Patent Law Blog (Patently-O)

The Federal Circuit's New Obviousness Jurisprudence: An Empirical Study

By Jason Rantanen

[Download the draft article]

Obviousness remains one of the primary issues raised in patent cases.  A few weeks ago, Dennis noted that "the vast majority of BPAI/PTAB decisions focus on the question of obviousness,"  and 5 of the 11 opinions involving utility patents issued by the Federal Circuit this past month addressed obviousness.  Many of these cases revolve around application of the Supreme Court's decision in KSR v. Teleflex, and reflect disagreements over the interpretation of the Court's opinion.   

This article presents the results of an empirical examination of the Federal Circuit's obviousness jurisprudence over a period of fifteen years, asking whether the Federal Circuit really changed its behavior as a result of KSR.  In systematically examining the court's opinions, I found the following:

• Following KSR the Federal Circuit has become substantially less favorable to patentees on the issue of obviousness. 
  
• The Federal Circuit’s ubiquitous pre-KSR requirement that patent challengers identify a “teaching, suggestion, or motivation” (“TSM”) to combine or modify the prior art has largely disappeared, at least in formal terms.
• Although the concept underlying TSM has endured, in the form of a “reason to combine” requirement, the post-KSR form of that requirement differs substantially from its pre-KSR incarnation.
• The Federal Circuit now routinely relies on language from KSR that “[a] court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions”  and the use of “common sense” to find combinations and modifications of the prior art to be obvious.

Although there may be some disagreement within the court, taken as a whole this study provides strong evidence that the Federal Circuit has both changed what it says and does when reviewing appeals involving the issue of obviousness. The magnitude of some of my findings was particularly surprising: for example, in the five years after KSR the Federal Circuit affirmed the PTO on the issue of obviousness 91% of the time (94 out of 103 times).

 

Continue reading the draft

Over the next few weeks I'll be posting some of my findings that didn't make it into the article. 

Best Super Bowl Commercial So Far

Via Michael Risch

Patent Term Calculations: District Courts Split on PTA Calculations; Revive Focus on Deference to PTO Determinations

By Dennis Crouch

Exelixis v. Kappos (Exelixis II) (E.D. Va. 2013)

We now have a district court split on post-RCE patent term adjustment. This decision – siding with the PTO – arises from a second Exelixis case and will be called Exelixis II (Brinkema, J.) In Exelixis I, Judge T.S. Ellis sided with the patentee in finding that the PTO was improperly under-calculating the patent term owed to patentees who had filed a request-for-continued examination during the course of prosecution. Exelixis v. Kappos, — F. Supp. 2d —, 2012 WL 5398876 (E.D. Va. Nov. 1, 2012), as amended Nov. 6, 2012. In the parallel caes of Novartis AG v. Kappos, — F. Supp. 2d --, 2012 WL 5564736 (D.D.C. Nov. 15, 2012), Judge Huvelle adopted the reasoning of Judge Ellis in siding with the patentee. Those decisions basically held that "once the three year clock has run, PTA is to be awarded on a day for day basis regardless of subsequent events." The PTO has argued that an RCE stops the running of the PTA clock.

In her newly released opinion, Judge Brinkema has sided with the PTO in holding that "'any time consumed by continued examination of the application requested by the applicant under section 132(b)' (via the filing of an RCE) does not count toward that three-year period." Quoting 35 U.S.C. §154(b)(1)(B). Exelixis I is already on appeal to the Federal Circuit and part II may be there soon as well.

The PTA statute is poorly written and thus both sides offer reasonable interpretations. In that type of scenario the most important factor is often whether deference is given to the agency's statutory interpretation. Here, Judge Brinkema determined that the PTO's interpretation of its statute should be accorded Skidmore deference because the PTO's interpretation is a "reasonable conclusion as to the proper construction of the statute." Quoting Cathedral Candle Co. v. U.S. Int'l Trade Comm'n, 400 F.3d 1352 (Fed. Cir. 2005). In that case, Judge Bryson wrote "we believe the Supreme Court intends for us to defer to an agency interpretation of the statute that it administers if the agency has conducted a careful analysis of the statutory issue, if the agency's position has been consistent and reflects agency-wide policy, and if the agency's position constitutes a reasonable conclusion as to the proper construction of the statute, even if we might not have adopted that construction without the benefit of the agency's analysis." Of course, that case was not a patent case. And the Federal Circuit has appeared much less willing to offer deference to USPTO decisions.

Read the new opinion here: http://ia601604.us.archive.org/3/items/gov.uscourts.vaed.280154/gov.uscourts.vaed.280154.31.0.pdf.

Smartphone Wars: Micron’s Slide-to-Unlock Patent

by Dennis Crouch

Adding a bit of drama to the slide-to-unlock debate, Micron has just received its own patent covering a "system and method for controlling user access to an electronic device." U.S. Patent No 8,352,745 issued in January 2013 but claims priority to an original application filed in February 2000 and lists Jim McKeeth as inventor.

Claims:

1. A system comprising:

a touch screen upon which a user is to enter, by drawing, a geometric pattern in a specified direction to gain access to the system; and

a processing circuit coupled to the touch screen to compare the user entered geometric pattern to a predefined geometric pattern stored in a memory.

6. The system of claim 1 wherein the user entered geometric pattern is a line.

Apple's slide-to-unlock patents claim priority only to the 2004-2005 timeframe and, although they may be separately patentable, Apple's patents will not serve to invalidate Micron's new patent.

Samsung has a 10-year cross-license deal with Micron. I have not seen reports of any similar deals with Apple, Google\Motorola, or RIM. It will be interesting to see whether Micron holds onto the patent or shifts it to an enforcement company as it did in 2010 in sending 4,000+ patents to John Desmarais for enforcement. Micron is a major manufacturer of computer memory with a market valuation of about $8 billion, perhaps they should just ask for Apple to endorse-over its recent billion dollar patent infringement judgment. One complicating factor is that I suspect Micron is a supplier for all of the potential defendants.

NO DISCLAIMERS OR DISAVOWALS

What do you think of the following boiler-plate language that some applicants are including in their office-action responses:

NO DISCLAIMERS OR DISAVOWALS

Although the present communication may include alterations to the application or claims, or characterizations of claim scope or referenced art, the Applicants are not conceding in this application that previously pending claims are not patentable over the cited references. Rather, any alterations or characterizations are being made to facilitate expeditious prosecution of this application.

Applicant reserves the right to pursue at a later date any previously pending or other broader or narrower claims that capture any subject matter supported by the present disclosure, including subject matter found to be specifically disclaimed herein or by any prior prosecution.

Accordingly, reviewers of this or any parent, child or related prosecution history shall not reasonably infer that the Applicants have made any disclaimers or disavowals of any subject matter supported by the present application.

Who reads Patently-O: Top Corporate and Governmental Subscribers

1. USPTO
2. GE
3. Samsung
4. Qualcomm
5. Pfizer
6. Microsoft
7. IBM
8. Dow
9. Dr. Reddy's
10. LGE
11. USCourts
12. DuPont
13. Intellectual Ventures

Piercing the Corporate Veil: Corporate Officers Are Liable for Their Own Torts

by Dennis Crouch

Hall v. Bed, Bath & Beyond, Inc. and Nachemin, __ F.3d __ (Fed. Cir. 2013)

This design patent decision is interesting and important on several levels and so I have divided the post into two sections. This section focuses on the Federal Circuit's dismissal of the charges filed personally against a Bed Bath & Beyond employee who allegedly caused the infringement. In my view, the court arrived at the wrong conclusion in holding that the corporate veil protected the employee from patent infringement liability. In a separate post, I wrote about the court's decision to maintain a low notice pleading requirement for design patent infringement litigation.

Set Up From the Complaint: Mr. R.J. Hall designed a new product known as a "Towel Tote" that is basically an absorbent scarf with pockets on the ends.  [See one here]. After filing his design patent application, Hall e-mailed with Mr. Farley Nachemin at Bed Bath & Beyond (BB&B) to see whether the company would retail his product.  Nachemin is a VP at BB&B and is employed as the General Merchandise Manager. Nachemin showed interest and two later met face-to-face. In the meetings and e-mails Hall made clear that the patent was pending. However, instead of moving forward with Hall, BB&B (with direct participation from Nachemin) mailed Hall's product to Pakistan and had it copied and manufactured for retail distribution back in the US.

When Hall later sued BB&B, he also sued Nachemin for infringement and inducing infringement (as well as other federal and state business torts).

Corporate Veil Protecting Officers and Directors: In a recent opinion, the Federal Circuit agreed with the district court that the Corporate Veil shields Nachemin from liability under New York law (the law applicable to this case). The basic contention is that - as a Vice-President of the Company, Nachemin is an officer of the company and therefore cannot ordinarily be held liable for debts of the company unless the corporate veil is pierced. Under New York law, "the party seeking to pierce a corporate veil [must] make a two-part showing: (i) that the owner [or officer] exercised complete domination over the corporation with respect to the transaction at issue; and (ii) that such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil." Quoting Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997). The appellate panel arrived at the reasonable conclusion that the complaint did not sufficiently allege domination by Nachemin.

Error: However, the error in the Federal Circuit's decision is its seeming assumption that the corporate veil applies to protect an officer who personally committed the tort of patent infringement. It does not. The court wrote:

[Defendants] primarily argue that under New York law, "the party seeking to pierce a corporate veil [must] make a two-part showing: (i) that the owner exercised complete domination over the corporation with respect to the transaction at issue; and (ii) that such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil." Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997); see also Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131, 138 (2d Cir. 1991) ("[T]o pierce the corporate veil, the parent corporation must at the time of the transaction complained of . . . have exercised such control that the subsidiary 'has become a mere instrumentality' of the parent, which is the real actor."). Applying the principles of New York law, we do not discern reversible error in the district court's dismissal of the action against Mr. Nachemin.

The problem with the court's conclusion is that the corporate veil does not liberate an individual from personally committed torts.

The Corporate Veil: Corporate law is, for the most part, a creature of state law. Each state has its own rules regarding the various corporate forms and their resulting limitations of liability that protect corporate owners as well as officers and directors of the corporation. However, all states follow the general principle that certain qualified parties will not be held liable for debts of a corporation unless the facts conform to a veil-piercing exception to the rule as suggested above.

Agents Personally Liable for Their Own Torts: One enormous caveat to the corporate veil protection is the general rule that corporate officers and agents are personally liable for their own tortious conduct. Thus, a bouncer who commits battery will be personally liable for the damage caused even if the improper action was at the behest of his nightclub employer. See Aguirre v. Paul, 862 N.Y.S.2d 580 (2008) ("A corporate officer is not held liable for the negligence of the corporation merely because of his official relationship to it; it must be shown that the officer was a participant in the wrongful conduct."); Munder v. Circle One Condominium, Inc., 596 So2d 144 (Fla 4th DCA 1992); Messenger v. Frye, 176 Wash 291 (1934).

Agent Personally Liable for Their Own Torts Even if Act is On Behalf of Company: It is generally not an excuse that the tortious conduct was done on behalf of the corporate entity. Thus, a person is liable for his own tortious conduct even when acting for the benefit of another.

Personal Liability for Patent Infringement: A plain reading of the patent laws make clear that individuals can be held liable for patent infringement. 35 U.S.C. 271(a) ("whoever without authority makes … any patented invention, within the United States … infringes the patent"). That reading is supported by a long history of holding individuals personally liable for patent infringement. There have been a few Federal Circuit cases on point. In Orthokinetics, lnc. v. Safety Travel Chairs, Inc., 806 F.2d 1565 (Fed. Cir. 1986), the court wrote:

[I]t is well settled that corporate officers who actively aid and abet their corporation's infringement may be personally liable for inducing infringement under § 271(b) regardless of whether the corporation is the alter ego of the corporate officer.

Id. See also Wordtech Systems, Inc v. Integrated Networks Solutions, Inc., 609 F.3d 1308 (Fed. Cir. 2010) (corporate structure does not shield officers from liability for personally participating in contributory patent infringement); Power Lift, Inc. v. Lang Tools, Inc.,774 F.2d 478 (Fed. Cir. 1985) and Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544 (Fed. Cir. 1990).

In a 2003 article, Professor Lynda Oswald foreshadowed the wrong-turn made by the court here. Oswald writes:

[Courts] tend to mis-apply the general principles of agency and tort law described above when evaluating the liability of an officer for the infringing acts of his or her corporation. Although courts purport to look for personal participation by the officer in the patent infringement of the corporation, courts typically gauge such personal participation by examining whether the corporate veil can be pierced to hold the officer personally liable for violating § 271(a)'s prohibition against " making, using, or selling" the patented invention. In doing so, however, courts fail to recognize that piercing analysis is irrelevant to issues of officer liability.

See Lynda J. Oswald, The Personal Liability of Corporate Officers for Patent Infringement, 44 IDEA 115, 130 (2003).

Nachemin might not be liable in this case, but it is clear that the corporate veil does not serve as his shield.

Notes

• The individual liability of Mr. Nachemin was something of an appendage to the decision as a whole. I suspect that the confused language that I note is most likely due to the light treatment given to the issue.

Student Writing Competition

Georgia State University College of Law has announced a Student Intellectual Property Writing Competition. First Place: $3,000; Second Place: $2,000; Third Place: $1,000.  Winning papers will be published in the conference materials for the GSU 2013 Corporate IP Institute. See http://law.gsu.edu/ipcomp. Submission deadline this year is April 30.

Rexnord v. Kappos

By Jason Rantanen

Rexnord Industries, LLC v. Kappos and Habasit Belting, Inc. (Fed. Cir. 2013) Download 2011-1434.Opinion.1-18-2013.1
Panel: Newman (author), Lourie, Prost

In Rexnord v. Kappos, the Federal Circuit reversed the Board of Patent Appeals and Interferences' conclusion of nonobviousness, concluding that claims 1-14 of Patent No. 6,523,680 are obvious as a matter of law.  The significant aspect of this opinion is the court's rejection of the PTO's arguments that "the Board need not consider other grounds that had been presented during the reexamination, for they had not been raised on the appeal to the Board" and that "the Board does not consider aspects
beyond those relied on by the examiner."  Slip Op. at 12.  The CAFC's ruling on the latter point, however, creates some significant tensions and does not cleanly resolve the issue. 

The '680 patent relates to a mechanical convey belt formed of rows of belt modules interlinked by transverse rods.  Rexnord filed a petition for inter partes review, arguing that claims 1-4 of the '680 patent were invalid as anticipated and obvious.  The issue on appeal focused on a limitation in representative claim 1 that required a web with a diameter of less than 10 mm. In its petition for inter partes reexamination, Rexnord included the argument that the 10mm limitation was merely a "design choice."  Slip Op. at 13.  In holding that this element was obvious in light of the prior art, however, the Examiner did not reference the "design choice" argument.  Instead, the Examiner stated that:

Thompson ’048 discloses the broad teaching of providing a corrugated intermediate portion with
an adjacent web portion to prevent objects from being pinched between adjacent modules where a
space bounded by the web, an outer end of the first link end and the sidewalls of the second link
ends is completely closed. It would have been obvious to one of ordinary skill in the art to [include
in] the modules of Horton ’248 . . . a web adjacent the corrugated portion to prevent objects from being pinched between adjacent modules as taught by Thompson ’048

Slip Op. at 9 (emphasis added).

Habasit, the patent owner, appealed the examiner's rejection to the BPAI.  In its appeal, Habasit argued that the examiner erred because none of the references disclosed a space with a diameter less than 10 mm, as required by the claims. Although only the second argument is discussed in the CAFC opinion, Rexnord raised two arguments in response: (1) both Palmaer and Thompson disclosed a completely closed space (i.e.: a space with a diameter of 0 mm) and (2)

Thompson, Jr. et al. goes beyond merely disclosing a closed space in a preferred embodiment, and teaches the exact subject matter that Habasit asserts is novel in the '680 Patent. Despite the efforts by Habasit to distort the teachings of Thompson, Jr. et al., the reference clearly teaches solving the identical problem, see col. 1, lines 26-34 of Thompson, Jr. et al. (“objects being conveyed are subject to being caught in the gaps between the links”), solved by Habasit using an identical solution, see col. 14, lines 38-41 of Thompson, Jr. et al. (“the plates 51 on the links 25 cover the gaps 37 to prevent catching articles therein, while providing movement between adjacent links so as to allow traversing of a radiused section”). Accordingly, Thompson, Jr. et al. clearly teaches one skilled in the art to prevent objects from being pinched between modules by modifying Horton to at least partially, or completely, cover a gap in which the object can be pinched.

2008 WL 8119276.

The Board ruled in favor of Habasit, holding that "the Examiner has not identified where the prior art discloses that this space has a diameter of less than 10 mm as required by the claims,"  Slip Op. at 10, quoting Board opinion at 11, and rejecting the space of 0 mm argument.  In reaching this conclusion, the Board did not discuss Rexnord's second argument above.  Slip Op. at 9. 

In its request for rehearing from the Board decision, Rexnord subsequently raised two arguments relating to the 10mm limitation: that the 10 mm spacing was inherent in the prior art and that it was merely a design choice in light of the prior art. The Board denied rehearing, stating that “Rexnord’s reasons as to why it would have been obvious to construct a space as recited in the claims (Request, 3–5) were not the rationale of the Examiner’s rejection.” Slip Op. at 11, quoting Dec. on Rehearing at 3.

On appeal, the CAFC rejected Rexnord's inherency argument but agreed with its obviousness argument.  The main aspect of the appeal, however, was the Federal Circuit's rejection of the PTO's argument that Rexnord couldn't argue grounds for affirming the rejection that were not articulated by the Examiner:

When Habasit appealed the examiner’s decision, Rexnord was not barred from presenting this argument in defense of the examiner. The PTO states in its brief on
this appeal:

Just as this Court does not entertain arguments made outside of appellant’s opening brief, see, e.g., In re Watts, 354 F.3d 1362, 1367 (Fed. Cir. 2004); In re Schreiber, 128 F.3d 1473, 1479 (Fed. Cir. 1997), the Board has a rule that similarly bars the presentation of new arguments outside appellant’s opening brief (absent circumstances not alleged here), see 37 C.F.R. § 41.79(b).

PTO Br. 24. We observe that Rexnord was not the appellant before the Board, and that the premise is an incorrect statement of the appellate process. On judicial review, the correctness of the decision appealed from can be defended by the appellee on any ground that is supported by the record, whether or not the appellant raised the argument.

While this general point seems to be solid, the opinion uses it to support two rules that are in tension: (1) that the appellee can include in its response brief arguments that it raised before the examiner but were not discussed in the examiner's decision ("When Habasit appealed the examiner's decision, Rexnord was not barred from presenting this argument in defense of the examiner," Slip Op. at 13), and (2) that the appellee before the Board does not need to raise those arguments until its request for reexamination ("The issue was fully raised before the examiner, and these references were not again a patentability issue until after the Board reversed the examiner," Slip Op. at 13; "Rexnord asked the Board on rehearing to consider the other grounds before the examiner, in support of the examiner's decision," Slip Op. at 14). 

In other words, the CAFC seems to be saying that the appellee to the board can raise these arguments in its response brief or it can wait until it files its request for rehearing (or maybe that it can only raise these arguments in its request for rehearing; I'm not sure given the court's ambiguity).  Both seem somewhat inconsistent with the way appellate practice usually works: if an appellee doesn't argue an issue in its responsive brief, it generally can't argue that issue in its request for rehearing regardless of whether it made the argument before the lower tribunal. 

Note that this opinion invovled an appeal from the BPAI, which is now the Patent Trial and Appeal Board.  If it carries over into PTAB practice, however, it could have significant consquences for how appeals are structured. 

Antigua to Reject Intellectual Property Rights of US Companies as WTO Authorized Trade Sanction for Killing Offshore Online Gambling

By Dennis Crouch

The Caribbean nation of Antigua and Barbuda has won its case against the United States at the World Trade Organization (WTO) and is now authorized and moving forward with the granted sanction – suspension of all American-owned intellectual property rights within the Antigua borders. This trade sanction comes as a response to the US campaign against off-shore on-line gambling. That campaign has decimated an Antiguan industry and was found to violate the US WTO trade obligations. Antigua has been negotiating with the US for the past decade on some mechanism to resolve the dispute.

In a press release, Hon. Carl Roberts High Commission from Antigua to the UK indicated the following: "For nearly a decade, Antigua has sought to resolve the dispute with the United States Government over the US failure to abide by American treaty obligations with regard to remote gaming." Colin Murdoch, Trade Ambassador for Antigua goes on: "This decision [to suspend US IP rights] did not come easily. After countless proposals from our government have been more or less ignored by the Office of the USTR - numerous decisions by the WTO declaring the United States Government's position illegal - and failure of the United States Government to provide meaningful proposals to end the dispute, the WTO provides this remedy not to encourage illicit behavior by nations; but rather to provide them with a way to secure their legal rights as sovereign nations."

At this point, the Antiguan government has not indicated the exact date when suspension will begin or whether the suspension will apply to both IP procurement and enforcement. About 10 patent applications were filed in Antigua in both 2010 and 2011.

The Land of 365 Beaches may soon become the hot site for unlicensed but legal copyright streaming. Companies may want to proactively register their .AG domain as well.

The Decline in Law School Applications

Law school applications down 20% from last year and 38% from 2010. [Link][ATL]  If projections hold there will be about 54,000 law school applicants this season — the lowest since before 1984. (i.e., since before L.A. Law.)  Law schools have also shrunk their class-size, but not proportionally.

 

Get a New Patent Law Job: Recent Patent Law Job Postings

Here are a set of recently-posted patent law jobs posted to our Patently-O Job Board:

• Holland & Hart is seeking junior level EE patent attorneys and patent agents for its Boulder, Salt Lake City, and Washington DC offices.
• Morgan, Lewis & Bockius LLP is seeking a junior level patent prosecution associate for its Philadelphia office.
• AstraZeneca is seeking a Senior or Principal Patent Attorney for managing its broad IP portfolio.
• Valspar is seeking a Licensing Attorney for its downtown Minneapolis HQ.
• Hollister Incorporated is seeking an experienced Patent Agent for its north-Chicago HQ.
• Cargill is seeking a patent attorney for its Minneapolis HQ.
• Gilead Sciences is seeking experienced patent prosecution attorneys for its Silicon Valley HQ. Gilead is also seeking a health care contracts attorney to take on a range of challenging areas within the legal department applicable to the distribution, pricing and reimbursement of prescription drugs.
• The National Institute of Standards and Technology (Federal Agency) needs to hire a registered patent practitioner.
• Edell, Shapiro & Finnan, LLC is seeking a patent attorney with 2+ years patent prosecution experience and a background in physics or EE for its Maryland office.
• Workman Nydegger is seeking a junior level patent prosecution attorney for its Salt Lake City office.
• Trading Technologies (TT) is seeking to add a Patent Prosecution Paralegal with vision and ambition for its Chicago HQ.
• Hickman Palermo Truong Becker Bingham Wong LLP is seeking a patent prosecution attorney with 2+ years experience for its Silicon Valley office.
• Faegre Baker Daniels is seeking a patent prosecution associate with 2-4 years of experience and background in EE or CompSci to join its Indianapolis office.

More jobs are being posted almost every day. We have two current sponsors on the Job Board site, including Eric Gould and Elysium Digital. Thanks for your support! – Dennis

Design Patent Litigation: Notice Pleading Requirements Remain Low

by Dennis Crouch

Hall v. Bed, Bath & Beyond, Inc. and Nachemin, __ F.3d __ (Fed. Cir. 2013)

This design patent decision is interesting and important on several levels and so I have divided the post into two sections. This section focuses on the district court's clear error in dismissing the infringement lawsuit on the pleadings.  The second section will focus on the Federal Circuit's dismissal of the charges filed personally against the employees who caused the allegedly infringement.

The set-up here is interesting.  Mr. R.J. Hall designed a new product known as a “Towel Tote” that is basically an absorbent scarf with pockets on the ends.  [Buy one here.] After filing his design patent application, Hall sat down with Mr. Farley Nachemin at Bed Bath & Beyond (BB&B) to see whether the company would retail his product.  Instead of moving forward with Hall, BB&B mailed Hall's product to Pakistan and had it copied and manufactured for retail distribution back in the US.

When his patent issued, Hall sued BB&B as well as Nachemin and other executives for design patent infringement and a number of state-law business claims such as, false advertising, misappropriation, and unfair competition.  U.S. Design Patent No. D596,439.  The district court then dismissed the case on the pleadings –  finding that the complaint did not particularly identify the “new, original, and ornamental” features of the design patent. On appeal, the Federal Circuit rejects that decision and instead holds that, even under Iqbal and Twombly, a pleading does not require this level of information. Rather, following the law of utility patents, the court holds here that a proper design patent infringement complaint only requires the following five elements:

1. An allegation of ownership of the patent;
2. The name of the defendant;
3. The patent number;
4. A statement of the means by which the defendant allegedly infringes; and
5. Relevant sections of the patent laws.

Citing Phonometrics, Inc. v. Hospitality Franchise Systems, Inc., 203 F.3d 790 (Fed. Cir. 2000).  In this case, the district court's ruling was well off-base because the design patentee need not prove the design's points of novelty even at trial since validity is presumed and infringement no longer relies on the points-of-novelty test.

In the litigation, BB&B had filed a counterclaim alleging that that Mr. Hall himself had violated the Lanham Act by telling the company his product was “protected by patent” even before the patent issued.  BB&B also alleged that the Hall committed false marking by continuing to mark his product “patent pending” even several months after the patent had issued.  On appeal, the Federal Circuit holds that these statements “cannot be viewed as even plausibly misleading.”  With regard to the the false marking claim, the court also adds that the defendant had failed to plead competitive harm, which is now a core element of false marking under the Leahy-Smith America Invents Act of 2011.

+ + + + +

Judge Newman wrote the majority opinion that was joined by Judge Linn.

Judge Lourie wrote in dissent – basically arguing that more deference should have been given to the district court's role of ensuring that the pleadings are clear enough.  Judge Lourie acknowledged legal mistakes of the district court, but also directed attention to a separate aspect of the district court decision. The district court wrote: “Rather than plead in a coherent fashion, making clear how the facts support a particular theory of infringement as to a given Defendant, Plaintiff has conflated all his facts, pleading without making any distinctions of any kind. This ambiguity in pleading is unacceptable.”   

Notes

• As with most design patents, this one issued without substantive examination on the merits.  The application was filed in November 2008 and the first correspondence from the USPTO was a notice of allowance mailed in May 2009. The patent issued shortly thereafter.
• Professor Tushnet has more on her site with more focus on the Lanham Act claims: http://tushnet.blogspot.com/2013/01/do-you-know-where-your-towel-is-and.html. 

Chisum Patent Academy

There are only a few CLEs that treat the event as a comprehensive course really focusing on advanced patent law issues. Although pricey – I would recommend the Chisum Patent Academy taught by the team of Don Chisum and Janice Mueller.

• Next meetup is February 20 – 22, 2013 in NYC. http://www.chisum-patent-academy.com/

 

Obvious as a Matter of Law

By Dennis Crouch  [UPDATED]

Soverain Softwarwe v. Newegg (Fed. Cir. 2013)

This Federal Circuit decision is fairly big news as far as its legal results. District Court Judge Davis rejected Newegg's obviousness argument on summary judgment – finding each of the asserted patent claims not invalid. On appeal, the Federal Circuit has completely reversed that holding and instead finds here that all of the asserted claims are invalid as obvious. The case also raises a novel argument for secondary indicia of nonobviousness.

The unanimous opinion is written by Judge Newman and joined by Judges Prost and Reyna.

The Federal Circuit panel's approach here follows the lead of KSR International Co., v. Teleflex, Inc., 550 U.S. 398 (2007). In that case, the Supreme Court was able to make the legal conclusion that the asserted claims were obvious because the factual underpinnings of obviousness were not in material dispute.

Where, as here, the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate.

In his usual quotable way, Greg Aharonian writes that "A bit of commonsense leaks into the CAFC."

The asserted patents in this case are all eCommerce patents purchased out of bankruptcy. United States Patent Nos. 5,715,314, 5,909,492, and 7,272,639. The court walked through the obviousness of each different claim finding that (1) each element was found in the prior art and (2) the combination of elements would have been well within the skill of an ordinary database designer and GUI developer.

Licensing as Secondary Indicia of Nonobviousness: The court does have an interesting discussion of secondary indicia of nonobviousness. The patentee argued that the extensive licensing of its patent provided evidence of the patent's nonobviousness – asking the rhetorical question "why would someone pay to license an invalid patent?" The court did not entirely foreclose that argument in the future, but appears to have sided with Newegg's contention that the licenses were taken "to avoid the costs of litigation" and not to take advantage of the invention.

Patently-O Bits & Bytes by Lawrence Higgins

Upcoming Events:

• The New Jersey Intellectual Property Law Association presents: Electronics, Telecom, and Software Patent Practice Update on January 24, 2013. Agenda includes panels on Non-Practicing Entities, America Invents Act, and case law updates. "We are delighted to provide this second annual program to educate intellectual property attorneys about the latest developments in patent law under the America Invents Act and recent rulings in patent litigation that impact legal practice in the electronics, telecom and software sectors," said Robert E. Rudnick, Program Chair. "We are particularly pleased to offer a panel this year addressing issues our clients face in view of patent infringement claims raised by Non-Practicing Entities." To view the program agenda and register, please visit http://www.njipla.org/events.asp#event52.
• C5's 5^th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)
• IBC Legal will hold its 21^st Anniversary Biotech & Pharmaceutical Patenting Conference 2013: Protecting and maximizing medical innovation February 26-27 at the Westin Grand Munich. The conference will help you get up to date with this complex sector's key legal issues and gain commercial insights into how to surmount the practical challenges that Biotech & Pharmaceutical Patenting poses. Guest speakers include: Heli Pihlajamaa, Juergen Dressel, Tom Bombelles, and many others. [Link] (PatentlyO readers use code FKW82348PTLL for a 10% discount)
• American Conference Institute is hosting its Life Sciences Collaborative Agreements and Acquisitions conference February 27-28th, 2013 in New York, NY. Learn more and register with code PO 200 to receive a discount: [Link].
• Practical Law is hosting the 1^st Annual Life Sciences Law Forum on March 5-6 at the Hilton Waldorf Hotel, in London. The forum will provide a unique cross-border analysis of market trends, discuss issues at the heart of your business and prepare you for what lies ahead. Guest speakers include: Ewan Nettleton, Bill Mordan, Elizabeth Choo, Reza Green, and many others. [Link] (PatentlyO readers register online with discount code LSPA01)
• American Conference Institute is hosting its Medical Device Patents conference March 5-6th, 2013 in Chicago. In response to the daunting challenges facing the medical device industry, ACI's Advanced Summit on Medical Device Patents provides a forum for the key players - preeminent in-house IP counsel, patent prosecutors and litigators, the PTO, and judges - to unite and share their collective intellectual property knowledge to provide you with cutting-edge patent strategies you can immediately incorporate into your practice before the historic switch to first-to-file on March 16th, 2013. [Link] (PatentlyO readers use code PO 200 for a discount)
• American Conference Institute is hosting its FDA Boot Camp conference March 19-20th, 2013 in New York, NY. Register with code PO 200 for a discount. [Link]
• Marcus Evans is hosting its IP Law 2013 Summit in Colorado Springs, CO March 21-23. The IP Law Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from Americas leading corporations and mid-market organizations. Register online at [Link].

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

Patent versus Copyright

Relative frequency of the words "Patent" and "Copyright" in Google's digital library of books.     

US Government Brief: Farmer who Purchases Commodity Soybeans Cannot Replant Those Beans Without Committing Patent Infringement

By Dennis Crouch

Bowman v. Monsanto (SCOTUS 2013)

In its newly filed brief, the US Government has agreed with Bowman that violation of use restrictions on commodity GM soybeans cannot result in patent infringement. However, the Government ultimately sides with Monsanto in arguing that the progeny beans grown by Bowman represent an infringing "mak[ing]" of Monsanto's patented invention.

Briefing continues in the GM seed case between the Indiana farmer Vernon Bowman and the developer of GM glyphosate resistant "RoundUp Ready" soybeans Monsanto. Monsanto holds two patents that clearly and literally cover the seeds in question. U.S. Patent Nos. 5,352,605 and RE39,247E. For several years, Bowman had been looking for a legitimate way to grow RoundUp Ready soybeans without paying the large license fee charged by Monsanto. What he did was find a seeming loophole in the Monsanto license agreement that allowed farmers to sell soybeans to the commodity market without any ongoing restrictions on the use of those beans. Call these "authorized sales" because the unrestricted sale of GM seeds to commodity market was authorized by the patentee, Monsanto. Normally, those commodity beans are purchased by CAFO and public school lunch operators, but Bowman purchased them with the intent of growing more soybeans. The nice thing about soybeans is that they self-pollinate and thus apart from mutation, soybean progeny are genetically identical to their forebears. The US commodity marketplace does not normally distinguish between GM and non-GM soybeans. However, Bowman relied on his reasonable assumption that most of the beans would be RoundUp Ready because of Monsanto's deep market penetration. Bowman planted the beans and fond that the bulk were resistant to the glyphosate herbicide. Bowman saved some of his harvest for replanting and sold the rest back to the commodity market. This continued for several years until Monsanto sued Bowman alleging patent infringement – arguing that Bowman's operation was "making" new infringing seeds in violation of the Patent Act. 35 U.S.C. 271(a) ("whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States … during the term of the patent therefor, infringes the patent").

Thus far, courts are siding with Monsanto, but now the Supreme Court will weigh in on whether those Monsanto-authorized sales should be seen as exhausting the patent rights in the progeny. The judicially created doctrine of exhaustion is designed to better ensure free alienation of goods and a robust secondary market. Exhaustion fits within the centuries long common law history of rejecting covenants and conditions that unduly limit the alienability (resale) and use of property rights. Although much of the property case-law has focused on real estate, the rules against unreasonable limits on alienation and use are at their peak in the context personal property, such as the soybeans at issue in this case. For the most part, restrictions on use and resale of personal property will not be enforceable against a bona fide purchaser. Under the patent exhaustion doctrine, patent rights are said to be exhausted for goods that enter the stream of commerce with the patentee's authorization and without restriction. Thus, when Ricoh sells a patented copier to a customer, the patent rights are exhausted and Ricoh cannot later assert patent infringement when the customer sells the copier to a third party or when that third party uses the copier. Unauthorized sale and use can each constitute patent infringement, but Ricoh would have no case here because its patent would be deemed exhausted. Final point on exhaustion is that it normally applies on an item-by-item basis. The fact that a customer owns an authorized Ricoh copier whose patent is exhausted does not provide the customer with any authority to build another copier that infringes the patent. Making that new copier would constitute patent infringement.

The case at hand is unique because of the self-replicating nature of soybeans (and life in general). In its brief, the US Gov't frames the issue as:

Whether the authorized sale of one generation of a patented plant seed exhausts a patentee's right to control subsequent generations of that seed.

In his framing of the question, Bowman identifies the Federal Circuit's decision as creating a loophole for self-replicating technologies.

Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

Monsanto took its turn by presenting questions in apparently ad absurdum form:

1. Whether the first-sale doctrine grants the purchaser of a patented article the right to make, use, and sell an unlimited number of new copies of the patented invention that have never been sold.

2. Whether patent treats as per se unenforceable all restrictions imposed by license on the use of a patented article following an authorized sale.

There is some amount of cross-talk in these questions presented. Each party accuses the other of seeking an exceptional rule for self-replicated technology. Monsanto here also attempts to bring-in an additional factual question regarding whether the commodity seeds were actually sold without use restrictions.

As suggested above, the key briefs have now been filed (except Bowman's reply brief) and oral arguments are set for February 19, 2013.

I previously discussed Bowman's brief here: http://www.patentlyo.com/patent/2012/12/patent-exhaustion-gmo.html

U.S. Government Brief: The most important brief filed in the case is most likely that of the US Government filed as a joint effort by both Department of Justice and the US Patent Office. That brief fully supports the Federal Circuit's holding that patent exhaustion does not apply to the progeny because the progeny are new articles of manufacture. The brief cites case-after-case where Supreme Court has indicated that exhaustion only applies to the article sold and does not permit the purchaser to make new copies. Unfortunately, the Government brief does not seriously engage the peculiarity of this case – that the patented article is life form that self-replicates by its nature- other than by noting that Bowman "creat[ed]" the progeny "through planting and cultivation." In his brief, Bowman disputes that growing crops constitutes "making" because seeds that fall to earth will naturally sprout and grow without human intervention. The Government also tries to make a distinction based upon elements of the PVPA, but I don't believe those hold water.

On one element, the US Government agreed with Bowman – that the Federal Circuit rule that a patentee's conditional sale of patented goods binds subsequent downstream purchasers. The Government writes that the proper rule, under Supreme Court precedent, is that downstream purchasers will not be liable patent infringement based upon failure to comply with use restrictions placed on the original authorized sale.

Restrictions on downstream use or resale may be enforceable as a matter of state contract law, but a purchaser's failure to comply with such restrictions does not constitute patent infringement.

Although agreeing in principle with Bowman, the Government then reiterated that Bowman is liable for the progeny that are not exhausted.

Read the brief: http://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/briefs-v2/11-796_affirmance_usa.authcheckdam.pdf

Moving from a Patent Agent to a Patent Attorney

By Dennis Crouch

In November 2012, I posted about the fact that a large number US Attorneys are actually listed as "patent agents" on the USPTO rolls rather than patent attorneys. While this issue is typically rather minor it does have a few implications. First, it creates an artificial disconnect between state attorney conduct regulators and the USPTO's Office of Enrollment and Discipline (OED). The professional status of Patent Agents is regulated only by the USPTO while the Patent Attorneys are regulated by both the USPTO and the relevant state of attorney registration. Second, the misidentification causes policymakers to over-estimate the number practicing patent agents. The combination of these two issues pushes the USPTO's OED to be more proactive and aggressive because it believes itself to be the sole regulator of so many patent law professionals. Finally, the misidentification creates some confusion in the marketplace – especially for innovators looking particularly to hire a patent agent because of their perceived lower cost and greater technological focus. See: Dennis Crouch, Are you a Patent Attorney Masquerading as a Patent Agent? at http://www.patentlyo.com/patent/2012/11/patent-attorney-agent-registration-status.html.

In the November post, I particularly called-out the Finnegan Henderson firm for having a large number of patent attorneys actually listed as patent agents in addition to well-known patent litigator Joe Re from Knobbe who was also listed as a patent agent. I just pulled-up the USPTO Roster again and found that Joe Re is now officially a patent attorney as are about 20 Finnegan attorneys who were previously listed as patent agents. In all, more than 200 attorneys have changed their status in the past two months. I suspect that there are at least 1,000 more individuals who are still misidentified on the rolls.

Arbitrary $50,000 contingency payment does not prevent mootness

By Jason Rantanen

Allflex USA, Inc. v. Avid Identification Systems, Inc. (Fed. Cir. 2013) Download 11-1621
Panel: Lourie, Clevenger, Bryson (author)

Allflex v. Avid involves the situation where a party to litigation settles the case but seeks to preserve its ability to appeal the district court's adverse rulings by structuring the settlement agreement to include a contingency payment that turns on the outcome of the appeal.  Here, the Federal Circuit imposes some constraints on parties' ability to avoid mootness through what effectively amounts to a "side bet."

Allflex sued Avid for, among other things, a declaratory judgment that it did not infringe several of Avid's patents.  During the litigation, it came to light that Avid and its (former) counsel "should be sanctioned" because they had failed to disclose the existence of reexamination proceedings that were pending with respect to the patents in suit.  (Due to the settlement the parties later entered into, no actual sanctions were apparently ever assessed against Avid).  The court subsequently granted partial summary judgment on Allflex's inequitable conduct claim, holding that Avid's failure to disclose information about prior public use and an offer of sale was material.  The court declined to enter summary jugment on the issue of intent, concluding that a genuine issue of fact remained.  (Note: the court's ruling issued a few months before the Federal Circuit's en banc decision in Therasense v. Becton Dickinson.) Shortly thereafter, the parties entered into a settlement agreement under which Avid agreed to pay Allflex $6.55 million.

Comment: it's noteworthy that in this case the patent holder paid the accused infringer a substantial sum of money to settle the case.  After skimming through Allflex's Complaint, this does not appear to me to be (at first glance) an instance of a reverse payment, since Allflex's complaint alleged several other claims,including breach of a settlement agreement, against Avid, and Allflex potentially stood to recover monetary sanctions.  However, those who are interested in reverse payment cases may wish to take a closer look, particularly in light of the court's statement on p. 13 that "Avid is not and never was at risk of having to pay a monetary judgment on that claim, as inequitable conduct is a defense or an equitable remedy, not a claim for damages, even when it is pleaded as an affirmative claim in a declaratory judgment action." 

The settlement agreement contained a contingency clause, however.  Avid reserved the right to appeal the district court's grant of summary judgment of noninfringement, as well as the materiality and sanction rulings, and if it was successful in overturning any or all of those three findings Allflex would pay Avid $50,000.  Avid did appeal, challenging the district court's rulings on all three issues.  Allflex declined to file a brief. 

In general, a party who is unhappy with the district court's rulings may not appeal those rulings after it has settled the litigation: the settlement agreement renders the case moot because the parties are no longer adversaries.  For example, a patent holder who enters into an agreement with its opponent to settle the case in its entirety after the district court grants summary judgment of invalidity could not subsequently appeal the invalidity ruling. 

On the other hand, where the parties agree to a sum of damages that would be paid or not paid depending on the outcome of the case on appeal, a live controversy may remain.  Avid's own past illustrates this point: in a separate litigation, it had obtained a jury verdict of $26,981 for a patent that was subsequently held by the court to be unenforceable due to inequitable conduct.  The parties settled all issues, but agreed that if Avid prevailed on its appeal of the inequitable conduct issue, it would recover the $26,981 in damages.  Avid Identification Systems, Inc. v. Crystal Import Corp., 603 F.3d 967 (Fed. Cir. 2010).  Even though the defendant in that case declined to contest the merits of the appeal, the $26,981 was "not a token or arbitrary sum introduced for the purpose of manufacturing a controversy."  Id. at 972. 

Here, however, the $50,000 did constitute such a "token or arbitrary sum introduced for the purpose of manufacturing a controversy."  It did not reflect an actual damages award, as in Crystal Import, nor was it a "reasonable estimate of the value of any of the issues on appeal."  Slip Op. at 12.  Instead, it was just a number that Avid had hoped would be large enough to persuade the court that a controversy remained.  The court found particularly problematic the fact that the $50,000 would be awarded whether Avid prevailed on any one or more of the issues: this indicated that the $50,000 was completely untethered to the value of any one of those issues. 

The court's ultimate holding on the issue: "We hold that where, as here, the appellant has identified no relationship between the valuation placed on the appeal and the issues the appellant wishes to challenge, the parties have simply placed a “side bet” on the outcome of the appeal, which is not enough to avoid a ruling of mootness."  Slip Op. at 14.  There are good reasons for this rule:

When one party wishes to maximize its prospects of prevailing on an issue that has been the subject of a settlement agreement similar to the one in this case, it would no doubt be tempting to set the contingency payment at a level that would be sufficient to avoid the mootness rule of Aqua Marine, yet low enough to avoid encouraging the adverse party to participate in the appeal. As this case demonstrates, that results in the highly unsatisfactory situation in which the court finds itself with a one-party appeal, where there is no adversarial presentation and the court consequently has reduced confidence in any ruling it might enter. In some instances, as we pointed out in Crystal Import, one-party appeals are unavoidable. But where, as in this case, the appellant has failed to satisfy us that the arrangement leading to the one-party appeal reflects the existence of a legitimate, continuing case or controversy, we decline to be a party to the exercise.

Third Party Submissions

by Dennis Crouch

To the extent that folks are studying this, the following is a list of the 111 applications for which third parties have submitted prior art references under pre-issuance submission authorization of the America Invents Act.

• File Attachment: AppsWith3rdPtySubmissions.xlsx (9 KB) (Current Through December 5, 2012)

In December, PTO Director David Kappos reported that the PTO had received 270 third party submissions.  The PTO’s figure represents the number of submissions but the report fails to mention multiple submissions per application.

+ + + + +

The first case from the list that I pulled-up with an Office Action is U.S. App. No. 12/829,968 owned by Alcon and that claims an implantable sensor that fits in the anteriour chamber of a patient’s eye. 

1. A sensor comprising:

a housing having a configuration that generally conforms to a curvature of an anterior chamber of a patient's eye; and

a sensing device disposed in the housing and configured to detect physiological parameters and transmit a signal representing the physiological parameters.

The anonymous third party submitted a german patent application as a reference and now that application has served as the basis for the USPTO rejection of the claims. The Office Action also rejected the claims as being indefinite based upon the claim term “generally.”  The examiner writes:

The term ‘generally’ is not defined by the claims, the specification does not provide a standard for ascertaining the requisite degree, and the one of ordinary skill in the art would not be reasonable apprised of the scope of the invention. As such, it is unclear what is claimed by ‘generally conforms.’

Citing 35 U.S.C. 112(a).

The examiner also rejected the claim for lacking subject matter eligibility under 35 U.S.C. 101 because the claim is “drawn to a body part.”  The examiner suggested that a cure for the perceived problem would be to claim that the device is “configured to” conform to the patient’s eye. 

And the Internet Won: Parallel Networks Versus Website Operators

Parallel Networks v. Abercombie & Fitch, et al. (Fed. Cir. 2013)

Back in 2010 Parallel Networks sued about 120 different companies in a single patent infringement lawsuit – alleging infringement of its U.S. Patent No. 6,446,111. The patent covers the use of individualized applets on handheld devices to speed up data transfer rates but have been asserted against almost anyone involved in ecommerce. The original owner EpicRealm created some buzz back in 2000 with $75 million in venture financing. However, the company was squeezed out by Akamai. The patents are basically all that is left, and the Federal Circuit has largely eliminated their power (at least of the '111 patent) by affirming E.D.Tex. District Court Judge Davis's narrowing claim construction and resulting summary judgment of noninfringement.

The decision is primarily a detailed claim construction analysis that focuses on defining the scope of claim terms with a focus on how those terms are used in the claims and how the invention is described in the specification.

Design Patents are Still Relatively Quick

The chart below is a histogram of prosecution pendency for design patents issued during the past three years. As the chart shows, the bulk of design patents are issued within 12-months of the filing date and only a handful take more than three years to issue. As I have written before, most design patents are issued without substantive rejection or amendment.

Nike's Design Patent No. D659,988 issued last year after less than three-months in prosecution as part of the design patent "rocket docket."

Toyota's Design patent No. D674327.

USPTO New Fee Schedule

By Dennis Crouch

Today the USPTO published its final fee-setting rules under what is being termed the USPTO's "Section 10 authority" based upon Section 10 of the Leahy-Smith America Invents Act that provides the USPTO with broad authority to set fees with the major caveat being that the fees as a whole be set to recover the aggregate costs of the Patent Office. The new fees are scheduled to become effective on March 19, 2013. (A few days after the March 16, 2013 critical date for the First-to-File Changes.)

The major changes include:

• Micro entity 75% reduction for most fees (universities qualify and may want to file provisional applications now and wait to file their non-provisional applications).
• Total Filing Fees – Up: $1,260 to $1,600.
• Issue Fees – Down: $1,770 to $960 and $300 publication fee eliminated. (These will not be implemented until January 2014).
• Maintenance Fees: Up
  • First Fee at 3 ½ years: $1,150 to $1,600.
  • Second Fee at 7 ½ years: $2,900 to $3,600.
  • Third Fee at 11 ½ years: $4,810 to $7,400.
• Extension-of-time fees up about 10%
• Claim Fees: Up
  • More than 3 independent claims: $250 to $420 per claim.
  • More than 20 total claims: $62 to $80 per claim.
• RCE Fees: UP: $930 to $1,200 and new surcharge of $500 for filing a second RCE.
• Appeals: Slightly Cheaper file an appeal, but a new surcharge of $2,000 for actually forwarding the brief to the PTAB rather than settling the case with the examiner.
• Ex Parte Reexamination: Down from $17,750 to $12,000, small and micro entity privileges apply.
• Inter Partes Reviews will cost $23,000 ($14,000 refund if IPR petition is rejected).
• Post Grant Reviews will cost $30,000 ($18,000 refund if PGR petition is rejected).
• Derivation Petition remains $400.
• Assignments: Free if submitted electronically this is down from $40.

More here: https://t.co/GCbHlXN1

Design patent fees are also changing:

• Total Filing Fees - $530 to $760
• Issue Fee – Down: $1010 to $560

3rd Circuit: Covenant not to Sue is a License and therefore Not Dischargeable in Bankruptcy

By Dennis Crouch

In re Spansion (3^rd Cir. 2012)

A recent Third Circuit decision focuses on the impact that a bankruptcy has on a patent license. In 2009, Spansion and Apple settled a patent dispute with Spansion agreeing to end its case at the ITC and to refrain from suing in district court. The agreement stated:

Provided that neither Spansion nor any successor in interest to any of the patents being asserted in the referenced ITC action do not bring an action of any nature asserting any such patent before any legal, judicial, arbitral, administrative, executive or other type of body or tribunal that has, or claims to have, authority to adjudicate such action in whole or in part against Apple or any Apple product, Apple agrees Spansion will not be disbarred as an Apple supplier as a result of the referenced ITC action.

The agreement also particularly stated that Spansion will remain a primary supplier "for the life-time of the product" and will be considered for future platforms.

Later that year, Spansion filed for bankruptcy and the trustee moved to reject the settlement as an executory contract. The normal rule in bankruptcy (under 11 U.S.C. § 365(a)) is that the debtor (here Spansion) can unilaterally reject executory contracts if it so chooses. Any resulting contract damages will be unsecured debts that are unlikely to receive any payout. IP law has a special exception codified in 11 U.S.C. § 365(n). Under that rule, a licensee can elect to retain its license rights despite a debtor's rejection. The statute states:

If the trustee rejects an executory contract under which the debtor is a licensor of a right to intellectual property, the licensee under such contract may elect . . . (B) to retain its rights . . . under such contract . . . to such intellectual property . . . as such rights existed immediately before the case commenced."

On appeal, the question is whether the contract between Spansion and Apple is a license or instead merely a promise not to sue. The bankruptcy court initially held that Apple's § 365(n) election did not apply because the agreement was not a license. Reviewing that decision, the Delaware District Court found that the agreement was a license "because it was a promise not to sue." Now, the Third Circuit has affirmed the District Court with quotation from the Supreme Court's 1927 decision in De Forest Radio.

"[A] license ... [is] a mere waiver of the right to sue by the patentee." De Forest Radio Tel. & Tel. Co. v. United States, 273 U.S. 236, 242 (1927). A license need not be a formal grant, but is instead a "consent[ ] to [the] use of the patent in making or using it, or selling it ... and a defense to an action for a tort." Id. The Court of Appeals for the Federal Circuit explained that the inquiry focuses on what the agreement authorizes, not whether the language is couched in terms of a license or a covenant not to sue; effectively the two are equivalent. TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009).

Here, the promise to "dismiss the ITC action" and "not re-file the ITC action or another action related to one or more of the same patents against Apple" was a promise not to sue on a patent and therefore is a license of patent rights.

Thus, Apple retains its license regardless of who buys the patent rights.

One question not resolved by the appeal are Apple's ongoing duties vis-à-vis the agreement. The statute calls for ongoing payment of royalties. However, it appears that there is no further monetary payment due in the agreement, although Apple has promised to keep Spansion as a supplier and consider Spansion for future contracts. If Apple is released from those commitments then it will actually be better off because of its business partner's bankruptcy – a result that is not often the case.

Deleting Cybor: En Banc Opportunity

by Dennis Crouch

Hal Wegner recently sent around an interesting note regarding the Federal Circuit and the fact that there are only nine regular judges on the court (excluding senior judges). This number is down from the court's usual contingent of twelve judges. Notably absent are Retired Chief Judge Michel, Senior Judge Linn, and Senior Judge Bryson. Richard Taranto has been nominated to fill Chief Judge Michel's position that has been vacant since 2010. No nominees have been put forward yet to replace either Judge Linn or Judge Bryson who took senior status in November 2012 and January 2013 respectively.

The current nine-member circuit is important in the context of petitions for en banc (re)hearing. The court's normal operating procedure is that a case will only be heard en banc if a majority of judges favor an en banc hearing. With the current slate of nine regular members, a majority requires only five votes.

This is particularly relevant to claim construction because a majority of current member have suggested that Cybor should be reviewed and have thus implied that judges should be given some amount of deference – at least for the factual conclusions that lead to the claim construction.

The most recent en banc vote on revisiting Cybor case was the 2012 Highmark petition that lost on a 6-5 vote. Since that vote, two judges from the majority have left the court. Wegner writes:

En banc review was denied by a 6-5 vote in Highmark, Inc. v. Allcare Health Management Systems, Inc., 701 F.3d 1351 (Fed. Cir. 2012). Two voices from the per curiam majority opinion have since taken senior status and thus will not vote on en banc review, Linn, Bryson, JJ. The Highmark dissent by five votes in a minority thus could translate into a five vote majority in any new en banc vote: The five votes of Rader, C.J., Moore, O'Malley, Reyna, Wallach, JJ., create the necessary majority for en banc review.

Once Richard Taranto is confirmed, a majority will immediately require six votes – a much less likely outcome.

Next step: Finding the right case, right away. One potential suggestion is Lighting Ballast Control LLC v. Phillips Electronics North America Corp. et al.

Inventor Count

by Dennis Crouch

The chart below shows the number of inventors per patent over the past seven years.  What you can see is a continued increase in the percentage of patents with teams of inventors. In particular, the percentage of patents with only one inventor continues to fall while the percentage of patents with three or more inventors continues to rise.  These results follow the long trend that I discussed back in 2009: See Dennis Crouch, The Changing Nature of Inventing: Collaborative Inventing at http://www.patentlyo.com/patent/2009/07/the-changing-nature-inventing-collaborative-inventing.html. 

See also http://www.patentlyo.com/patent/2012/10/the-number-of-inventors-per-patent-has-risen-fairly-steadily-for-the-past-40-years-today-most-patents-are-directed-toward-i.html; http://www.patentlyo.com/patent/2011/05/persons-skilled-in-the-art-should-the-now-established-model-of-team-based-inventing-impact-the-obviousness-analysis.html

 

 

Gunn v. Minton: Oral Arguments

By Dennis Crouch

Gunn v. Minton (Supreme Court 2013)

The Supreme Court today heard oral arguments in the case of Jerry Gunn, et al. v. Vernon Minton. In the case, Mr. Minton has alleged that his former litigation counsel committed legal malpractice resulting in a dramatic loss of potential patent licensing revenue.

A malpractice claim against a lawyer is traditionally a state law claim. The question that has reached the Supreme Court is, despite the underlying state law claim, whether the Federal Courts have exclusive jurisdiction over this case because it requires substantial consideration of patent law issues. If the Federal Courts have jurisdiction than the Federal Circuit would also have jurisdiction on appeal.

Although there are some nuances, the basic malpractice claim is that his attorneys should have argued that the public use and sale of his patented product was an experimental use and therefore did not create self-sacrificial prior art or trigger the statutory bar of (old) 102(b).

From prior Supreme Court decisions such as Grable, we know that the current rule is that Federal Courts have subject-matter jurisdiction over State Law claims when the well pled complaint includes a "substantial" "contested issue" of Federal law.

The most likely focus of an opinion in this case will be a further definition of the meaning "substantial" and what is meant by a "contested issue." My take-away is that the Supreme Court has no inclination of severely restricting arising under jurisdiction.

The first question of the case came from Justice Ginsburg who pointedly asked the law firm's attorney (Ms. Webre) "what do you mean by 'substantial'? The answer:

I would answer in two layers. First, Mr. Minton's claim did not involve a legal question of … how does the experimental use doctrine work; how is it applied, what are its parameters. . . .

And it is not a substantial question because, first, from a unique case perspective, it involved merely a hypothetical determination. There were no actual patent rights that would be at issue. Those were already fully, finally, irrevocably determined in the underlying patent litigation in Federal court.

And second, from a jurisprudence standpoint, the question of uniformity of patent law, any decision by a State court in Mr. Minton's legal malpractice claim would not be binding in any way on either the PTO in a patent application, or on any subsequent Federal court deciding a real patent case.

Ms. Webre's key argument here is separate that notion of an issue necessary to resolve the case from that of a "substantial issue." Both are required for Federal Jurisdiction under Grable.

The discussion later moved to the Federal Circuit's aggrandizement of jurisdiction. Ms. Webre again:

I think it's interesting to back up a little bit and look at the Federal Circuit's evolved perception of its own exclusive jurisdiction. In the early years of the Federal Circuit in 1984, the first Chief Justice -- the first chief judge of the court, Chief Judge Markey, in the Atari case … the Federal Circuit wrote, "Congress was not concerned that an occasional patent law decision of a regional circuit court or of a State court would defeat its goal of increased uniformity in the national law of patents."

That was the view of the Federal Circuit's own jurisdiction in 1984. But in the time evolved, the Federal Circuit has changed its perception of its own jurisdiction and that's why we are here today. In 2007, the Federal Circuit went awry and changed the standard that no longer follows what this Court articulated in Grable.

They have improperly conflated the necessity and substantiality components of an appropriate Grable analysis, and they totally disregard a proper balance of the State and Federal interests. The Federal Circuit announced that there's an interest in -- Federal interest in uniformity of patent law, and then that was that. That was the end of the inquiry. There is no balance if you don't look at the State interest on the other side.

In rebuttal, Mr. Michel (attorney for the plaintiff) argued that patent law is fairly unique because the law exclusive Federal jurisdiction. In his view, the exclusivity shows congressional intent that even seemingly minor patent issues should be seen as substantial. Mr. Michel also discussed the potential impact on patent attorneys in each state who will be bound by the patent law malpractice rules derived from state court decisions even though the state courts are not bound to follow Federal Circuit precedent. He particularly pointed out that the Texas state court did not follow the Federal Circuit in this very case. Here, for instance the Texas trial court based its conclusion of no-malpractice on a concept of experimental use that departs severely from Federal Circuit precedent. In the final minutes of her response, Ms. Webre suggested that patent attorneys buck-up and recognize that they are bound by both federal and state law.

Read the transcript here: http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-1118.pdf

Reviving an Invalid Patent through Attorney Malpractice?

By Dennis Crouch

Normal rule is that when a court finds a patent invalid that the patentee will be estopped from attempting to enforce the patent against any other party. This is the rule that arises from Blonder-Tongue Labs., Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971).

My question: Would this collateral estoppel continue to apply if the patent owner was able to show that it lost the prior case because of attorney negligence rather than because the patent was actually invalid? In criminal and class action cases this sort of inadequate representation argument regularly wins with the support of the due process clause of the constitution. But, a patent infringement lawsuit is somewhat different. However, a key to the Blonder-Tongue decision is the assumption that in the originally case "the plaintiff had fully and fairly, but unsuccessfully, litigated same [validity] claim in the prior suit." It is hard to say that the claim was fully and fairly litigated if its lack of success was due to attorney malpractice.

The outcome of this question is likely to have some impact on the Gunn v. Minton patent litigation malpractice case that was recently argued at the Supreme Court. In particular, if proof of inadequate representation can clear the patent then there is a much stronger case that the malpractice claim raises substantial issues of patent law.

When does the Written Description Requirement Limit Amendments to Design Patent Drawings

By Dennis Crouch

In re Owens (Fed. Cir. 2013) (decision pending)

In 2006, P&G obtained a design patent for its Crest brand mouthwash bottle. D531,515. Before that patent issued, the company filed a continuation application and eventually amended the drawings to use ghost-lines (dashed lines) for most of the bottle design and solid design lines for only a small portion of the bottle surface.

In the figures below, the drawing on the left is the design drawing originally filed in the specification and issued in the D'515 patent. The drawing on the right is found in the continuation and the subject of this appeal. In design patents, the drawings are of critical importance because the single allowable design patent claim typically ties the scope of enforceable right to the drawings. Here, for instance, in the D'515 design patent P&G claims "the ornamental design for a bottle, as shown and described."

Now, for claim purposes, ghosted lines have essentially no meaning and are given no weight. Thus, the continuation below claims a portion of the bottle base. The focus of the litigation is on the front portion of the bottle that previously claimed an inverted irregular pentagon and now appears to be limited to only the upper portion of that pentagon in a roughly trapezoidal shape. The base of the trapezoid is ghosted, but the drawing does claim the surface up to the ghosted line. In the photo of the Crest bottle to the right, you can see the inverted pentagon design is created by a label sticker.

During prosecution, the PTO rejected P&G's continuation application -- concluding that the new claim (as shown in the drawing) did not satisfy the written description requirement of 35 U.S.C. § 112(a). In other words, it is not apparent from the originally filed specification that that the inventor was at that time in possession of the invention as now claimed. P&G's argument is that the area being claimed was already disclosed in the original application and that is literally true. The PTO responds, however, that the original application did disclose a break-point for the trapezoidal area now being claimed. In other words, nothing in the original application indicates that the portion now claimed could itself be a design. The PTO has proposed a rule it feels is administrable: applicants can amend claims by "ghosting" solid lines and vice-versa, but applicants cannot further partition areas or define new portions without running afoul of the written description requirement.

Design patents are largely governed by the same rules as utility patents. This is often unfortunate because the policy goals supporting many of the (utility) patent rules do not map well to the world of design rights. Designs are, for the most part, being used as an additional layer of trademark (trade dress) protection rather than as an incentive to invest in the invention of new designs. This case fits that mold well. But, it is the patent laws that we follow.

In thinking about the written description requirement, a good beginning approach is to try to first uncover the best analogy to utility patent doctrine. One analogy might be to subgenus & subrange claims. Utility patents regularly disclose and claim concentration level ranges, such as "concentration of cardiolipin is between 0.02 and 0.04%." When impinging prior art is discovered, one solution is to amend the claim scope to narrow the claims - perhaps to change the concentration to "between 0.02 and 0.03%." However, the written description requirements limits an applicant's ability to make this narrowing amendment unless there is some evidence that the applicant had (at the time of the application filing date) possession of the invention with the narrower range as well. For these points, the M.P.E.P. cites In re Smith, 458 F.2d 1389 (CCPA 1972) (a subgenus is not necessarily described by a genus encompassing it and a species upon which it reads) and In re Lukach, 442 F.2d 967 (CCPA 1971) (subgenus range was not supported by generic disclosure and specific example within the subgenus range). Of course, the amendment by P&G in the present case is not a narrowing amendment but rather might better be seen as a broadening amendment – of course, broader and narrower in design patent law is somewhat difficult to define. The written description requirement is also used to invalidate claims that have been broadened by eliminating claim limitations. Such cases include ICU Medical v. Alaris Medical System (Fed. Cir. 2009) and the often maligned Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998) (claims to a sectional sofa comprising, inter alia, a console and a control means were held invalid for failing to satisfy the written description requirement where the claims were broadened by removing the location of the control means). See also MPEP § 2172.01.

All-in-all, the PTO's position makes sense to me – that nothing in the new original application suggests the claim limit as suggested by P&G. Design patent claims are considered "as a whole" and refocusing only on a small portion of a design can dramatically alter the impact and overall feel of the design. In the ordinary doctrine of patent law, such a potentially dramatic change in claim scope is only allowed if the original disclosure evidences that the inventor possessed the refocused invention at the time of filing. It is reasonable here to say that Owens did not possess that new invention as now claimed. Here, we should be keen to recognize that the written description requirement is separate and distinct from the enablement requirement – even though both arise from the same statutory phrase in Section 112. Here, there is no question that the enablement requirement is met.

The kicker for the PTO in this case is that written description is a question of fact and PTO determinations on questions of fact are given substantial deference on review by the PTO. There is hardly any question in my mind that the PTO's position passes that low threshold.

The case was recently argued before Judges Prost, Moore, and Wallach. This panel is interesting because of Judge Moore's famous pre-nomination article on the problems of patent continuations. This case arises out of a continuation. P&G wants to claim priority back to the original filing date because the original patent had already been out for more than a year by the time that the amended claims were introduced in the continuation. Thus, if it cannot claim priority then its original work will serve as prior art to block this later patent from issuing. A decision is expected later this spring.

In the trade dress world, this mess would not make such a difference because we don't worry about prior art but rather priority in the marketplace. But again, in the US, design patent rights are squarely within the pigeon hole of patent law.

Related articles

Guest Post by Sarah Burstein: Apple v. Samsung

Mark-Up and Commentary on the Patent Law Treaties Implementation Act of 2012

Moving Away from Beauty as a Factor in Design Patent Validity

What can Patent Applicants do to Improve Patent Quality?

By Dennis Crouch

Patent "quality" has many different meanings. The primary focus of the PTO under Director Dave Kappos is on the timely issuance of "right sized," valid patents. I would add an additional important focus of ensuring that the scope and coverage of each patent is relatively easy to determine. These measures of patent quality fit within broader goals of the patent system -- incentivizing innovation and disclosure of those innovations within a competitive marketplace. The patent rules are intended work as something of a feedback system at varying levels of granularity, guiding innovators and applicants in ways that hopefully push us toward those ultimate goals.

I tend to model the patenting process is something of a negotiation between the PTO an the patent applicant. The PTO possesses the authority to grant or deny patent applications, but every word found in the patent is written or approved by the patent applicant. Obviously, the patent applicant's role in this process is deep and substantial. A patent's conception begins with words drafted by the patent applicant, not the examiner; amendments are made by the patent applicant, not the examiner, and, after approval by the patent examiner, is the patent applicant must approve the final issuance of a patent (with the payment of a fee).

For many years, I have argued that meaningful change in the state of patent law and patent quality could be implemented in incentives that push applicants toward filing quality patent applications – claiming valid subject matter and drafting claims with well-defined scope. The USPTO agrees and has now published a notice on its project to "focus[] on potential practices that applicants can employ at the drafting stage of a patent application in order to facilitate examination and bring more certainty to the scope of issued patents." Email comments to QualityApplications_Comments@uspto.gov by March 15, 2013.

The PTO's current ideas on this front focus on ways to clarify the meaning of terms used in the claims and the resulting scope of the claims. Some of the initial ideas presented are traditional define-your-terms notions while others suggest that new mechanisms of information connectivity may offer solutions.

On these fronts, the PTO lists the following ideas and requests comments:

1. Clarifying the Scope of the Claims
   1. Presenting claims in a multi-part format by way of a standardized template that places each claim component in separate, clearly marked, and designated fields. For instance, a template may facilitate drafting and review of claims by separately delineating each claim component into separate fields for the preamble, transitional phrase, and each particular claim limitation.
   2. Identifying corresponding support in the specification for each of the claim limitations utilizing, for example, a claim chart or the standardized template described above. This practice could be particularly beneficial where claims are amended or where a continuing application (continuation, divisional, continuation-in-part) is filed.
   3. Indicating whether examples in the specification are intended to be limiting or merely illustrative.
   4. Identifying whether the claim preamble is intended to be a limitation on claim scope.
   5. Expressly identifying clauses within particular claim limitations for which the inventor intends to invoke 35 U.S.C. 112(f) and pointing out where in the specification corresponding structures, materials, or acts are disclosed that are linked to the identified 35 U.S.C. 112(f) claim limitations.
   6. Using textual and graphical notation systems known in the art to disclose algorithms in support of computer-implemented claim limitations, such as C-like pseudo-code or XML-like schemas for textual notation and Unified Modeling Language (UML) for graphical notation.
2. Clarifying the Meaning of Claim Terms in the Specification
   1. Indicating whether terms of degree—such as substantially, approximately, about, essentially—have a lay or technical meaning and explaining the scope of such terms.
   2. Including in the specification a glossary of potentially ambiguous, distinctive, and specialized terms used in the specification and/or claims, particularly for inventions related to certain technologies, such as software.
   3. Designating, at the time of filing the application, a default dictionary or dictionaries (e.g., a technical dictionary and a non-technical dictionary) to be used in ascertaining the meaning of the claim terms.

As we all move forward with this process (over the years…), I am confident that we will begin to think of patents less and less like "documents" that printed and read, but more like digital information maps that provides a network of information about inventions. Part of this potential comes from linking claim terms to descriptions found elsewhere and direct mark-up that ties original text to post application changes and notations.

None of these changes would make patent quality easy – but they would likely help move us in the right direction.

AIA Technical Amendment Becomes Law

H.R. 6621, officially titled An Act To correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code was signed into law by President Obama on January 14, 2013 and, for the most part, the provisions of the law are now effective.

Here is the official summary:

• Amends the Leahy-Smith America Invents Act (AIA) to make technical changes regarding the transitional program for covered business method patents and joinder of parties.
• Applies, to any civil action commenced on or after enactment of this Act, the AIA's bar on using an accused infringer's failure to obtain the advice of counsel to prove that any infringement was willful or induced. (Currently, the bar would not take effect until one year after the AIA's enactment.)
• Prohibits a nine-month waiting period for inter partes review from applying to issuances of first-to-invent patents ineligible for post-grant review. (Currently, the remaining first-to-invent patents to be issued prior to the effective date of the new first-to-file patent system have no avenue for review during the first nine months because they must wait nine months for inter parties review and are ineligible for post-grant review.)
• Revises the filing deadline for inter partes review to be after the later of either: (1) nine months after the grant of a patent (currently, nine months after such grant or the issuance of a reissue patent), or (2) the termination date of any post-grant review.
• Extends the time period for an applicant to file an inventor's oath or declaration, substitute statement, or recorded assignment until the date on which the issue fee for the patent is paid. (Current law permits a notice of allowance of a patent application only after such a filing.)
• Makes provisions concerning travel expenses for employees of the U.S. Patent and Trademark Office (USPTO) and the payment of administrative judges effective as of September 16, 2011.
• Modifies requirements and time periods for activities relating to patent term adjustments. Revises the patent extension period for certain international applications. Specifies that a civil action filed in the U.S. District Court for the Eastern District of Virginia is the exclusive remedy for challenging a USPTO decision on a request for reconsideration of a patent term adjustment determination.
• Repeals a provision prohibiting the USPTO from accepting certain international applications designating the United States from anyone not qualified under specified application requirements.
• Revises USPTO funding requirements to make all federal patent law fees available for expenses relating to patent processing and to permit patent and trademark fees to be used interchangeably to cover proportionate shares of the USPTO's administrative costs. (Currently, patent fees are used to cover administrative costs relating to patents while trademark fees are used to cover administrative costs relating to trademarks.)
• Modifies requirements for applicants filing petitions to institute derivation proceedings and delineates the criteria applied to deem an application as an earlier application with respect to an invention relative to another application.
• Sets forth authority for the Patent Trial and Appeal Board to conduct, and for courts to review appeals from, interference proceedings declared after enactment but before the effective date of certain AIA amendments replacing interference proceedings with derivation proceedings.
• Modifies the original appointment terms for members of the Patent Public Advisory Committee and the Trademark Public Advisory Committee. Directs the Secretary of Commerce to designate, from among the appointed members, a Chair and Vice Chair of each committee.

Read the text:

• http://www.gpo.gov/fdsys/pkg/BILLS-112hr6621enr/pdf/BILLS-112hr6621enr.pdf

Means Plus Function Claiming

by Dennis Crouch

 

The chart above shows the percentage of published non-provisional patent applications that include the term "means for" at least once in the claimset. Although not the only way of doing so, "means for" is traditionally used by patent attorneys to invoke the doctrine known as means-plus-function claiming allowed under 35 U.S.C. 112p6. [Soon to be renumbered 35 U.S.C. 112(f)].  As the chart shows, the percentage of applications that include at least one means-plus-function term is well under 10% and seemingly in continued decline. A decade ago, about 1/4 of all applications included this type of claim. 

Section 112(f) states: 

(f) Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

Under the statute, a term claimed in means-plus-function format will be construed to cover the corresponding structure that is described in the specification and equivalents thereof.  Thus, for a claim recites a "means for fastening," the first step in understanding the scope of that claim is to look in the patent specification to see whether any structural component has been described.  If so, then the means-plus-function term will be construed to cover that structure and its equivalents.  Thus, in our fastenting example, if the specification discusses glue as a way to fasten two objects to gether, then the "means for fastening" will be interpreted as covering glue and its equivalents.  One reason why means-plus-function claims have fallen out of favor is that this actual scope given to the means claim is quite narrow, while a different term such as "a fastener" might be given a broader scope.  If there is no corresponding structure given in the specification, then the means-plus-function term will be considered indefinite and the associated claim invalid or unpatentable.  

The idea behind means-plus-function claims is that it is often much easier and more straightforward to claim a means for doing something rather than listing (in a claim) all the possible ways of accomplishing the task.  The strong limitations on the claim scope stemming from an MPF term stems from Supreme Court cases such as O'Reilly v. Morse, 56 U.S. 62 (1853). In that case, Morse (inventor of the telegraph) attempted to claim any use of electromagnetism for sending signals over a distance. Morse made clear in his claim that he intended to not be limited "to the specific machinery or parts of machinery described in the foregoing specification and claims."  In deciding the case, the Supreme Court held that to be patentable, the legal claim must be more directly tied to the practical application and implementation of the idea. The restrictions on the interpretation of means-plus-function terms help ensure that those claims are tied to particular structures and thus will not run afoul of Morse or other similar doctrines. 

Because of these restrictions on means-plus-function terms, Professor Mark Lemley has suggested that courts begin to interpret software claim terms as being written in means-plus-function format.  [Link].  In all likelihood this would severely limit the scope of many software related patents and would also lead many of them to be invalidated under MPF-indefiniteness. 

Related articles

Means-Plus-Function: Invalid as Indefinite

The Frequency of Means-Plus-Function Claims

BPAI: First Decide Indefiniteness, then Subject Matter Eligibility

Flowchart Insuficient Structure to Define Sofware Means-Plus-Function Limitation

An Examination of Software Patents

Naples Midwinter: Patent Law Experts Conference

February 4-5 sounds like a great time to be in Naples, Florida – especially because that will be the site of the first Naples Midwinter Patent Law Experts Conference held at the Naples Ritz Carlton.  The conference is sponsored by Akron University Law School and is intended to be a small gathering of experts with a cap on attendance.

All-star speakers include The Hon. Richard Linn, The Hon. Teresa Stanek Rea, Professors Tim Holbrook, Jeffrey Samuels and Hal Wegner; and many others.

• Conference website: http://www.uakron.edu/law/ip/naples-midwinter.dot;
• Contact: Margaret E. Matejkovic, Associate Dean, Akron University Law School at ema16@uakron.edu.

2013 Student Writing Competition. The Virginia State Bar Intellectual Property Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia and relating to an intellectual property law issue or the practice of intellectual property law. The winner receives a cash prize of $4,000. The judge of the final round of the competitor is the Honorable Richard Linn, judge of the U.S. Court of Appeals for the Federal Circuit. The deadline for submissions is Friday, May 24, 2013 at 4:00 EDT.

http://www.vsb.org/site/sections/intellectualproperty-calendar/2013-student-writing-competition

Some of you may have heard that there is a serious security problem with JAVA 7 (the default version). Luckily most patent attorneys are still running Java 6 in order to interact with the USPTO's PAIR and EFS-Web servers. According to reports, JAVA 6 does not suffer from the problem?

Fewer Patent Claims Per Application

By Dennis Crouch

Since 2004, patent applicants have been filing fewer and fewer patent claims per application. The chart below is just one example. It shows the number of applications that include more than three independent claims, grouped by application filing date. (The chart only includes published applications). One interesting result here is that, although more applications are being filed each year the total number new patent claims being applied-for has decreased over the past decade.

This is an update from my prior post "Fewer Jumbo Patents."

Patent Law: Preparing for March 16, 2013

The folks at Klarquist have a fun new video on the AIA. Thoughts on the recommendation to file before March 16 if possible?

The Timing of Patent Grants

by Dennis Crouch

To create the chart below, I merged the my database of all utility patents issued since January 2005 with my database of all patent applications published since January 2005.  I then looked to see how many of the published applications have issued as patents and grouped those according to the application filing date. This chart necessarily excludes information related to unpublished applications.  

From the chart, about 10% of the applications filed 18-months ago have already issued as patents, and about 50% of the applications filed four years ago (January 2009) have issued. The chart is intended to provide some sense of how long it might take to obtain patent protection.  With the advent of fee-based accelerated examination, an applicant can largely direct its patent timing.  The question for quickly issued patents is whether that speed came at the sacrifice of adequate scope.   

The second chart shows two different series: One for "original" non-provisional applications and another for applications that claim priority to a prior US non-provisional application (i.e., continuation applications). As is apparent from that chart, the continuation applications tend to issue much more quickly. 

The seeming artificat in the continuation series (red) stems from a rush of continuation-application filing in the run-up to USPTO's (failed) implementation of continuation rules.  Because the rules were never implemented, many applicants abandoned those hastily filed continuations. 

 

 

NPEs Solidify Enforcement Jurisdiction at USITC

By Dennis Crouch

InterDigital v. USITC and Nokia (Fed. Cir. 2013) (en banc)

An en banc request for rehearing in the Interdigital case has been denied, but the panel majority has released a new opinion particularly addressing the patent-troll-domestic-industry question. Judge Newman has also released a new dissenting opinion.

The question in the appeal raised by Nokia is whether InterDigital's patent licensing activities satisfied the "domestic industry" requirement of section 337 of the Tariff Act of 1930, 19 U.S.C. §§ 1337(a)(2) and 1337(a)(3). Here, the court again sided with InterDigital and held that the "most natural reading" of the statute indicates that section 337 relief is "available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing." There is no requirement for manufacture by the patentee or any other domestic party. Rather, "[a]s long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337." The majority opinion was written by Judge Bryson and joined by Judge Mayer.

In dissent, Judge Newman argued that a domestic industry requires domestic manufacture. No other judge joined Judge Newman in dissent – suggesting that the majority opinion is on solid footing with the court. And the result is that NPE lawsuits in the ITC are also on solid footing. The benefit of ITC litigation is the stronger likelihood of injunctive relief and the potential of industry-wide enforcement. To collect monetary damages, that injunction would need to be translated into a license agreement.

= = = = =

19 U.S.C. §1337(a)(2) creates a prerequisite to IP enforcement in the USITC that "an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established."

19 U.S.C. §1337(a)(3), as amended in 1988 describes the "industry in the United States" as follows:

[A]n industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned—

(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.

= = = = =

Apart from jurisdiction, there has been a recent push for the USITC to consider delaying, reducing, and rejecting injunctive relief in situations where the patentee's motivation for an injunction is to force a monetary settlement. See Colleen V. Chien and Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell Law Review 1 (2012). The statute provides that:

If the Commission determines, as a result of an investigation under this section, that there is a violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States, unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.

19 U.S.C. § 1337(d)(1).

= = = = =

Nokia is expected to file a petition on this issue to the Supreme Court.

New on AskPatents Awaiting Your Answer

1. I don't want to patent my idea, but I want to share it with the world and prevent others from patenting it. What is the best approach? [Link]
2. Who decides whether a patent is offered under FRAND terms? [Link]
3. I lied on my inventor oath regarding inventorship, what does this do to my employer's patent? [Link]
4. What is differences between US8216392 and US7445677 (both directed to cleaning of a jet engine core)? [Link]
5. Save Google: Prior Art on BT's US6628314 - a Computer interface method and apparatus with targeted advertising. [Link]
6. Prior Art for this claim: Chicken sternal cartilage-derived material comprising hydrolyzed collagen type II, said hydrolyzed collagen type II having an average molecular weight of between about 1,500 and 2,500 daltons. [Link]

Citing Patent References

by Dennis Crouch

The chart above shows a histogram of the number of references cited on the face of utility patents issued in the calendar year 2012.  As is apparent, this is a highly skewed dataset with a long tail.  Over the past five years, the percentage of patents citing more than 100 references has risen from 3% in 2005 to more than 8% today.  Obviously, an examiner is unlikely to thoroughly review more than 100 references during the ordinary patent prosecution process. Once we all agree on that fact, the 100+ references do not create real problem so long as the USPTO examiner has data processing tools to help discover important elements within that focused set of references. 

Inter Partes Review: Winning by Losing

By Dennis Crouch

Garmin v. Cuozzo, IPR2012–00026, (P.T.A.B. 2013) Download Notice-15

In what appears to be the first Inter Partes Revew petition decided on the merits, the USPTO Patent Trials and Appeal Board (PTAB) has granted Garmin's petition for inter partes review of only claims 10, 14, and 17 of US Patent 6,778,074 owned by Cuozzo Speed Technologies LLC.  [See UPDATE BELOW] This is a mixed opinion because Garmin had requested IPR of claims 1–20. Inter Partes Review is a spawn of the America Invents Act (AIA) and serves as a more robust and rapid version of inter partes reexamination. In order to grant an IPR petition, the USPTO must determine that the petition shows "a reasonable likelihood that the petitioner would prevail." Now that the petition has been granted, the PTAB will move forward with the trial to determine whether those three claims are valid. Under the statute, the PTAB's determination as to whether to institute a PGR cannot be appealed. 35 U.S.C. § 314.

Cuozo originally sued Garmin, Tom Tom and several automakers for patent infringement in a New Jersey federal court. That lawsuit is still in the early stages of discovery, but the basic allegation is that Garmin's navigation systems infringe the '074 claims that are directed toward the use of encoded speed limit indicators. 

For Garmin, this may be a case of winning-by-losing.  In its IPR petition, Garmin suggested that the PTO use the broad claim construction suggested by Couzo's infringement allegations for the claim requirement that a "speedometer" and a "colored display" be "integrally attached".

The Patent Owner has taken a very broad view of the meaning of the claims based upon the allegations set forth in its complaint against the products of the real parties in interest here. The "broadest reasonable construction" of the challenged claims must be consistent with the allegations set forth in Patent Owner's civil complaint. Petitioner submits, for the purposes of the IPR only, that the claim terms are presumed to take on their ordinary and customary meaning that the term would have to one of ordinary skill in the art in view of Patent Owner's civil complaint and the Specification of the '074 Patent.

The PTO rejected the notion that the patent owner's post-patent-issuance civil complaint has any bearing on the claim construction and also found that the claim scope suggested unduly broad.

Petitioner does not make known its construction of "integrally attached." Instead, Petitioner states that the term has to mean, in this proceeding, what the Patent Owner asserts it means in the infringement suits the Patent owner has filed against various parties including Petitioner. That argument is without merit. The meaning of claim terms is not governed by what the Patent Owner says they mean in filing an infringement suit based on the '074 Patent. There is no reason to assume that the Patent Owner's litigation position is correct. Litigation positions taken subsequent to issuance of the patent are unreliable. . . .

On this record, we construe "integrally attached" as applied to the colored display and the speedometer in the context of the disclosure … as meaning that the two elements are discrete parts physically joined together as a unit without each part losing its own separate identity. In the combined unit, the colored display is still the colored display and the speedometer is still the speedometer; each retains its own separate identity.

The PTAB went on to particularly find that a single display screen showing both the speedometer and colored display would not satisfy the integrally attached limitation as construed above.

The single electronic display screen of Aumayer showing both the image of a speedometer and a colored scale mark indicating the current speed limit does not meet the claim recitation "integrally attached" as applied to a speedometer and a colored display. There, the speedometer and the colored display are not discrete and separately recognizable parts that are "integrally attached" to each other. Rather, the liquid crystal display screen is itself a single component which performs the function of both the speedometer and colored display.

In the context of the inter partes review, the result is that the suggested references do not show the claims unpatentable. Garmin's gambit, however, is that the same narrow claim construction will carry-over to the litigation and result in a finding of non-infringement. Although the district court will not be bound by this construction, it is likely to be instructive and at least cognitively limiting to the New Jersey judge – especially since the PTO's interpretation is the 'broadest reasonable construction.'

UPDATE: It turns out that the PTAB has released at least one earlier petition decision – in IPR2012–00026 involving Microsoft’s challenge of ProxyConn’s Patent No. 6,757,717. In that decision, the PTAB granted the IPR for claims 1, 3, 10, and 22–24, but denied the petition to review claims 11, 12, and 14.

= = = = =

Under 35 U.S.C. § 316, the USPTO has one year from now to make a final determination in the case. The USPTO has scheduled for the trial to be complete in August 2013.

Fewer Jumbo Patents

Since 2005, the average number of claims in issued patents has fallen rather steadily. The drop is most particularly apparent in patents that include more than 20 claims. The chart below shows the percent of issued patents with more than 20-claims charted as a 20-week moving average by issue date. One trigger for this change was a December 2004 change in the application fee structure that roughly tripled the cost for filing each claim more than the original 20. With that cost-structure, it became cheaper to file a second patent application rather than one application with 40 claims. There are other hypotheses for the shift, such as the commodification of the 20-claim application, downturn in the economy that limited both cash-on-hand (for some companies) and the expected value of issued patents, changes in the value of patent claims, etc. Foreign applicants generally file fewer claims on average than those contained in US originated applications. However, both groups have experienced a relatively similar drop.

Already v. Nike (Supreme Court 2013)

Held: “This case is moot.”

USPTO Grant Rate: 2013 Forecast

by Dennis Crouch

Only two weeks into 2013, the USPTO continues to issue patents at a record pace. New patents are issued each Tuesday morning.  On January 8, 2013 the PTO issued 5,633 utility patents – the most ever issued on a single day.  The prior two weeks rank second and third on the all-time list.  Thus, although we are only two-weeks into the new year, if current projections hold the PTO will issue more than 290,000 patents in 2013. That represents a major jump from 2012's record of 253,000 issued patents.

Two things are happening to cause this change: (1) the PTO now grants a greater percentage of patents than it did a few years ago – that percentage has continued to rise throughout the past two years; and (2) the PTO has a greater number of disposals - primarily because of the agency's hiring binge.  In 2012, the first of these contributed more to the increased number of grants. I expect that in 2013 the increased throughput will have the greater impact as new examiners get up-to-speed.

The strength of this forecast will largely depend upon whether the Agency continues on the same path after Director Kappos steps-down later this month.  Deputy Director Rea is unlikely to move away from this course and may well push for more efficiency during her expected tenure as Acting Director.  However, the new appointee (yet unnamed) may be a different story.  A second major factor that could negatively impact the grant rate is another budget crisis that would limit the ability of the USPTO to pay examiners for overtime work.

How [Not] to Fight PTAB Obviousness Decisions

By Dennis Crouch

In re Chevalier (Fed. Cir. 2013) (nonprecedential) (Patent Application Ser. No. 11/407,778)

In a non-precedential but instructive opinion, the Federal Circuit has affirmed the USPTO's obviousness rejection of L'Air Liquide's application covering devices used to form gas-liquid dispersions. The Board rejected claim 1 as obvious, over a combination two prior art references – finding that it "would have been obvious to one skilled in the art to modify the Kwak device in view of the teachings of Howk."

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The difficulty with appealing PTAB decisions is that conclusions of fact made by the USPTO's appellate board are reviewed for substantial evidence. In order to win an appeal on a factual question, the patent applicant must go quite a bit further than simply proving that the PTAB's decision was wrong. Rather, the PTAB decision will only be overturned if not based on "more than a mere scintilla" of evidence. Restated, the question is whether the factual conclusion is based upon "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." "[T]he possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607 (1966).

This case represent the most frequent form of PTAB decision – that the applied-for patent claim is unpatentable as obvious over a combination of references. The ultimate question of obviousness is a question of law (reviewed de novo on appeal). However, that ultimate conclusion is based upon a set of factual underpinnings as explained by Graham v. Deere. The Federal Circuit has also held that "[t]he presence or absence of a motivation to combine references in an obviousness determination is a pure question of fact." In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000).

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Chevalier challenged the combination of references – arguing that the combination of Kwak and Howk would be inoperable. Apparently Chevalier took the drawings from Kwak and Howk and unsuccessfully tried to jam them together. The Federal Circuit saw that process as "misapprehend[ing] the nature of the obviousness inquiry."

The obviousness inquiry does not ask "whether the references could be physically combined but whether the claimed inventions are rendered obvious by the teachings of the prior art as a whole." In re Etter, 756 F.2d 852 (Fed. Cir. 1985) (en banc); see also In re Keller, 642 F.2d 413 (CCPA 1981) (stating "[t]he test for obviousness is not whether the features of a secondary reference may be bodily incorporated into the structure of the primary reference"). Rather, in a case such as this where each of the elements of the claim are known to the art, the obviousness inquiry requires a finding that the combination of known elements was obvious to a person with ordinary skill in the art.

Here, each of the elements of the claim is taught by Kwak with the exception that the Kwak deflector is not attached to the drive shaft. This deficiency in Kwak is supplemented by Howk, which teaches a deflector attached to the drive shaft. The examiner found, and the Board affirmed, that one of ordinary skill would be motivated to modify Kwak in view of Howk because the modification "would facilitate a more rapid and more complete conversion from axial flow to radial flow of the liquid exiting from the bottom of the device." Ex Parte Gilbert Chevalier, 2011 WL 6747404 (B.P.A.I. Dec. 21, 2011). Chevalier does not challenge this finding. Accordingly, we find no error in the Board's determination that Kwak and Howk could be combined to achieve the claimed invention, nor do we find any error in the Board's determination that one of ordinary skill would be motivated to combine these references to achieve an aeration device that more rapidly and more completely converts axial flow to radial flow in the gas-liquid mixture.

The appellate panel then moved to KSR v. Teleflex to bolster its decision:

Our conclusion is strengthened by Chevalier's admission that the deflectors of Kwak and Howk are "recognized equivalents performing the same function of converting axial flow to radial flow." Appellant's Br. 9. The Supreme Court stated in KSR that "when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result." KSR. Here, the claimed invention merely substitutes the deflector of Howk, which is attached to the drive shaft, for the deflector of Kwak, which is attached to the floor of the basin. This substitution achieved only the predictable result of converting the axial flow of the gas-liquid mixture to radial flow.

Rejection affirmed

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The problem with the appeal here is that the appellate arguments are essentially a repeat of the lawyerly discussion of facts made to the examiner and PTAB. When those do not work at the PTO, they are highly unlikely to work on appeal to the Federal Circuit. (No factual affidavits were submitted in the case at the PTO). If Air Liquide had wanted to win the case, they would have been better served to hire expert witnesses to provide testimony either as affidavits to the PTAB or else bring forth that evidence in a civil action. Of course, that approach is likely more expensive and raises a greater potential of inequitable conduct charges down the line – especially in cases like these where other members of the patent family have already issued.

Zumbiel v. Kappos

By Jason Rantanen

The C.W. Zumbiel Company, Inc. v. Kappos (Fed. Cir. 2012) Download 11-1332
Panel: Prost (dissenting-in-part), Moore, Wallach (author)

Prior to KSR v. Teleflex, the Federal Circuit granted significant deference to the PTO on obviousness determinations; following KSR, that deference has only increased.  Zumbiel v. Kappos represents possibly one of the more extreme examples of that deference.  This appeal is unusual, however, in that it involves substantial deference to the BPAI/PTAB's finding that a claim is nonobvious, deference that is (in the dissent's view) contrary to other aspects of the Court's holding in KSR. 

Graphic Packaging International is the assignee of Patent No. 6,715,639, which is directed to a carton or box that holds containers such as cans and bottles.  Zumbiel filed for an inter partes reexamination of the '639 patent, arguing that the claims were obvious in light of various prior art references.  The BPAI (now the PTAB) determined that some of the claims were obvious (including claim 1) and some were nonobvious (including claim 2).  Both parties appealed the adverse determinations.

Representative Claim 1:

1. An enclosed carton for carrying a plurality of containers in two rows, with a top row and a bottom row, said containers each having a diameter, the carton comprising:

a. a top panel, side panels, a bottom panel, and closed ends, at least one of which is an exiting end;
b. a dispenser which is detachable from the carton to form an opening at an exiting end through which the containers may be removed;
c. the dispenser being a unitary structure comprising a portion of the top panel, portions of the side panels, and a portion of the exiting end, said portions being defined by a tear line extending across the top panel, side panels, and exiting end;
d. means for preventing the end container in the bottom row from accidentally rolling out of the carton after the dispenser has been opened, the height of the means above the bottom panel being less than the diameter of said end container; and
e. a finger flap located along the portion of the tear line extending across the top panel for pulling the dispenser open along the tear line,
f. whereby when the dispenser is opened it may optionally remain attached to the carton
at the exiting end to form a basket at the exiting end of the carton.

Representative Dependent Claim 2:

2. The carton of claim 1, in which the finger flap is located between the first and second containers in the top row.

Prior Art Reference 1 (Ellis):

Prior Art Reference 2 (German '718) (note that there were two additional prior art references):

The Federal Circuit began by affirming the PTAB's determination that representative claims 1 and 13 were obvious.  Among other issues, the court employed a "predictable variations" approach to conclude that a claimed limitation would be met.  German argued that the prior art did not teach the claimed location of the finger flap; the court, however, agreed with the Board that "providing the finger opening on the top wall of the carton would be a predictable variation that enhances user convenience...and is within the skill of a person of ordinary skill in the art."  Slip Op. at 15. 

The court next turned to Zumbiel's appeal of the PTAB determination that representative claim 2 was nonobvious.  The sole additional limitation added by claim 2 is that "the finger flap is located between the first and second containers in the top row."   Thus, "the dispute lies in whether the location of the finger flap between the first and second cans is obvious in light of the prior art."  Slip Op. at 20.  Applying a substantial evidence standard, the majority affirmed the Board's determination that (1) a third prior art reference did not provide the necessary teaching for moving the tear line and (2) "there was little incentive to relocate Ellis's finger flap to a position between cans in order to provide space for the fingers."  Slip Op. at 22.  Based on these findings, the majority held that claim 2 was nonobvious.

Judge Prost's Dissent: In a plain language dissent, Judge Prost strongly disagreed with the majority's determination of nonobvious:

"Failing to apply KSR to the facts of this case, the Board has concluded that the invention recited in claim 2 is non-obvious. Because I believe that a common sense application of the obviousness doctrine should filter out low quality patents such as this one, I cannot join the majority in endorsing the Board’s incorrect approach on this question. Thus, with respect, I dissent."

...

[L]et’s be clear what claim 2 is about. The claimed invention takes the opening from Ellis, takes the stacked can configuration from another box, and puts them together. The result is—as one would expect—a box that has the known benefits of Ellis’s opening and the known benefits of a stacked can configuration.

Why is this assembly non-obvious? Because, the Board explains, the patentee has solved a difficult implementation problem, the solution to which was supposedly not obvious to box makers who lacked extraordinary skill. The secret lies in the proper positioning of the tear line. That is, according to the Board, ordinary box makers would not have put the tear line between the first two cans in the top row.

Where else could have they put it? There are just four other options: (1) above the first can, (2) above the second can, (3) in front of the first can, (4) behind the second can. The first two alternatives are just offensive to common sense: With the cans right below, there would be no room to push the flap through (the flap is positioned at the center of the tear line). The third and fourth options are not quite as illogical, but even without expertise in box making, one may intuit that they make awkward designs (the third opens too little, the fourth too much).

More importantly, however, whether some of the alternatives would work just as well or not, the patentee’s choice of tear-line-placement involves no more than the exercise of common sense in selecting one out of a finite—indeed very small—number of options. And there are no unexpected results[.]

The point here is not that the Board got the facts wrong. The point is that contrary to the Supreme Court’s instructions, an “overemphasis on the importance of [teachings of prior art]” has insulated the Board’s analysis from pragmatic and common sense considerations that are so essential to the obviousness inquiry. KSR, 550 U.S. at 419. The Board’s approach relegates one of ordinary skill to an automaton. Should this approach become commonplace, it would lower the obviousness bar and
hence hinder competition and innovation. That is why, unlike the majority, I do not see any room for deference to the Board’s determination in this case.

 

 

 

Does License of Future Inventions Invoke Patent Law Based Court Jurisdiction?

By Dennis Crouch

National Pasteurized Eggs v. Davidson (Fed. Cir. 2012)

In yet another patent contract dispute, the Federal Circuit has transferred appellate jurisdiction back to the regional circuit. Here, it appears that the mistake was due to an error by the district court clerk who thought of the case as a patent case.

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National Pasteurized Eggs (NPE) filed the case in 2007 asking the New Hampshire district court to quiet title in several US and foreign patents. From the complaint:

By this action, NPE seeks a declaratory judgment of rightful ownership of three United States patents and two international patent applications and resulting foreign patents, as specified below.

Download Davidsoncomplaint.

The patents at issue all list Mr. Leon J. Davidson (LJD) as the inventor and involve methods of pasteurizing in-shell chicken eggs and treating eggs with anti-bacterial agents. See U.S. Patent No. 6,322,833.

Davidson founded the Pasteurized Egg Corporation (PEC). When he left the company in 2000, he signed an assignment and further cooperation agreement.  [Appendix to Complaint] PEC went bankrupt in 2003 and its intellectual property assets were purchased by National Pasteurized Eggs (NPE) who is looking to ensure all of the Davidson patents are assigned to the company. (Note – the Davidson's brand shown to the right is also owned by PEC).

In considering what rights Mr. Davidson retains, the agreement uses the term "inventiveness." The agreement states:

New processes or intellectual property ("inventiveness") developed prior to January 1, 2001 ("Old Inventiveness"), including a method for extending the shelf life of pasteurized eggs by treatment with antibacterial agents, shall be the property of PEC and LJD shall take such actions as may be reasonably required by PEC to assist PEC to complete the development, improvement, documentation, protection and patenting of such Old Inventiveness.

Inventiveness developed by LJD, whether in combination with "Old Inventiveness" or prior inventiveness, which results in protection from new patents or patent applications providing broader or improved protection, on or subsequent to January 1, 2001 ("New Inventiveness") shall be considered the property of LJD.

It is this poorly written agreement that has led to the legal conflict.

Davidson filed a number of patent applications following the 2001 agreement and argued that those applications involved new inventiveness. In its ruling, the district court sided with NPE – holding that the inventiveness associated with the primary disputed patent occurred prior to the 2001 date since testing had already begun on the new process.   Download Davidsonfinaljudgment.  It is this decision being appealed.

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After losing at the district court, Davidson filed a Notice of Appeal to the First Circuit. However, the district court clerk sent the docket and certificate to the Federal Circuit. On unopposed motion, the Federal Circuit has now transferred the case to the First Circuit.

In its order, the Federal Circuit suggested, but did not decide, that the First Circuit is the proper site of appellate jurisdiction. In this case, however, the transfer was required because the Fed. R. App. P. 3(d)(1) does not allow a district court clerk to unilaterally change the appellate court.

Fed. R. App. P. 3(d)(1) states that the clerk of the district court "must promptly send a copy of the notice of appeal and of the docket entries .,. to the clerk of the court of appeals named in the notice."

Because of the mandatory language of Rule 3(d)(1), we believe we must transfer this appeal to the First Circuit, i.e., the clerk of the district court was required to send the notice of appeal to that court. Although we do not address jurisdiction, the case appears to involve ownership of patents rights and contract interpretation. See Luckett v. Delpark, Inc., 270 U.S. 496 (1926).

The appeal will now be heard by the Court of Appeals for the First Circuit.

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There is some chance that the Federal Circuit will see the case again – depending upon whether the First Circuit sees a substantial question of patent law buried in whether Davidson's new patents include some "inventiveness developed by LJD . . . subsequent to January 1, 2001."

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Judge Bryson Assumes Senior Status

Today, Judge William C. Bryson of the United States Court of Appeals for the Federal Circuit assumed senior status.  Judge Bryson joined the court in 1994.  A true career civil servant, his experience prior to joining the bench was extraordinary: he served as a law clerk to both Judge Friendly of the Second Circuit and Justice Thurgood Marshall, and spent seventeen years at the Department of Justice (including two stints as Acting Solicitor General) prior to his appointment to the Federal Circuit. His work ethic, keen intelligence, and sense of fairness are legendary on the court.

One short story of my own: A few hours after interviewing with Judge Bryson, I was ecstatic to receive a phone call from the judge offering me a position in his chambers.  But Judge Bryson made the offer with a  condition: he required me to wait at least a week before I could accept the offer, so that I could really think about the offer and weigh any offers from other judges.  In today's day of hour-long exploding clerkship offers, Judge Bryson's practice really stands out in sharp contrast (admittedly, I don't know whether he still follows this rule).  Of course, I accepted the offer as soon as I was permitted to!

In celebration of Judge Bryson's service on the Federal Circuit, I reached out to several of his other former clerks for their thoughts on the judge.  There were far more than I could possible include here, but the comments below are representative:

• "The best thing I learned working for Judge Bryson is not to be so enamored of the easy parts of your case that you lose sight of the hard parts.  Work to find the hardest question that a judge or an opponent might put to your case.  If you can’t figure that out, you don’t know your case well enough.  Then work to find the best answer to that hard question.  If you don’t have a good answer, you are not doing everything that you can to win.  Surprisingly, many attorneys arguing at the Court seemed shocked to be challenged or have their arguments tested."
• "I have had many senior partners, clients, superiors, etc. tell me over the years that they want my unvarnished views and don’t want “yes men” to just nod along.  Judge Bryson embodied the rare person who really meant that when he said it."
• "Judge Bryson was assigned the standard floor space in the Markey courthouse -- three bay windows' worth -- and was allowed to configure his chambers as he saw fit.  He took none of the windows for his own office.  Instead, he sat in a windowless room and used the bay windows for a library and conference room open for use by (and frequently used by) all of chambers staff.  This unusual and perhaps unique arrangement speaks volumes to Judge Bryson's humility, collegiality, and work ethic." (This specific recollection was shared by many of Judge Bryson's former clerks).
• "Probably every person that argues in front of Judge Bryson lives in respect of his hypotheticals.  He has a good knack for boiling down the essential point of a case into a hypothetical question or statement.  As a clerk, the amusing aspect of the hypotheticals was that many attorneys could not decide whether they should agree, or disagree, with his hypothetical.  The deer-in-the-headlights look from these attorneys was priceless."
• "If you have a good substantive case, you want Judge Bryson on your panel.  If you don’t have a good substantive case, you don’t want to see him show up on your panel."
• "At the end of our clerkship during a recruiting dinner, I had a very senior figure at one of the top patent firms (you’d know his name immediately) say to me  “You know… some people would say that Judge Bryson is the smartest judge on the bench.”     I’ve had this statement repeated to me many times by members of the Fed Cir bar over the last 11 years."
• "When I brought my kids into chambers, I was worried about them overstaying their welcome and bothering Judge Bryson.  To the contrary, I think that if Judge Bryson had had his way, he would have spent the whole afternoon looking up countries on the globe and drawing on the white board with them."
• "I think of Judge Bryson as extraordinarily dedicated to reaching the correct decision in any appeal. For patent cases, I remember that he would always spend a great deal of time attempting to understand the underlying technologies. One time, I saw him studying briefs while he was waiting for the Metro at McPherson Square."
• "During the clerkship, I was endlessly impressed by how Judge Bryson was always able easily to pierce through a complicated record to identify what was central to the disposition of a case --- and how he worked through all issues with such integrity.  Various former clerks of Judge Friendly (the Second Circuit titan for whom Judge Bryson had also clerked) have often spoken about how their judge didn't really need any law clerks, because his knowledge of the law was just so encyclopedic, and because he was so efficient and self-sufficient; I feel the same way about Judge Bryson.  And on top of it all, he is a true and kind mentor.  Those of us who have had the privilege of clerking for Judge are truly lucky."
• "Judge Bryson's questions at argument could be difficult to deal with, even for seasoned attorneys.  In one example, an attorney attempted to sidestep one of Judge Bryson's questions (or at least buy himself time), arguing that "I'm from Texas, I think slow and I talk slow."  Judge Bryson was not so easily brushed aside, responding something like, "I'm from Texas too, but I would like you to answer my question.""
• "Judge Bryson is easily the smartest lawyer I've ever known, and yet also one of the most unassuming people I've ever known.  I recently read a biography of Judge Bryson's former boss Judge Friendly.  I frequently recalled my year as a clerk for Judge Bryson as I read about Judge Friendly's intellect, work habits, non-ideological approach to judging, and how his clerks apparently had to work hard to come up with things that the judge hadn't already figured out on his own.   Much like Judge Friendly was, though, Judge Bryson is not the least bit pretentious or taken with his own intellect -- despite having infinitely more skill and experience than his clerks, Judge Bryson treated his clerks as colleagues and was always open to hearing their ideas.  I can think of no better way to have started my legal career than the year I spent as a clerk for Judge Bryson."

As a senior judge, Judge Bryson will continue to sit regularly on the court, although with a reduced docket.  We can hope that he will do so for many years!