some cases, the CAFC rejected its application to the multi-part claims at issue.  "While our precedent suggests that written description for certain antibody claims can be satisfied by disclosing a well-characterized antigen, that reasoning applies to disclosure of newly characterized antigens where creation of the claimed antibodies is routine."  Slip Op. at 19.  Here, the creation of the claimed antibodies - which possessed a number of characteristics beyond their relationship with the antigen - was anything but routine.  "Claiming antibodies with specific properties, e.g., an antibody that binds to human TNF-α with A2 specificity, can result in a claim that does not meet written description even if the human TNF-α protein is disclosed because antibodies with those properties have not been adequately described."  Id. at 20.  As Centocor "failed to support its contention that generating fully-human antibodies with he claimed properties would be straightforward for a person of ordianry skill in the art" at the time, possession of the known antigen did not place it in possession of the claimed antibodies. 

For those who are interested in reading further, PatentDocs has a detailed write-up of the decision.

 

Federal Circuit Dispositions (Updated)

By Jason Rantanen

Last week I posted data about the CAFC's use of Rule 36 summary orders for the past several years, and suggested that there appears to be a notable uptick in the court's use of Rule 36 for patent infringement appeals this year.  Several folks commented that because there are frequently fewer judges sitting during the summer months, it may be possible that most Rule 36 dispositions occur during the early months of the financial year.  As a result, the linear projection I used for 2011 overpredicted the number of Rule 36 dispositions for the year.

To examine this suggestion, I conducted the same search as before, but limited the time range to the identical period as for 2011: October 1 - February 14.  Fully expecting that the suggestion was correct, I was surprised by the results.  Over the 12 years that I had examined the number of hits were almost exactly what would be expected from a linear prediction: 516 predicted vs. 513 actual.  Looking at the last five years produced essentially the same result: 247 predicted vs. 236 actual, a ratio of 1.05 predicted : actual.  Applying this value, along with a more appropriate multiplier than I originally used (12/5 as opposed to 24/9, since virtually all Rule 36 orders will come in the first half of the month), still produces a prediction of 89 Rule 36 dispositions this year - far exceeding the previous highest total of 64 (2007).

Below is a chart showing the number of Rule 36 dispositions during only the first four and a half months of the financial year. 

A word of caution: Any estimates of total Rule 36 dispositions for the year are still highly speculative, and I would avoid reading too much into this data.  Nor do I think it wise to try to ferret out reasons for the apparent spike in Rule 36 dispositions at this point - it's just far too early.  Still, the data does suggest that it might be a good idea to keep an eye on the court's use of Rule 36 dispositions, and it would be an interesting subject to examine if a long term trend does become apparent.

Patently-O Bits & Bytes by Lawrence Higgins

Sharon Barner returns to the practice of law

• Former Deputy Director of the USTPO has announced her return to the Foley & Lardner law firm in Chicago. Barner was chair of the Intellectual Property Department at Foley & Lardner before she left to work for the USPTO. While at the USPTO Barner was the driving force behind the 2010-2015 USPTO's Strategic Plan. [Link]

Carlson Marketing is suing MillerCoors

• Carlson Marketing Worldwide is suing MillerCoors over its "Miller High Life Extras Loyalty Program." Carlson owns patent [6,039,244] which covers a "Method of building up a data bank containing customer data and/or for the organization of." At issue in the suit is the 1^st claim of the patent which claims, "a method for motivating a customer to purchase a product or a service and for rewarding the customer for repeat purchases thereof, the method comprising the steps of…" [Link] If Carlson wins this suit they could potentially file suit against many more large companies for patent infringement.

Can Patent Attorneys and Agents use Groupon when seeking new clients?

• According to the Rule 5.4(a) of the ABA's Model Rules of Professional Conduct, "a lawyer or law firm shall not share legal fees with a nonlawyer. Groupon makes money by keeping approximately half the money the person pays for the coupon. So maybe Rule 5.4(a) would rule out patent attorneys in some states, but what about patent agents? The state of Missouri does allow lawyers to use Groupon as a way of obtaining new clients. While other places like North Carolina does not allow lawyers to use Groupon [Link]. The question I pose is, "Would the USPTO allow agents and attorneys to use Groupon?"

European Parliament voted for a single patent law system

• European member states will soon operate under a single patent law system rather than rely on their individual patent law systems. While the single patent law system is voluntary, most European states joined the system. There appear to be at least 2 holdouts as Italy and Spain have decided not to join at this time. [Link] The benefits of this system over the current state of affairs will not be understood until the legislation is developed.

Patent Jobs:

• King & Spalding is seeking a patent attorney with 2 years experience and a engineering background to work in its Houston or Atlanta office. [Link]
• Rothwell, Figg, Ernst & Manbeck is searching for a patent attorney with 3-6 years experience. To work in its DC office. [Link]
• NXP is seeking an IP Monetization Specialist with an electrical engineering background to work in their San Jose location. [Link]
• Sheldon Mark & Anderson is in search of a patent attorney with 2-5 years experience in IP litigation. [Link]
• Klarquist Sparkman is seeking a patent associate or agent with 1-4 years experience. [Link]

Upcoming Events:

• Northwestern Journal of Technology and Intellectual Property will hold its 6^th Annual Symposium entitled "The Economics of Intellectual Property and Technology on March 4^th in Chicago. The keynote speaker is Michael Fricklas, General Counsel of Viacom. [Link]
• The Toledo Intellectual Property Law Association (TIPLA) will be hosting its 2011 Spring Seminar, entitled "A Comprehensive Approach to Protecting Designs: The Overlap of Patent Design, Trade Dress, and Copyright Protection", on March 9^th at the University of Toledo College of Law. Guest speakers include: Theresa Orr, Katrina Quicker, Christopher Weston, and William Bryner. [Link]
• The Columbus School of law will host its Dean William Robinson Intellectual Property Law Lecture Series on March 29. The series lecture will be presented by Professor Jeffrey Lefstin. [Link]
• The University of Houston Law Center's Institute for Intellectual Property & Information Law will host a Symposium on June 4^th in Sante Fe, New Mexico. The Symposium will focus on "Trademark: Today and Tomorrow". Presenters include:  Ann Bartow, Barton Beebe, Greg Lastowka, Mark McKenna, and Rebecca Tushnet. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Global-Tech v. SEB: Supreme Court Argument Tomorrow

By Jason Rantanen

Tomorrow, February 23rd, the Supreme Court will hear arguments in Global-Tech v. SEB, a case with broad implications for the doctrine of inducement of patent infringement.  Previous Patently-O postings on the subject, including summaries of several of the briefs, are provided below.  Unsurprisingly, there are a wide range of opinions as to the proper standard, with positions ranging from strict liability on the question of infringement to recklessness to requiring knowledge or purpose to infringe a patent. 

• Supreme Court to Hear Case on Inducing Patent Infringement
• Global-Tech v. SEB: Petitioner's Merits Briefs
• Global-Tech v SEB: Amicus Briefs
• Global-Tech v. SEB: Respondent and Additional Amicus Briefs

Other Patently-O writings on the subject:

• Inducing Infringement: Knowledge-of-Patent Element Satisfied by "Deliberate Indifference"  (Summarizing the inducement issue in the underlying CAFC opinion, SEB v. Montgomery Ward)
• Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases (Discussing the CAFC's use of non-patent and non-Federal Circuit cases in SEB v. Montgomery Ward)
• An Objective View of Fault in Patent Infringement (Expressing my view that the appropriate standard for fault in the context of inducement is neither knowledge/purpose nor strict liability, but objective recklessness)

In re Katz (part 2): Indefiniteness of computer processes

By Jason Rantanen

In re Katz Interactive Call Processing Patent Litigation (Fed. Cir. 2011)
Panel: Newman, Lourie, Bryson (author)

In addition to the discussion of complex patent litigation management procedures, summarized yesterday, In re Katz is also notable for its analysis of the indefiniteness of computer processing-type means plus function elements.

The patents at issue relate to interactive call processing and conferencing systems.  Ten of the selected claims include "means for processing"-type limitations.   For example, claims 96, 98, and 99 of the asserted '863 patent recite a "means for processing at least certain of said answer data signals."  Applying WMS Gaming, Inc. v. International Game Technology, 184 F.3d 1339 (Fed. Cir. 1999) and Aristocrat Technologies Australia Pty Ltd v International Game Technology, 521 F.3d 1328 (Fed. Cir. 2008), the district court found the claims indefinite because the specifications disclosed only general purpose processors without disclosing any of the algorithms used to perform the claimed functions.   

The Federal Circuit agreed with the district court's analysis of three claims.  Under Federal Circuit precedent, "a computer-implemented means-plus-function term is limited to the corresponding structure disclosed in the specification and equivalents thereof, and the corresponding structure is the algorithm."  Slip Op. at 18, citing Harris Corp. v. Ericsson Inc., 417 F.3d 1241, 1253 (Fed. Cir. 2005).  "[B]y claiming a processor programmed to perform a specialized function without disclosing the internal structure of that processor in the form of an algorithm, Katz’s claims exhibit the 'overbreadth inherent in open-ended functional claims,' ... in violation of the limits Congress placed on means-plus-function claims in section 112, paragraph 6."  Slip Op. at 19 (internal citation omitted).  Thus, claims 21 and 33 of the '551 patent and claim 13 of the '065 patent, which claim a “processing means . . . for receiving customer number data entered by a caller and for storing the customer number data . . . and based on a condition coupling an incoming call to the operator terminal, the processing means visually displaying the customer number data” but do not disclose an algorithm that corresponds to the “based on a condition coupling an incoming call to the operator terminal” function are invalid for indefiniteness.

The CAFC reached the opposite result on the remaining seven claims - not on the ground that the patent disclosed the requisite algorithms, but on the basis that no algorithm was necessary because the claim elements may simply claim a general process computer:

[i]n the seven claims identified above, Katz has not claimed a specific function performed by a special purpose computer, but has simply recited the claimed functions of “processing,” “receiving,” and “storing.” Absent a possible narrower construction of the terms “processing,” “receiving,” and “storing,” discussed below, those functions can be achieved by any general purpose computer without special programming.  As such, it was not necessary to disclose more structure than the general purpose processor that performs those functions. Those seven claims do not run afoul of the rule against purely functional claiming, because the functions of “processing,” “receiving,” and “storing” are coextensive with the structure disclosed, i.e., a general purpose processor.

Slip Op. at 20-21. 

The CAFC also reviewed the district court's grant of summary judgment on other issues of indefiniteness, as well as written description, obviousness, claim construction, and noninfringement, largely affirming.  Of these issues, patent litigators may want to take note of the court's comment that when dealing with written description issues it is permissible for the court to construe claims whose meaning has not been placed in dispute, "as claim construction is inherent in any written description analysis."  Slip Op. at 27.  Using this seemingly innocuous statement, the CAFC rejected Katz's argument that it was denied the opportunity to demonstrate specification support or proffer expert testimony on the written description issue because it "should have been clear to Katz that the construction of the claims was important to the written description analysis." 

Patently-O Bits and Bytes by Dennis Crouch

By Dennis Crouch

• Prioritized Examination: Yesterday, I wrote about the PTO's implementation of a prioritized examination program (Track 1). Although the notice published by the PTO indicated that the Office was proceeding "with immediate implementation," the notice also refers to an "implementation date." I contacted PTO officials for some clarification and can report that Track 1 is not yet available; that the implementation date has not been set; but that the expectation is that the program will be implemented in May or June of this year.
• Story Suggestions: My student (and future patent attorney) Lawrence Higgins has been writing these bits and bytes posts lately. He's planning to write about interesting cases, bits of patent law news, moves made by patent law thought leaders, upcoming events, jobs available, etc. If you have topic suggestions, e-mail him: Lawrence.Higgins@patentlyo.com.
• End Patents?: Eric Johnson, Professor of Law at UND has released a draft of his article: Intellectual Property's Great Fallacy. In the article, Prof. Johnson attempts to explain why, except for some specific circumstances, patents and copyrights are completely unnecessary. "Using recent advances in behavioral economics, psychology, and business-management studies, it is now possible to show that there are natural and intrinsic motivations that will cause technology and the arts to flourish even in the absence of externally supplied rewards, such as copyrights and patents." http://ssrn.com/abstract=1746343

USPTO Implements Prioritized Examination (Track 1)

The USPTO has been working for a while on its three-track program for utility patent prosecution. The multi-year backlog of applications yet to be examined is the driving force for the program. The program is also built on a key insight – that some patent applicants are seriously harmed by delays in prosecution while others would prefer additional delay if it allows them to also defer cash outlays for the prosecution and maintenance costs. The three track program would allow applicants to pay an additional fee to enter the accelerated track (Track 1). Alternatively, applicants may be able to delay paying certain fees by deferring examination in Track 3. It is expected that most applications would follow the standard course, which now defines Track 2.

Last week, the USPTO published a statement that it is moving forward with immediate implementation of Track 1 – "providing fast examination for applicants desiring it, upon payment of the applicable fee." The fee - $4,000 – is steep, but the PTO calculated that fee is sufficient to cover the examination costs. The Administration's proposed budget would allow for a discount for small entities, but that would need Congressional approval because of limits USPTO fee setting authority.

What does an applicant get for $4,000:

Under Track I prioritized examination, an application would be accorded special status and placed on the examiner's special docket throughout its entire course of prosecution before the examiner until a final disposition is reached in the application. The aggregate goal for handling applications under Track I prioritized examination would be to provide a final disposition within twelve months of prioritized status being granted. The final disposition for the twelve-month goal means: (1) Mailing of a notice of allowance, (2) mailing of a final Office action, (3) filing of a notice of appeal, (4) declaration of an interference by the Board of Patent Appeals and Interferences (BPAI), (5) filing of a request for continued examination, or (6) abandonment of the application, within twelve months from the date prioritized status has been granted.

Additionally, the Office is planning to cap the number of prioritized examinations (if needed) in order to better ensure that a final disposition will be provided within twelve months.

In order to qualify for Track 1, the patent application must be an original utility or plant patent application filed electronically and have no more than four (4) independent claims and thirty (30) total claims. The prioritization will be terminated (without refund) if the applicant ever requests an extension of time to respond to an office action. Although recommended by the USPTO, no pre-filing search or analysis is required. The accelerated process is apparently available for continuation applications so long is the application is filed on or after the implementation date of the program.

Why $4,000: The USPTO has attempted to make clear that the $4,000 fee is set based on its "estimated average cost to the Office of performing the service" as required under 35 U.S.C. § 41(d)(2). According to the office, the fee is not "based upon any perceived level of participation" in the program. Adjustments to the fee are likely once the costs are better understood.

Documents:

• File Attachment: Federal Register Notice (204 KB)

We now have about 130 patent and technology law professionals registered to attend the Missouri Law Review's symposium on February 25, 2011 in Columbia Missouri with USPTO Director Dave Kappos and professors Lisa Dolak, Christopher Holman, Mark Lemley, Peter Menell, Jason Mudd*, Lee Petherbridge, Ryan Vacca, Greg Vetter, and Elizabeth Winston.

There are about 20 more spots available. The event is free, but please register.

Links:

• Program
• Symposium Main Page
• Simple Registration Form
• Most folks staying the night will be at the Hampton Inn off Stadium Drive.
• * Jason Mudd is a practicing attorney at Shook Hardy & Bacon and a graduate.

In re Katz: Managing Complex Patent Suits

By Jason Rantanen

In re Katz Interactive Call Processing Patent Litigation (Fed. Cir. 2011)
Panel: Newman, Lourie, Bryson (author)

Patent litigation is often an astonishingly complex affair.  As proof, one need look no further than In re Katz, an opinion that demonstrates both the heavy burden that patent infringements suits can place on the courts, and the remarkable job that trial and appellate courts do in dealing with those suits.  This post will discuss the CAFC's ruling regarding trial court claim selection procedures in complex patent infringement actions; a subsequent post will focus on the CAFC's review of the summary judgment rulings.

At the core of In re Katz resides the relatively simple concept of a patent holder asserting its patent rights against a group of alleged infringers.  In this instance, however, the patent rights consisted of  "a total of 1,975 claims from 31 patents" asserted against "165 defendants in 50 groups of related corporate entities."  Slip Op. at 6.  Although initially filed in Delaware and Texas, the Judicial Panel on Multidistrict Litigation transferred the actions to the Central District of California for coordinated pretrial proceedings before Judge Klausner.  

In an effort to manage the vast numbers of claims and infringement allegations, Judge Klausner imposed limitations on the number of claims to be addressed in the litigation.  The court "ordered Katz initially to select no more than 40 claims per defendant group, and after discovery to narrow the number of selected claims to 16 per defendant group."  Slip Op. at 7.  Katz was further limited to a total of 64 claims to be asserted against all defendants, although the court included a proviso that Katz could add new claims if they "raise[d] issues of infringement/validity that [were] not duplicative of previously selected claims."  Id. at 7. Katz sought to sever and stay the disposition of all the unasserted claims, contending that the limitations violated its due process rights.  The district court denied Katz's motion, and after granting summary judgment in the defendants' favor on the selected claims, Katz appealed.

On appeal, the Federal Circuit affirmed the district court's ruling on the motion to sever and stay, implicitly approving the court's claim selection procedure.  Focusing primarily on Katz's argument that the claim selection procedure violated its due process rights with respect to the unasserted claims, the CAFC held that the district court appropriately allocated to the patent holder the burden of showing that the issues raised by the new claims were not duplicative.  "When the claimant is in the best position to narrow the dispute, allocating the production burden to the claimant will benefit the decision-making process and therefore will not offend due process unless the burden allocation unfairly prejudices the claimant’s opportunity to present its claim."  Slip Op. at 11.  Here, Katz identified no errors in the district court's initial assessment, which revealed that the patents contained many duplicative claims.  Thus, it was efficient and fair to allocate the burden to Katz.  Furthermore, because Katz made no effort to identify any claims raising non-duplicative issues, the district court acted appropriately in denying Katz's motion.

Typical of several recent Federal Circuit decisions, the opinion includes a cautionary note.  "In approving the district court’s procedure, we do not suggest that a district court’s claim selection decisions in a complex case such as this one are unreviewable."  Rather, the panel comments that its holding is directed at broad assertions that courts may not impose claim selection requirements: 

Katz chose to make the “all or nothing” argument that the entire claim selection process was flawed from the start and that it is impermissible to give the judgments effect as to the unselected claims regardless of Katz’s failure to make any showing as to the uniqueness of any of those claims. That sort of global claim of impropriety is unpersuasive. In complex cases, and particularly in multidistrict litigation cases, the district court “needs to have broad discretion to administer the proceeding.” In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 1217, 1232 (9th Cir. 2006).

Slip Op. at 14.

Copyright Interlude: What is the Public Domain?

The Eighth Circuit Court of Appeals is holding court in the Missouri Law School this week. One of the appeals being heard is a copyright case involving the 1939 Wizard of Oz movie (as well as Gone with the Wind and Tom & Jerry). The case is captioned, Warner Bros. Entertainment, et al. v. X One X Productions, et al., App. No. 10-1743. TBS (now owned by TimeWarner) claims title to the copyright to the Wizard of Oz movie. The defendant apparently obtained a set of publicity posters and other material from the movie that are in the public domain and that were distributed prior to the movie being copyrighted. The public domain materials included images of Judy Garland playing Dorothy Gale, Jack Haley as the Tin Woodsman, etc. Using those public domain materials as a base, the defendant began manufacturing and selling t-shirts and trinkets showing the likeness of the well-known characters. To be clear, at least for the t-shirts, the defendant only used images cropped from the public domain materials. As the accused products below show, the defendant also included well known phrases from the movie such as "there's no place like home."

Warner (WB) sued the defendants alleging copyright infringement as well as liability under the Lanham Act. On summary judgment, the Missouri-based district court agreed that the defendant had not copied any images from the films, but still held that the defendant was liable for infringing the film copyrights. In particular, the lower court held that WB held copyright to the Wizard of Oz characters as portrayed in the movie:

i.e., Judy Garland as Dorothy Gale, Ray Bolger as Scarecrow, Jack Haley as Tin Man…. Each character has widely identifiable traits and is especially distinctive. Each has been extensively developed through the films. Be it Dorothy's inherent wisdom coupled with her Midwestern farm girl innocence, … or the apparent inconsistencies of Scarecrow, (without a brain vs. wisdom and leader), Tin Man (without a heart vs. compassion and tenderness) and Cowardly Lion, (without courage vs. bravery and chivalrousness), they are especially distinctive.

Ironically (and without comment from the district court), the particular identifiable traits of the characters identified here (apart from the portraying actors) were all derived directly from L. Frank Baum's 1900 Wonderful Wizard of Oz novel that is now out of copyright.

In focusing on the public domain materials, the district court indicated that merely copying the public domain material likely would not have created any copyright liability. Here, however, the defendant did not merely copy the posters. Rather,

they pluck from these pages images of Plaintiffs' copyrighted characters such that Defendants' images are no longer innocently copied publicity ads, but are indeed the characters themselves, to be embossed onto any number of trinkets, clothing and other collectibles. . . Notwithstanding Defendants have copied only the publicity materials, such actions violate the component parts of Plaintiffs' copyrights in the films.

Based on the finding of copyright infringement, the district court issued a permanent injunction that prohibits the defendants from

using for commercial gain images from the film The Wizard of Oz as well as images of Judy Garland as Dorothy Gale, Ray Bolger as Scarecrow, Jack Haley as Tin Man, and Burt Lahr as Cowardly Lion [except] that Defendants are [may use] reproductions of public domain movie publicity materials, in their entirety and without alteration or modification.

On appeal, the defendants have argued that they should be able to use particular images of the Wizard of Oz characters so long as they are taken from the public domain materials.

Documents:

• Download WarnerBrosAppellantBrf.pdf (4489.9K)
• Download WarnerBrosAppelleeBrf.pdf (1046.0K)
• Download WarnerBrosAppellantReplyBrf.pdf (912.8K)
• Download WarnerBrosDistrictCtOpinion.pdf (4924.1K)

Teresa Stanek Rea Takes Post as Patent Office Deputy Director

US Patent Office Director David Kappos has announced his new Deputy Director: longtime intellectual property law professional Teresa Stanek Rea. Ms. Rea is currently a partner at Crowell & Moring and was president of the AIPLA from 2008-2009 and was previously with Burns Doane. Ms. Rea replaces Sharon Barner who stepped-down this January after a short, but effective tenure.

Ms. Rea graduated from Wayne State Law School in 1980 and has been practicing patent law for over 25 years. Before that, she practiced as a pharmacist. Her technology focus has primarily been biotechnology. Her leadership in that area will be a welcome addition to the USPTO management team. In her role as AIPLA director, Ms. Rea has been involved in many of the recent major patent cases, including Tafas v. Kappos, Ariad v. Eli Lilly, Prometheus v. Mayo, and Cardiac v. St. Jude.

Joff Wild who edits the wonderful magazine IAM reported last week that Michelle Lee (Google's IP Chief) and Shanna Winters (Congressional Counsel) were also under consideration for the post.

 

Patently-O Bits & Bytes

By Lawrence Higgins

Upcoming Events:

• Judge Timothy Dyk will give a lecture on the commercial impact of complexity and confusion in patent law at the Lewis and Clark law school on March 1. [Link]
• Berkeley Center for Law and Technology is hosting an event entitled "Beyond Piracy in the New China" on March 10. [Link]
• 13^th Annual Richard C. Sughrue Symposium on Intellectual Property Law and Policy will be held in Akron on March 21. Guest Speakers include Donald Chisum, Judge Paul Michel, and Marybeth Peters. [Link]
• The University of Dayton School of Law will be hosting a symposium entitled "Killing the Golden Goose: How Today's Innovations in the Patent System are Harming Innovation Itself". The guest speaker is Professor F. Scott Kief. [Link]

USPTO Unveils Details of Fast-Track Patent Option

• USPTO plans to offer accelerated patent examinations for an extra $4,000 fee. Under this option, applications would be processed within a year of filing. Currently it takes the USPTO roughly 2 years to initiate its first office action. [Link]

Supreme Court will hear Global-Tech Appliance v. SEB S.A.

• On February 23^rd the Supreme Court will hear oral arguments in Global-Tech Appliances v. SEB S.A. [Link] The question presented is, whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is "deliberate indifference of a known risk" that an infringement may occur, or "purposeful, culpable expression and conduct" to encourage an infringement. [Link]

AT&T, Sprint, T-Mobile, Verizon, and MetroPCS has been sued by Sourceprose

• Sourceprose has filed suit in the Western District of Texas alleging that the above companies infringed on patent #'s 7,142,217 and 7,161,604. The complaint contends that the defendant's infringed on claim 1 of both patents. The technology is a mapping technology used in smartphones.

Google ask USPTO to reexamine 4 patents

• In August 2010, Oracle sued Google for infringing seven of its Java patents. [Link]Google has asked the USPTO to reexamine 4 of the patents in suit. The patents are 5,966,702, 6,061,520, 6,125,447 & RE 38,104 – related to the Java platform. [Link] The alleged infringing technology is Google's Android operating system for mobile phones.

Supreme Court will hear Microsoft v. i4i

• On April 18^th the Supreme Court will hear oral arguments in the important case of Microsoft v. i4i. [Link]The issue in the case is, whether Microsoft is required to prove invalidity of i4i's patent by clear and convincing evidence. [Link]This case could change the way patent law is currently practiced, if the standard is changed from the clear and convincing evidence standard. [Link]

Patent Jobs:

• HP is seeking an attorney with 1-10 years experience in patent prosecution. [Link]
• Infinity Pharmaceuticals is searching for a patent agent with 2-5 years experience in the pharmaceutical field to work at their Cambridge location. [Link]
• Amneal Pharmaceuticals is seeking a Director of Global Intellectual Property to work at their New Jersey location. [Link]
• Wenderoth, Lind & Ponack is seeking an entry-level patent attorney with a BSEE. [Link]

Federal Circuit Dispositions, Part II

By Jason Rantanen

As discussed yesterday, the Federal Circuit disposed of approximately 19% of the patent infringement appeals it adjudicated in FY 2010 via Rule 36 summary orders/affirmances.  Although this datum is interesting, it begs the question whether the CAFC's use of Rule 36 affirmances has changed over time.  To answer that question, I searched WESTLAW for the court's Rule 36 orders and manually reviewed the results.  As the following table shows, aside from a modest rise in 2006 and 2007, the CAFC's use of Rule 36 affirmances has remained relatively constant over the last twelve years - with one important exception.


That exception is FY 2011, which so far has exhibited a notable uptick in Rule 36 orders.  The blue bar for 2011 reflects only the Rule 36 affirmances issued through the first four and a half months of the fiscal year, which runs from October 1 to September 30.  If the current rate continues, the CAFC will issue over a hundred Rule 36 affirmances in patent infringement cases -  50% more than the next closest year (FY 2007).

The below chart presents the data in a slightly different way, comparing it to total patent infringement appeals and panel dispositions for the years in which I have data.  Data for FY 2011 reflects appeals docketed and terminated through January 28, 2011.  Note that the termination data for FY 2011 is slightly different from previous years (those years reflect panel adjudications, not all terminations).  As a result, the number of actual panel adjudications is likely somewhat lower. 

Limitations of this analysis: Because the data was obtained through searches of WESTLAW, it's possible that the number of Rule 36 dispositions is under-inclusive.  I suspect, however, that the variation is not particularly large, as the CAFC's own charts indicate that for patent infringement cases there were 42 summary affirmances in 2010, 55 in 2009, and 36 in 2008, an average variation from my data for those years of about 7. (Data for prior years is not readily available).

Federal Circuit Dispositions, Part I

By Jason Rantanen

The Federal Circuit's statistics page contains an array of information on both patent and non-patent appeals.  One of the court's most interesting visuals is a pie chart showing dispositions of appeals in patent infringement cases.  Below is the chart for the year ending on September 30, 2010.  (Note that, as one commenter pointed out, this chart shows only appeals in patent infringement cases (i.e.: appeals from district court determinations), an observation that is consistent with the data available here).

As the court's graph illustrates, the vast majority of patent appeals result in some form of substantive opinion, in many cases a precedential one.  Although the CAFC uses Rule 36 summary affirmances at about the same frequency when disposing of both patent and non-patent cases, it issues precedential opinions far more often when patents are involved in the appeal as the below chart illustrates:

Data sources: "Caseload Analysis" and "Pie chart for merit and non-merit dispositions, in a 12-month period," available at http://www.cafc.uscourts.gov/the-court/statistics.html.

Tomorrow I will dig deeper into the Federal Circuit's use of Rule 36 summary affirmances in connection with patent appeals.

USPTO Hopeful for Budget Increases

President Obama released his proposed budget for 2012. The new Budget would allow the USPTO "full access to its fee collections" and for a "temporary" but major fee surcharge. The proposed budget would include a 1.4% increase in fees based on the Consumer Price Index (CPI) increase and a 15% surcharge on patent fees. The projected collections for FY2012 would jump to $2.71 billion ($2,700,000,000.00), a 16% increase of FY2011 and a 34% increase of FY2010 spending.

The 2010-2012 increase works out to a little over $100,000 extra per examiner. Examiners should not, however, expect raises.

The increased budget is intended to help cut "the average overall processing time of a patent application from 35 months to 20 months by 2015" by hiring 1,500 new patent examiners and to implement a "much-needed 21st century information technology (IT) system" for the USPTO. The proposed budget is far less than the $1 billion infusion suggested by former Chief Judge Paul Michel.

Open Invitation for February 25th Event in Columbia Missouri

Dear Colleagues –

I am writing to invite you to the Missouri Law Review's upcoming symposium that will be held here in Columbia at the University of Missouri School of Law on Friday, February 25, 2011. The focus of the event will be on the Jurisprudence of the Court of Appeals for the Federal Circuit – with a special emphasis on the Court's patent law jurisprudence. David Kappos (Director of the US Patent & Trademark Office) will deliver the Earl F. Nelson Lecture. We have a set of great speakers coming that include Mark Lemley (Stanford) and Peter Menell (Berkeley). Two Mizzou Law grads will be presenting – Jason Mudd ('05) who is now an attorney at Shook Hardy and Ryan Vacca ('04) who is now a law professor at Akron.

Speakers include Professors Lisa Dolak (Syracuse) and Elizabeth Winston (Catholic) who have both been closely involved with Federal Circuit activities for a number of years. Their articles tend to show the type of insight that only comes from that type of experience. Professor Lee Petherbridge (Loyola LA) is one of the new leaders in empirical analysis of the court system. Many Patently-O readers know Professor Chris Holman (UMKC) from his biotech patent law blog. After practicing law for a number of years, Holman moved to academia and has written extensively on the role of patents in the biotechnology industry. Professor Greg Vetter (Houston) concentrates more on software related law and the interrelation between open source software and patent rights.

We have been approved for CLE credit in Missouri and are working on approval for neighboring states. This is a free event, but we apparently need to know how many will be there for lunch & cocktails. If you are planning to attend, please register.

Let me know if you have questions. dcrouch@patentlyo.com.

Links:

• Program
• Symposium Main Page
• Simple Registration Form
• Most folks staying the night will be at the Hampton Inn off Stadium Drive. Send me a note if you are arriving Thursday evening. Current forecast for February 25 is sunny and 60°.

Dissenting in Patent Cases

Over the past decade, the Federal Circuit has released thousands of patent case opinions.  For today's study, I focused on patent opinions released since January 1, 2000. And, I limited my search only to those opinions with Westlaw Headnotes. Westlaw consistently provides Headnotes for published CAFC decisions and for a small number of unpublished opinions that Westlaw deems important. For each opinion, I looked to see whether a dissent was filed and, if so, who filed the dissent.  I also excluded en banc opinions from this particular study and instead focused on three-member panels.

Of the approximately 2000 panel decisions in my sample, 13.5% included a dissent.

For those who follow Federal Circuit decisionmaking, it will not be surprising that Judge Newman filed the most dissenting opinions. Of the 471 decisions in my sample associated with Judge Newman, she dissented in roughly 17%. What may be surprising is that Chief Judge Rader has been the least likely dissenter of the appellate judges.

As the charts below suggest, Chief Judge Rader's low dissent count does not mean he builds unanimous coalitions. Rather, it appears that Chief Judge Rader is skilled at building majority coalitions. The first chart below shows the percent of panel opinions associated with a particular judge where a dissent was filed.  The final chart just considers opinions with a dissent and reports the percent of those opinions where a particular judge is in the majority.  As the final chart shows, in cases with a split decision, Judge Newman is rarely in the majority while Judge Rader is almost always in the majority. 

In the social dynamic of panel opinions, there are particular structures that tend to lead to dissent.  In Chief Judge Rader's case, more than 85% of his dissents were filed when at least one of Judges Lourie, Prost, or Bryson was on the three-member panel.

Using a slightly different dataset, Professor Cotropia (Richmond) found that the Federal Circuit is more likely to dissent than are other circuits — especially in patent cases. 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).  Cotropia suggests that "A likely explanation [for the high level of dissent] is that the repeated exposure to the same subject matter results in more diverse viewpoints. The deeper one gets into a particular subject, the more likely they develop their own opinions and the further developed and more nuanced these opinions become."

Patent Reform Act of 2011: An Overview

The Patent Reform Act of 2011 (S. 23) was introduced on January 25, 2011 by Senator Leahy (D-VT) who was joined by eight co-sponsors (all from the Judiciary Committee) that include Senators Coons (D-DE), Franken (D-MN), Grassley (R-IA), Hatch (R-UT), Klobuchar (D-MN), Kyl (R-AZ), Lieberman (I-CT), and Sessions (R-AL). The bill was referred to the Senate Judiciary Committee which unanimously approved the bill. The House of Representatives will likely move more slowly. Although House Judiciary Committee chair Rep. Smith (R-TX) co-sponsored the similar Patent Reform Act of 2009, Rep. Issa (R-CA) is the "patent expert of Congress" and has only tentatively supported the reform bills in the past. [UPDATE –  Most Recent Version of S. 23 2/11/11]

First-Inventor-to-File: The reform measure would move the US further toward a first-to-file system. Each patent application would be given an "effective filing date," and the patentability will be judged on whether any prior art was available prior to the filing date. One-year grace period would remain in effect, but only for the inventor's own disclosures (and disclosures derived from the inventor). Obviousness will also be judged as of the effective filing date. Inventors will no longer be able to swear behind prior art nor will they be able to establish priority in an interference proceeding. A new creation in the bill is a "derivation proceeding" that would operate only in times where an original inventor alleges that a patent applicant derived the invention from the original inventor's work.

Damages: Patent defendants have argued that courts often treat damages issues as afterthoughts with little procedural control. The proposed amendment would add specific procedures and checks on how a judge manages the damages portion of a case. The amended statute would require that a court "identify methodologies and factors that are relevant to the determination of damages" and that "only those methodologies and factors" be considered when determining the damage award. In addition, prior to the introduction of damages evidence, the court would be required to consider either party's contentions that the others damage case lacks a legally sufficient evidentiary base. In addition, the statute would require a judge to bifurcate the damages portion of a trial if requested "absent good cause to reject the request, such as the absence of issues of significant damages or infringement and validity." Oddly, the proposed statute seemingly bars a judge from amending the discovery schedule or any "other matters" based upon the trial sequencing.

Enhanced Damages: Although we often discuss enhanced damages for willful infringement, the current Patent Act is not explicitly limited to situations involving willful infringement. Rather, Section 284 simply states that "the court may increase the damages up to three times the amount found or assessed." Over the years, Federal Circuit precedent has limited the statute to only situations where the infringer's actions were at least objectively reckless. The amended statute would codify that holding with the words "Infringement is not willful unless the claimant proves by clear and convincing evidence that the accused infringer's conduct with respect to the patent was objectively reckless. [I.e., that] the infringer was acting despite an objectively high likelihood that his actions constituted infringement of a valid patent, and this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer." The statute also makes clear that accusations of willful infringement must be pled with particularity (following FRCP 9(b)); that proof of knowledge of patent is insufficient to establish willful infringement; that a pre-lawsuit notice of infringement cannot itself establish willfulness unless the notification is fact specific in explaining the infringement; that the failure to obtain the advice of counsel (or to present that advice to the jury) "may not be used" to prove willull infringement or inducement of infringement; and that damages subject to trebling are only those accrued after the infringement became willful; and that in a "close case" there will be no willful infringement (here, the statute requires a judge to "explain its decision" and to make a decision prior to the issue being tried by the jury).

Third-Party Challenges to Patent Rights: The bill includes three expanded ways that a third party can use the USPTO to challenge a patent: Pre-Issuance Third-Party Submissions; Third-Party Requested Post-Grant Review; and Inter Partes Post Grant Review.

Pre-Issuance Third-Party Submissions: Under the amendment, third parties would be allowed to submit any printed publication along with a description of the relevance to the USPTO to be considered during the examination of a pending patent application.

Third-Party Requested Post Grant Review: A post grant review proceeding would be created (similar to our current reexamination proceeding) that could be initiated by any party. The review would allow a third party to present essentially any legal challenge to the validity of at least one clam. A major limitation on the post grant review is the request for review must be filed within nine-months of issuance.

Inter Partes Review Proceedings: Once the nine-month window for post grant review is expired, a party may then file for "inter partes review." This new system would replace inter partes reexamination and would be limited to consideration of novelty & obviousness issues based on prior art patents and printed publications. (It appears that third-party requested ex parte reexamination would remain a viable option as well).

False Marking: A large number of false patent marking cases have been filed in the past year. The bill would eliminate those lawsuits except for ones filed by the US government or filed by a competitor who can prove competitive injury.

Oath: The bill would make it easier for a corporation to file a substitute inventor's oath when the inventor is non-cooperative.

Best Mode: Although an inventor will still be required to “set forth” the best mode for accomplishing the invention, the statute would be amended to exclude failure of disclose a best mode from being used as a basis for invalidating an issued patent. The PTO will still have a duty to only issue patents where the best mode requirement has been satisfied.

Fee Setting Authority: The PTO would be given authority to adjust its fees, but only in a way that "in the aggregate" recover the estimated costs of PTO activities. Along this line, a new "micro" entity would be created that would have additional fee reductions.

Top Twelve Most Read Patently-O Posts over the Past Year

1. Bilski v. Kappos
2. Court: Essentially All Gene Patents Are Invalid
3. Patent Reform Act of 2010: An Overview
4. Therasense v. Becton Dickinson: Federal Cicuit Grants En Banc Request to Rethink the Law of Inequitable Conduct
5. Dear Patent Attorney and Patent Agent: Consider Joining the PTO
6. USPTO Guidelines for Determining Obviousness
7. Patent Absurdity: The Movie
8. Federal Circuit Confirms that Patents Must Meet Both the Written Description and Enablement Requirements of Section 112.
9. Bilski, Kenny Rogers and Supreme Court Rule 46 (by Prof Ghosh)
10. Top-Ten Pending Patent Cases (using Hal Wegner's List)
11. Bilski Watch: Timing of Supreme Court Decisions (Using Prof Miller's Data)
12. How should a future patent attorney choose a law school?

See the list from 2009.

Patently-O Bits & Bytes

By Lawrence Higgins

Upcoming Events:

• The Churchill Club will hold their Great Debate on the topic, "Is Software Patentable? Should it be?" on February 16 in California. [Link]
• The Texas Intellectual Property Law Journal is hosting its annual Intellectual Property Symposium entitled "Creating a Landscape of Innovation" on February 18. [Link]
• Law Seminars International is holding its annual Conference entitled "Best Practices in Patent Monetization" February 21-22 in San Francisco. [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, but registration required).
• Judge Timothy Dyk will give a lecture on the commercial impact of complexity and confusion in patent law at the Lewis and Clark law school on March 1. [Link]
• Berkeley Center for Law and Technology is hosting an event entitled "Beyond Piracy in the New China" on March 10. [Link]
• The University of Kansas School of Law is hosting the 2011 Patent Conference (aka "Pat Con") on April 8. The idea behind the conference is that "patent scholars in law, economics, management science, and other disciplines can share their research." If you would like to present, please submit an abstract to KU Professor Andrew Torrance (torrance@ku.edu) by February 15th, 2011. [Link]

Palin trademark application refused

• Sarah and Bristol Palin attempted to register trademarks on their names for "motivational speaking services." The applications have been initially rejected on a technicality. Since the marks are the names of living individuals, those individuals (the Palins) must file a written consent for the name to be registered as a trademark. [Link]

Was Reexamination the Answer in Tokai v. Easton?

• Would the outcome of the CAFC's 2-1 panel obviousness decision been different if the obviousness issue had been determined in reexamination rather in the courts? Scott Daniels argues that a reexamination request would have accomplished the same result at a much lower price. [Link]

Senate Committee approves patent reform

• The US Senate Judiciary Committee approved the Patent Reform Act of 2011. [Link] Before doing so, however, the bill was amended to remove language making it more difficult to prove willful infringement. The bill will now move to the Senate floor to be voted on. This is the 3^rd time since 2008 that that patent reform legislation has gone to the Senate floor. [Link]

Patent Jobs:

• Fenwick & West is looking for an experienced patent attorney to work for its Silicon Valley office. [Link]
• AT&T is seeking a patent attorney with 3-5 years experience to work in their Atlanta location. [Link]
• Luce Forward is seeking an attorney with a minimum 7 years of experience in patent/trademark litigation or prosecution. [Link]
• Stanford Law School is searching for a Director of its soon-to-be-launched IP and Innovation Clinic. [Link]

Al Tramposch Takes Charge of USPTO External Affairs

Anyone working in international intellectual property policy probably knows Al Tramposch.  For the past few years, Mr. Tramposch has been serving as a deputy executive director of the AIPLA focusing on international and regulatory issues.  Prior to that, he worked for many years as the director of Industrial Property Law (patents, trademarks, and design rights) at WIPO in Geneva and in private practice in DC.  He also clerked for Judge Newman at the Federal Circuit.  I've known Tramposch to be extremely skilled – both because of his deep knowledge of the law and because of his natural management talent.

USPTO Director David Kappos recently appointed Tramposch to take over the position as Administrator for Policy and External Affairs at the USPTO. That position was previously held by Duke Law professor Arti Rai.  Tramposch will immediately be placed in the inner sphere of USPTO management.  According to the USPTO, the position has five core management responsibilities over (1) administration and support for external affairs, which will include all domestic and international IP policy-related operations; (2) congressional and legislative engagement, as carried out by the Office of Governmental Affairs; (3) education and training, as carried out under the Global Intellectual Property Academy (GIPA); (4) global IP leadership through administration of the IP Attaché Program; and (5) economic analysis, as carried out by the Chief Economist.

Professor Rai commented to me that Tramposch is “particularly well-suited for the vital role that the Administrator plays in managing relationships with WIPO, other international organizations, and the intellectual property systems of other countries.”

The second major empty slot at the PTO is that of Deputy Director. Sharon Barner left the position in January.

Super Bowl and the NFL's Trademark Offense

My local Super Market is advertising its assortment of “Big Game” supplies.  The store felt free to use “Big Game” to describe the Super Bowl since the USPTO rejected the NFL's attempt to register a trademark on the that particular phrase. My local sports bar was bold enough to advertise their “Super Bowl” party in a local advert.  The bar must be a risk seeker.  The NFL is clear in its website terms of use that everyone is “expressly prohibited from using or misusing any [NFL] Trademarks.”  And, the NFL has aggressively protected its mark.  

In a recent post, attorney-blogger Ken Basin took aim at the NFL and explained his opinion that the NFL is over-reaching.  His argument is that the doctrine of nominative fair use is certainly broad enough to allow a company to use the words “Super Bowl” when advertising a product or service to be used in conjunction with the Super Bowl.

Courts recognize that it’s virtually impossible to refer to particular products or services without using protected trademarks — how can I review the new Apple iPad without using the words “Apple” or “iPad”? That’s why the law allows the public to freely use a protected trademark nominatively, i.e., to describe the product or service underlying the mark, often in the only way that makes any sense. We lawyers call this idea the "nominative fair use" doctrine. And it applies even where the speaker’s goal in using the mark is to describe and promote its own products or services.

Read Ken's Post.

Mark McKenna — an avid sports fan and Notre Dame law professor has written several articles attacking the current breadth of trademark law.  One of his focal points has been the extension of trademark rights to cover merchandise such as t-shirts and jerseys. The recent paper by McKenna and Mark Lemley titled “Owning Mark(et)s” is on point.

Briefing Microsoft v. i4i: Amicus Briefs Supporting Easier Invalidation of Patents in Court

Microsoft v. i4i, Docket No. 10–290 (Supreme Court 2011)

Briefing has begun in earnest.  Microsoft recently filed its opening brief on the merits (File Attachment: microsoftopen.pdf (250 KB)) and now twenty-five self-proclaimed friends-of-the-court have added their respective two-cents.  The case focuses on the burden of proof required to invalidate an issued patent. Microsoft has challenged the Federal Circuit's rule that clear-and-convincing evidence is necessary. Instead, the software giant argues that a preponderance of the evidence should be sufficient to invalidate a patent — especially when a court is considering evidence of invalidity that was not considered by the Patent Office during examination. 

In many ways, this case would only shift marginal cases — such as when an accused infringer is able to prove that a patent is probably invalid, but cannot provide clear and convincing evidence of that fact.  The specific marginal problem for Microsoft is that it presented only limited evidence of the existence of custom built prior-art software that would invalidate i4i's patent. Unfortunately for Microsoft, that twenty-year-old software code is no longer available and the parties presented competing factual testimony as to the operation of the prior art software.

Of the twenty-five friend-of-the-court (FOTC) briefs filed thus far, twenty explicitly and officially support Microsoft's position that the standard should be lowered.  Five briefs claim to support “neither party.” (Briefs supporting i4i will be filed in March, 2011).  The official claim of support often has limited meaning. I would roughly divide the briefs into four groups: (1) Seven briefs support Microsoft's position that the clear-and-convincing standard should not apply when the evidence of invalidity was not considered by the USPTO. (2) thirteen briefs further argue that the standard should be lowered-across-the-board in [essentially] all cases.  (3) Two briefs take the opposite position — that the standard should remain clear and convincing. Although these two briefs officially support neither party, I expect many similar briefs to be filed in support of i4i next month. (4) Three briefs focus on interesting issues of whether we should have dual (or variable) standards that depend upon whether the PTO considered the evidence during prosecution. The following is a discussion of some of the more interesting aspects of the briefs that I noticed.

Lowering the Standard when the PTO has not Considered the Arguably Invalidating Evidence:

The well respected Supreme Court patent team at Fried Frank of Jim Dabney, Professor John Duffy, and Steve Rabinowitz filed a brief on behalf several corporations, including SAP, Symantec, Facebook, and Yahoo!. Their brief agrees with Microsoft that the standard for invalidating a patent should be lowered unless the file wrapper “shows that the PTO has engaged in reasoned decisionmaking with regard to a factual issue.”  The brief grounds its argument in  the Administrative Procedures Act (APA). As suggested above, the brief indicates that the APA “reasoned decisionmaking” analysis should occur on a fact-by-fact basis — with deference only given when evidence shows that the PTO made a reasoned decision regarding the fact in question.  File Attachment: sap.pdf (170 KB). Writing for a group of 37 Professors, Professor Mark Lemley adds that APA deference may be appropriate only in very limited circumstances — such as when a particular factual question was decided in the course of an adversarial inter partes reexamination proceeding. File Attachment: lemley.pdf (229 KB). In a complementary brief, WM Mitchell Law School's IP Institute (led by Profs Moy and Erstling) reviews 150 years of Supreme Court case to reach its conclusion that the clear-and-convincing evidence rule “was extended to issues not before the USPTO only recently.” File Attachment: wmmitchell.pdf (178 KB). See also File Attachment: bsa.pdf (196 KB). 

Generic pharmaceutical companies generally support Microsoft's position that “bad” patents should be easier to invalidate. Shashank Upadhye (Apotex's IP chief) generally presents interesting arguments. The gist of his brief is that courts would do better to err on the side of free competition (i.e., invalidity). File Attachment: apotex.pdf (181 KB). Teva argues that C&C standard encourages applicant to conceal prior art. The logic behind that argument is that applicants would prefer to sneak through the PTO and then rely on the C&C standard in litigation to win the case or force settlement. File Attachment: tevapharma.pdf (234 KB). The Bar Association of DC argues the other-side — that increasing the incentive to submit prior art references during prosecution will not lead to better patent quality. File Attachment: badc.pdf (104 KB).

Apple and Intel support Microsoft's position. However, it is clear that the companies (likely Apple) strained to avoid saying that they support “Microsoft” or even the “petitioner.”  Overall, I would say that the brief does more harm to its cause than good.  The problem is that the brief offers no additional arguments except for a three page section regarding “practical” and “empirical” evidence that the C&C standard makes a difference to juries. Unfortunately for Apple, the evidence presented is glaringly weak. File Attachment: apple.pdf (109 KB).  However, evidence from other briefs, such as that filed by Prof Hollaar may provide a cumulative bulk sufficient to make this case.  File Attachment: hollaar.pdf (262 KB).

EFF and PubPat: As might be expected, the Electronic Frontier Foundation (EFF) and the Public Patent Foundation (PubPat) both argued that a preponderance of the evidence should be sufficient to invalidate a patent in all cases. EFF's brief (penned primarily by Michael Barclay) focuses primarily on policy — arguing that the sheer number of issued-but-invalid patents makes this an important issue that needs resolution. File Attachment: eff.pdf (293 KB). Dan Ravicher at PubPat similarly writes that the “extremely poor quality” of US patents screams for a lowering of the standard. File Attachment: pubpat.pdf (92 KB). See also, File Attachment: ctia.pdf (200 KB), File Attachment: hercules.pdf (207 KB).  The brief by Google, et al., takes this a step further than the normal “lack of time” and “incompetence” statements –  arguing that the current law and practice “tilt the scales heavily in favor of granting patent applications based on incomplete analyses.” File Attachment: google.pdf (241 KB).

Cisco, Ebay, Netflix, Toyota, and others argue that the advent of third-party requested reexaminations changes the system in a way that impacts the proper standard used in district court litigation. The brief argues (in a way that I don't yet fully understand) that the existence of reexaminations suggests that the litigation standard should be a preponderance of the evidence. File Attachment: cisco.pdf (187 KB).

Supporting a High Standard: As the largest US patent holder, it might be no surprise that IBM supports a high standard for invalidating a patent.  Of course, across the “v” sits Microsoft as another very large patent holder.  I would point to three primary differences between IBM and Microsoft: (1) IBM has a long and extensive pro-patent stance; (2) IBM has an extremely strong and lucrative patent monetization program; and (3) perhaps most importantly, IBM itself has only rarely been sued for patent infringement.  File Attachment: IBM.pdf (274 KB). The AIPLA –  the largest association of US patent lawyers – also supports the status quo. File Attachment: aipla.pdf (157 KB).

Professor Morris does not take a position regarding a high or low standard. Rather, her focus is on whether it makes sense to have two standards of proof that vary according to whether the particular fact in question was considered by the USPTO. File Attachment: Morris.pdf (494 KB).

Notes:

• Microsoft provided a ZIP file of all the briefs. File Attachment: Amicus Briefs.zip (4504 KB)
• Michael Barclay discusses the briefs on his IP Duck Blog.

 

 

 

 

The Teeth of KSR: Obviousness on Summary Judgment

Tokai Corp. v. Easton Enterprises (Fed. Cir. 2011)

Tokai's patents relate to a safety switch the type of long-nozzle lighters that are often used to light barbecues and patron saint candles. Easton has allegedly sold more than 9-million infringing lighters in the US. The district court construed the claims broadly – leading Easton to admit infringement but successfully challenge the claims as obvious. The district court's obviousness finding came on summary judgment after the court excluded Tokai's expert testimony (since the plaintiff had not submitted written reports during discovery) – finding no "genuine issue of material fact as to the obviousness of the asserted claims."

On appeal, the Federal Circuit affirmed – holding that the district court had properly excluded the expert testimony and that the obviousness determination was correct.

Lets focus on obviousness:

Conventional wisdom over the past twenty years has been that summary judgment is useful for resolving issues of infringement and novelty, but that obviousness challenges are rarely resolved on summary judgment. Although ultimately a question of law, judges often leave the obviousness question for a jury. That conventional wisdom may have changed in 2007 when the Supreme Court decided KSR v. Teleflex, 550 U.S. 398 (2007). In that case, the Supreme Court wrote what looked like a summary judgment decision finding the asserted patent invalid as obvious.

The question of obviousness is defined in 35 U.S.C. § 103(a). The statute considers the differences between the patented invention and the prior art and whether, in light of those differences, a person having ordinary skill in the art would have found the invention obvious at the time of the invention.

Clear and Convincing + Added Burden: A question raised on appeal relates directly to the Supreme Court's upcoming decision in Microsoft v. i4i. Here, some, but not all, of the four prior art references had been considered by the USPTO during prosecution. The patentee argued that the court should have provided more deference to the PTO. On the other side, the defendant argued that much less deference should be given to PTO decisions because the PTO had not considered "key" elements of the obviousness argument. On appeal, the Federal Circuit affirmed that the current law-of-the-land requires clear and convincing evidence to invalidate a patent and that an "added burden" is not required when the obviousness question is based on at least some evidence not considered by the PTO.

Conclusion of Obviousness: In arriving at its conclusion that Tokai's asserted claims were obvious, the appellate panel looked at the fact that the components of the claim are "simple mechanical parts that are well known in the art;" that "a need for safety utility lighters was recognized in the art;" that similar safety switches were already available for cigarette lighters (an admitted analogous art); and that the art is "predictable." As in KSR, the appellate court here held that the "identified, predictable solution" to the "known problems" were within the grasp of a skilled artisan.

It would have been obvious to one of ordinary skill and creativity to adapt the safety mechanisms of the prior art cigarette lighters, as disclosed in Floriot and/or Morris, to fit a utility lighter as disclosed by Shike, even if it required some variation in the selection or arrangement of particular components.

Invalidity affirmed.

In dissent, Judge Newman lauded the importance of the invention and explained her view that the patents were valid.

The Tokai lighter has an ingenious safety design, whereby the device is simple to operate by adults but not by children, unlike prior art utility lighters, and locks automatically after use, unlike prior art utility lighters. The Tokai safety structure does not result from direct combination of the prior art. Nonetheless the district court, and now this court, hold on summary judgment that the asserted claims of the Tokai patents are invalid for obviousness. I must, respectfully, dissent.

. . . .

The determination of obviousness is not whether a person could, with full knowledge of the patented device, reproduce it from prior art or known principles. The question is whether it would have been obvious, without knowledge of the patentee's achievement, to produce the same thing that the patentee produced. This judgment must be made without the benefit of hindsight. It is improper to take concepts from other devices and change them in light of the now- known template of the patented device, without some direction in the prior art that would render it obvious to do so.

In a crowded and competitive field such as this is stated to be, a modification that achieves a valuable improvement is of significance in view of the many entrants seeking commercial advantage. As the Hummer court recognized, incremental but unobvious improvements serve the public interest, and are included in the purpose of the patent incentive.

  

Patently-O Bits & Bytes

 

By Lawrence Higgins

Upcoming Events:

• Licensing Executives Society will hold its winter meeting in San Jose from February 10-11. Speakers include Damon Matteo, Nola Masterson, and Bruce Lehman. Patently-O readers get $200 of the registration rate by using code PO11. [Link]
• Practising Law Institute (PLI) will hold its 5^th annual Patent Law Institute in New York from February 17-18. Deputy Director Sharon R. Barner will deliver the USPTO keynote address. [Link]
• The Texas Intellectual Property Law Journal will host its 12^th annual Intellectual Property Symposium on February 18^th in Austin. [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).
• 13^th Annual Richard C. Sughrue Symposium on Intellectual Property Law and Policy will be held in Akron on March 21. Guest Speakers include Donald Chisum, Judge Paul Michel, and Marybeth Peters. [Link]

Johnson & Johnson loses patent infringement suit

• A jury in Texas has ordered J&J to pay $482 million to inventor Bruce Saffran for infringing his patent. Saffran's patent # 5,653,760 [Link]was for a cardiac stent, which is used after heart surgery. Saffran previously won a $50 million settlement from Boston Scientific for infringing the same patent. [Link]

Virginia State Bar IP Section Law Student Writing Competition

• The Virginia State Bar Intellectual Property Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia relating to an intellectual property law issue or the practice of intellectual property law.  The winner receives a cash prize of $4,000. [Link]

Apple Patents Glove for Use with Electronic Devices

• Apple has been issued a patent for what they call a "High tactility glove system". Patent # 7,874,021 states that this glove may be used with an electronic device in cold weather, since regular gloves do work well when using devices like the iPod. [Link]

Sharp files patent infringement suit

• Sharp filed a patent infringement suit against Au Optronics, in regards to crystal display (LCD) technology. The companies had a license agreement which expired on December 31^st; Sharp wishes to block sales and imports of products that infringe the patent. [Link]

Patent Jobs:

• Euro-Pro is seeking a patent agent with an engineering background and 3-5 years experience. [Link]
• Roberts Mlotkowski Safran & Cole is looking for an experienced patent attorney with a chemical/chemical engineering degree to work for its Virginia office. [Link]
• Ice Miller is seeking a patent attorney with an engineering background and 2-4 years of experience. [Link]