Patent Law Blog (Patently-O)

Patently-O Bits & Bytes by Lawrence Higgins

Apple and the Slide to Unlock Patents!

• On October 25, 2011 the USPTO granted Apple a patent (8,046,721) for "Unlocking a device by performing gestures on an unlock image". Almost every touchscreen smartphone manufactured, uses slide to unlock technology. It seems like the Apple patent, could potentially be a problem for smartphone manufactures. However, many individuals propose that this patent should not have been issued because of the prior art that was available, such as the Neonode N1m which has been discontinued. It seems like many people forgot that Apple already has patented the slide to unlock feature, (Patent 7,657,849---which is cited in the "721" patent) so unless the Neonode has related prior art before December 23, 2005, the Neonode is not prior art. The "721" patent is a continuation of the "849" patent, therefore the "849" patent is not counted as prior art. As a result, the "849" patent is not invalid in light of the "721" patent, and most likely if the prior "721" patent has not been found invalid, nor will the "849" patent. [Patent] [Neonode] [Link]

Sony Buys Ericsson Patents and Holdings for $1.5 Billion

• Sony Ericsson has ended its joint venture and the 2 companies will go their separate ways. Sony paid Ericsson nearly $1.5 billion for the mobile phone joint venture, which will give Sony rights to smartphone patents held by Ericsson. Sony now expects to try to increase their market share. Sony held a market share of 11 percent (by value) in the Android phone market in the last quarter, representing 80 percent of the company's third quarter sales. 2011 has been the year of billion dollar patent deals, and it can be expected that many more patent deals relating to smartphones will be made in the future. [Link] [Link]

Call for Papers!

• The Third Annual Special Issue and Symposium for the Review of IP law (RIPL) will take place on April 19, 2012 in Chicago. The general theme will be "IP Law of China and the US" and subthemes cover the implementation of the new Chinese patent, copyright and trademark laws and theoretical or practical aspects of the cooperation of the IP laws of the US and China.

   

  The Special Issue and Symposium aims to gather professional and scholars from many disciplines including IP, international law, international business, ethics, and economic theory. The Symposium will bring an inspiring group of individuals to publish their writings and present their works at the symposium. [Link]

   

Patent Jobs:

• Apple is seeking a patent portfolio manager, with a minimum 5 years of patent preparation experience. [Link]
• Klarquist Sparkman, LLP is searching for litigation associates with 1-2 years of experience in IP litigation. [Link]
• Klarquist Sparkman, LLP is looking for a biotechnology patent associate or patent agent with 3+ years of experience. [Link]
• Bacon & Thomas is seeking a patent attorney with 1-4 years of experience and a mechanical or electrical background. [Link]
• Global Patent Group is searching for a patent attorney or patent agent with a background in plant biology and a Ph.D. [Link]

Upcoming Events:

• On October 28, the Annual Utah Cyber Symposium will take place. The Symposium will provide business and legal decision-makers in attendance from the business, academic, and legal communities a forum to learn more about legal and business challenges and opportunities facing the high tech industry today. Key business and legal leaders will instruct on how to improve your professional performance and bottom line, including the DOJ, Venture Capitalists, Professors, Business Leaders and Leading Attorneys. [Link]
• The Chicago-Kent Intellectual Property Law Society is hosting the "Patent Wars Round Table" on November 2, 2011 at 5:30 PM. The event will include a panel discussion on current trends in IP law, namely, the recent paradigm shift in patent strategy and valuation in mobile device companies. Panelists include David Ruder of RPX, Ragnar Olson of Global IP, John Paniaguas of Katten Muchin, and Pat Burns of Greer, Burns & Crain, and will be moderated by Professor Christopher Seaman of Chicago-Kent. Cost is $20 and includes open bar and appetizers. [Link]
• K&L Gates is holding a free webinar on Nov. 3 entitled "How the Patent Reform Act will Impact Your Business." The Act includes many changes, large and small, affecting subjects as far-reaching as the available appeals from reexaminations to the subject matter eligibility of tax planning methods and human organisms. The webinar will include a presentation and question and answer session. [Link]
• Whittier Law School's Center for IP Law and Law Review will host the 29^th Annual Law Review Symposium: The Law of the Smart Phone on November 4^th. The symposium will feature presentations and panel discussions devoted to the privacy, regulation, economics, and intellectual property issues surrounding smart phone technology. Guest speakers include, Gerald Faulhaber, Mark Roark, Alan Friel, Susan Freiwald and many others. [Link]
• World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
• IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7^th-8^th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
• The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.

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

 

CAFC: Patent Opinions Down, Rule 36 Affirmances Up

By Jason Rantanen

As I commented yesterday, the Federal Circuit's statistics page no longer provides information about the disposal of patent infringement appeals by merits panels.  To get a better picture of the CAFC's activity in this area, I put together a graph that illustrates the Federal Circuit's dispositions of appeals arising from the district courts over the past fiscal year. 

The CAFC's graphs from previous years:

As compared with the Federal Circuit's historical data, the FY 2011 graph reflects a significant rearrangement of the way in which the CAFC is resolving patent infringement appeals: many more appeals were disposed of this year via summary affirmances and the percentage of precedential opinions has dropped sharply.  The overall number of dispositions by merits panels is also down, although that may be a function of the overall decline in appeals filed over the past few years.

A few notes:

• Because this data includes only appeals arising from the district courts; i.e.: patent infringement suits,  it does not reflect appeals arising from the PTO or ITC.
• Similarly, it should not be taken by itself to evidence a decline in the CAFC's production: the court deals with several areas of law besides patent law, and any numerical representation of this sort necessarily does not take into account the complexity, quality, or length of individual opinions.  Overall, fewer high-quality precedential opinions may be more desirable than large numbers of low-quality precedential opinions.
• For the past year, the Federal Circuit has been significantly under strength, which may explain some of the patterns noted above.  Currently only ten of the twelve seats are filled; as of last year at this time only nine of the twelve seats were filled.  Furthermore, while Judge Gajarsa assumed senior status this year, and continues to be an active participant on the court, the court lost the valued services of Judges Friedman and Archer. 
• Thanks to my research assistant Alexandria Christian for revewing the CAFC's dispositions of appeals arising from the district courts - the data on which the first chart is based.

 

Federal Circuit Statistics - FY 2011

By Jason Rantanen

The Federal Circuit recently updated its statistics webpage with information for FY 2011 (October 2010-September 2011).  Unfortunately, much of the statistical information that the court previously provided has been removed and is no longer accessible.  Nevertheless, the available data does allow for at least a partial picture of the CAFC's activity.

In terms of overall caseload, one of the court's graphs indicates that it appears to be on the upswing after falling over the past few years:

Source: http://www.cafc.uscourts.gov/the-court/statistics.html 

This rise appears to largely be the result of a modest uptick in appeals of both district court and PTO rulings, as well as challenges to CAVC and MSPB determinations, as shown in another CAFC graph:

Source: http://www.cafc.uscourts.gov/the-court/statistics.html

Median time to disposition is holding fairly steady, although there is a slight upswing for appeals arising from the PTO:


Based on data obtained from http://www.cafc.uscourts.gov/the-court/statistics.html

While this information is unquestionably useful and well appreciated, statistical information that the CAFC previously provided is unfortunately no longer available.  This includes: data about merit and non-merit dispositions in patent suits (see also), affirmance and reversal rates for district court patent infringement appeals (Download 2001-2010 data), charts showing the number of appeals adjudicated by merits panels broken down by category type (IP, admin, and claims), data about merit and non-merit dispositions in all suits, the percentage of appeals terminated in 90 days or less, data showing the number of petitions for rehearing filed and granted (Download 2001-2010 data), and data showing the number of petitions for writ of certiorari filed and granted by the Supreme Court.  Some of this information may be derivable from the court's output, but much of it is difficult to obtain.

I gave the court clerk's office a call, and was told that this information had been removed and would not be updated.  The information that is currently on the website is the statistical information that will continue to be updated.  I have provided some of the court's past statistical data above; if any readers happen to have other old CAFC data in your possession (particularly information that is not available via review of the court's opinions themselves), please send me an email.

Update: The first two graphs will now open into larger views.

VS Tech v. Twitter: Patentable Subject Matter

VS Tech v. Twitter, 11–cv-0043 (E.D. Virginia 2011)

Trial is set for this week in the patent infringement lawsuit between VS Tech and Twitter.  VS’s asserted U.S. Patent No. 6,408,309 claims a “method of creating an interactive virtual community of people in a field of endeavor” and has a February 2000 filing date.  The inventor is Dinesh Agarwal who has also been a patent attorney since 1985.  VS Tech was formed to pursue the lawsuit and is headquartered in Mr. Agarwal’s law office address. The first two claims of the patent are reproduced below:

What is claimed is:

1. A method of creating an interactive virtual community of people in a field of endeavor, comprising the steps of:
a) selecting a field of endeavor;
b) compiling a list of members in the selected field;
c) selecting a member from the compiled list of members based on a preselected factor;
d) obtaining biographical information about the selected member;
e) processing the biographical information in a preselected format to create a personal profile of the selected member;
f) publishing the profile of the selected member on a machine readable media; and
g) allowing the selected member to interact with the profile.

2. The method of claim 1, wherein the step (f) comprises publishing the profile of the selected member on a network of computers.

In his most recent judgment in the case, Judge Morgan denied Twitter’s motion for summary judgment of invalidity under 35 U.S.C. 101, 102 & 103 and non-infringement.

The section 101 decision is interesting in that the judge treated the machine-or-transformation test as a question of fact to be determined by the jury.  “In light of all of the foregoing considerations, the Court finds that the evidence is sufficient for a reasonable juror to conclude that the '309 patent is linked to a particular machine or apparatus.”  Like claim construction and obviousness, patentable subject matter is treated by the courts as a question of law. However, unlike claim construction, the appellate courts have never held that it must be the judge who decides section 101 issues.

• File Attachment: Denial of Summary Judgment (1542 KB)
• File Attachment: Twitter Motion for Summary Judgment (2814 KB)
• File Attachment: VS Tech Opposition Brief (2481 KB)

When the case was filed in January, Patent Law reporter Joe Mullin wrote “The central role of patent lawyers in suits like this raises questions about the health of the U.S. patent system. Patent lawyers are insiders in this system, and an increasing number of them aren’t satisfied just with being very-expensive service providers to patent owners. They’re seeing the millions made by so-called patent trolls and are eager to get into the game themselves. The patent office simply isn’t set up to say no to a persistent applicant, and the patent lawyers know that as well as anybody.  Mike Masnick filed his story under the “bang-head-slowly dept.”

The following is the text of Twitter’s proposed jury instructions on what it terms “unpatentable subject matter”:

Even if an invention is both new and not obvious, a patent claim may be invalid if its subject matter is not patentable. The law establishes three categories that are not eligible for patents: laws of nature, physical phenomena, and abstract ideas.

Twitter contends that the asserted claims of the ‘309 patent claim an unpatentable abstract idea. Methods which can be performed mentally, or which are the equivalent of human mental work, are abstract ideas which cannot be patented. An abstract idea is unpatentable even if the patent claim limits the idea’s use to a particular technological environment, or adds insignificant post-solution activity. Systems that depend for their operation on human intelligence alone cannot be patented.

A useful and important clue for determining whether a patent claims unpatentable subject matter is whether the claim is tied to a particular machine or apparatus, or transforms a particular article into a different state or thing. This is called the “machine or transformation test.” To satisfy the machine prong of this test, the use of the machine must also impose meaningful limits on the claim’s scope. If the claim does not satisfy the machine-or-transformation test, this indicates that the claim may be invalid because it claims unpatentable subject matter.

 

 

This week in patent law class

• This week in patent law class: Left my students confused after discussing Benson, Flook, Chakrabarty, Diehr, and Bilski. I'm somewhat confused as well.
• Traditionally, a patentee could seek reissue to correct problematic claims if the problems were created “through error without any deceptive intention.”  The new patent act eliminates the “without any deceptive intention” limitation. What's the impact?

-Dennis Crouch

Patently-O Bits & Bytes by Lawrence Higgins

Samsung v. Apple: The Battle Continues

• A Netherland court recently denied Samsung's request for an injunction banning Apple from selling iPhones and iPads. Samsung claims that Apple should not be allowed to sell devices with 3G technology because they infringe Samsung patents. The court stated that because the 3G technology is the industry standard, Samsung is obliged to offer Apple licenses under fair, reasonable, and nondiscriminatory (FRAND) terms. It seems that the licensing fee Samsung sought was not a FRAND offer and that if Samsung does make a FRAND offer and for some reason an agreement is not reach Samsung may file another patent suit and ask for a new injunction request. [Link]

UK IPO

• Those who couldn't make it along to the UK IPO's event "Understanding the Use and Impact of Design Rights on the Design Sector" hosted by the Designs Council on 21 September 2011 can either listen to the presentations or download Word-format transcripts from this webpage. The event was a presentation of the economic research conducted for the IPO by the researchers, moderated by an expert panel and followed by a lively discussion. The research itself is published here. [Link]

Taiwan Will Form Patent Bank

• The quasi-government agency, the Industrial Technology Research Institute (ITRI) announced the bank, saying it could be similar to existing defensive patent aggregators such as RPX and Allied Security Trust. The director of ITRI stated that the bank will assist Taiwanese manufactures with the creation of patent portfolios and patenting strategies during the manufactures' R&D periods and later assist in defending them from suits and in expanding their market share. HTC is a Taiwan based company, who has been in a heated patent infringement battle against Apple, and it would be to their advantage for an IP bank like this. [Link]

Patent Jobs

• King & Spalding is searching for a patent attorney with 1-2 years of experience to work at their Houston office. [Link]
• McDonnell Boehnen Hulbert & Berghoff is seeking a junior associate with 2-3 years of experience, to work in their electrical arts group. [Link]
• Rambus is seeking a Senior Patent Counsel with 8+ years of experience and a BSEE or related degree. [Link]
• Sheppard Mullin is searching for 2 attorneys: (1) an associate with at least 2 years of patent prosecution experience, and (2) an associate with 2-4 years of patent litigation experience. [Link]
• The University of New Hampshire School of Law's Franklin Pierce Center for IP is seeking to hire a full-time professor of patent prosecution practice. [Link]

Upcoming Events:

• The 2011 AIPLA Annual Meeting will be held October 20-22, in Washington, DC. The Annual Meeting will bring nearly 2,000 IP professionals together to meet, share, and connect with one another and provide insight into some of the most pressing issues facing our profession today! Over 100 IP Professionals, from corporations, law firms, universities, the courts, federal agencies, with expertise both domestically and internationally will be presenting on a varied landscape of IP issues. [Link]
• Back to School: The New Patent Law Explained, conference will be hosted by Berkeley Center for Law and Technology on October 21 in Berkeley, California. Professors and practitioners will provide detailed explanations of the changes and discuss the impact on patent prosecution, counseling, and litigation. [Link]
• American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25^th-October 26^th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
• The University of Texas at Austin will hold its 16^th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
• Whittier Law School's Center for IP Law and Law Review will host the 29^th Annual Law Review Symposium: The Law of the Smart Phone on November 3^rd. The symposium will feature presentations and panel discussions devoted to the privacy, regulation, economics, and intellectual property issues surrounding smart phone technology. Guest speakers include, Gerald Faulhaber, Mark Roark, Alan Friel, Susan Freiwald and many others. [Link]
• IPMI is holding the IP Law & Management Institute on November 6^th – 8^th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]
• World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]

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

Guest Posts: Preparing for Mayo v. Prometheus Labs

By Professor John Golden, Professor in Law, The University of Texas at Austin

Mayo Collaborative Services v. Prometheus Laboratories, Inc., No. 10-1150 (S. Ct.)

Scheduled for oral argument on Wednesday, December 7, 2011

In Mayo Collaborative Services v. Prometheus Laboratories, Inc., the U.S. Supreme Court looks to address questions of whether and when certain types of medical methods are patentable subject matter. Prometheus specifically involves methods for optimizing patient treatment in which the level of a drug metabolite is measured and a measured level above or below a recited amount "indicates a need" to decrease or increase dosage levels. In 2005, the Court granted certiorari on related issues in Laboratory Corp. of America v. Metabolite Laboratories, Inc., but the Court later dismissed LabCorp as improvidently granted. In 2010, the Court reaffirmed the existence of meaningful limitations on patentable subject matter in Bilski v. Kappos, but the Court but did little to clarify the scope of those limitations.

Will Prometheus bring light where Bilski failed? Arguments to the Court invite it to further clarify the status of the machine-or-transformation test for process claims. Bilski indicated that this test is relevant but not necessarily decisive, and the Federal Circuit relied heavily on the test in upholding the subject-matter eligibility of Prometheus's claims. In the circuit's view, "asserted claims are in effect claims to methods of treatment, which are always transformative when one of a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition." Likewise, a metabolite-level measurement step was found to "necessarily involv[e] a transformation." Although Prometheus's claims include "mental steps," the circuit emphasized that the inclusion of such steps "does not, by itself, negate the transformative nature of prior steps."

Prior posts provide additional background on the Prometheus case. The first wave of merits briefs have been filed. These include the opening brief for the petitioners, briefs in support of the petitioners, and briefs in support of neither party. The respondent-patentee's brief as well as supporting amicus briefs will be due in the upcoming weeks.

BRIEF FOR PETITIONERS (Stephen Shapiro, Mayer Brown): Prometheus's patent claims violate Supreme Court precedent forbidding claims that "preemp[t] all practical use of an abstract idea, natural phenomenon, or mathematical formula." Prometheus's claims "recite a natural phenomenon—the biological correlation between metabolite levels and health—without describing what is to be done with that phenomenon beyond considering whether a dosage adjustment may be necessary." The claims' drug-administration and metabolite-measurement steps are merely "'token' and 'conventional' data-gathering steps" that cannot establish subject-matter eligibility. Patent protection is unnecessary to promote the development of diagnostic methods like those claimed and will in fact interfere with both their development and actual medical practice.

AMICUS BRIEFS SUPPORTING PETITIONERS

AARP & PUBLIC PATENT FOUNDATION (Daniel Ravicher, Public Patent & Cardozo School of Law): "Allowing patents on pure medical correlations … threatens doctors with claims of patent infringement" and "burdens the public with excessive health care costs, and dulls incentives for real innovation." "The Federal Circuit has latched on to trivial steps beyond mental processes, such as the 'administering' step in this case, to uphold patents that effectively preempt all uses of laws of nature." Prometheus's recitation of an "administering" step stands "in stark contrast to most pharmaceutical patents that require a 'therapeutically effective amount' of a drug be administered."

ACLU (Sandra Park, ACLU): In assessing subject matter eligibility, the Supreme Court "has focused on the essence of the claim," using a "pragmatic approach [that] allows the Court to see through clever drafting." Prometheus's insertion of drug-administration and/or measurement steps into a claim "does not alter the fact that the essence of the claim is the correlation between thiopurine drugs and metabolite levels in the blood." Further, the First Amendment bars Prometheus's claims. "What Prometheus seeks to monopolize … is the right to think about the correlation between thiopurine drugs and metabolite levels, and the therapeutic consequences of that correlation."

AMERICAN COLLEGE OF MEDICAL GENETICS ET AL. (Katherine Strandburg, NYU School of Law): The patents at issue "grant exclusive rights over the mere observation of natural, statistical correlations." They "convert routine, sound medical practice into prohibited infringement" and generate burdens and conflicts for patient care and follow-on innovation. "The machine or transformation test is inapposite … to determining whether a claim preempts a natural phenomenon." It can be too trivially satisfied without shedding sufficient light on whether claims "reflect inventive activity" or "improperly preempt downstream uses of the phenomenon."

ARUP & LABCORP (Kathleen Sullivan, Quinn Emanuel): "The patents assert exclusive rights over the process of administering a drug and observing the results…. This not only blocks the mental work of doctors advising patients, but also impedes the progress of research by seeking to own a basic law of nature concerning the human body's reaction to drugs." "Patents on measurements of nature" raise constitutional concerns by removing factual information from the public domain, thereby conflicting with patents' constitutional purpose to "promote the Progress of Science and useful Arts" and threatening to chill "scientific and commercial publication."

CATO INSTITUTE ET AL. (Ilya Shapiro, Cato Institute): This case provides the Supreme Court with an opportunity to strike a blow against the "thousands of abstract process patents which have been improvidently granted since the 1990s" and that are already adversely affecting software and financial innovation. Historically, patentable "processes" "aimed to produce an effect on matter, and these patents do not." The "indicat[ing] a need" clauses in Prometheus's claims do not even form part of a process because they do "not describe an action." Patent claims such as these, "whose final step is mental," impermissibly tread on the public domain and "freedom of thought."

NINE LAW PROFESSORS (Joshua Sarnoff, DePaul College of Law): The Supreme Court "should expressly recognize" that the Constitution requires that "laws of nature, physical phenomena, and abstract ideas" be treated as prior art for purposes of determining patentability. "Allowing patents for uncreative applications would effectively provide exclusive rights in and impermissibly reward the ineligible discovery itself." Barring claims like Prometheus's under section 101, as opposed to relying on patentability requirements such as novelty and nonobviousness, promotes "efficient gate-keeping" and "sends important signals."

VERIZON & HP (Michael Kellogg, Kellogg Huber): "It is longstanding law that a claim is non-patentable if it recites a prior art process and adds only the mental recognition of a newly discovered property of that process." See Gen. Elec. Co. v. Jewel Incandescent Lamp Co., 326 U.S. 242 (1945). "This principle is soundly based on Section 101's limitation to processes and products that are not only 'useful' but 'new.'" "[A]dding to the old process in Prometheus's patent claims nothing more than a mental step of recognizing the possible health (toxicity or efficacy) significance of the result of the process does not define a 'new and useful process.'"

AMICUS BRIEFS SUPPORTING NEITHER PARTY

UNITED STATES (Solicitor General Donald Verrilli, Jr.): The claimed methods recite "patent-eligible subject matter," and petitioners' objections to patentability are properly understood as challenges to the claimed methods' novelty and nonobviousness. By analogy with "patent law's 'printed matter' doctrine," the claims should ultimately be found invalid because, as construed by the district court, they "merely … appen[d] a purely mental step or inference to a process that is otherwise known in (or obvious in light of) the prior art." But the Supreme Court should affirm the Federal Circuit's holding on subject matter eligibility.

AIPPI (Peter Schechter, Edwards Wildman): AIPPI "encourages all member countries to allow medical personnel the freedom to provide medical treatment of patients without the authorization of any patentee." Unlike the U.S. and Australia, most countries "exclud[e] methods of medical treatment of patients from patent eligibility." When the medical-practitioner exemption of 35 U.S.C. § 287(c)(1) applies, "the courts lack subject matter jurisdiction." The exemption applies to the defendants, who "are plainly 'related health care entities.'" Thus, "the case should be dismissed for lack of federal subject matter jurisdiction."

MICROSOFT (Matthew McGill, Gibson Dunn): Subject-matter eligibility tests should not involve "pars[ing] the claimed invention into the 'underlying invention' and those aspects that are 'conventional' or 'obvious' or insignificant 'extra- or post-solution activity.'" Such parsing lacks any guiding principle that can make its application predictable. Petitioners seek an improperly "expansive application of the mental steps doctrine." "[I]f every step of a process claim can be performed in the human mind, that process is unpatentable." But the Federal Circuit has improperly "extended th[is] principle to apply to machines or manufactures that replicate mental steps."

NYIPLA (Ronald Daignault, Robins Kaplan): Innovation's "bewildering pace" argues against "rigid categorization of patent-eligible subject matter." "[T]here is no basis for excluding processes directed to analyzing the chemicals in a patient's body from patent eligibility." When satisfied, the machine-or-transformation test should decisively establish eligibility. But failure of the test should not necessarily establish ineligibility. Preemption analysis "must incorporate a critical assessment of whether the claim at issue actually claims a fundamental principle as a fundamental principle in contrast to an application of that principle."

ROCHE & ABBOTT (Seth Waxman, WilmerHale): Patents are crucial for innovation in personalized medicine and more particularly for the continued development diagnostic tests that can enable such medicine's practice. Arguments "that patents on diagnostic tests stifle innovation and basic scientific research" are "largely based on speculation, rather than sound evidence." Generally speaking, "market-driven business practices and self-enforcing market norms correct for any perceived limitations on the accessibility of patented diagnostic technologies." Congress should be trusted to provide appropriate patent-law exemptions for medical practice and research.

Limiting Damages: $107 Million Interest Charge Improperly Awarded On-Top of Pre-Agreed Damages

By Dennis Crouch

Sanofi-Aventis v. Apotex (Fed. Cir. 2011)

The case focuses on Sanofi's patent covering clopidrogrel bisulfate tablets sold under the trade name Plavix. ($4.5 billion in annual sales). In 2001, the generic drug manufacturer Apotex filed an abbreviated new drug application (ANDA) with the FDA – requesting that it be allowed to manufacture a generic version on the drug and alleging that Sanofi's patent was invalid. Sanofi sued for infringement.

Pre-Judgment Agreement to Limit Damages: May 2006, the parties came to a limited agreement that any actual damages for infringement would be limited to "50% of Apotex's net sales." The agreement stated that:

If the litigation results in a judgment that the '265 patent is not invalid or unenforceable, Sanofi agrees that its actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex's net sales of clopidogrel products . . . . Sanofi further agrees that it will not seek increased damages under 35 U.S.C. § 284.

Apotex subsequently began marking its generic product before being stopped a few weeks later by a preliminary injunction. After Sanofi won the infringement trial, the judge set damages for that infringement at 50% of net sales plus interest. In dollar figures, damages were $442 million and the interest charge was $107 million. The district court had agreed that it should be bound by the prior agreement between the parties, but held that the agreement only limited damages and did not limit interest.

Contract Specification: Of course the contract could have spelled-out whether the limitation applied to interest charges, and the parties most certainly considered that issue during negotiations. But, for whatever, reason, they chose not to specify in the contract whether interest charges should be limited. Thus, the court was forced to consider the proper default rule for this situation.

At the Federal Circuit, Apotex argues that the interest payment should be included as part of the damage award and that the judgment therefore exceeds the agreed upon 50% damage limitation. In a 2-1 decision, the Federal Circuit has sided with Apotex – holding that the phrase "actual damages" as used in the contract "include[s] all damages necessary to compensate Sanofi for Apotex's infringement."

Because prejudgment interest is a form of compensatory damages, the district court erred by awarding additional prejudgment interest pursuant to 35 U.S.C. § 284.

In the majority opinion, Judge Moore relied both on the contractual language and on the history of compensatory damages that traditionally include both a reasonable royalty calculated at the point of infringement and interests charges for the delay in payment. Both of those elements are part of the "actual damages" calculation necessary to fully compensate the patent holder for past infringement. This follows the view espoused by the Supreme Court in its 1983 case involving General Motors where the court wrote:

An award of interest from the time that the royalty payments would have been received merely serves to make the patent owner whole, since his damages consist not only of the value of the royalty payments but also of the forgone use of the money between the time of infringement and the date of judgment.

Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983).

Patent Act Damages: As usual, the language of the Patent Act is somewhat ambiguous on the meaning of damages. The first paragraph of Section 284 calls for an award of "damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court." One view of this provision would require damages to be, at a minimum, a combination of a reasonable royalty plus interests and costs. In my view, however, the better plain meaning interpretation of Section 284 is that a court is required to award damages (minimum of reasonable royalty) and in addition must award interest and costs.

The appellate panel rejected the parties' analysis of the language of the patent act as irrelevant – holding instead that "actual damages" was a contract term and that the interpretation therefore does not depend upon any statutory language.

While interesting, these arguments neither illuminate nor resolve the issue before us – the meaning of "actual damages" in the May 2006 agreement. The agreed upon "actual damages" are a creature of contract and not of the Patent Act. By entering into the May 2006 agreement, the parties decided that the agreement itself – not § 271(e)(4)(C) or § 284 – would govern the appropriate measure of damages from Apotex's infringement.

Writing in Dissent, Judge Newman would have applied the usual background rule that interest is different from damages as a primary driving factor in interpreting the contract. In that framework, the contractual limitation on damages would not apply to limit interest as well.

My colleagues err in reading the contract's silence on interest for infringement as meaning that the parties intended and agreed to forgo the interest to which the patentee is entitled by statute and precedent. I must, respectfully, dissent

c

Telegram for the Federal Circuit: Electronic Case Filing Is Now Available

By Andrew Dhuey

"I'm following your case at the Federal Circuit – would you please send me a PDF of the parties' briefs? Thanks in advance." Patent litigators and prosecutors throughout the nation have been sending emails with this request for years, relying on the kindness of strangers for a professional courtesy. They do this because there is usually no easy way for them to obtain Federal Circuit briefs. The reason for that is the Court – charged by Congress to resolve the most important technology disputes in the world – still does not have electronic case filing (ECF).

In the federal judiciary, ECF is now operational in all appellate and district courts, save two: the Supreme Court and the Federal Circuit. Some Supreme Court justices are comically unfamiliar with such cutting-edge technologies as texting and email, though the Chief Justice probably does know more about pagers than the typical 20-something today. Fortunately, the technological backwardness of the Supreme Court's case filing system is of no consequence – you can get just about any petition or merits stage brief you might want from SCOTUSblog, the American Bar Association and other online sources.

At the Federal Circuit, however, odds are you have only three options when seeking a brief or motion: i) pay several hundred dollars for a messenger to go to the Court and copy it, ii) pay Westlaw or Lexis a similar amount to download it (if available) or iii) ask an attorney in the case for the favor of a PDF (tip: ask really nicely).

The Court's long delay in implementing ECF is puzzling. In case after case, Federal Circuit judges and their law clerks demonstrate their ability to learn and analyze extremely complex technologies in widely disparate fields. Why then is the Court lagging behind every regional circuit court and all district courts in the nation when it comes to adopting technology in its own operations?

ECF is not a newcomer to the federal courts. District courts started using ECF in 2002; circuit courts in 2005. On June 28, 2007, then Chief Judge Michel announced that the Court hoped to utilize ECF in fall 2007. Since then, nothing. Well, slightly more than nothing. This message appears on Federal Circuit electronic docket sheets: "The following documents, filed after 8/13/07, are available for download: official caption, entry of appearance, certificate of interest. No other case documents are available electronically." I can scarcely imagine any documents of less interest to others than captions, entries of appearances and certificates of interest, yet these are the ones you can obtain electronically.

The Federal Circuit's lack of ECF is not merely a hassle for lawyers in search of briefs and motions. Scores of non-lawyers, including inventors, veterans, federal employees and vaccine-case claimants, represent themselves in Federal Circuit appeals. That rather challenging task would be less daunting if they had easy access to well-written appellate briefs of experienced counsel.

Federal Circuit judges, please consider this an amicus filing from someone who has great respect for you and the Court – it is time to roll out ECF.

Patently-O Bits & Bytes by Lawrence Higgins

Where Will the Patent Satellite Offices Open!

• There currently is a lot of lobbying going on by politicians to bring the USPTO to their state. Lawmakers from Silicon Valley, Colorado and Texas are trying to win one of the two satellite offices, since Detroit already is entitled to an office under Leahy-Smith. Colorado Sens. Michael Bennet and Mark Udall, sent a letter to David Kappos trying to sell him on the Rocky Mountain State. Also California lawmakers Anna Eshoo and nine other from sent a letter to Obama making their pitch for Silicon Valley. [Link]
  

Beacon Navigation Files Suit Against Car Makers

• On October 11^th Beacon Navigation filed patent infringement suits against all the big name automobile manufactures. Beacon claims that automobile manufactures infringed either all or some of their patents including 5,819,201, 6,163,269, & 5,878,368. Beacon claims that because the GPS navigation systems in their products are specially adapted for an infringing use of each patent, and embody a material part of the inventions claimed in each patent. As noted by PriorSmart, Beacon is the first plaintiff to file a high volume of individual cases since the new joinder restrictions were enacted. [Complaint]

Mark T. Banner Scholarship

• The Richard Linn American Inn of Court is proud to offer the Mark T. Banner Scholarship for law students. This scholarship is part of The Richard Linn American Inn of Court's commitment to fostering the development of intellectual property lawyers of high ethics, civility and professionalism, and especially those from diverse backgrounds. [Link]

Patent Jobs:

• Harman International is seeking a patent attorney with at least 8 years of experience. [Link]
• Klarquist Sparkman is searching for lateral patent associates or patent agents with at least 1-4 years of experience. [Link]
• Klarquist Sparkman is searching for a patent attorney or patent agent with 3+ years of experience. [Link]
• Lee & Hayes is looking for patent attorneys with at least 3 years of experience. [Link]
• Withrow & Terranova is seeking patent attorneys or patent agents with at least one year of experience. [Link]
• Trading Technologies is searching for a patent agent with 3-5 years of experience. [Link]
• Trading Technologies is seeking a patent attorney with 3-5 years of experience. [Link]
• Volpe and Koenig is looking for a Japanese patent paralegal with prior experience as a patent paralegal. [Link]

Upcoming Events:

• The 2011 AIPLA Annual Meeting will be held October 20-22, in Washington, DC. The Annual Meeting will bring nearly 2,000 IP professionals together to meet, share, and connect with one another and provide insight into some of the most pressing issues facing our profession today! Over 100 IP Professionals, from corporations, law firms, universities, the courts, federal agencies, with expertise both domestically and internationally will be presenting on a varied landscape of IP issues. [Link]
• American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25^th-October 26^th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
• Licensing Executives Society (LES) will be holding their annual meeting on October 16-19 at the Manchester Grand Hyatt in San Diego. Guest speakers include, Martha Ries, VP of IP Management, The Boeing Company and Barbara Dalton VP, Venture Capital, Pfizer. [Link]
• The University of Texas at Austin will hold its 16^th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
• IPMI is holding the IP Law & Management Institute on November 6^th – 8^th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]
• World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]

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

Book Review: Justifying Intellectual Property

By Dennis Crouch

Excellent practitioner guides are often described as the "Bible for ___." Peter Menell's "Patent Case Management Judicial Guide" might fit into this category as the patent litigator's Bible.  However, I see some disconnect in the bible naming process.  Although the Christian Bible does include rules of practice, it turns out that those rules are regularly ignored. Many practicing Christians instead see the Bible as more simply providing a source of faith as well as some general guidance.

It is in this broader context that that I see Professor Rob Merges' new book Justifying Intellectual Property as a new Bible for Intellectual Property. In his 2011 Harvard University Press book, Merges explains his faith in intellectual property and how the basis for his faith provides general guidance for the structure of a well designed intellectual property system.

Merges is an excellent writer, but the reading is still dense – largely because Merges bases his arguments on the philosophic writings of John Locke, Immanuel Kant, and John Rawls. In reading the book, I am continually referring to the original sources (via the public domain and an internet search).  This takes time, energy, and active reading, but will be rewarding for any patent attorney looking to live a purpose filled life.

Merges also believes that utilitarianism is important to intellectual property. However, that justification has always lacked power because proof that the IP system really works has turned out to be "impossibly complex." In the end, utilitarianism or consequentialism offer only a hollow purpose. As Merges writes in his introduction "[m]aximizing utility, I have come to see, is not a serviceable first-order principle of the IP system. It is just not what IP is really all about at the deepest level." It makes sense to me that any true right needs more justification than can be provided by an econometrician. (My conclusion may well be based on the large number of economists that I know with failed moral compasses.) To be clear, Merges argues that the IP system should be designed efficiently and in a way that generally benefits society. His point, however, is that utilitarianism does not fully justify the property rights. Rather, for Merges, concerns of efficiency, along with proportionality, dignity, and non-removal are all "midlevel" principles that, though important, are not fundamental justifications. At the fundamental level, Merges relies upon deontological ethics derived from Locke (justification for appropriation), Kant (individual freedoms), and Rawls (distributive justice).  By threading together these historic lines of thought, Merges provides an ethical foundation both for the establishment of property rights for creative contributions to society as well as for substantive limits to those rights.

Justifying Intellectual Property is a fascinating book and I will likely post a second discussion of the book after I finish reading the second half.  The book does not have all the answers and, in my view, is not always correct.  It does, however offer a new framework for understanding intellectual property with a particular focus on why it makes sense to offer property rights for creative enterprises. 

Info:

• Title:Justifying Intellectual Property
• Author: Robert P. Merges, Faculty Director, Berkeley Center for Law & Technology; Wilson Sonsini Goodrich & Rosati Professor of Law and Technology
• Hardcover: 422 pages
• Cost: $60 list price
• Publisher: Harvard University Press (June 13, 2011)
• ISBN: 0674049489

Law Jobs: Patent Prosecution Professor at UNH

Univ. of New Hampshire School of Law in Concord, N.H. (formerly Franklin Pierce) is looking to hire a new full-time professor of patent prosecution practice. As many patent attorneys know, patent prosecution is already a major component of UNH’s patent law program.

“The person who is hired for this position must be able to teach and continue to develop a program of instruction that provides students with the skills needed to prosecute patent applications, including claims drafting and patent application preparation and procedures. The course includes a weekly lecture component that is given by the patent prosecution professor and small sections with practicing patent attorneys that are managed by the patent prosecution professor. By the end of this two-semester program, students will have drafted a complete patent specification and claims, responded to various USPTO Office Actions, and learned to prepare additional documents for filing with the USPTO.”

UNH is also willing to accommodate individuals interested in combining teaching responsibilities with an ongoing law practice or other professional obligation.

Links:

• Read the job posting
• Read about UNH Law’s Center for IP
• Patently-O Patent Law Jobs

Patent Issues Arising from the US-Korea Free Trade Agreement

This week, US Congress ratified a negotiated free trade agreement with (South) Korea. The agreement includes a major section on intellectual property law.

Agreed to terms include the requirements that each nation:

• Make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application.
• May only exclude inventions from patentability when it is necessary to protect public order or morality; or when the invention is a diagnostic, therapeutic, and surgical procedure for the treatment of humans or animals. However, the fact that a particular practice is against the law of a nation may not be used as a reason to deny patentability.
• May only revoke a patent on grounds that would have justified a refusal to grant the patent.
• Shall not allow third-party oppositions of pending patent applications (pre-grant).
• Will offer at least a 12-month pre-filing grace period for disclosures authorized by or derived from the patent applicant.

The agreement must also be ratified by the Korean National Assembly. Read the US-Korean agreement here: http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file273_12717.pdf. US Congress also passed similar agreements with the Latin American Nations of Panama and Columbia.

Design Registration? The agreements all additionally call for the parties to "make all reasonable efforts to ratify or accede to … the Hague Agreement Concerning the International Registration of Industrial Designs (1999) and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989)." The United States is not currently a signatory to either of these agreements.

Further agreements in the air: The US passage of the Leahy-Smith America Invents Act has been taken as a signal that further harmonization efforts may also be successful. In particular, it appears that many nations would be willing to implement a new US-style grace period at least if they are limited activities subsequent to a non-commercializing public disclosure authorized by or derived from the patent applicant or inventor.

 

Guest Post: Industrial Designs – the Wonder Weapon for the German Blitzkrieg?

PatLit is part of a family of excellent IPKat blogs created by UK attorney Jeremy Phillips. As you might guess, the website has a European focus, although not exclusively so. In a recent post, Michael Thesen wrote about the ongoing patent litigation between Samsung and Apple – with a focus on a German preliminary injunction based upon a European Design Registration. The following is reproduced with permission.

* * *

A preliminary injunction granted on the request of Apple for preventing the sales of Samsung's Galaxy Pad in most of Germany has recently caused a fairly big swivet in the IP community. This 1st instance case, featuring an industrial design and a defendant citing somewhat flimsy evidence, has even found its way to the hall of fame of "patent wars" in minimum time.

What is surprising from a patent litigator's point of view is how simple this is. How is it possible that a preliminary injunction is granted based on an unexamined right? [DDC Note: Unlike US Design Patents, Europe Design Rights are registered without substantive examination.] 

As everywhere, the decision to grant a preliminary injunction requires a careful balancing of the right owner's interest in preventing damages of irreparable nature and the defendant's interest in a fair procedure. For any kind of protective right, doubts in the validity and doubts in the question of infringement will lead to a refusing decision in order to safely avoid erroneous judgments due to precipitate action. 

In patent matters, even a successfully completed examination procedure is not necessarily sufficient to prove the enforceability with a sufficient degree of certainty (at least in Germany). Rather, additional conditions have to be met. In the case of unexamined utility models, the burden of substantiating the enforceability is at the plaintiff's side, which must produce at least the results of a professional search carried out on the subject-matter of the utility model or a positive decision of an invalidity procedure.

Nothing of this kind can be found in the judgment of the Düsseldorf court – the reason being fairly simple: the validity is legally presumed in Art. 85(1) of the Community Design Regulation (CDR), i.e. the court has to treat the community design as valid. This legal presumption may be challenged by way of a counterclaim. However, this shifts the burden of proof/substantiation to the defendant's side. The applicability of Art. 85(1) CDR to interim relief has been questioned, but is generally accepted as far as the author of this note knows.

In practice, the short time scale of procedures in interim relief, the lack of search possibilities comparable to those available for patents and utility models and an official search result to start with leaves the defendant defenseless. This has a further crucial effect on the question of infringement because the defendant has practically no possibility to substantiate the existing design corpus such that the judge has to presume a high degree of freedom of the designer and thus a large scope of protection (cf. Art 10(2) CDR).

Further, the Hagen District court holds that the damages caused by infringements of industrial designs are more likely to be of irreparable nature as compared to patents because the industrial value of the former lies primarily in its individual character, which would be "diluted" when admitting counterfeits during the procedure of the merits, whereas the value of the patent basically lies in its technical advantages which are, as such, not affected by counterfeits on the market.

In particular in the world of telecommunication patent wars there is one further feature of industrial designs which makes them frightening weapons: they are not essential for standards and, thus, not subject to FRAND agreements. As a matter of course, there is no way to obtain interim relief against a global competitor on the basis of a standard-relevant patent. 

In other words, you need not bother with being fair, reasonable and non-discriminative when using industrial designs.

The result is that industrial designs are tools which are largely underestimated in the portfolio of most of the IP right holders. Design rights are not expensive, powerful, can be enforced rapidly, easy to understand even for less experienced judges or customs officers, not susceptible for translation errors even in China, and deserve a decent fraction of every company's IP budget.

The original post can be found here: http://patlit.blogspot.com/2011/10/industrial-designs-wonder-weapon-for.html. 

Bosch v. Pylon: jettisoning the presumption of irreparable harm in injunction relief

By Jason Rantanen

Robert Bosch LLC v. Pylon Mfg. Corp. (Fed. Cir. 2011) Download 11-1096
Panel: Bryson (dissenting-in-part), O'Malley (author), Reyna

This is a very important Federal Circuit decision that firmly eliminates the presumption of irreparable harm in the context of injunctive relief.  While laying this issue to rest, however, the court offers an alternative idea: that even post-eBay, courts should (and implicitly must) consider the fundamental nature of patents as property rights when conducting an injunction analysis.

This case involves wiper blade technology.  Bosch, the patent holder, sued Pylon for infringement of a set of wiper blade patents.  At the trial court level, Bosch prevailed on a jury finding of validity and infringement before requesting entry of a permanent injunction.  The district court denied the injunction and Bosch sought interlocutory appeal of the denial while the damages determination was pending.

The presumption of irreparable harm is dead. Much attorney and commentator ink has been spilled over whether the presumption of irreparable harm following judgment of infringement and validity survived eBay Inc. v. MercExchange, L.L.C.  The Federal Circuit's opinion in Bosch v. Pylon should put an end to any further debate.  "We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief."  Slip Op. at 10.  Although not expressly stated by the court, the unequivocal implication is that this is as true for preliminary injunctions as it is for permanent injunctions.

Long live the requirement that courts acknowledge the fundamental nature of patents as property rights! While affirming the death of the presumption of irreparable harm, Bosch simultaneously suggests an alternative approach that perhaps may turn out not all that different: the importance of recognizing that patents are property rights when performing the injunction analysis.

Although eBay abolishes our general rule that an injunction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other short-cuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.

Slip Op. at 11. In other words, "While the patentee’s right to exclude alone cannot justify an injunction, it should not be ignored either."  Id. 

In the end, however, Bosch makes little use of this new approach, instead focusing on other types of errors committed by the district court.   Thus, it remains to be seen whether a failure to consider the "fundamental nature" of patent rights will be grounds for reversal. 

Reversal of district court denial of permanent injunction: In reversing the denial of an injunction, the court applies an approach reminiscent of the Supreme Court's own jurisprudence in recent years. 

Over the past quarter-century, this court has encountered many cases involving a practicing patentee seeking to permanently enjoin a competitor upon an adjudication of infringement. In deciding these cases, we have developed certain legal standards that inform the four-factor inquiry and, in particular, the question of irreparable harm. While none of these standards alone may justify a general rule or an effectively irrebuttable presumption that an injunction should issue, a proper application of the standards to the facts of this case compels the conclusion that Bosch is entitled to the injunction it seeks. It is in ignoring these standards, and supplanting them with its own, that the district court abused its discretion.

Slip Op. at 12.  Under this precedent, the court identifies two related legal errors and an error of judgment; taking the all the factors together, the majority concludes, compels the entry of a permanent injunction. The legal errors consisted of the district court's conclusions that the presence of additional competitors in the market, without more, cuts against a finding of irreparable harm, as did the non-core nature of Bosch's wiper blade business in relation to its business as a whole.  "Injuries that affect a “non-core” aspect of a patentee’s business are equally capable of being irreparable as ones that affect more significant operations."  Slip Op. at 16.  Ultimately, the trial court's error "arises from its conclusion that, if a fact supports the granting of an injunction, its absence likely compels the denial of one.  That is not the law, however."  Slip Op. at 17. 

Dissenting in part, Judge Bryson disagreed with the majority's decision to remand with instructions to enter an injunction.  While Judge Bryson would not have affirmed the denial of an injunction, nor would he have expressly reversed, instead preferring to remand the matter back to the district court for further findings of fact and a reweighing of the equities.  

Guest Post: First Patent Reform, Now Trade Secret Reform?

By David S. Almeling

Last month, President Obama signed into law the America Invents Act, enacting the most significant reform to patent law in a half-century. Last week, Senators Herb Kohl and Christopher Coons introduced an amendment to the Currency Exchange Rate Oversight Reform Act (the "amendment"), which would, for the first time, provide a federal right of civil action for trade secret owners. In a press release announcing the amendment, Senator Coons stated it "would allow for a single, uniform, nationwide cause of action instead of the patchwork of state laws now in place, and would elevate trade-secret intellectual property on the same level as copyright, trademark and patent violations."

Although it's a step in the right direction, the amendment falls short. This article summarizes the amendment and explains why it's not a complete solution to the problems it seeks to solve.

Our State-Based Trade Secret Regime

Unlike trademarks, copyrights, and patents, trade secrets are not governed primarily by federal statute. Each state retains its own autonomous trade secret law. The inevitable result is that trade secret law differs from state to state. For example:

• Forty-six states have enacted some or all of the Uniform Trade Secrets Act ("UTSA"). Those states aren't a unified bunch, though, as state legislatures made modifications to the UTSA and state courts adopted various interpretations of even the same provisions. The four states that don't follow the UTSA — Massachusetts, New Jersey, New York, and Texas — rely instead on the 1939 Restatement of Torts and other sources.
• Some states, such as Illinois, embrace the inevitable-disclosure doctrine, under which a court can enjoin an employee from working for a new company when that employee had access to her former employer's trade secrets and has responsibilities at the new employer that make it inevitable that she would disclose those trade secrets. Other states, such as California, reject the doctrine. Many states haven't decided one way or another.
• Most states have a statute of limitations that lasts three years (e.g., California). Other states have statutes as short as two years (e.g., Texas) and as long as five (e.g., Illinois).

With these interstate discrepancies comes a host of problems. A case's outcome may depend on the state in which suit is brought; the result in Kansas City, Missouri, may be different from the result across the river in Kansas City, Kansas. Another problem is the additional burden on plaintiffs and defendants, who must research which jurisdiction's laws are most favorable to their case, and on courts, which must decide between the competing laws. Such differences also create uncertainty, and thus cost, about which court will decide the dispute and what law that court will apply. Such differences impose further costs on trade secret owners who operate in multiple states, as they must protect trade secrets in a way that complies with the laws of each state.

The Amendment

The amendment would amend the federal Economic Espionage Act ("EEA"), which criminalizes certain types of trade secret misappropriation, to include a right of civil action for anyone "aggrieved by a violation of section 1832(a)." Section 1832(a) is one of the two types of conduct prohibited under the EEA, and it applies to misappropriating trade secrets related to or included in a product that is produced for or placed in interstate commerce knowing or intending that the misappropriation will injure the trade secret owner.

This new right of action would be limited to trade secret owners who provide a "sworn representation . . . that the dispute involves either substantial need for nationwide service of process or misappropriation of trade secrets from the United States to another country."

The amendment provides various forms of relief, including injunctive relief, damages, exemplary damages, and reasonable royalties. Significantly, the amendment also authorizes a court to issue a seizure order for property "used or intended to be used . . . to commit or facilitate the commission of the violation alleged in the civil action."

The amendment would not preempt any other law: "Nothing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law."

The Amendment is Limited

Among the amendment's limitations:

• It doesn't "preempt any other provision of law." Translation: the amendment doesn't replace the current state-based regime, but instead adds a new law to the mix.
• It applies only to one of the two categories of misappropriation prohibited by the EEA, and that category does not include many forms of misappropriation.
• It applies only to trade secrets that are "related to or included in a product" — a subset of all trade secrets, which broadly include any information that is secret, derives economic value from that secrecy, and is the subject of reasonable measures to maintain its secrecy.
• It applies only if the case involves either the need for nationwide service of process or the misappropriation of trade secrets from the U.S. to another country. Only a small percentage of cases fall into those categories.
• By amending the EEA, the amendment incorporates the EEA's substantive requirements, including intent, that are in addition to the usual elements necessary to establish a prima facie case of trade secret misappropriation.

I spoke with a member of Senator Kohl's staff, who said that one purpose of the amendment is to expand the current framework of the EEA by providing a limited federal right of civil action. That is a laudable first step, but the amendment won't fix the patchwork problem because the only way to eliminate differences among states is to preempt state laws.

So if the amendment won't work, what law will? One that provides a private right of action for all types of trade secret misappropriation and that preempts inconsistent state law. One, quite simply, that replaces the current state-based trade secret regime with a federal one.

David Almeling is a counsel with O'Melveny & Myers in the firm's San Francisco office. This article does not purport to represent the views of O'Melveny or its clients.

 

Book Review: Introduction to Patent Law for Non-Lawyers

by Dennis Crouch

Jeff Schox recently sent me a copy of his new book on patent law: Not So Obvious: An Introduction to Patent Law and Strategy. Schox uses the $39 paperback for the patent class he teaches to Stanford engineering students. The book is written in plain language and is clearly designed to be read by engineers wanting a first-cut understanding of the patent system and its purpose. In addition to patentability and infringement, the book also includes a nice chapter on inventorship and ownership rights. 

In the past, I have often recommended the "Patent it Yourself " book by David Pressman to inventors and others wanting to better understand the process. The problem with Pressman's book is that it has become so lengthy (596 pages) that it is no longer an easy resource for those more casually involved in the system.  Schox book likely fills that gap. (PIY is still a great resource for those more deeply involved in prosecution.)

Do others have recommendations of patent law resources for inventors who want to better understand the system without actually becoming patent agents? 

Stay Pending Reissue: Timing and Blog Reliability

Tyco Fire Products LP v. Victaulic Co., 10-cv-4645 (E.D. Pa. October 4, 2011)

by Dennis Crouch

In September 2010, Tyco Fire filed suit against Victaulic alleging infringement of two fire sprinkler system patents. U.S. Patent Nos. 7,793,736 and 7,819,201. Almost one-year into the lawsuit, Tyco Fire filed a pair of reissue application with the PTO – admitting that that both patents have defects that need correcting. The reissue applications request that the PTO narrow the subject matter being claimed with the apparent hope of avoiding an adverse invalidity decision in court.

After filing the reissue applications, the patentee requested that the district court stay the litigation pending the outcome of the reissue. In response, Victaulic cited my post from January 2011 identifying the average five-year pendency for reissued patents. In a brief filed under seal, Tyco's attorneys from Morgan Lewis called my post "unreliable" and "unsubstantiated" because it was found in a blog.

In deciding the issue, the judge correctly found that the reissue will certainly take some time even if my post regarding the average delay does not exactly predict the path for Tyco's applications. A potential important difference is that my data reflects the average for all reissue prosecutions but does not separate-out cases going through expedited reissue. See MPEP § 1442.

In the end, the judge refused to stay the litigation based upon the potential delay and the fact that the reissue does not appear to be likely to narrow the issues in the litigation. In addition, the court found that the reissue was motivated by claim construction questions posed by the defendant in the litigation. This timing issue (first seeing the claim construction arguments, then filing for reissue) raised "alarm bells" with the judge who identified the move as a potential "litigation gambit" intended to give the plaintiff a tactical advantage.

Stay denied.

Note: I contacted the Morgan Lewis attorneys who submitted the brief for a comment on what was particularly unreliable or unsubstantiated regarding my post. They have not responded.

BPAI's ex parte Decision Based Upon New Factual Findings Constitutes a New Ground of Rejection

In re Stepan Co. (Fed. Cir. 2011)

by Dennis Crouch

This is an important administrative patent law case holding that when the Board of Patent Appeals (BPAI) affirms a rejection based upon a new factual finding, it must identify the holding as a new ground for rejection.  This holding benefits patent applicants because it creates a right to either reopen prosecution or request a rehearing based upon the new ground.

Here, the examiner rejected Stepan's claims as anticipated and obvious.  Stepan had submitted a Rule 1.131 affidavit claiming a prior invention date in order to antedate one of the references. However, the examiner gave the affidavit no legal effect based upon the judgment that a prior public use of a portion of the invention qualified as 102(b) prior art because it occurred more than one year before the application filing date.

In the administrative appeal, the Board ruled that the applicant could claim priority to an earlier application and that, therefore the the prior art was no longer 102(b) prior art. However, the Board affirmed the rejection after holding that the prior use was still 102(a) prior art because the content of the Rule 1.131 affidavit was insufficient to prove Stepan's prior invention rights.

Writing for the Court of Appeals for the Federal Circuit, Judge Prost vacated the Board's decision — holding that the Board's factual finding on the sufficiency of the content of the affidavit was a new factual finding that was not a basis of the examiner's rejection being reviewed and, therefore, that the Board must identify the affirmed rejection as a new ground of rejection.

Notice does not focus on the applicant’s arguments divorced from the examiner’s rejections of record that are actually appealed to the Board.  Instead, it focuses on the “adverse decisions of examiners” during prosecution which form the basis of the Board’s scope of review.  35 U.S.C. § 6(b).  Because Stepan did not have prior notice of the Board’s intent to craft and rely on new findings of fact to support a §§ 102(a)/103(a) rejection and because it failed to identify this rejection as a new ground, Stepan’s notice rights were violated.  5 U.S.C. § 554(b)(3); 35 U.S.C. § 6(b).  Had the Board labeled its rejection as a new ground of rejection, Stepan could have reopened prosecution to address the newly-alleged deficiencies in its Declaration with the examiner. 

Note: Although this case involves an ex parte reexamination, the principles here apply equally with ordinary ex parte examination.  However, the decision will not apply to the new post grant review proceedings under the Leahy-Smith AIA because the review goes directly to the Board (the newly named Patent Trial and Appeal Board or PTAB) rather than an examiner.

Two men walk into a bar…

The Narrows: Winning by Arguing Both Trade Secret Misappropriations and Patent Infringement

Atlantic Research Marketing Systems (ARMS) v. Troy Industries (Fed. Cir. 2011)

By Dennis Crouch

This appeal stems from a 2007 patent infringement and business tort lawsuit filed by ARMS against its former employee and current competitor (Mr. Troy). ARMS' reissue patent claims a firearm hand-guard with an attachment point at the firearm's barrel nut. The original patent application included both the barrel nut attachment and a sleeve support as claim limitations. However, the reissue patent does not require the sleeve support. That change is important for the case because TROY's competing hand-guard uses the barrel nut as the single attachment point.

On summary judgment the district court ruled the patent invalid for failing the written description requirement of 35 U.S.C. § 112 p1.

Written Description Requirement: Section 112 p1 of the Patent Act requires that a patent specification include "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same." In Ariad, the Federal Circuit reaffirmed that this provision creates the separate and distinct requirements of written description and enablement. The test for written description considers whether, after reading the original specification, one of skill in the art would understand that the inventor was in possession of the claimed invention. Most written description cases arise in situations like this where the patentee has amended its claims well after the application filing date.

Although not cited here, this case is similar to the Federal Circuit's Gentry Gallery decision where an element in the original claims was omitted in a broader-amended claim. In Gentry Gallery, the original application was directed to a pair of recliners with controls located on a console. The amended claims removed any restriction on the console location. The Federal Circuit held those broader claims invalid because "the patent disclosure did not support claims in which location of recliner controls was other than on the console."

On appeal here, the Federal Circuit agreed that the broader claims are invalid under the written description requirement because it the specification does not provide any evidence that the inventor invented a hand-guard that uses the barrel nut as the one and only attachment point.

[I]t is undisputed that the written description for the '465 patent does not disclose to a person of ordinary skill in the art an invention where the yoke/barrel nut attachment point provides complete support for the handguard accessory. Claims 31-36, however, clearly cover such a design. Put differently, claims 31-36 [as amended] exceed in scope the subject matter that [the inventor] chose to disclose to the public in the written description. Therefore, we hold that the district court properly granted summary judgment invalidating claims 31-36 for failing to satisfy the written description requirement of 35 U.S.C. § 112. Mr. Swan used the reissue process to impermissibly obtain claims unsupported by the written description.

ARMS had also sued TROY for trade secret violation and argued in court that ARMS version of the barrel-nut-only attachment was a trade secret stolen by TROY. That testimony bolstered the court's conclusion that the asserted claims lacked the written description support to cover a barrel-nut-only attachment.

[ARMS] cannot now "have it both ways" by reaching back and relying on the disclosures in the '245 patent to claim an invention he was purposely shielding from the public.

Trade Secret Violation: Although TROY won the patent dispute, the jury found troy liable for trade secret misappropriation and breach of a fiduciary duty to his former employee. The award was $1.8 million in damages under Massachusetts Trade Secret Law. (Massachusetts has not adopted the UTSA). As noted above, the alleged trade secret is the method of attaching the hand-guard to a firearm using only the barrel nut. The jury was instructed that any protectable trade secret must go beyond what was disclosed in the '245 patent. Based upon that instruction, the Federal Circuit affirmed – finding no clear error.

This strategy worked perfectly for ARMS who would likely be satisfied winning either patent infringement or trade secret misappropriations. Although the court clearly sympathized with TROY's position, it noted that the legal positions taken by the two parties meant that ARMS was likely to win one of its claims.

Troy's argument illustrates the inherent tension Atlantic Research created by contending that Troy misappropriated trade secrets, while simultaneously asserting that the products Troy developed with the misappropriated trade secrets infringed its patent. In response, Troy contended that Atlantic Research's patent disclosed the trade secret, but also contended that the patent asserted against it was invalid for failing to disclose a written description of a handguard that attaches solely at the barrel nut. These conflicting positions left little room for either party to prevail on both claims.

The problem: In the end, the Federal Circuit vacated the jury verdict on a "jury taint" issue. One juror brought a plumbing clamp from home during deliberations to show other jurors and the appellate panel held that the judge should have taken more dramatic steps to ensure that the clamp did not have any "prejudicial effect on the jury as a whole."

Patently-O Bits & Bytes by Lawrence Higgins

Is it really a First-to-File Patent System?

• With the passage of the America Invents Act (AIA), the US was going to become a First-to-File, instead of a First-to-Invent patent jurisdiction. However, was this really accomplished with the AIA, or was something else achieved? When most people think of a First-to-File patent system, they would probably think it means exactly what it says (the first person to file the patent application has priority). However, the 1-year grace period exceptions in 35 U.S.C. 102(b) seems to create a quasi or pseudo First-to-File system.

  102(b) (1) reads:

  • DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION. – A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if –

1. The disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor

The language of 102(b)(1) could cause lots of controversy. Essentially if an inventor puts his invention or disclosure on the internet or discloses it any public way, he/she has one year from that date to file a patent application, and the disclosure would not count as prior art against the inventor. However, the disclosure would count as prior art for a later inventor, which seems to suggest a First-to-Invent system. This creates an incentive for inventors to disclose inventions immediately so as to bar other inventors and receive an early priority date. I expect litigation about this topic and the many situations that could arise.

Judge T. John Ward, Sr. Steps Down

• Judge Ward, who is credited with turning Marshall, Texas into an unlikely hotspot for patent litigation, will return to the practice of law at Ward & Smith. Judge Ward will practice law alongside his son T. John ("Johnny") Ward, Jr. During Ward's tenure, the Eastern District also developed a reputation as being a haven for patent holders, particularly nonpracticing entities, or "patent trolls." Could the departure of Judge Ward potentially lead to a decrease in the amount of cases filed in the Eastern District of Texas? [Link]

WIPO's Statistical Country Profiles Tool

• Statistical country profiles provide information on patents, utility models, trademarks and industrial designs. They cover different dimensions of IP activity, including incoming and outgoing filings, the share of filings in different technological fields, total patents in force, and the use of international IP systems by applicants. The filings and grants are divided into the following categories: "resident" - domestic filings; "non-resident" - filings coming in from other countries; "abroad" - filings going out to other countries. The statistics also associate IP activity relative to countries' economic performance. For example, users can compare the trend of a country's total IP filings - defined as the sum of resident and abroad filings - with that of the country's GDP. Furthermore, they indicate the country's global rank for each indicator. [Link]

Upcoming Events:

• Houston Intellectual Property Law Association (HIPLA) will be holding its Annual IP Institute in Galveston, Texas October 6-8. The Institute will feature topics such as: Do's and Don'ts in IP Licensing, Due Diligence and Ethics in Acquisitions, Patent Prosecution Under the New Cases and Inducement of Patent Infringement after Global Tech Appliances v. SEB. The guest speaker will be Lord Justice Robert "Robin" Jacob, Court of Appeal of England and Wales. [Link]
• The 17^th Annual Advanced ALI-ABA Course of Study for the Corporate Counsel and the Private Practitioner: Trial of a Patent Case will be held in Chicago October 13-14. Guest speakers include: Judge James Holderman, Judge Liam O'Grady, Scott Coonan, James Leeds, and many more individuals. (Patently-O readers can get 30% off with discount code CT017POB) [Link]
• The 4^th Annual Inland Empire Intellectual Property Institute (IEPI) will be held in Spokane, Washington on October 14^th. The program will cover: developments in patent prosecution, patent litigation, copyright and trademark; ethical considerations for IP attorneys; patent reform and its impact on the practicing attorney, and many more topics. Guest speakers include: David Powers, Nancy Kim, Shirley Anderson and many other individuals. [Link]
• American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25^th-October 26^th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
• Licensing Executives Society (LES) will be holding their annual meeting on October 16-19 at the Manchester Grand Hyatt in San Diego. Guest speakers include, Martha Ries, VP of IP Management, The Boeing Company and Barbara Dalton VP, Venture Capital, Pfizer. [Link]
• The University of Texas at Austin will hold its 16^th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
• IPMI is holding the IP Law & Management Institute on November 6^th – 8^th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]

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

Notes from DC

• Read the new Patently-O Patent Law Journal Essay by Prof. Sarnoff. He explains some of the problems arising from the elimination of section 102(f) in the new Patent Act.
• I’ll be at the Houston’s 27th Annual Institute on Intellectual Property (in Galveston) this evening and tomorrow. I look forward to seeing you there. – Dennis
• Intellectual Ventures has filed its first patent infringement lawsuit using its own name. Intellectual Ventures I & II v. Motorola Mobility, Inc.  The case was filed in Delaware using the new Feinberg Day firm and former Judge Joseph Farnon’s boutique firm as local counsel. The case asserts six patents: 6,412,953,  6,557,054,  6,658,464,  7,120,462,  7,409,450, and 7,810,144. IV obtained the patents from various sources, including Hyperspace Communications, Malibu Networks, Khyber Technologies, TeleShuttle, and the Taiwan-based company Industrial Technology Research Institute. The case is also interesting in that Google is a major investment in the Intellectual Venture funds and is also in the process of merging with Motorola.

Sarnoff: Derivation and Prior Art Problems with the New Patent Act

In a new Patently-O Patent Law Journal essay, Professor Joshua Sarnoff (DePaul) highlights a set of important problems in the Leahy-Smith America Invents Act. The essay, titled Derivation and Prior Art Problems with the New Patent Act focuses primarily on the elimination of 35 U.S.C. § 102(f) and its implications regarding the patentability of material that was either wholly or partially derived from another source.

Professor Sarnoff writes: 

Legislation sometimes is enacted that obviously requires either immediate revision or creative administrative and judicial interpretation. The new Leahy-Smith America Invents Act's derivation and prior art provisions fall in that category. Whether or not the move from a first-to-invent to a first-inventor-to-file system is viewed as good policy and as authorized by the Constitution, the particular changes made to the prior art provisions may not prevent or invalidate patents on inventions derived from others, i.e., when the applicant has obtained knowledge of an invention from another, original inventor and then files for a patent on the same or a similar invention. In particular, obvious inventions made with unauthorized derived knowledge will now be patentable, given the elimination of prior art section § 102(f). Absent creative interpretations by the U.S. Patent and Trademark Office (PTO) and the courts, the new derivation proceedings will not prevent a first filer from obtaining a patent even if the first filer's invention is merely an obvious extension of information derived from another. Further, the new act adds a narrow and poorly understood category of prior art that may generate years of needless litigation to re-settle the currently well-understood boundaries of the public domain. I discuss these problems in detail below.

There is some hope that Congress and the Administration will take Professor Sarnoff's concerns to heart.

Read the article: Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Review 12 at http://www.patentlyo.com/files/sarnoff.2011.derivation.pdf.

Prior Patently-O Patent Law Journal Articles include:

• Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent L.J. 6.
• Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission's (FTC) Recommendations to the International Trade Commission (ITC): Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent L.J. 1.
• Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent L.J. 111.
• Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent L.J. 95.
• Kristen Osenga, The Patent Office's Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89.
• Peter S. Menell, The International Trade Commission's Section 337 Authority, 2010 Patently-O Patent L.J. 79.
• Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently-O Patent L.J. 72.
• Kevin Emerson Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 60.
• Etan Chatlynne, Investigating Patent Law's Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37.
• Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24.
• Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19.
• Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently-O Patent L.J. 7.
• Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1.
• Edward Reines, and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, 2009 Patently-O Patent L.J. 1.
• Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1.
• Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38
• Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36.
• Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30
• John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21.
• Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1.

Patently-O Bits & Bytes by Lawrence Higgins

Patent Jobs

• Kessler Topaz Meltzer & Check is seeking an IP litigation associate with 4-6 years of experience. [Link]
• Amin Talati is searching for a patent attorney with 10+ years of experience to work at their Chicago office. [Link]
• Roberts Mlotkowski Safran & Cole is looking for an IP attorney with 2-4 years of experience and a background in electrical engineering. [Link]
• Roberts Mlotkowski Safran & Cole is looking for an IP attorney with 2-4 years of experience and a chemical background. [Link]
• Hope Baldauff Hartman is searching for patent agents and patent attorneys with a minimum 4 years of experience to work in their Atlanta office. [Link]
• Howard & Howard Attorneys is looking for an IP associates with 4-8 years of experience and a EE or chemical background. [Link]
• Axiom is seeking patent agents and patent attorneys to work remotely. [Link]
• Fairchild Semiconductor is searching an IP attorney with at least 3 years of experience and an EE background. [Link]
• Abel Law Group is seeking a patent attorney with 4+ years of experience and a chemical and/or ceramic background. [Link]
• Choate, Hall & Stewart is looking for biologists, chemists and materials scientists to join their IP practice. [Link]
• Holland & Hart is searching for an administrative IP specialist/Secretary. [Link]
• Maginot, Moore & Beck is seeking patent attorneys with 1-5 years of experience and an EE background. [Link]
• Akerman Senterfitt is searching for a Chemical IP associate with 1-3 years of experience. [Link]
• Rutan & Tucker is looking for an experienced patent prosecution paralegal. [Link]
• The Sughrue Firm is seeking patent attorneys with at least 2-3 years of experience to work in their D.C. office. [Link]
• The Sughrue Firm is seeking patent attorneys with at least 2-3 years of experience to work in their Silicon Valley office. [Link]
• The Ware Firm is searching for recent Federal Circuit Clerk with a technical background. [Link]
• The Ware Firm is seeking a patent agent/technologist with a technical background. [Link]
• DTS is looking for a patent searcher with 3+ years of searching and/or patent experience. [Link]

Kimberly-Clark v. First Quality Baby Products: No CAFC en banc resolution of standard for preliminary injunctions

By Jason Rantanen

Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC (precedential order denying rehearing en banc) Download 10-1382 order
Newman, O'Malley and Reyna dissenting

During the last few years a significant intra-circuit split has developed at the Federal Circuit over the appropriate standard to apply to likelihood of success determinations made in the context of requests for a preliminary injunction.  Last week the Federal Circuit declined to take the issue en banc in a move that prolongs the uncertainty but perhaps paves the way for Supreme Court review.

As in other areas of the law, the determination of whether to grant a preliminary injunction requires the applicant to establish four factors: a likelihood of success on the merits, irreparable harm in the absence of preliminary relief, that the balance of equities tips in the applicant's favor, and that an injunction is in the public interest.  The judges of the Federal Circuit disagree, however, about the standard for demonstrating a likelihood of success on the merits, as well as whether such a showing is a necessary prerequisite for entry of a preliminary injunction.

On this issue, several of the judges (including Judges Dyk and Prost, who participated on the panel in this case) apply the standard that an applicant fails to establish a liklihood of success on the merits if the accused party raises a defense that "does not lack substantial merit," and that such a failure precludes entry of a preliminary injunction.  This was the standard applied in the Kimberly-Clark opinion itself, in which the panel vacated a district court's entry of a preliminary injunction with respect to three patents (although it did affirm an injunction based on a fourth patent, concluding that the accused infringer "failed to raise a substantial issue of patentability"). Download 10-1382

Other judges, most vocally Judge Newman, take the view that a defense that does not "lack substantial merit" does not equate with a failure to establish a likelihood of success on the merits, and in any event should not automatically preclude entry of a preliminary injunction.  In her dissent in the denial of rehearing en banc in Kimberly-Clark, for example, Judge Newman - joined by Judges O'Malley and Reyna - criticizes the alternate rule as an absurdity.  "This standard essentially negates the possibility of grant of a preliminary injunction to preserve the status quo during patent litigation, for in today’s complex patent law it is hard to imagine a case in which a defense that is “not substantially meritless” cannot be devised at the preliminary stage."  Dissent at 5-6.  In support of her view, Judge Newman points to the disconnect between "lacks substantial merit" and the standard applied by everyone besides the Federal Circuit.  "The panel's approach is in conflict with not only the Supreme Court, but with every other circuit."  Id. at 6. Nor should a defense that lacks substantial merit automatically preclude entry of a preliminary injunction if the balancing of the four factors necessitates otherwise. See id. at 10-12. Judge O'Malley, writing separately, expressed her strong agreement with the points raised by Judge Newman, as well as concerns about the difficulties faced by district courts in resolving the court's precedent in this area.

Regardless who is correct on the appropriate standard for a preliminary injunction, it is apparent that a sharp split exists within the Federal Circuit that it will be unable to resolve on its own in the near future.  The denial of the en banc request suggests two possible outcomes: (1) that success of a preliminary injunction appeal to the Federal Circuit will continue to be heavily panel-dependant for foreseeable future, or (2) that the Supreme Court will intervene in this case or another to resolve the split and restore some predictability to the area of preliminary injunctions.

Steve Jobs is listed as a co-inventor of dozens of patents – many of them reflecting the iconic and revolutionary designs associated with Apple. Jobs died today and is already missed.

My first Steve Jobs computer was the Apple II c in 1984.  

Private Federal Civil Actions for Trade Secret Infringement

by Dennis Crouch

Senator Coons (D-Del.) today proposed a pair of trade secret focused amendments to the pending Currency Exchange Rate Oversight Reform Act of 2011.

Most trade secret litigation occurs at the state level. Although Title 18 of the US Code creates a cause of action for Trade Secret Theft, that provision gives standing only to the Attorney General and not to private parties. Senator Coons' amendment would open the door to a Private Civil Action for Trade Secret Theft that would be brought in Federal Court. In his press release, Senator Coons writes:

The … amendment, introduced with Senator Herb Kohl (D-Wis.), would protect U.S. businesses from the theft of trade secrets by allowing victimized companies to sue for trade-secret theft in federal court. The legislation would allow for a single, uniform, nationwide cause of action instead of the patchwork of state laws now in place, and would elevate trade-secret intellectual property on the same level as copyright, trademark and patent violations.

Federal Trade Secret Theft under Section 1832(a) requires a host of intentional acts involving stealing, copying, or receiving trade secret information that is related to a product produced in interstate or foreign commerce. The Coons amendment would allow a private civil action with the additional requirement that the plaintiff submit a sworn affidavit that either (1) there is a substantial need for nationwide service of process or (2) the case involves misappropriation of trade secrets from the US to another country.

The amendment also provides for immediate ex parte seizure orders and the award damages for the infringement.

Senator Coons also proposed a second amendment that would allow Homeland Security to share information and suspected counterfeit product samples with intellectual property rightholders. This would loosen the current rules that restrict information that Customs & Border Patrol can share with US rightholders.

Learn more:

• David Almeling, Four Reasons to Enact a Federal Trade Secrets Act, 19 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 769 (2009) (describing the lack of uniformity in state implementation of the Uniform Trade Secrets Act).

Federal Circuit Upholds Strong Domestic Industry Requirement for USITC Patent Litigation

John Mezzalingua Associates (d/b/a PPC, Inc.) v. International Trade Commission (Fed. Cir. 2011)

by Dennis Crouch

Most U.S. patent litigation takes place in federal district courts. However, when an infringing product is imported into the U.S., the patentee typically has a right to complain to the U.S. International Trade Commission (USITC) and to request an order that blocks the infringing products from entering the U.S. under Section 337 of the Tariff Act of 1930 (as amended). The USITC was formerly known as the U.S. Tariff Commission and, despite its current "international" name, the agency is fully within the U.S. government.

The USITC offers benefits for patentees over federal court litigation. In particular, the USITC often reaches its conclusion in less time and is not bound by the equitable limitations on injunctive relief. However, damages are not available and USITC orders are subject to more political control via presidential review of exclusion orders.

A major caveat to the Section 337 actions is that the USITC only has power to act to protect a "domestic industry." In this case, the Federal Circuit appellate panel has affirmed the USITC's judgment that the patentee, PPC, failed to prove the existence of a domestic industry related to its patented coaxial cable connectors. (U.S. Design Patent No. D.440,539).

Domestic Industry. Section 337(a)(3) defines a domestic industry for articles protected by intellectual property. Under the statute, a domestic industry "shall be considered to exist if there is in the U.S."

A. significant investment in plant and equipment;
B. significant employment of labor or capital; or
C. substantial investment in its exploitation, including engineering, research and development, or licensing.

To qualify, these activities must be tied to the patent, copyright, trademark, mask work, or design being protected. To be clear, the nexus must be fairly tight.  Here, the ITC ruled that there was a domestic industry for some of PPC's asserted patents but no domestic industry for this particular patent –  even though the patents are in the same priority family.

PPC is a US company that designs and manufactures cable connectors. PPC does not itself manufacture any product covered by the '539 patent. However, it has previously filed (and won) a number of prior lawsuits against infringers and, in one instance, licensed the '539 patent as part of a settlement agreement.  Here, it was clear that PPC had made "substantial investment" in protecting its patent rights through litigation and the patentee argued that investment fits within the "licensing" prong of 337(a)(3)(C)'s domestic industry definition.

On appeal, the Federal Circuit acknowledged that the statute does not indicate whether litigation expenses can count toward licensing investment.  In resolving the issue, the panel held that infringement litigation expenses will not normally be counted as licensing investment even if the result of the litigation is a license — otherwise the domestic industry requirement would be effectively meaningless. The court noted that litigation expenses may count toward licensing investment if, for instance, PPC had offered to license the patent prior to litigation or otherwise conducted settlement or licensing negotiations during the litigation.  The fact that PPC asked for injunctive relief in the prior litigation was also used as evidence that the prior litigation was directed toward protecting exclusive rights rather than part of a licensing initiative.

Standing: PPC had actually won its case at the USITC, but on a different patent. In the appeal, the USITC argued that PPC had no standing to appeal the favorable decision. The Federal Circuit rejected that argument — holding that PPC had a separate interest in obtaining a general exclusion order in the '539 patent even though all currently identified products will be excluded based upon the separate patent.

Dissent: Judge Reyna dissented — arguing that a patentee's infringement litigation expenses should count toward the licensing prong of the domestic industry requirement. Judge Reyna here provides a full analysis of the case that both explains his legal and factual arguments for reversal.

Verizon and Google combined forces to file a brief of amici curiae arguing that litigation expenses should not be counted in the domestic industry inquiry.  These industry-giants were concerned that the court would open the door for non-practicing entities to assert their rights in the USITC.  They argue "Patent litigation is not a protectable domestic industry."  Download GoogleVerizonITCBrief.

For those interested in studying USITC litigation, some excellent recent analysis of the judicial body has been done by Colleen Chien and Sapna Kumar.  You may also want to download the Section 337 Practice Guide.

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Pending Supreme Court and en banc Federal Circuit Patent Cases

By Jason Rantanen

The Supeme Court continues to take an active interest in patent cases, with three currently pending before the Court.  Briefs are available through the American Bar Association's Supreme Court coverage site.

Patent Cases Pending Before the Supreme Court:

Mayo v. Prometheus: Subject Matter Patentability of Processes, redux. In Mayo, the Supreme Court will revisit the issue of patentable processes in a case that was the subject of a grant-vacate-remand order following Bilski.  The Court has asked the parties to answer the following question:

Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between blood test results and patient health, so that the claim effectively preempts all uses of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve “transformations” of body chemistry.  

Argument is set for December 7, 2011.  This case has prompted substantial debate and numerous amici submissions.  Prior PatentlyO posts:

• Prometheus v. Mayo (January 25, 2009)
• Mayo v. Prometheus: Medical Methods and Patentable Subject Matter at the Supreme Court (October 28, 2009)
• Prometheus v. Mayo: En Banc Petition on Patentability of Medical Methods (June 26, 2010)
• Mayo v. Prometheus Labs: Bilski and Medical Methods (June 29, 2010)
• Prometheus v. Mayo: Patenting Medical Methods (September 15, 2010)
• Prometheus Laboratories v. Mayo: The Broad Scope of Statutory Subject Matter (December 22, 2010)
• Supreme Court to Revisit Patentable Subject Matter Eligibility (June 20, 2011)

Kappos v. Hyatt: Standard of Review of Patent Office Appeals to the District Court.  In Kappos v. Hyatt, the Supreme Court will address the de novo nature of a civil action brought by a patent applicant under 35 U.S.C. § 145.  The Federal Circuit, sitting en banc, previously held that in such a proceeding the applicant many present new evidence to the district court and that any factual conclusions impacted by that evidence must be determined de novo, without deference to the patent office.  The Supreme Court has not yet set oral argument.  Prior PatentlyO commentary:

• Appealing a BPAI Rejection: Can the Applicant Present New Arguments and New Evidence to the District Court? (February 17, 2010)
• The Timeliness of the En Banc Rehearing of Hyatt v. Kappos (February 18, 2010)
• Hyatt v. Kappos: Federal Circuit Opens Door to Post-BPAI Civil Actions (November 8, 2010)
• US Government Asks for Increased Deference When Patent Applicants Challenge BPAI Decisions in Court (April 11, 2011)
• Supreme Court takes Two More Patent Cases (June 27, 2011)

Caraco v. Novo: Counterclaims Relating to Brand Name Description of Claim Scope. This case relates to a generic company's ability to seek a counterclaim to correct a brand pharmaceutical company's alleged misdescription of patent claim scope submitted to the FDA. Oral argument is set for December 5, 2011.

Patent Cases Pending Before the Federal Circuit Sitting en banc:

Akamai v. Limelight and McKesson v. Epic: Multi-Party, Multi-Step Infringement issues.  In this set of cases the Federal Circuit will address infringement liability when multiple parties collectively perform separate steps of a muti-step process claim but no single entity performs all the steps. Oral argument will take place on November 18, 2011.  Prior PatentlyO commentary:

• Akamai v. Limelight: Joint Infringement Requires an Agency Relationship or a Contractual Obligation
• Joint Infringement: When Multiple Actors Work in Concert
• Federal Circuit orders En Banc rehearing of Akamai Joint Infringement Claim
• En Banc: Federal Circuit to further Address Joint Infringement

No Litigation Estoppel until All Appeals Exhausted in Inter Partes Reexamination

Bettcher Industries v. Bunzl USA (Fed. Cir. 2011)

by Dennis Crouch

For one summer during college, I worked in a meat packing plant. In one hand, I wielded a power-operated knife while the other, gloved in chain-mail, held thawing pork-bellies. This case involves litigation over a hand-held rotary blade used in the commercial food processing industries. As is now common, after Bettcher filed its infringement lawsuit, Bunzl, the defendant, requested the patent undergo inter partes reexamination at the USPTO. Bunzl asserted the same prior art in both its reexamination request and in its invalidity defense before the district court.

The issue on appeal is the timing of the estoppel provision associated with inter partes reexamination under 35 U.S.C. § 315(c). Under the statute,

"[a] third-party requester whose request for an inter partes reexamination results in a[ reexamination] order … is estopped from asserting at a later time, in any civil action [related to patent law] … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

As I read the statute, a reexamination requester is blocked from making particular invalidity arguments in court if certain conditions are met. These conditions include: (1) a final determination that the reexamined claim is valid; and (2) a finding that the invalidity argument is based on grounds that were or could-have-been raised by the requester during the inter partes reexamination.

In the case at hand, the USPTO had granted Bunzl's reexamination request, but the reexamination examiner had rejected Bunzl's position and issued a right-to-appeal-notice to Bunzl. Bunzl appealed to the BPAI, and recently lost the appeal, but had now requested rehearing by the Board. If Bunzl loses at the BPAI, it has a right to further appeal the reexamination to the Court of Appeals for the Federal Circuit.

In summary, at this point, the USPTO Examiner has made a "final" decisions that the claim is valid, and the BPAI has made a "final" decision that the claim is valid. However, Bunzl still has a right to appeal. The question from those facts is whether the claim is "finally determined to be valid" under the statute.

Deciding the issue, the Federal Circuit held that a claim is not "finally determined to be valid" under Section 315 until all appeals are exhausted.

[T]his court agrees with Bunzl that the estoppel provision of § 315 is triggered not when examination is completed but only after all appeal rights have been exhausted.

On remand, the district court will need to determine whether a new trial is necessitated by the additional prior art made available by the lack of estoppel.

Judge Reyna dissented – arguing that the estoppel issue is moot because the claim is anticipated as a matter of law.

The plain meaning of the claim language of the '325 patent reads on Bettcher's own prior art products, which include all of the structural features required by the claims, and which possess the capability of satisfying the functional or intended use limitations.

. . . .

No reasonable jury could conclude that the claims of the '325 patent were novel over the pre-1998 blades because none of the dispositive facts were disputed and the law is clear. I would reverse the district court and enter judgment as a matter of law of anticipation.

In reaching his outcome, Judge Reyna is finding that, as a matter of law, the wrong conclusion was reached by the trial jury, the district court judge, the original patent examiner, the reexamination examiner, the BPAI, and the other two judges on the court.

Comments by Crouch: This case is in tension with the recent Federal Circuit decision of Marine Polymer Tech. v. Hemcon, Inc. In that case, the court held that non-final arguments made during reexamination created intervening rights that relieved an accused infringer from liability, and that the intervening rights were created at the point of the arguments even though the reexamination was ongoing.

Guest Post: Accelerated Examination and Prioritized Examination

By: Nicholas Witchey, Ph.D.; Robert D. Fish, Esq.; and the Fish & Associates team

Passage of the Leahy-Smith America Invents Act (AIA) includes many changes to U.S. patent law. This article focuses on one change that might be overlooked: Prioritized Examination ("PE") of patent applications. The PE program allows an applicant to pay an additional $4800 fee ($2800 for small entities) to place an application on a prioritized track where the patent office has a goal to provide final disposition of the application (i.e., final rejection or allowance) within a year on average. Interestingly, the AIA retains the Accelerated Examination ("AE") program established on August 26, 2006, as discussed in MPEP 708.02(a). While the PE program prioritizes an application for prosecution ahead of standard filings, the AE program prioritizes and accelerates the actual prosecution of the application. The prioritized examination and accelerated examination programs co-exist as of September 26, 2011.

We recently had a chance to discuss co-existence of the AE and PE programs with Robert W. Bahr, Acting Associate Commissioner for Patent Examination Policy, during a recent MarcusEvans� IP Law Summit in September, 2011. Mr. Bahr stated there are no current plans to make changes to the AE program to align it with the PE program, or vice versa. He sees both programs as viable examination routes for applicants, and that applicants are expected to make a business decision as to which program should be taken. Therefore, it is up to the applicant to work with their patent practitioners on how best to align patent filing tactics with clients' business objectives.

How do these programs compare and which makes the most sense to use? The AE program and PE program are far from identical and have many differences, which gives rise to possible benefits in aligning patent application filing tactics with a client's business strategy.

One of the major differences is that the PE process does not require a pre-examination search document ("PESD") and an accelerated examination support document ("AESD") whereas these documents are required for the AE program to illustrate how the claims of an AE application are allowable over known related art. Preparation of the PESD and AESD documentation requires significant searching and analysis on part of the practitioner. Following the PE program can save an applicant $10,000 or more over the AE program in searching and analysis costs, but that doesn't necessarily mean the total cost is less expensive over a lifetime of an application's prosecution. Within the AE program, the time spent in searching for related art and in improving/focusing the claims tends to yield stronger claim sets, which contributes to faster allowance possibly within months of being accepted into the AE program. Without such thoroughly analyzed claim sets, an applicant could spend $10,000 and many years going back and forth with the examiner to achieve allowance for an application filed within the PE program.

Other than PESD and AESD considerations, the basic requirements for putting an application on file are the same for AE and PE applications, (e.g., formal drawings, no missing part, correct margins, etc.) except that the AE process allows only 3 independent claims and 20 total claims, while the PE process allows 4 independent claims and 30 total claims subject to excess claim fees. In both cases failure to follow the filing rules will result in the petition being dismissed or denied.

There is also a significant difference in fees. The filing fees of an AE application for a large entity are $1380, which includes $130 in petition fees, $1250 in filing fees, plus any excess page size fees. Corresponding small entity filing fees are $660 plus any excess page size fees. In contrast, the filings fees of a PE application for a large entity are $6480, including $4800 in petition fees, $1250 in filing fees, a $130 processing fee, and a $300 publication fee, plus excess claim and page size fees. The corresponding total for a small entity is $3630, plus excess claims and page size fees. From purely a filing fee point of view, the AE program is less expensive. Micro entity discounts do not apply to a PE application petition fee.

Prosecution is also different. AE turnaround is one month on non-final office actions, and failure to meet that strict time requirement results in abandonment of the application. Within the PE program turnaround is the normal three months. The three month deadlines can be extended as usual, but doing so results in the application falling out of the PE program. Applications that have fallen out of the PE program are placed on an examiner's standard docket. Thus, the AE program returns faster results than the PE program, but also has more severe consequences when the response dates are missed.

There are also some inconsistencies in availability of AE and PE applications. For example, one can file a PE application for a plant, while the AE program can not be used for plant patent applications. At least initially, the PE program is also being limited to 10,000 applications per USPTO fiscal year. There doesn't seem to be a formal limit on the number of AE applications, but there have only been an average of about 800 AE applications filed per year so there is little concern with respect to the USPTO limiting AE submissions.

With the introduction of the AE program, the PE program, and other prosecution tracks, the USPTO appears to be developing a full spectrum of possible approaches for prioritizing patent applications rather than a one-size-fits-all approach. Clients can select a style of examination based on their business needs or available budgets. If a cost-effective immediate feedback is required, the PE program might be a proper path for clients wishing to get prosecution started early. If a strategic set of claims are required, the AE program would likely be the best approach for clients wishing to obtain issued claims quickly. We expect the PE program to likely fill their allocated 10,000 applications per fiscal year quickly. In fact, our office has already started filing application with PE petitions. When the allotted yearly slots are taken, the AE program will remain available.

Our office has substantial experience with the AE program, and, although we are strong advocates of the AE program, we believe that PE program also offers other benefits to clients. Clients now have a greater selection of filing options to meet their business goals or filing budgets. A detailed analysis that one would conduct for an AE application would still have merit when filing an application within the PE program. There may even be cases where an applicant might strategically decide to file an application, or a family of applications, in both programs to obtain an optimized result.

The AIA also allows for changes to other prioritized programs including petitions to make special or important technologies, and patent prosecution highways. These programs can also be leveraged to prioritized examination and offer benefits to clients as well. We encourage readers to explore all the programs currently offered or that will be offered over the next 18 months.

USPTO Hiring and Paying More for Administrative Judges

The USPTO’s new Patent Trial and Appeal Board is taking over a backlog of over 24,000 pending ex parte appeals.  The Board has had some difficulty in hiring and retaining top administrative patent judges.  One element of the America Invents Act is to boost the salary schedule of USPTO’s administrative judge so that it is only constrained by the USPTO Director’s salary schedule — currently $165,000. However, unlike the USPTO Director, Administrative Judges will also be eligible for overtime pay.

Director Kappos has announced his desire to hire 1,500 – 2,000 new examiners in the next year.