Patent Law Blog (Patently-O)

Global-Tech v. SEB: Supreme Court Affirms CAFC Result But Not "Deliberate Indifference" Standard

By Jason Rantanen

Global-Tech Appliances, inc. v. SEB S.A. (2011)  Download Global-Tech v SEB
Majority: Alito (author), Roberts, C.J., Scalia, Thomas, Ginsburg, Breyer, Sotomayor, Kagan.  Dissent: Kennedy.

In an 8-1 decision this morning, the Supreme Court affirmed the result in Global-Tech v. SEB, holding that while inducement of infringement of infringement requires knowledge that the induced conduct itself infringes, that knowledge element can be met by a showing of "willful blindness."  In reaching this conclusion, the Court rejected the Federal Circuit's adoption of a "deliberate indifference" standard.  By endorsing a "willful blindness" approach to knowledge - which Justice Kennedy's dissent indicates is a novel move - this opinion may have profound implications well beyond the area of intellectual property law.

Inducement of Infringement Requires Knowledge That the Induced Acts Constitute Patent Infringement
The Court first held that, like contributory infringement, inducement of infringement requires that the accused inducer know that the third party's conduct constitutes an infringement.  This is separate from any intent required to produce the acts themselves (i.e.: making, using, offering to sell, selling, or importing of a patented invention).  After recognizing that there are two conflicting interpretations of 35 U.S.C. § 271(b), the court looked to inducement's common origin with contributory infringement (which the Court in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476 (Aro II) held required knowledge of infringement) and concluded that the same knowledge requirement applies to inducement:

Based on this premise [that contributory infringement requires knowledge of infringement], it follows that the same knowledge is needed for induced infringement under §271(b). As noted, the two provisions have a common origin in the pre-1952 understanding of contributory infringement, and the language of the two provisions creates the same difficult interpretive choice. It would thus be strange to hold that knowledge of the relevant patent is needed under §271(c) but not under §271(b).

Knowledge Requirement Satisfied by Willful Blindness
Turning to the question directly presented by the case, the Court further held that while deliberate indifference does not satisfy the knowledge required for § 271(b), willful blindness does.  In reaching this conclusion, the Court looked to criminal law, which holds that defendants cannot escape the reach of the law by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.

Willful blindness exists when two requirements are met.  First, "the defendant must subjectively believe that there is a high probabilty that a fact exists."  Slip Op. at 13.  Second, "the defendant must take deliberate actions to avoid learning of that fact."  Id.  According to the Court, "[t]hese requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence."  Slip Op. at 14.  Furthermore, "[u]nder this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts."  Id.  "By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, see ALI, Model Penal Code §2.02(2)(c) (1985), and a negligent defendant is one who should have known of a similar risk but, in fact, did not, see §2.02(2)(d)."

While this was not the test applied by the Federal Circuit, the Court concluded that the evidence, when considered under the appropriate standard of review, met its willful blindness standard.  In reaching this conclusion, the Court looked to the Pentalpha's decision to copy all but the cosmetic features of SEB's fryer; its decision to copy an overseas model of SEB's fryer, and its decision not to inform its attorny that the product "was simply a knockoff of SEB's fryer." 

Justice Kennedy: Inducement Should Require Actual Knowledge
Writing in dissent, Justice Kennedy would have held that willful blindness is insufficient to satisfy the knowledge requirement of inducement.  "Willful blindness is not knowledge; and judges should not broaden a legislative proscription by analogy."  Kennedy Dissent at 1.  In particular, the Justice disagreed that the Court had a long precedent of invoking the doctrine of willful blindness as constituting knowledge in the criminal context.  "[T]his Court has never before held that willful blindness can substitute for a statutory requirement of knowledge."  Dissent at 3.

Following from this, Justice Kennedy warns of the enormous ramifications Global-Tech may have:

The Court appears to endorse the willful blindness doctrine here for all federal criminal cases involving knowledge. It does so in a civil case where it has received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue.

There is no need to invoke willful blindness for the first time in this case. Facts that support willful blindness are like these tend to be the only available evidence in any event, for the jury lacks direct access to the defendant’smind. The jury must often infer knowledge from conduct,and attempts to eliminate evidence of knowledge may justify such inference, as where an accused inducer avoids further confirming what he already believes with good reason to be true. The majority’s decision to expand the statute’s scope appears to depend on the unstated premisethat knowledge requires certainty, but the law often permits probabilistic judgments to count as knowledge.

Dissent at 3-4.

Upcoming Event: Chisum Patent Academy

by Dennis Crouch

Professors Don Chisum and Janice Mueller are two of the leading patent law experts in the US. Chisum's 28–volume treatise is the world's most cited source of patent law knowledge and Mueller's one-volume treatise on US patent law is the leading patent law hornbook.  For 2011–2012, I have decided to rely primarily on Mueller's treatise for my patent law class rather than a traditional casebook.  The hornbook is nice because it actually explains the law; at $66 it is half the cost of most textbooks; and it will actually be a useful reference for students long after class is over.  However, the main reason that I chose a straightforward text is that I am planning to spend about 1/3 of the patent law course doing hands-on activities (such as interviewing inventors, drafting claims, responding to office actions,  and arguing Markman hearings). 

The point of this post is to highlight the upcoming three-day Chisum Patent Academy that Professors Chisum and Mueller will be team-teaching July 25–27 in Seattle Washington. The course is an intense focus on current patent law and its nuances.  If anyone has had Chisum or Mueller for classes, then you know that they are both excellent teachers and this looks to be an excellent program.

The cost is $2,000; enrollment is limited to 10–participants; 18–hours of CLE will be applied for.

Link:

• http://www.chisum-patent-academy.com/
• Contact info@chisum.com

Matching the Problem with the Methodology: The Failure of the EC’s PatQual Report

Guest Post by Ronald Mann, Professor of Law at Columbia Law School

There's a lot of press lately for PatQual, the EC's massive "Study on the Quality of the Patent System in Europe." To read the press clippings, you'd think the European Commission had produced the definitive work on how to assess the output of government patent offices. But a closer look suggests this study falls far short of the standards for which academics or serious policy analysts strive.

To start with the most obvious problem, the standards of the data analysis are far below what would pass in this country, much less in the quantitatively sophisticated venues of European universities. Although the 194-page report includes more than 100 figures and tables, with detailed and intricate cross-tabulations that slice numerous survey responses across metrics like the business sector of the respondent, the size of the company's patent portfolio, or the size of the company, not a single one of the graphics mentions the number of companies responding to any particular inquiry, and only once in the entire tome do the authors mention that a mere 221 companies and 98 Universities responded. The small n means that the bulk of the report describes "important" findings about the opinions of important sectors of the EU based on the opinions of a handful of companies.

To give one of the starker examples, Table 4 discusses answers about the relative importance of metrics of patent quality by firm size. The column for medium firms (between 50 and 250 employees) reflects the responses of less than 25 companies – out of presumably tens of thousands of such firms across the EU. Given the thin description of the sample in the report, it is entirely possible that all of those firms are located in a single country, or even a single city.

For my own purposes, the most important subjects that the report addresses are the comparative quality of the EU and US systems, questions that are particularly important now as the US and EU offices attempt to establish work-sharing arrangements. To its credit, the report does a good job of discussing the multi-faceted nature of patent quality from a user's perspective, concluding that it includes some combination of timeliness, reliable validity, and cost effectiveness. And it makes some sense to use a survey to analyze the relative importance different users attribute to those different quality metrics. Even there, though, we would expect some attention to sample size and selection bias (the respondents were identified primarily through trade associations, which presumably have their own particular axes to grind on the issues that the report addresses).

But it makes no sense to use surveys to compare how the different systems are doing on those metrics. So, for example, the report goes out of its way to emphasize how poorly the U.S. office is doing on timeliness as compared to the EU – 81% of respondents rate the EU well on timeliness but only 51% rate the US well. But why should we care about a survey on timeliness, when actual data is available? Although reasonable minds could differ on exactly what the right metric for timeliness is, how comparable the two systems are and what the optimal pendency time would be, it is easy to obtain reliable quantitative data on the existing situation. And the data show pretty definitively that however concerned the PTO and US patenters are about pendency time in the US, it is even longer in the EU (almost 50% longer in fact).

So what do we get from a survey purporting to show that the EU is doing much better on timeliness? We learn that if you ask people in the EU, they think their system is better than ours. Presumably if you asked patentees in the US, where Dave Kappos has made his attack on the backlog a highly visible affair, you'd get the same answer.

But that only shows the limits of survey evidence. It is just as easy to produce a poorly designed survey that "proves" things that are demonstrably false as it is to produce a poor case study that emphasizes poorly chosen and unrepresentative anecdotes. As empirical scholars, it is important to ensure that the data on which policymakers make important choices is as reliable as it should be. And the PatQual study, sad to say, surely fails any reasonable baseline of reliability.

Patently-O Bits & Bytes by Lawrence Higgins

Pro Bono Patents!

• Members of the Twin Cities legal community are launching a pilot program to provide pro bono legal services to low-income, independent inventors. One of the programs goals is to put a dent in the USPTO’s backlog of patent applications, by increasing the efficiency of the applications submitted by independent inventors. This Pro Bono program is encouraged by the USPTO and the program’s success may help spark innovation across the nation. [Link]

Should Disney be allowed to trademark "SEAL TEAM 6"?

• The Navy is challenging Disney’s attempt to trademark the name of the elite squad that took out Bin Laden. On May 3^rd Disney filed the mark "SEAL TEAM 6" for various goods and services. [Link] [Link] [Link] However, it looks like the Navy did not like Disney trying to profit off of their work, so the Navy filed for the mark "SEAL TEAM" on May 13^th. [Link] It looks like the Navy is trying to create a likelihood of confusion with the mark "SEAL TEAM", so that the USPTO will not issue the mark to Disney under 15 USC 1052(d). [Link]

Groklaw new editor will be Mark Webbink

• Pamela Jones (PJ) the editor of Groklaw announced in early April that she was not going to write any more articles for Groklaw. However, PJ was bombarded with messages asking to keep the website going, so she asked Mark Webbink to become the new editor. Mark Webbink accepted the proposal and is officially the new writer of Groklaw. Mark is a visiting professor at New York Law School where he runs the Center for Patent Innovations, oversees the Peer To Patent project, and is a senior lecturing fellow at Duke University School of Law where he teaches intellectual property courses. [Link]

Inventor of the Year Award

• IPO Education Foundation is seeking nominations for its 38th National Inventor of the Year Award. The award presents an opportunity for nominators to obtain major recognition for a deserving employee, client, or colleague as one of America's most outstanding inventors. Nominators could get recognition for themselves and their firm. The deadline for nominations is June 1. [Link]

Patent Jobs:

• O’Shea Getz is seeking a patent attorney with at least 4 years of experience to work in their Springfield, MA office. [Link]
• Klarquist Sparkman is looking for an IP litigation associate with 1-2 years of experience to work in their Portland office. [Link]
• Laird Technologies is searching for an IP manager with 3 years of patent prosecution experience to work at their Chesterfield, MO location. [Link]
• Ballard Spahr is seeking an IP litigation associate with 3-5 years of experience to work in their Philadelphia office. [Link]

Upcoming Events:

• The Berkeley Center for Law & Technology (BCLT) and the USPTO are co-hosting a conference on the interface between the PTO and the District Courts on June 7^th in Berkeley, California. The keynote address will be delivered by Teresa Stanek Rae. Guest speakers include Robert Bahr, Elaine Gin, and Stuart Graham. [Link]
• AIPLA’s Chemical Patent Practice Road Show: Prosecution and Litigation Strategies will be held in Chicago on June 23^rd. This seminar will cover advanced issues relating to chemical patent prosecution and litigation. Guest Speakers include Sharon Barner, Bradley Crawford (from MBHB), Whitney Remily, Michael Tierney, and Alexander Wilson. [Link]
• The National Association of Patent Practitioners (NAPP) will hold their 2011 Annual Meeting and Nuts & Bolts Short Course at the Venetian Palazzo Hotel in Las Vegas, Nevada on July 16-19, 2011. [Link]

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

Arris Group v. BT: Vendors and DJ Standing

By Jason Rantanen

Arris Group, Inc. v. British Telecommunications PLC (Fed. Cir. 2011) Download 10-1292
Panel: Rader, Newman, Dyk (author)

Arris Group manufactures cable telephony and data products for cable system operators, such as its customer Cable One, to use in Voice over Internet Protecol (VoIP) telephone services.  In 2007, British Telecommunications (BT) sent a letter to Cable One accusing it of infringing various system and method patents held by BT and requesting that the parties begin licensing negotiations.  During those negotiations, BT provided Cable One with a 118-page presentation showing how selected claim elements were met by Cable One's services.  That presentation identified Arris's products as embodying numerous elements and performing numerous method steps of the asserted claims; however, the presentation did not assert that Arris directly or indirectly infringed BT's patents.  Nearly two years of negotiations (which were expanded to include Arris) followed, but no license agreement was consummated. 

In 2009, Arris filed a declaratory judgment action seeking a declaration that it does not infringe the BT patents and that the patents are invalid, as well as an injunction preventing BT from instituting infringement proceedings against Arris or its customers.  The district court dismissed the action for lack of subject matter jurisdiction, finding that there was no case or controversy between the parties.  Arris appealed.

An Economic Injury is Insufficient to Establish a Case or Controversy
The CAFC first rejected Arris's contention that there is an Article III case or controversy simply because Arris has suffered an economic injury as a result of BT's infringement threats.  "[I]n patent cases before the Supreme Court's decision in MedImmune, the regional circuits and our court held that economic injury is not alone sufficient to confer standing.  MedImmune did not abandon this rule."  Slip Op. at 8-9.  Rather, there must be an "adverse legal interest," which "requires a dispute as to a legal right - for example, an underlying legal cause of action that the declaratory defendant could have brought or threatened to bring."  Slip Op. at 9 (emphasis added). 

But an Implicit Contributory Infringement Threat is Sufficient
The CAFC did conclude, however, that a case or controversy existed based on BT's implicit assertion that Arris was contributing to the infringement of BT's patents.  "When the holder of a patent with system claims accuses a customer of direct infringement based on the customer's making, using, or selling of an allegedly infringing system in which a supplier's product functions as a material component, there may be an implicit assertion that the supplier has indirectly infringed the patent."  Slip Op. at 11.  Here, the court found that BT's assertion of direct infringement against Cable One, which "made it clear that Cable One's use of Arris's CMTSs and E-MTAs was central to BT's infringement contentions," Slip Op. at 14, established an Article III case or controversy regarding whether Arris was contributorily infringing BT's patent.

The "central" nature of Arris's products, itself not an element of contributory infringement, nevertheless drove the court's conclusion.  Although the court did step through the various elements of contributory infringement, it did so in only a single paragraph, and even that analysis relied heavily on the significant degree to which BT's infringement presentation to Cable One focused on Arris's products.  See Slip Op. at 16-17.  The court also found the inclusion of Arris in BT's licensing and infringement negotiations to be a relevant factor.  Thus, while a discussion of the actual elements of contributory infringement will doubtless be important to future declaratory plaintiffs relying on an indirect infringement theory, the actual outcome may be driven more by the underlying relationship between the patent holder and its infringement allegations to the declaratory plaintiff than by a formal analysis of contributory infringement.

En Banc: Federal Circuit to further Address Joint Infringement

McKesson Technologies Inc. v. Epic Systems Corp., (Fed. Cir. 2011) (en banc order)

The Court of Appeals for the Federal Circuit has ordered an en banc rehearing to further address questions of when multi-party actions can lead to a finding of patent infringement.  In McKesson, no single party had performed each and every step of the claimed method. However, one party (the health care provider) had completed a portion and had allegedly induced separate parties (users) to complete the remaining steps.  Of importance to the decision, the encouragement offered by health care provider did not amount to “control” over the users.  Taking these facts, the original Federal Circuit panel held the patent not infringed because (1) no party could be considered a direct infringer of the patent and (2) liability for inducing infringement is not actionable because there is no underlying direct infringement.

In the en banc order, the court identified two questions to be addressed by the parties in their briefs:

1. If separate entities each perform separate steps of a method claim, under what circumstances, if any, would either entity or any third party be liable for inducing infringement or for contributory infringement?  See Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983).
2. Does the nature of the relationship between the relevant actors—e.g., service provider/user; doc-tor/patient—affect the question of direct or indirect infringement liability?

A second en banc rehearing on the topic of joint infringement is already pending.  In April 2011, the Federal Circuit ordered en banc rehearing of Akamai Technologies, Inc. v. Limelight Networks, Inc. In that case, the court asked the following question

If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?

Although not explicitly announced, it is likely that the Federal Circuit will hold oral arguments for these two cases on the same day.  To account for the timing difference, the court had shortened the briefing deadlines in McKesson

Therasense v. BD: En Banc Federal Circuit Raises Bar for Proving Inequitable Conduct and Unenforceability

Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (en banc)

File Attachment: TherasenseFromPatentlyo.pdf (285 KB)

In a 6–1–4 decision, an en banc Federal Circuit has attempted to cure the “plague” of inequitable conduct pleadings by raising the standards for proving that the alleged bad act was material to patentability and that the patentee undertook the alleged bad act with intent to deceive the USPTO.  The court has also rejected the sliding scale approach that previously allowed strong evidence of materiality to compensate for weak evidence of intent to deceive (and vice-versa).  Finally, the the court held that a finding of inequitable conduct should not immediately render a patent unenforceable. Rather, the court must also “weigh the equities” to determine whether the inequitable conduct warrants the unenforceability remedy.

To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO. The accused infringer must prove both elements—intent and materiality—by clear and convincing evidence. If the accused infringer meets its burden, then the district court must weigh the equities to determine whether the applicant’s conduct before the PTO warrants rendering the entire patent unenforceable.

Intent: For the element of intent to deceive the USPTO, the Federal Circuit now demands evidence of a “deliberate decision” to deceive.  Focusing on the failure to submit material prior art, the court held that the intent element requires “clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it. . . . Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” When circumstantial evidence is used, intent to deceive must be the “most reasonable inference.”

Materiality: For the element of materiality, the Federal Circuit now demands evidence of “but-for materiality.”  In other words, the court must find that, but for the deception, the PTO would not [should not] have allowed the claim.  “In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” 

Exceptions: As a major exception, the court here held that in cases involving affirmative egregious misconduct, but-for material need not be proven. 

Unenforceable: [UPDATED] Even when material and intent are proven, the court held that a patent should only be rendered unenforceable due to inequitable conduct “where the patentee’s misconduct resulted in the unfair benefit of receiving an unwarranted claim.”  As in eBay v. MercExchange, this equitable analysis is intended to serve as a substantial requirement that limits the discretion of district courts.

Apple Buys 200+ Patents from Freescale Semiconductor

Apple Inc. recently recorded the receipt of 200 patents and pending patent applications from the electronics company Freescale Semiconductor, Inc.  Although not recorded until May 18, 2011, the assignment is dated April 11, 2011.  Freescale began as a division of Motorola in 1949 and spun-off in 2003.  Some of the patents transferred originally belonged to Motorola.

The law does not require that patent assignments be recorded. However, the recordation of rights protects the assignee against others who may later claim rights under color of title.  The recordation statute is a “notice statute” and indicates that a prior conveyance of an interest in a patent “shall be void as against any subsequent purchaser or mortgagee for valuable consideration, without notice, unless it is recorded in the [USPTO] within three months” from the date of the prior conveyance. 

To be clear, the assignment records available only indicate that Apple received an “assignment of assignors interest.”  Thus, it is unclear from the information now available whether (1) Apple obtained full title to the patents and (2) whether Apple purchased the rights or obtained them through some other type of transaction.  However, a cash purchase is likely because Apple has a large multi-billion-dollar cash surplus while Freescale has a large multi-billion-dollar debt that has come due.  The patents were previously mortgaged and a release of the security interest has not yet been recorded.

Assigned Patents include Patent Nos. 7929636; 7912083; 7881721; 7852811; 7813455; 7809074; 7808886; 7702029; 7693128; 7675844; 7627325; 7623599; 7609779; 7602861; 7603094; 7602837; 7599321; 7593485; 7590184; 7590419; 7539272; 7539462; 7495515; 7489202; 7486941; 7469020; 7421252; 7412006; 7403758; 7392026; 7369820; 7346317; 7346098; 7324558; 7313166; 7301402; 7266359; 7231586; 7227916; 7215972; 7209720; 7177616; 7158603; 7158578; 7148749; 7127563; 7120402; 7117234; 7109816; 7046977; 7042909; 7016398; 7010278; 6996158; 6982605; 6973142; 6961011; 6959035; 6952572; 6950634; 6950910; 6933766; 6930554; 6914935; 6889036; 6845233; 6839381; 6812802; 6804501; 6782038; 6768353; 6760386; 6751264; 6693490; 6625233; 6600344; 6594328; 6560447; 6490440; 6487395; 6487260; 6487398; 6445790; 6424825; 6400821; 6400218; 6393071; 6370211; 6356217; 6327313; 6317064; 6310856; 6301306; 6289060; 6275540; 6263199; 6259318; 6243410; 6233287; 6185411; 6137997; 6133793; 6130921; 6100721; 6073002; 6055436; 6049703; 6049233; 5960042; 5945878; 5943378; 5926052; 5905757; 5886547; 5874860; 5867063; 5812027; 5799043; 5799011; 5777516; 5778306; 5757236; 5757237; 5758275; 5748042; 5737327; 5734974; 5701600; 5696797; 5678223; 5673003; 5670951; 5633895; 5630222; 5606731; 5604926; 5584053; 5513382; 5493700; 5481226; 5478773; 5471665; 5448770; 5430416; 5387547; 5363071; 5194833; 5175729; 5128632; 5072193; and 5061911.

Assigned pending Patent Applications include Publication Nos. 20110096707; 20110019631; 20110009148; 20100322226; 20100202553; 20100115358; 20100110901; 20100113105; 20100091826; 20100061468; 20100061278; 20100042881; 20090304109; 20090245148; 20090245223; 20090238121; 20090232097; 20090201861; 20090190688; 20090181691; 20090181690; 20090116599; 20090051441; 20090034636; 20090034480; 20080318579; 20080267057; 20080268785; 20080268888; 20080232308; 20080233964; 20080233992; 20080232234; 20080229177; 20080227495; 20080165875; 20080165717; 20080101494; 20080080439; 20080080632; 20080080449; 20080076370; 20080075058; 20080043883; 20080025197; 20080009250; 20070293180; 20070280379; 20070274477; 20070201586; 20070109055; 20060239377; 20060223462; 20060170499; 20060035611; 20050111529; 20050079850; 20050042996; 20040041644; 20040041616; 20040019620; and 20030035498.

There is a substantial amount of diversity among this group of patents. They almost all relate to hardware for computers and wireless devices.

Responding to USPTO Requests for Information

By Dennis Crouch

In the comment section of a prior post, I highlighted a an Office Action asking an applicant (Intellectual Ventures) to provide further background information on their invention, including "a detailed summary of the improvements" associated with the invention and "any technical information known to Applicant concerning the related art."

As the present disclosure was submitted without a section describing the background of the invention and, more specifically, the state of the art at the time the present invention was conceived, Examiner also requests, under 37 C.F.R. §§ 1.105 (vi) and (viii), that Applicant submit with the response to this Office Action a detailed summary of the improvements included in the claimed invention as well as any technical information known to Applicant concerning the related art.

See Prosecution History File of US App. Serial No. 11/880,432.

Rule 105 (37 C.F.R. § 1.105) provides patent examiners with authority to request certain types of information from applicants or anyone with a duty under Rule 56 (37 C.F.R. § 1.56). The rule reads as follows:

In the course of examining or treating a matter … in a patent, or in a reexamination proceeding, the examiner or other Office employee may require the submission, from individuals identified under § 1.56(c), or any assignee, of such information as may be reasonably necessary to properly examine or treat the matter, for example:

1. Commercial databases: The existence of any particularly relevant commercial database known to any of the inventors that could be searched for a particular aspect of the invention.
2. Search: Whether a search of the prior art was made, and if so, what was searched.
3. Related information: A copy of any non-patent literature, published application, or patent (U.S. or foreign), by any of the inventors, that relates to the claimed invention.
4. Information used to draft application: A copy of any non-patent literature, published application, or patent (U.S. or foreign) that was used to draft the application.
5. Information used in invention process: A copy of any non-patent literature, published application, or patent (U.S. or foreign) that was used in the invention process, such as by designing around or providing a solution to accomplish an invention result.
6. Improvements: Where the claimed invention is an improvement, identification of what is being improved.
7. In Use: Identification of any use of the claimed invention known to any of the inventors at the time the application was filed notwithstanding the date of the use.
8. Technical information known to applicant. Technical information known to applicant concerning the related art, the disclosure, the claimed subject matter, other factual information pertinent to patentability, or concerning the accuracy of the examiner's stated interpretation of such items.

37 C.F.R. § 1.105. The rule states that the applicant fully complies by making an accurate statement that "the information required to be submitted is unknown to or is not readily available" to anyone with a Rule 56 duty.

In Star Fruits S.N.C. v. United States, 393 F.3d 1277 (Fed. Cir. 2005), the Federal Circuit agreed that the USPTO has broad authority to request information that goes beyond information defined by Rule 56 as material to patentability.

We think it clear that "such information as may be reasonably necessary to properly examine or treat the matter," 37 C.F.R. 1.105(a)(1), contemplates information relevant to examination either procedurally or substantively. It includes a zone of information beyond that defined by section 1.56 as material to patentability, and beyond that which is directly useful to support a rejection or conclusively decide the issue of patentability.

In Star Fruits, the Federal Circuit identified the line dividing proper and improper requests as whether the request for information is "arbitrary or capricious."

So long as the request from the examiner for information is not arbitrary or capricious, the applicant cannot impede the examiner's performance of his duty by refusing to comply with an information requirement which proceeds from the examiner's view of the scope of the law to be applied to the application at hand. To allow such interference would have the effect of forcing the Office to make patentability determinations on insufficient facts and information. Such conduct inefficiently shifts the burden of obtaining information that the applicant is in the best position to most cheaply provide onto the shoulders of the Office and risks the systemic inefficiencies that attend the issue of invalid patents. Examination under such circumstances is neither fair and equitable to the public nor efficient.

In Star Fruits, the examiner had requested "any information available regarding the sale or other public distribution of the claimed plant variety anywhere in the world." The Federal Circuit found that demand for information neither arbitrary nor capricious and therefore enforceable.

In Ex Parte Schneidereit, 2009 WL 798905 (Bd. Pat. App. & Inter. 2009), the BPAI suggested that the examiner use Rule 105 to request a clarification of what structure corresponds with a means-plus-function element. See also Ex Parte Personalized Media Communications, LLC, 2008 WL 5373184 (Bd. Pat. App. & Inter. 2009) (suggesting that the examiner request information as to how added claims satisfy the written description requirement).

The question then for patent examiners is how to respond to the request from above?

Notes:

• Does it matter in any way that the '432 application lists 15 inventors? About 1 out of every 1000 recently issued patents lists 15 or more inventors.

In re Brimonidine Patent Litigation: Reviewing Nonobviousness Determinations

By Jason Rantanen

In re Brimonidine Patent Litigation (Fed. Cir. 2011) Download 10-1102-1103
Panel: Bryson (author), Dyk (dissenting in part), Prost

Appellate review of obviousness assessments is highly fact-intensive.  Although there are several viable legal approaches that can be applied, from the Graham framework to the "obvious to try" analysis, the Federal Circuit's review of this issue largely boils down to an evaluation of the district court's express or implied factual determinations.  The CAFC's recent opinion in the Brimonidine patent litigation is no exception, and it highlights the degree to which Federal Circuit judges are willing to dig into the factual record to serve as the ultimate arbiters of obviousness.

Background
In the mid-1990's, Allergan introduced ALPHAGAN, an optically administered solution containing 0.2% brimonidine, a drug that reduces an eye problem associated with glaucoma.  An allergic reaction to  brimoninidine among some patients led to the introduction of ALPHAGAN P, a formulation with a lower concentration of brimonidine, higher pH, and solubility-enhancing component.  ALPHAGAN P also uses stabilized chlorine dioxide (SCD) as a preservative instead of benzalkonium chloride, which was known to be an eye irritant.  Although the formulators initially expressed concern that the SCD would oxidize brimonidine, they later found the two were compatible.

Following Apotex and Exela's submission of Abbreviated New Drug Applications seeking permission to market a generic version of ALPHAGAN P, Allergan sued them for infringement of five patents under 35 U.S.C. § 271(e)(2): Patent No. 5,024,078, covering a buffered, aqueous ophthalmic solution generally, and four patents (referred to as the "related patents") more specific to its brominidine-containing product.  The district court found all the patents nonobvious following a bench trial and Apotex stipulated to infringement.  The district subsequently found that Exela infringed one of the related patents and entered an injunction against both defendants.

Buffered Solution Patent: Obvious
The panel first addressed Apotex's challenge to the district court's nonobviousness ruling on the '078 patent.  After analyzing the content of the two prior art patents cited by Apotex, the panel unanimously concluded that the district court was wrong.  "Based on the evidence presented at trial, we are convinced that it would have been obvious to one of skilled in the art to adjust the SCD solution disclosed in Ratcliff to approximate physiologic pH, to include a buffer component to maintain that pH, and to include a tonicity component to approximate physiologic osmoloality."  Slip Op. at 8.  Although a re-evaluation of the evidence is inherent in the panel's analysis, the opinion frames the court's conclusion as one of law: "We therefore hold that the district court committed legal error in concluding that it would not have been obvious to one skilled in the art."  Slip Op. at 9.

"Related" Patents: Nonobvious
The majority reached a different result on the four "related patents," concluding that the district court correctly found the narrowest claims to be nonobvious.  Here, too, the panel engaged in a detailed analysis of the factual determinations made by the district court.  With respect to the "related patents," however, Judges Bryson and Prost agreed that the district court had reached the correct conclusions, giving particular deference to the district judge's weighting of the testimony.  The opposite conclusion was reached by Judge Dyk, who dug deeply into the factual record before concluding that the district court had clearly erred.

Reviewing Prior Art Patents vs Other Evidence of Obviousness
Although neither the majority nor dissent explicitly discussed the standard of review, the different ways in which the court handled the two groups of patents perhaps hints at the manner in which the Federal Circuit reviews obviousness determinations.  The prior art asserted against the '078 patent consisted of two earlier patents.  Although likely not intended by the panel, the opinion's discussion of the '078 patent reads like a de novo review.  The analysis of the "related patents" differs significantly.  Here, the majority explicitly defers to the district court's factual findings in places, while the dissent concludes that the district court made "clearly erroneous findings of fact," Dissent at 3, implicitly referencing the standard of review.  Although somewhat of a subjective assessment, it certainly seems plausible that the CAFC may be much more willing to engage in de novo review on the question of obviousness when the prior art consists of patents as opposed to other forms of evidence

Exela's Noninfringement Appeal
The panel also reversed the district court's determination that Exela's product would infringe one of Allergan's patents.  This section of the opinion is largely noteworthy for its discussion of the effects of statements made in ANDAs and the extent to which companies are bound by those statements.  The CAFC concluded that the statement in Exela's ANDA that its product would be manufactured with a pH of between 6.5 and 6.7 (the claims required a minimum pH of 7.0) overrode Allergan's argument that Exela might produce its product with a higher pH to account for a fall in the pH that occurs over time.  "Here, neither party disputes that if Exela complies with its ANDA, it will never manufacture or sell a product at a pH above 6.7.  We cannot assume that Exela will not act in full compliance with its representations to the FDA, and we accordingly reverse the district court's judgment [of infringement]."  Slip Op. at 22. 

Who is the Client?: Advising Inventors, their Spouses, and their Start-Up Companies

James Joyce v. Armstrong Teasdale (8^th  Cir. 2011)

Joyce invented a heuristic computer firewall system and exclusively licensed the patent rights (“royalty free”) to his newly formed company, TechGuard.  TechGuard was primarily owned by Joyce and his wife Suzanne Magee. Actually, Magee held more shares than anyone else — an arrangement designed to allow the company to qualify for grants and contracts designated for women and minority owned businesses. 

Teasdale represented both Joyce and the new company and drafted the license agreement. According to Joyce's malpractice complaint, Teasdale advised Joyce to sign the agreement and also that it was “not necessary for him to have separate legal counsel” and that Joyce's rights were fully protected because he and his wife were the majority shareholders in the new company.

Joyce & Magee then divorced. In the divorce decree, Magee was awarded 50% of ownership rights of the patent and has seemingly taken full control of TechGuard.  Magee is the CEO of TechGuard (now a multi-million dollar company) and Joyce is not even listed in the company history.

Malpractice Allegations: Now, Joyce has sued Teasdale for malpractice — alleging that the firm breached a fiduciary duty by acting in conflict with Joyce's interests in representing TechGuard.

Statute of Limitations: The present appeal focuses on the five-year Missouri statute of limitations.  The district court had dismissed the case on the pleadings after finding that the alleged malpractice and potential damages would have been ascertainable in 2001 when the agreements were signed and that the complaint was not filed until 2008. On appeal, the 8th Circuit reversed — holding that in Missouri, the statute of limitations does not begin to run until a "reasonably prudent person is on notice of a potentially actionable injury,” quoting Powel v. Chaminade Coll. Preparatory, Inc., 197 S.W.3d 576, 582 (Mo. 2006), and that “Missouri does not impose upon a layperson the duty to double-check the attorney's work or to understand that an attorney's conduct caused harm unless a source external to the attorney-client relationship reasonably puts the layperson on notice the attorney has caused harm.” 

In the complaint, Joyce alleged that the firm had advised him against obtaining separate counsel. Based at least partially on that allegation, the appellate court held that the signed agreements by themselves do not serve as “notice of a potentially actionable injury under the circumstances pleaded in Joyce's complaint.” 

On remand, the firm may still win the statute of limitations argument, but it must first provide evidence that “a reasonably prudent person in Joyce's position would not only know the effect of the agreements, but would also know the effect of the agreements would give rise to a potentially actionable injury.”)

Intellectual Ventures: Revealing Investors

XILINX, Inc. v. Intellectual Ventures LLC (N.D. Cal. 2011)

XILINX is a billion dollar company that manufactures programmable memory chips. In February 2011, XILINX filed a declaratory judgment lawsuit against Intellectual Ventures and its subsidiary corporations – asking the Northern District of California court to rule that it could not be liable for infringing a set of fifteen (15) intellectual ventures patents. The case will be interesting to watch, although it will most likely end with a confidential license well prior to a judgment on the merits.

Intellectual Ventures is important because they are now one of the Top-Five owners of US Patents. Although the company has played extensive games in an attempt to stifle the utility of the patent ownership recording system, it has been reported to hold at least 30,000 patents. Intellectual Ventures is quickly becoming more aggressive at packaging and licensing its broad patent portfolio.

One interesting aspect of the case is each party's choice of litigation counsel. XILINX has hired Jones Day, which is one of the largest law firms in the world. Intellectual Ventures has hired John Desmarais and his small upstart firm of patent litigators. (Desmarais was formerly a top litigator at Kirkland & Ellis). IV's local counsel is Bradford Black who also has his own two-person law firm. Over the past two years, the largest law firms shed about 10% of their lawyers (not even counting the complete collapse of Howrey LLP). During that time, Desmarais & Black left big-law and founded their own small firms focused on providing very high quality services and costs naturally controlled by a limited overhead and limited number of lawyers available. This trend appears likely to continue over the next several years as the market for top-quality lawyers resets itself.

Another interesting aspect of the case is Intellectual Ventures recent filing that lists its major investors as required by Fed. R. Civ. Pro. R. 71. (File Attachment: Financial Interest in IV.pdf (104 KB)) These include:

• Technology Companies – For the most part, these tech companies appear to have invested in intellectual ventures as part of a licensing agreement.
  • Adobe
  • Amazon.com
  • American Express
  • Apple
  • Cisco Systems
  • Detelle Relay KG
  • eBay, Inc.
  • Google
  • Microsoft
  • Nokia
  • Nvidia
  • OC Applications Research (merged with IV)
  • SAP
  • Sony Corp.
  • TR Technologies
  • Verizon
  • Xilinx (yes, the plaintiff is also an investor)
  • Yahoo
• Universities – It appears that the university ownership is not directly related to any transfer of patent rights from the Universities to IV.
  • Brown University
  • Cornell University
  • Grinnell College
  • Mayo Clinic
  • Northwestern University
  • Stanford University
  • University of Minnesota
  • University of Pennsylvania
  • University of Southern California
  • University of Texas
• Individuals
  • Peter Detkin (IV Co-Founder and Vice-Chairman)
  • Eric Dobkin (Goldman Sachs; IV Board of Advisors)
  • Richard Fields
  • Gregory Gorder (IV Co-Founder and Vice-Chairman)
  • Paul Gould
  • Adam Holiber (IV Licensing Executive)
  • Edward Jung (IV Co-Founder and CTO)
  • Nathan Myhrvold (IV Co-Founder and CEO)
  • Nancy Peretsman (leading Investment Banker)
• Investors
  • Allen SBH (Updated: Apparently Not Paul Allen)
  • Bush Foundation
  • Charles River Ventures
  • Commonfund Capital Venture Partners
  • Dore Capital
  • Flag Capital
  • Flora Family Foundation
  • Hewlett Foundation
  • Howard Hughes Medical Institute
  • Legacy Ventures
  • McKinsey and Co.
  • Next Generation Partners
  • Noregin Assets
  • Reading Hospital
  • Rockefeller Foundation
  • Roldan Block NY
  • Seqouia Holdings
  • Skillman Foundation
  • Sohn Partners
  • Taichi Holdings
  • TIFF Private Equity
  • White Plaza Group

Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?

By Dennis Crouch

A claimed invention is unpatentable if, at the time the invention was made, the invention as a whole would have been obvious "to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a) (emphasis added). When applying this subsection, courts have generally followed the statutory language and sought to identify knowledge of a hypothetical individual person with ordinary skill in the relevant area of technology.

When the Patent Act became law in 1952, the inventive process may have largely paralleled the language of the statute – namely, the vast majority of patents were each associated with a single respective inventor who took a step beyond the ordinary. In that year (1952), 82% of patents listed only one inventor and a mere 3% listed three or more inventors.

By 2011, the statistics had inverted. Less than one-third (32%) of patents issued so far this year list just a single inventor and 43% identify three or more inventors. During this 60-year time period, the average number of inventors per patent has more than doubled. The ordinary inventor today is a joint inventor who invents as part of a team. There are some areas of technology that seem to have more aggressively embraced the team-inventorship – Patents in several Art Units in TC 1600 (Bio and Organic Chemistry) have less than 10% likelihood of listing only one inventor. Art unit 3677 (Jewelry) has the highest percent of solo-invented patents at 77%.

These changes in practice prompt a reflection on the threshold "person having ordinary skill in the art" and whether the obviousness test should reflect some nuances of teamwork. As compared to a solo worker, teams often have an overall broader depth of knowledge, but are often plagued by communication difficulties. In the obviousness analysis, this shift could be reflected in a broader scope of potential prior art but a more rigorous analysis of whether the ordinary team would make leaps of analysis necessary to combine disparate prior art. The team approach also has a major potential impact on other doctrines such as antedating prior art based on prior invention and diligence.

In re Kao: Important Decision Controlling BPAI Obviousness Holdings

In re Kao, ___ F.3d ___ (Fed. Cir. 2011)

In an important decision for patent prosecutors, the Court of Appeals for the Federal Circuit has partially overturned a PTO obviousness decision. The question on appeal for all three related patent applications was whether the Board of Patent Appeals & Interferences (BPAI) had properly held the pending claims obvious.

Background: Endo Pharmaceuticals has three pending patent applications that were all rejected on obviousness grounds and those rejections were affirmed by the BPAI. The applications relate to controlled-release oxymorphone tablets and were all found obvious as compared to Patent Cooperation Treaty (PCT) Pub. No. WO 01/08661 ("Maloney").

Obviousness: The Section 103(a) of the patent act states that a claimed invention is unpatentable "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." In Graham v. John Deere, the Supreme Court outlined a set of factual inquiries that should serve as the basis for the ultimate legal question of obviousness. When a BPAI decision is appealed directly to the Federal Circuit, the appellate court affirms factual findings so long as they are supported by "substantial evidence," but reviews ultimate obviousness conclusion de novo. Theh substantial evidence requirement offers substantial deference to the BPAI and will be accepted so long "as a reasonable mind might accept [the evidence as] adequate to support [the] conclusion [being drawn]." Quoting In re Kumar, 418 F.3d 1361 (Fed. Cir. 2005).

BPAI Factual Findings Lack Substantial Evidence for the '432 application: The parties all recognized that controlled-release oxycodone was within the Maloney prior art. The Board made the further factual conclusion that the claimed invention, including a claimed dissolution rate, would be realized by taking a chemical formula provided by Maloney and replacing the known oxycodone with the claimed oxymorphone. On appeal, the Federal Circuit held that this factual finding was not supported by substantial evidence.

Accepting that it would be obvious to substitute oxymorphone in Maloney's Formula 6, the Board's reasoning nonetheless does not pass the substantial evidence threshold as to whether such a substitution would indeed fall within the dissolution profile of pending claim 1.

The problem was that the dissolution rate reported in Maloney was measured in a different way than that claimed by Endo, and the USPTO provided no "direct factual support in the record for the view that the claimed range of dissolution rates actually over-laps with the dissolution rate disclosed in Maloney." In this case, testimony before the board (from Endo's expert) was that "there is no general correlation" between the two measurement methods. The expert also "cited prior art literature that supported this conclusion." On remand, the claim may still be held obvious, but the USPTO will need to do a better job linking the prior art to the patent as claimed. However, the Federal Circuit was clear that: "the Board should neither rely upon conclusory reasoning nor its own conjecture in assessing the weight of evidence."

Secondary Considerations Nexus: The court also held that, when presented, the BPAI must consider secondary considerations of nonobviousness. The doctrine requires a nexus between the claim scope and the secondary consideration. The nexus requirement has seemingly been more and more strictly applied over the years. In the recent Tokai decision, the court held that "if commercial success is due to an element in the prior art, no nexus exists." In this case, the court wrote "Where the offered secondary consideration actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention." (emphasis added) (I would inquire what the court means by "novel in the claim.")

The nexus requirement is a two-way requirement in the secondary consideration will be rejected if either (1) overbroad so as to be a result of prior art aspects of the claim or (2) overly narrow so that only small number of potential embodiments exhibit the asserted secondary benefits. However, the court here (and elsewhere) have held that the applicant need not provide hard evidence that every embodiment covered by the claim has that nexus.

[A]n applicant 'need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success, so long as what was sold was within the scope of the claims.'

Quoting In re DBC, 545 F.3d 1373 (Fed. Cir. 2008).

Obviousness and its Interplay with Patentable Subject Matter of Section 101: Endo's '740 application claimed a method of treatment that included the step of "providing information" about a correlation between renal failure and bioavailablity of oxymorphone. Citing King Pharma, the Federal Circuit held that, even if novel, the informing step "cannot confer patentability absent a functional relationship between the informing and administering steps." Here, the court distinguished from "transformative" and therefore patentable information delivery – such as a method of adjusting dosage based upon the informing step.

Waiving Rights to Appeal Particular Claim Issue: In its BPAI brief, Endo had grouped together all twenty claims of one of the pending applications under representative claim 1. On appeal, the Federal Circuit held that Endo had therefore waived its right to separately argue any of the other claims.

Pre-Examination Interview Program Formalized and Expanded to All Art Units

The USPTO has expanded its "First Full Action Interview" pilot program to include all areas of technology.  Under the program, patent applicants may request (and must be granted) an interview with the patent examiner assigned to the case prior to the first Office action on the merits.

To be eligible, the pending application must not have more than three independent and twenty total claims all directed to a single invention (i.e., not subject to a restriction requirement).  To participate, an applicant must electronically file a request for a first action interview at least one day before an Office action is entered into PAIR.  An application that does not originally fit within the requirements can become eligible through a preliminary amendment.

Timing: Requests may be filed as of today, May 16, 2011.  The pilot program will run for one year.

Prior to the interview, the examiner is required to prepare a "pre-interview communication" that indicates references to be cited and outlines any potential rejections/objections. 

Since taking office as USPTO Director, David Kappos has pushed for more direct interaction between patent applicants and patent examiners.  In the USPTO press release, Kappos is quoted saying

We're expanding this pilot program because we've seen that, by enhancing the interaction between the applicant and the examiner early in the examination process, it helps both applicants and the USPTO.  We hope that by expanding the pilot to even more technology areas, we will see many more applicants take advantage of this program and realize its benefits.

In the prior pilot, the USPTO found that about 1/3 of applications were allowed in the first office action on the merits. (Outside the program, only about 11% of applications receive a first-action allowance.)

No additional fees are required to participate in the program. However, applicants must waive their right to request a pre-examination refund of fees.

Notes:

• Description of the Pilot Program
• Examiner "Talking Points Memo" for the FAI
• Request for a First Action Interview (PTO/SB/413C)
• Questions on procedure should be directed to Joseph Weiss at (571) 272-7759 or first.action.interview@uspto.gov.
• Restriction: Although I state this above, some comments assumed that the "not subject to restriction requirement" could not be cured. Rather, an application subject to a restriction requirement will still qualify for the program once the applicant elects one group of claims without traversing.

   

  

The Rambus Opinions: CAFC rules on the "reasonable forseeability" of litigation

By Jason Rantanen

Micron Technology, Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1263
Hynix Semiconductor Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1299-1347
Panel: Newman (concurring and dissenting in part on Hynix), Lourie, Bryson, Gajarsa (concurring and dissenting in part on Micron and Hynix), and Linn (author of both Micron and Hynix)

Rambus is a company founded to commercialize inventions related to DRAM computer memory, including its RDRAM product.  It is currently engaged in several patent suits against manufacturers of SDRAM, an alternate type of memory technology.  Central to these cases is the issue of whether Rambus's destruction of documents - particularly a "shred day" during which thousands of pounds of documents were destroyed - prior to the commencement of the litigation constituted spoliation.  Given this case's discussion of document retention obligations, it has particular relevance for in-house counsel and outside counsel advising companies prior to the commencement of litigation.  Irrespective of the legal question discussed below, the specific factors discussed at pages 16-23 of Micron are worth reading.

Procedural Posture
Although addressing the same fundamental issue, Micron and Hynix arrived at the court in diametrically opposed postures.  In the district court proceedings on appeal in Hynix, Judge Whyte of the Northern District of California concluded that no spoliation occurred, while in the proceedings leading to Micron, Judge Robinson of the District of Delaware ruled that Rambus had engaged in spoliation and entered judgment in Micron's favor as a sanction.

Litigation Must Be Reasonably Forseeable
The resolution of the two appeals turned on the issue of when litigation became "reasonably forseeable," thus triggering Rambus's duty to preserve evidence.  Rambus argued that "to be reasonably forseeable, the litigation must be imminent, at least in the sense that it is probable and free of significant contingencies."  Micron and Hynix, on the other hand, aruged that reasonable forseeability incorporates no requirement of imminence. 

The five-judge panel unanimously concluded that the "reasonably forseeable" standard does not carry an imminence requirement.  While "[t]his standard does not trigger the duty to preserve documents from the mere existence of a potential claim or the distant possibility of litigation...it is not so inflexible as to require that litigation be imminent, or probable without significant contingencies,' as Rambus suggests."  Micron Slip Op. at 12-13. 

Applying this standard, the CAFC determined that the Micron district court had not clearly erred when it concluded that litigation was reasonably foreseeable prior to the critical 'shred day.'  In particular, the CAFC noted that (1) Rambus's document retention policy was not adopted for purposes of business management, but instead to further Rambus's litigation strategy; (2) Rambus was on notice of potentially infringing activities by particular manufacturers; (3) Rambus took several steps in furtherance of litigation prior to the key shredding party; (4) Rambus is the plaintiff-patentee [but see note below], and its decision whether to litigate or not was the determining factor in whether or not litigation would ensue; and (5) the relationship between Rambus and the DRAM manufacturers was not one of mutual benefit that subsequently turned sour, but rather was naturally adversarial. 

Arriving at a consistent outcome in Hynix, three of the five judges (Lourie, Byrson, and Linn) concluded that Judge Whyte erred in determining that litigation was not reasonably forseeable by inappropriately applying the stricter "imminent, or probable without significant contingencies" requirement for reasonable foreseeability.  "In Micron II, this court held that that standard does not carrry a gloss requiring that litigation be "imminent, or probable without significant contingencies....The district court here applied just such a standard. This is evident for three reasons." Hynix Slip Op. at 13 (internal citation omitted).

Yet although the reversal is clear, the majority's reasoning for its conclusion is not.  The majority first held that the district court erred not by considering the presence of contingencies at all, as one might expect given its preceding statement, but by failing to decide "that the resolution of these contingencies was reasonably foreseeable."  Id. at 14.  The majority's reason thus implicitly assumes that contingencies are, in fact, relevant to the foreseeability inquiry.  The second and third reasons - that the evidence of non-foreseeability was insufficient and the Hynix district court was the only court out of four to conclude that litigation was not reasonably foreseeable as of the critical date - similarly have little to do with whether the Hynix district court applied the correct legal standard.  The majority's actual analysis thus seems at odds with its statement that the foreseeability standard does not include a 'probable without significant contingencies' requirement given that its only relevant basis for reversal applies exactly such an analytical framework.  It is further puzzling because it involves an assessment of purely factual issues, not legal standards, to which it applies a de novo standard of review.

The Dissent
Writing in dissent in Hynix, Judge Gajarsa joined by Judge Newman takes the majority to task for its overriding drive to arrive at a consistent result in Hynix and Micron, a drive that in their view produced an erroneous result:

Seizing on the district court’s alleged grafting of an overly strict “gloss” on the reasonably foreseeable litigation standard, the majority claims that the district court erred as a matter of law by applying the wrong standard for spoliation. In so doing, the majority ignores the district court’s well-articulated understanding of the relevant Ninth Circuit law and its factual findings, which demonstrate that the district court applied the very standard that the majority now requires. The majority obtenebrates the facts presented in the district court’s opinion to resolve the conflict between the spoliation determinations in this case and in Micron.

Hynix dissent at 2.  In particular, the dissent criticizes what it perceives to be the majority's attempt to cloak its review of a factual determination as a legal issue in order to avoid applying a deferential standard of review, thus leading to an inconsistent result:

The majority created this standard in Micron with the intention of reconciling the district court’s spoliation determination in that case with the present one. The desires of an appellate tribunal, however, should not drive the outcome of decisions. Divergent district court opinions do not necessarily mean that the trial courts applied different “glosses” on a particular standard. Rather, this court must review district court opinions with the applicable standard of appellate review, which, in this case, is clear error or an abuse of discretion. In refusing to do so, the majority shirks its duties and performs its own factual analysis. The majority castigates the district court here for using a narrower “gloss” on the standard for spoliation just as the majority in Micron castigates the district court for holding the asserted patents unenforceable as a sanction for spoliation.

Id. at 3.

A Meaningless Remand?
Although affirming the Micron district court's conclusion that litigation was reasonably foreseeable, the majority nevertheless vacated the district court's sanction determination.  This move is unlikely to produce in any meaningful change.  The majority's basis for the remand was that the Micron district court opinion failed to provide sufficient detail or analysis in support of its conclusion that Rambus acted in bad faith, that Micron suffered prejudice, or that judgment in Micron's favor was the appropriate sanction to impose.  Given Judge Robinson's prior opinion, however, the inevitable result will be a more detailed opinion that reaches precisely the same conclusion on these issues. 

Judge Gajarsa dissented from this determination as well, again criticizing the majority for reviewing the facts and weighing the evidence "before it substitutes its judgment for that of the district court, deciding that based on the district court's thorough factual analysis, it would not have granted the dispositve sanctions."  Micron dissent at 2.

Note on consistency: In concluding that the Micron district court correctly concluded that litigation was reasonably foreseeable, the CAFC relied on the fact that Rambus was the plaintiff-patentee (and thus controlled the initiation of the litigation). Micron Slip Op. at 22.  Yet both the caption and the opinion's procedural background indicate that Rambus did not initate the lawsuits; rather they were declaratory judgment actions brought by Micron and Hynix. 

Disclosure: Although I had minimal exposure to the Rambus litigations while an attorney with Munger, Tolles, & Olson, note that my former employer did and continues to represent Rambus.

Tivo v. Echostar: En Banc Opinion Stands

By Jason Rantanen

TiVo Inc. v. EchoStar Corp. (Fed. Cir. 2011) (en banc nonprecedential order) Download Tivo 2009-1374 5 10 11 adl order to aso_new
Before Rader, Newman, Mayer, Lourie, Bryson, Gajarsa, Linn, Dyk, Prost, Moore, O'Malley, and Reyna

The saga of TiVo v. EchoStar plays on.  Shortly after the Federal Circuit issued its en banc opinion on April 20, 2011, discussed here, TiVo and EchoStar reached a widely publicized settlement.  On May 2, the parties informed the CAFC of the settlement and asked the court to dismiss the appeal.

The court, again ruling en banc, declined to do so as it would effectively nullify the en banc opinion.  Drawing upon the law of the Seventh, Ninth, and Eleventh Circuits, the CAFC concluded that "[i]f we were to grant the parties’ motion, the judgment  would be that the appeal is dismissed. Although the parties do not ask us to vacate our decision, at this stage, days before issuance of a mandate, we determine that granting the motion to dismiss, which would result in a modification or vacatur of our en banc judgment, is neither required nor a proper use of the judicial system."  Slip Op. at 2. 

Unless and until: In noting that the parties are free to request that the district court dismiss the complaint and vacate its previously imposed sanctions, the CAFC commented that the district court would lack jurisdiction to take this action "unless and until we return the case to its docket."  Slip Op. at 3.  Presumably the CAFC does not intend to modify its en banc opinion, but the court's choice of words leaves open that possibility.

Odom v. Microsoft: Using Your Own Patents as Prior Art

[UPDATED August 18, 2011 to Reflect the Fact that the Christopher Brown mentioned here is not Christopher Brown, CTO of OPSCODE]

Odom v. Microsoft (Fed. Cir. 2011)

By Dennis Crouch

I previously wrote about the Federal Circuit affirmation of the lower court's summary judgment ruling that Odom's claims are obvious when judged against a single prior art patent.  

The prior art patent in this case is Patent No. 6,057,836 and is owned by the defendant, Microsoft. The inventors on Microsoft's '836 patent include Jude Kavalam (now CTO at Spoken Communications), Christopher Brown (now CTO at Opscode) and Jeff Bogdon (named inventor on 25+ patents).  The '836 patent provides a mechanism for users to re-size toolbar groups and has a number of similarities to the invention that Odom claimed in his patent and the appellate panel identified the advances offered by Odom as “insignificant.” Odom has now petitioned the Federal Circuit for a rehearing.

An interesting aspect of this set-up is the way that Microsoft used its patent as a priority document to help establish its freedom to operate rather than as intellectual property per se.  Microsoft could have achieved the same results by simply publishing its prior invention. Likewise, in the US, Microsoft could have relied on its prior-inventor rights under 35 U.S.C. 102(g).  However, the patent-as-prior-art approach has a number of advantages over these alternatives. Of course, alternative approaches are not mutually exclusive and instead can each be part of a layered strategy of protection.

Creating Prior Art - Patent versus Publish: Under 35 U.S.C. 102(a) & (b), any prior publication has the same weight as a prior patent or published patent application. An issued patent additionally offers intellectual property rights. However, even apart from those IP rights, there are several reasons why a company may choose to file for patent rights when attempting to create prior art to forestall infringement litigation.  First, because a patent application will be considered prior art as of the date of filing (once published or patented) under 35 U.S.C. 102(e), the company can establish a prior art priority date without actually publicly disclosing the invention for at least 18 months. This delay in publication will often be seen as valuable.  The patent approach also comes with a guarantee that the document will qualify as prior art as of a specific, known date — as opposed to a non-patent publication that will be judged and timed according to the sufficiency of distribution or indexing. In addition, the patent rules force a more complete disclosure and therefore may result in better documentation of the invention and a broader scope of disclosure than what would have been otherwise published.  Finally, a patent may well provide a sense of authority and an equitable claim-to-right that would not accompany a mere publication.

Creating Prior Art – Patent versus Prior Inventor Rights: In the US, a prior inventor can also invalidate a patent by proving prior invention under 35 U.S.C. 102(g).  However, that approach is fraught with potential doctrinal difficulties and a patent disclosure offers a much cleaner mechanism.  These difficulties may well have arisen in this case. For instance, Odom presented evidence of Microsoft's recognition that the Kavalam project was unable to achieve the the results claimed by Odom. And, several years later (well after Odom's priority date), Microsoft finally filed for patent protection on what is arguably Odom's invention — arguably recognizing that Odom's invention is distinct when compared with Kavalam.  These facts suggest that perhaps Microsoft would not fare well in a 35 U.S.C. 102(g) argument.  Adding to this difficulty is the extensive paper trail requirement for proving 35 U.S.C. 102(g). 

Four Corners of the Prior Art?: The district and appellate court decisions considered the Kavalam patent on its face and did not bite on any of Odom's arguments regarding Microsoft's actual activities and admissions that could have limited the interpretation of the disclosure.  This approach simplifies the analysis, but it is probably wrong once the case steps into the question of obviousness — especially when the alleged prior art was created by one of the parties to the lawsuit.  In KSR v. Teleflex, the Supreme Court ordered that courts apply a flexible, common sense approach obviousness. Here, that guidance seems to mean that a court should consider extrinsic facts that tend to expand or limit the interpretation of the prior art reference. 

Notes:

• Odom's patent issued from a continuation application. Odom cited the Kavalam patent in the parent case, but did not re-submit the patent in the child case (examined by the same examiner) and the Kavalam patent is not listed on the face of the asserted patent.  The Federal Circuit opinion implicitly suggests that this prior art was not considered by the examiner. Those who disagree may want to support the rehearing request.

Aristocrat v. IGT: Attorney Negligence, Revival, and Inequitable Conduct

Aristocrat Techs. v. Int'l. Game Tech. & IGT (N.D. Cal. 2011) (File Attachment: AristocratIneqCond.pdf (125 KB))

Patent attorneys regularly have hundreds of patent applications pending, each with their own due dates – far too many for anyone remember on their own. We keep track through docketing systems, paralegals, and attorney cross-checks. We are often overwhelmed – especially when firms change and staff leaves (as happened in this case). One of the comments to this post astutely introduced the old adage: "there but for the grace of God go I."

The Aussie slot-machine manufacturer Aristocrat missed its US national stage patent filing deadline by one day. The patent was saved when the USPTO granted Aristocrat's US attorney's petition to revive the abandoned application based on the claim that the "entire delay" in filing the appropriate papers was "unintentional."  During infringement litigation against market leader IGT, the district court first held the patent invalid based on a defense of improper revival. In particular, the district court held that the USPTO lacked authority to revive national stage applications unless the abandonment met the much higher standard of being unavoidable.  On appeal, the Federal Circuit reversed — holding that improper revival did not constitute a cognizable defense to allegations of infringement under 35 U.S.C. 282.

On remand, IGT shifted its focus to unenforceability — alleging that Aristocrat committed inequitable conduct in the revival of its abandoned application.

Late Filing and Hiding Abandonment from Client: The district court used one-hundred-twelve paragraphs to described the facts relating to the abandonment and revival.  Here are a few key facts:

• January 10, 2000: On the day of the 30–month deadline, Aristocrat's US patent counsel (Shahan Islam) used US Express mail to file the necessary documents to enter US national stage examination.  The USPTO received the documents the next day (January 11, 2000). However, according to the USPTO, Islam did not include sufficient evidence to prove the January 10, 2000 mailing date. And, Mr. Islam's firm did not retain the filing evidence in a locally held file.
• June 2001: The USPTO dismissed Islam's petition to correct the filing date and indicated that the application remained abandoned.  Mr. Islam later testified that he did not remember receiving the June 2001 decision.  The court found that Mr. Islam likely saw the decision shortly after it was mailed.
• November 2001: Aristocrat requested a status update on the application from Mr. Islam. (Up to that time, Aristocrat had been told nothing of the abandonment issues).  In December 2001, Mr. Islam responded in an e-mail that "we have learned that the application won't be examined for at least another nine months(!) [or] so in view of the backlog."  The e-mail did not indicate anything about the abandonment.  Mr. Islam also forwarded his response to another attorney at his law firm saying "lets discuss."
• During this same time period, eight other Aristocrat applications being prosecuted by Mr. Islam also went abandoned based on failure to respond to PTO notices mailed in 2001.
• July 18, 2002: Mr. Islam (at this point with the KMZ firm) filed a petition for revival for unintentional abandonment — included a statement that "the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition under 37 CFR 1.137(b) was unintentional."  In addition, Mr. Islam filed a preliminary amendment and petition for accelerated examination.  In a letter to Aristocrat, Mr. Islam incorrectly (and apparently intentionally) stated that the amendment & petition to accelerate had been filed in January 2002.  The letter did not mention the petition for revival.
• September 3, 2002: USPTO granted the petition to revive. 
• 2003: KMZ attorneys informed Aristocrat of the abandonments & revivals.

Revival: The USPTO typically does not require documentation to revive under the unintentional delay standard. Rather, the office relies on the applicant's statements that the entire delay in filing a response was unintentional.  Here, the USPTO did not require specific documentation.

Unintentional versus Not Intentional: In its analysis, the district court held that the facts did not provide clear and convincing evidence that Mr. Islam had intentionally delayed the petition filing. In particular, the court could find no motive for the delay.  Instead, the delay appeared to be the result of Mr. Islam's ongoing negligence rather than intentional misbehavior.  Negligence is the foundational non-intentional tort and therefore a finding of negligence does not suggest that the delay was intentional. In an odd logical analysis, Judge Whyte concluded that Islam's failure to notify Aristocrat of the abandonment "actually suggests that the delay was unintentional."

Mr. Islam did not want to disclose his errors [to Aristocrat] because he was likely embarrassed by his failure to act in accordance with his client's instruction. Had it been granted, Mr. Islam's Petition to Correct would have avoided abandonment altogether. Mr. Islam's deflections in December 2001 show that he was fully aware that Aristocrat wished to proceed with the '717 application. Mr. Islam's comments to Mr. Owen's regarding the PTO backlog at the time further avoided acknowledging any personal responsibility for delay but it may have been correct, especially considering that the '717 application remained in an abandoned state even after the PTO had officially revived it. Still further, Mr. Islam's incorrectly dated Second Preliminary Amendment is further evidence that Mr. Islam's chief motive was to hide his failures from Aristocrat. Once the June 2001 Decision was sent, a decision to deliberately delay reviving the '717 application would not have helped to hide his errors from Aristocrat.

Although Judge Whyte found "Mr. Islam's testimony was disturbingly vague and his lack of memory difficult to believe," the Judge agreed with the notion the delay was entirely explained by Mr. Islam's disorganization and the "out of control" state of his practice at the time. "Even if Mr. Islam failed to properly prosecute the '717 application, 'unintentional' delay does not require that the delay have occurred despite the exercise of due care and diligence (as does 'unavoidable' delay)."

After holding that the delay was not intentional, the court concluded that the statement regarding unintentional delay could not be a material misrepresentation and therefore that the defense of inequitable conduct could not stand.

Expert Opinion: Two leading patent law experts testified at the inequitable conduct hearing: Charles Van Horn for Aristocrat and Paul Gardner for IGT. While the court found the testimony helpful for explaining the prosecution of PCT applications, it found the experts' extensive legal conclusions filled with "blatant advocacy" to be "not helpful." Judge Whyte has been known to speak critically against expert testimony in patent cases.

Trade Secrets and Published Patent Applications

Tewari De-Ox Systems v. Mountain States (5th Cir. 2011)

In 2005, Tewari's CEO (Dr. Tewari) visited Mountain Systems (MTSR) to demonstrate his “zero ppm oxygen meat-packing method” that greatly extends the shelf life of packaged meats. Prior to the demonstration, the two companies signed a non-disclosure agreement (NDA).  When MSTR allegedly began using the method without permission. 

The major catch in Tewari's breach of trade secret argument was that the bulk of the disclosed method could also be found in Tewari's already published patent application. (The application was abandoned after receiving a final rejection on obviousness grounds).

Trade secret is derived from state law.  Under Texas law (the law of this case), a successful trade secret plaintiff must prove that (1) a trade secret existed; (2) the trade secret was “acquired through a breach of a confidential relationship or discovered by improper means;” and (3) that the trade secret was then used without authorization.

Patent Publication Eliminates Trade Secret: In a straightforward opinion, the appellate panel held once published, the information in a patent application should be considered “generally known and readily available” and therefore are no longer amenable to trade secret protection.  

Tewari argued that the patent application publication should not matter in this case because the defendants obtained their information from him in a confidential transaction rather than from the public source. The appellate court, however, rejected that argument because the application was already published at the time of his disclosure.  (The court noted that the source of defendant's trade secret knowledge may be important for trade secret analysis if the publication occurred subsequent to the fiduciary relationship.)

Although the material disclosed in the patent application is not protectable under Texas trade secret law, the court held that Tewari may have transferred protectable information that was not in the patent application — such as specific information regarding making and using the invention that was not particularly identified in the patent application.

Remanded for further consideration.

USPTO BPAI to Reconsider Restriction Practice and Markush Claims

Ex parte DeGrado (BPAI 2011)

The University of Pennsylvania's pending patent application No. 10/801,951 is directed to the treatment of microbial infections with an amphiliphilic oligomer. The amended claims define the oligomer with seven functional variables that are each independently selected from separate Markush-style groupings and ranges.  (Formula R1-[-x-A1-x-y-A2-y-]m-R2). The result is that millions of different oligomers fit within the claim scope. 

The case is now on appeal before the BPAI on grounds of obviousness-type double patenting based on a prior similar patent also coming from Professor Degrado's Lab.  Penn has refused to file a term-limiting terminal disclaimer.

In a recent decision, USPTO Commissioner Robert Stoll asserted his role as an Administrative Patent Judge in joining a BPAI decision in the case. The particular decision here does not relate to the obviousness-type double patenting rejection, but rather to “whether Applicants may be required to restrict their claims to a single invention” and whether the claim as drafted is a “proper Markush Claim.” The BPAI has asked for further briefing on those issues.

Limits on Restrictions: The USPTO's authority for restriction practice stems at least in part from 35 U.S.C. 121. That Section authorizes the USPTO Director to require applications “to be restricted to one” invention. However, in the 1978 Webber case, the CCPA limited that power –  holding that Section 112 gives applicants authority to present claims structured as they see fit. In that case, the court specifically held that patent applicants had the right to include multiple independent and distinct inventions within a single claim.  The BPAI has asked the parties in this dispute to brief this conflict between Webber and the language of Section 121.

Markush Claims: The BPAI has also requested briefing on the question of whether the claims here are proper Markush-type claims.

This case is likely to result in a precedential BPAI opinion and CAFC appeal and may have an important impact on restriction practice and Markush-style claiming.

File Attachment: DeGradoAppealBrf.pdf (1407 KB)

 

 

Malpractice: Failure to Thoroughly Advise in Settlement Negotiations

Viking Corp. v. Van Dyke Gardner (Mich. Ap. Ct. 2011) (VikingMalpracticeOpinion.pdf)

First Lawsuit & Settlement: In 2003, Viking and several other fire sprinkler manufacturers were sued for infringing Central Sprinkler's patent rights.  In 2005, the parties settled the case with a non-exclusive license agreement that included the payment of ongoing royalties and $1,000,000 for past damages. Although Central Sprinkler was (and still is) a subsidiary of Tyco International, the agreement did not expressly bind Tyco or its other divisions.

Second Lawsuit & Settlement: In 2007, Tyco sued Viking for infringement of two additional patents and Viking again settled the case by paying additional royalties and damages. One of the patents had already issued by time of the 2005 agreement. The other did not issue until 2007.

Malpractice Allegations: Viking then sued its original litigation counsel for malpractice.  Viking's position was that it had understood the 2005 agreement to bind the entire family of Tyco companies and that Viking would have no further liability to Tyco with respect to its large “K factor sprinklers.”  The particular alleged acts of malpractice were (1) advising Viking to enter into the 2005 agreement, (2) failing to include the new Tyco patents in the 2005 agreement or to at least advise Viking that they were excluded, and 3) failing to bind Tyco in the 2005 agreement or to at least advise Viking that Tyco was not bound.

On summary judgment, the trial court dismissed the case — holding that Viking was estopped from claiming that it did not understand the 2005 settlement agreement.  Critical to this holding were the conclusions that the law firm made no affirmative misrepresentations regarding the agreement and, as a signatory to the agreement, Viking was presumed to have read and understood the terms of the agreement.

On appeal, the Michigan appellate court affirmed — holding that absent fraud, coercion, or mistake, the law generally presumes that a signatory to an agreement knows the nature of the agreement.

Defendants claim, and we agree, that because plaintiff signed the 2005 agreement, it should be presumed to know and understand the nature of the document—especially the fact that Tyco was not a party to the agreement and Tyco would not be bound by it. In addition, plaintiff offers no evidence that defendants advised it otherwise. Plaintiff's executives claim that a release from Tyco was one of the goals of the 2005 settlement negotiations and that they believed Tyco and Central were the same entity. However, Van Dyke testified, and [Viking's Vice President] confirmed, that Van Dyke never told plaintiff that Tyco would be bound by the 2005 agreement. On the contrary, Van Dyke explained that Central flatly rejected a draft including Central and its parents, but plaintiff's executives thereafter continued reviewing and negotiating drafts that excluded Central's parents.

Here, the court went on to hold that there was no malpractice liability even if the firm's actions rose to the level of negligence because the alleged negligence was not the proximate cause of harm.

Patently-O Bits & Bytes by Lawrence Higgins

Although in the midst of final exams, Lawrence Higgins was still able to complete this week's installment of Bits and Bytes - DC

Indiana University Maurer launches Center for IP Research

• The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

• Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

• Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential. Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google's $900 million dollar offer. [Link]

Patent Jobs:

• Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
• Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
• Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
• University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

• The 3^rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [Link]
• The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI's Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
• American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

   

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

Odom's patent confirmed invalid by Federal Circuit

Gary Odom v. Microsoft (Fed. Cir. 2011)

Gary Odom runs his own patent search firm as well as his own patent law blog – the Patent Prospector – where he provides piquant comments on patent law and practice.  Odom is also a patent holder. His Patent No. 7,363,592 is directed toward a modification of the “toolbar” and “tool groups” that are familiar aspects of most computer software displays.  

At their broadest, the claims are directed to a method of (1) first displaying a toolbar made up of a set of tool groups with user-manipulable dividers located at the ends of the groups; and then (2) changing the position of the dividers based upon user input.

Odom filed for patent protection in 2000. In 2008, Odom sued Microsoft, arguing that the new “Ribbon” of Office 2007 infringed upon the patent. On summary judgment, the Oregon district court held the asserted claims (1) invalid as obvious and (2) not infringed either literally or under the doctrine of equivalents.

The district court based its obviousness holding on the conclusion that Odom had merely “cobbled together various pieces of what was already out there in a manner . . . that would have been obvious to anyone skilled in the art at the time of the invention.”  On appeal, the Federal Circuit affirmed.

The obviousness analysis began with Microsoft's previously filed patent directed to a “composite toolbar” that can be manipulated by a user. (Patent No. 6,057,836 to Kavalam, et al.).  The Kavalam patent provides a mechanism for users to re-size toolbar groups.  The appellate panel found only one difference between Kavalam's disclosure and Odom's claim — that Odom's tool groups “are on a single toolbar.”  However, the court found that difference merely “an insignificant advance over Kavalam.”  The court went on to hold that the “weak” secondary considerations presented by Odom could not overcome “strong prima facie” evidence of obviousness.

Considered by the Examiner? Odom's patent at issue in this case issued as a continuation.  In the parent case, Odom had submitted the Kavalam patent in an information disclosure statement and Kavalam is cited as one of 11 references considered by the examiner. The same USPTO examiner worked on both the original and the continuation. However, Odom did not re-submit the Kavalam patent as material art (nor did he submit any other references) in the continuation case and the new patent cites only one reference on its face.  As David Jaglowski notes in the comments below, the MPEP indicates that the patent examiner is supposed to review and consider all information that had been filed in any parent application. M.P.E.P. Section 609.02.

The examiner will consider information which has been considered by the Office in a parent application when examining: (A) a continuation application filed under 37 CFR 1.53(b), (B) a divisional application filed under 37 CFR 1.53(b), or (C) a continuation-in-part application filed under 37 CFR 1.53(b). A listing of the information need not be resubmitted in the continuing application unless the applicant desires the information to be printed on the patent.

That rule of examination is followed by a subsequent admonition in M.P.E.P. Section 707.05: "In all continuation and continuation-in-part applications, the parent applications should be reviewed for pertinent prior art."  The actual rules of practice (37 C.F.R. 1.98)  state that material must be resubmitted in a continuation unless the information was properly submitted in the prior application.

Whether the Kavalam patent was considered by the examiner is important because it relates to the the pending Supreme Court case of Microsoft v. i4i. In that case, the Supreme Court is likely to approve of some type of divided analysis between invalidity arguments previously considered by the examiner, and those not previously considered.  In my estimation, however, the court is unlikely to spell out the dividing line of when an argument may be deemed to have been previously considered.  I suspect that the situation presented here will likely fall on the side of not considered because, despite the rules, there appears to be no evidence that the examiner actually considered the reference in the continuation application. Of course that legal and factual conclusion may depend upon which panel of Federal Circuit judges is the first to decide the issue post-i4i.  (Note –  This issue is merely an aside for Odom's case as the examiner's consideration of the reference was not addressed by the Federal Circuit opinion.)

Judicial Bias: The Federal Circuit did address Odom's argument regarding judicial bias by the Oregon court.  Odom's argument was based on the court's rulings on Odom's motion to strike; Odom's motion to stay;  Odom's motion to block his (former) attorneys from withdrawing from the case; and by allowing Odom's former attorneys to (allegedly) breach attorney-client privilege by talking with the judge.  The Federal Circuit rejected all of those arguments as lacking merit.

Impermissible Recapture Rule Curtails Potential for Broadening Reissue

by Dennis Crouch

In re Mostafazadeh (Fed. Cir. 2011)

In 2001, National Semiconductor filed a broadening reissue request for its Patent No. 6,034,423 that had issued the year prior.  The invention itself is related to semiconductor packaging supports. During original prosecution of the application, the claims were amended to include a “circular attachment pad” limitation in order to overcome anticipation and obviousness rejections.  In the re-issue, the company is seeking claims not bound by the “circular” limitation.  The Examiner and BPAI both rejected the proposed amendment as an “improper recapture of subject matter surrendered during prosecution” of the original application.

The reissue process is designed to allow a patentee to alter the scope of the patent rights.  However, there are several limits on the ability of patent applicants to expand patent scope during reissue. First, claims can be broadened only if the broadening reissue is filed within two-years after issuance of the original patent. See MPEP 1412.03. Second, a patentee may not use a reissue to recapture subject matter that was surrendered in the original prosecution in an effort to obtain allowance of the originally filed claims. 

Because impermissible recapture is judged as a matter of law, USPTO determinations are reviewed de novo on appeal. The Federal Circuit has set out a three-step process for determining whether scope has been impermissibly recaptured:

1. Consider whether aspect of the pending reissue claims are broader than the patented claims.
2. Consider whether the broader aspects relate to material that was surrendered in order to overcome a prior art rejection.
3. Determine whether a substantial portion of surrendered material “has crept into the reissue claim.”  

The key is to look to see whether the reissue claims cover embodiments that were not covered by the issued  but that were covered by the originally filed claims. 

The impermissible recapture rule is not strict — some small amount of recapture is allowed. The court has ruled, for instance, that attempting to recapture a portion of previously surrendered scope is permissible if the reissue “materially narrows” the claims relative to the originally filed claims in a way that relates to the subject matter surrendered.  According to the court, a narrowed limitation may be “modified . . . so long as it continues to materially narrow the claim scope relative to the surrendered subject matter such that the surrendered subject matter is not entirely or substantially recaptured.”  However, entirely eliminating a previously added limitation will always trigger the recapture rule prohibition.  Of course, this begs the question of “what is a limitation?”

Here, the patentee added the “circular attachment pad” limitation during prosecution and now want to eliminate the “circular” limitation.  The patentee argues that the claim is still substantially narrowed as compared to the original claims. The Federal Circuit rejected that argument because any broadening of scope in the reissue must be coupled by a material narrowing within the reissue in a way that relates to the subject matter being recaptured.

In an e-mail today, Hal Wegner of Foley & Lardner suggested prudent patent applicants should not rely on broadening reissues. Rather, the best practice is to file a continuation application to “cover miscellaneous embodiments that could not be fit within the claims as allowed by the examiner.”

Billups-Rothenberg v. ARUP: The Dangers of FIling Too Early...Or Too Late

By Jason Rantanen

Billups-Rothenberg, Inc. v. Associated Regional and University Pathologists, Inc. (Fed. Cir. 2011) Download 10-1401
Panel: Gajarsa (author), Linn, and Moore

Billups is a classic example of the difficulties companies face when engaging in patent races.  Patent races occur when two or more entities are in competition to be the first to develop and patent a new technology.  In these sitautions, companies race to file patent applications, hoping to gain a competitive advantage.  Sometimes, however, the applications are filed before the inventors have really developed a patentable invention; othertimes, the applications are filed too late, after a competitor has filed its own application or published crucial information. In this case, Billups filed Patent No. 5,674,681 too early and Patent No. 6,355,425 too late, losing on both ends.

The patents-in-suit relate to a genetic test for Type I hereditary hemochromatosis that involves the detection of specific mutations in genes involved in regulating iron absorption.  The district court granted summary judgment of no written description for the '681 patent and anticipation of the '425 patent.

Lack of Written Description of Earlier Patent
On appeal, the CAFC first affirmed the district court's ruling that the '681 patent lacked written description, applying its customary approach to biotechnology inventions.  Here, Billups disclosed only the approximate location of the relevant mutation in the '681 patent, a disclosure that it argued was sufficient to place the inventor in possession of the invention (which in this case included the step of detecting the mutation) when combined with the knowledge that existed at the time of invention.  The CAFC disagreed.  "Given the lack of knowledge of sequences for the hemochromatosis gene and its mutations in the field, the limited extent and content of the prior art, and the immaturity and unpredictability of the science when the '681 patent was filed, Billups cannot satisfy the written description requirement merely through references to later-acquired knowledge."  Slip Op. at 11. 

The panel also, unnecessarily in my opinion, addressed the problem in genus-disclosure terms.  After quoting the relevant case law regarding disclosure of genus claims, the court concluded that the the patent failed because it "does not not identify even a single species that satisfies the claims.  In this case, the eventual discovery of only one species...within the claimed genus does not constitute adquate written description of that genus."  It is opaque to me what relevance a post-filing discovery of a species, let alone one by a third party, has to a species-genus analysis.

Anticipation of Later Patent
At the same time that Billups was conducting its  research, another group of scientists isolated and sequenced the hemochromatosis gene, published their results, and obtained Patent No. 6,025,130, filed nearly three years before the '425 patent.  The CAFC agreed with the district court that the '130 patent was anticipatory.

The inquiry focused on whether the '130 patent disclosed the diagnosis of an iron disorder using a specific mutation, the S65C mutation.  The '130 patent reports the genetic sequence of the S65C mutation, among with others that the inventors believed relevant to hemochromatosis, and describes techniques for conducting genetic assays that it states can be used to design a diagnostic device and method for screening the mutations.  Billups argued that this disclosure was not anticipatory because the '130 patent did not conclude that the S65C mutation was related to a hemochromatosis disease state, merely that there was a correlation and thus, Billups argued, the S65C mutation may have been only  a clinically insignificant polymorphism. 

Relying on the doctrine that a "reference is no less anticipatory if, after disclosing the invention, the reference then disparages it" (Slip Op. at 15), the CAFC rejected BIllups argument.  Here, "the '130 patent disclosed using the S65C mutation when diagnosing hemochromatosis, but qualifies that disclosure with the obseravation that the mutation "may only be a polymorphic variant."  Id., quoting '130 patent (emphasis in opinion).  Although the prior art questioned the utility of the application of the disclosed invention, it nevertheless disclosed it, thus rendering the '425 patent anticipated. 

Dir. Kappos Brings in New Chief Judge: James D. Smith

The USPTO has announced a new Chief Administrative Patent Judge to lead the Board of Patent Appeals and Interferences (BPAI). James Donald Smith will be leaving his role as Chief IP Counsel for Baxter International to take on the difficult task of shoring up the important section of the Office. Smith is expected to begin serving as Chief Judge on May 8, 2011 and is replacing Michael Fleming who stepped down in 2010 and Jay Moore who has been the Acting Chief Judge for the past several months.

The BPAI is struggling with a caseload that has grown dramatically over the past several years and a backlog of over 20,000 pending appeals. In addition a large and growing number of hotly contested inter partes reexaminations are reaching the Board and creating a heavy workload. These proceedings increasingly involve high profile patents involved in parallel infringement litigation. In many cases, courts stay litigation pending outcome of the reexamination and are looking to the USPTO for accurate and timely conclusions. The Board's profile and its workload would likely both increase under the patent reform measures now pending in Congress.

Mr. Smith has a long background in patent law. He is currently the Associate General and Chief Intellectual Property Counsel of Baxter International. He previously clerked for former Federal Circuit Chief Judge Paul Michel, served in private practice as a patent attorney at Arnold White & Durkee and Dewey Ballantine (now Dewey Le Boeuf). He also spent time at Nokia (Director of IP Licensing), Lexmark (Chief IP Counsel) and Emory University School of Law (Dean of Students and Professor).

Mr. Smith has been a registered patent attorney since 1988. He graduated from Duke University (J.D.) and the University of Maryland at College Park (B.S.E.E.).

The upper management of the USPTO is now solidly in the hands of patent law professionals with extensive experience in corporate patent law and management practice. This includes Director David Kappos (20+ years at IBM); Deputy Director Theresa Stanek Rea (25 years law firm practice); BPAI Chief Judge James D. Smith (20+ years in law firm and corporate practice); and Administrator for Policy and External Affairs Albert Tramposch (years in law firm practice followed by governmental work). Two exceptions to this "rule" are the Patent Commissioner Robert Stoll and Deputy Commissioner Peggy Focarino. Both Stoll and Focarino started their patent careers as examiners and have been at the USPTO collectively for more than 60 years. Although very much a "political" position, the role of Commissioner is most often filled by individuals who have dedicated the bulk of their careers to the USPTO.

USPTO Press Release

 

Rembrandt v. AOL: Licensing and Indefiniteness

By Jason Rantanen

Rembrandt Data Technologies, LP v. AOL, LLC (Fed. Cir. 2011) Download 10-1002
Panel: Gajarsa (Linn), Linn, and Dyk

In 2008, Rembrandt sued Canon and Hewlett-Packard, among others, for infringement of Patent Nos. 5,251,236 and 5,311,578.  Rembrandt contended that Canon and HP infringed by marketing office products containing modem chips capable of implementing International Telecommunications Union protocol V.32.  The modem chipsets in the accused products are manufactured by a third party, Conexant.

At the trial court level, the district court granted summary judgment in favor of the defendants on the basis that because Conexant was a licensee of the '236 and '578 patent, Rembrandt's rights were exhausted and it could not recover from Canon and HP.  The court further held that claims 3-11 of the '236 patent were invalid for indefiniteness as they improperly mixed method and apparatus elements and that claims 1-11 (all of the asserted claims) were invalid for indefiniteness for failing ot disclose algorithms corresponding to functions set out in the claims.  Rembrandt appealed.

Patent Rights Exhausted Through Prior License
The patents-in-suit were originally owned by AT&T, who granted a license to Rockwell International in the late 1980's.  Under a 1995 side letter, AT&T also granted Rockwell the right to sublicense "to any future divested present business of Rockwell."   That license was subsequently assigned to a reorganized Rockwell ("New Rockwell"), and then to Conexant as part of a spin-off of its modem business.  The patents themselves changed hands several times through a series of divestitures and acquisitions until  finally owned by Rembrandt.

On appeal, Rembrandt argued that patent exhaustion did not apply because Conextant was not a valid licensee under the terms of the agreements.  Looking to the terms of the contact, the CAFC held that contrary to Rembrandt's argument, sublicensing did not require AT&T's consent as long as it occured as part of a divestiture of Rockwell's present business.  Nor did the general rule that "the law does not recognize any right of a nonexclusive licensee to assign the license or to further sublicense" apply because the contract expressly allowed for such sublicenses to be granted.   

The CAFC also applied a pro-licensee interpretation of the scope of the license.  In connection with the sublicense provision, the 1995 Side Letter limited that right "only to the extent applicable to products and services sold by the future divested business prior to its divestiture."  Rembrandt contended that this meant the specific models being sold by Rockwell in 1996, when it divested its semiconductor business to New Rockwell.   The CAFC disagreed.  Looking to the 1988 and 1995 agreements, the court noted that neither refers to specific models of modems, instead specifying product types in general, functional terms.  Thus, because Old Rockwell sold modems prior to the transfer to New Rockwell, and because New Rockwell sold V.34 protocol-compliant modem chipsets prior to the divestiture to Conexant, the court concluded that the sublicensing conditions were satisfied. 

Indefiniteness
The CAFC also addressed three separate indefiniteness issues.  The court first affirmed the district court's grant of summary judgment that claims 3-11 of the '236 patent were indefinite because they contained both apparatus and method claims.  "[R]eciting both an apparatus and a method of using that apparatus renders a claim indefinite under section 112, paragraph 2."  Slip Op. at 15, quoting IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005).  Rembrandt's only argument in response was to request that the court insert apparatus language into claim 3, from which claims 4-11 depended.  Unsurprisingly, the court declined to do so.  "[T]he correction suggested by Rembrandt is "not minor, obvious, free from reasonable debate or evident from the prosecution history.'"  Slip Op. at 17 (quoting district court opinion).

Rembrandt fared somewhat better on claims 1 and 2.  The district court invalidated these claims (as well as claims 3-11), construing them to contain several means-plus-function elements and holding them indefinite due to the patent's failure to disclose an algorithm able to perform the recited functions. 

The CAFC disagreed that two of these elements were drafted in means-plus-function form.  Although the elements contained the word "means," that created only a presumption that the limitation was drafted in means-plus-function format.  "This presumption can be rebutted if the claim limitation itself recites sufficient structure to perform the claimed function in its entirety."  Slip Op. at 19.  That determination involves a 'one skilled in the art' analysis:  "When determining whether a claim term recites sufficient structure, we examine whether it has an understood meaning in the art."  Id.  

Here, there was no dispute that two of the claim elements, "fractional rate encoding means" and "trellis rate encoding means" recited sufficient structure.  Rembrandt's expert testified that these terms were used in publications and published patents in the early 1990's and were self-descriptive to one of ordinary skill in the art, testimony that went undisputed by the parties.   Thus, these elements recited sufficient structure by themselves to overcome the presumption of treatment under § 112, ¶ 6.

The CAFC did recognize a dispute over two other terms, "buffer means" and "combining means."  Here, the panel appears to have agreed with the district court's interpretation of these elements being in means-plus-function format.  However, the panel could not agree that the specification failed to disclose algorithms for these elements.  Remrandt's expert testified that the figures, text, and table in the '236 patent disclose complete algorithms to a person skilled in the art; Canon argued that they did not.  Thus, the court reversed the district court's grant of summary judgment of invalidity of claims 1 and 2 of the '236 patent.