Patent Law Blog (Patently-O)

IPCom Wins by Waiver – Federal Circuit Temporarily Revitalizes IPCom Case Against HTC

By Dennis Crouch

HTC v. IPCom (Fed. Cir. 2012)

IPCom is the German version of a "patent troll." Or, as Lord Justice Jacob wrote in Nokia v. IPCOM, EWCA Civ 6 (2011), "IPCom is a 'non practising entity', i.e. a patentee with no business of its own in products covered by the patents." The company is run by Bernhard Frohwitter, one of the most successful German patent litigators and backed by New York private equity. As suggested by this introduction, IPCom is pursuing patent battles against telecommunications device manufacturers around the world. [Even though I used the word "troll" here, I certainly believe that non-practicing entities should generally have a right to enforce their patents.]

In 2011, IPCom sued the Taiwanese company HTC Corporation in the US for infringement of its Patent No. 6,879,830. The patent covers an apparatus for solving the wireless communications problem of handing-over a data-stream connection to another base station as the wireless device travels geographically. The patent was originally owned by the German company Bosch who transferred rights to IPCom as part of a major IP asset purchase.

IPXL: The district court held the asserted claims invalid on summary judgment as indefinite under 35 U.S.C. §112. Following IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005), the district court rejected the claims as reciting an apparatus with method steps. On appeal, the Federal Circuit has reversed – holding that the lower court misconstrued the language of the claims.

I have reproduced a representative claim below, but the basic gist is that a mobile station apparatus is claimed that operates with a network. The network provides a number of functions regarding the handover process, including storing data, holding information in reserve, and then later deleting the information after the handover. The claim includes only one element for the mobile station – requiring that the mobile station comprises "an arrangement" for reversing the handover if it is unsuccessful.

Claim 1. A mobile station for use with a network including a first base station and a second base station that achieves a handover from the first base station to the second base station by: storing link data for a link in a first base station, holding in reserve for the link resources of the first base station, and when the link is to be handed over to the second base station: initially maintaining a storage of the link data in the first base station, initially causing the resources of the first base station to remain held in reserve, and at a later timepoint determined by a fixed period of time predefined at a beginning of the handover, deleting the link data from the first base station and freeing up the resources of the first base station, the mobile station comprising: an arrangement for reactivating the link with the first base station if the handover is unsuccessful.

In IPXL, the court held a claim invalid that was structured as an apparatus claim that also required the performance of method steps. Here however, the Federal Circuit interpreted the claim language as having an apparatus defined by its capability to perform a set of defined tasks. The legal distinction here is in whether the apparatus must perform the step or merely be capable of performing the step. In addition, the language discussing the function of the network does not create any problem because the claim itself is actually claiming a mobile station. Thus, the "prohibition on hybrid claiming" identified in IPXL does not apply to this case.

In interpreting the claim, the court relied on its old rule of construction that claim terms "are generally given their ordinary and customary meaning." Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). Using ordinary meaning as a starting point ,the court also walked through the specification and prosecution history in reaching its conclusion that the seeming action-items were directed to the network rather than the mobile device itself.

Prosecution History: One basis of HTC's argument came from the prosecution history where the applicant referred to the six action elements in the claim as a "process" and the examiner called them "steps." The Federal Circuit held that HTC (and the lower court) placed too much emphasis on those statements – especially because "in most cases" the examiner was referring to parallel method claims not at issue here. In looking at the prosecution history, the court also sent the reminder that prosecution history is less important in interpretation than claim and specification language. "Although the district court was correct in considering the prosecution history, the claim language and specification in this case are better sources for the correct construction."

Because the court identified the source of error claim construction rather than indefiniteness, the case was reviewed

Means-Plus-Function and Waiver: HTC also offered a separate invalidity challenge based on the claimed "arrangement for reactivating." HTC argued that – as a means-plus-function limitation – the scope of the term is defined by the corresponding structure found in the specification. Further, HTC argued that the specification did not include any supporting structure and that the claim must therefore be held invalid as indefinite. The district court rejected that argument – holding that the disclosed processor and transceiver served as the corresponding structure. On appeal, the Federal Circuit identified that holding as in error because the claimed function must be tied to a more particular structure. Here that structure would ideally be an algorithm that defines in some terms how the arrangement would work. See Aristocrat Techs. Austl. PTY Ltd. v. Int'l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).

After identifying the error, the appellate panel refused to reverse because HTC had failed to properly preserve an objection for the appeal. The problem: At the trial court, HTC had argued that more hardware disclosure was necessary beyond the "processor and transceiver," while on appeal, HTC (and in the reply brief) shifted its argument to focus on the need for an algorithm. The appellate court held that this late-stage argument was too late.

To be clear, HTC had argued that the means-plus-function limitation was indefinite because it lacked sufficient corresponding structure in the specification. HTC's error was that it identified the patent's problem as lacking sufficient description of the hardware that would perform the claimed function while the Federal Circuit saw the patent's problem deriving from lacking a sufficient description of the algorithm that would perform the claimed function. The Federal Circuit's point was that no more hardware need be disclosed so long as the algorithm is there. This result is a bit odd for a few reasons. The practical reason for this failing is likely that these issues were litigated before the Federal Circuit's 2008 decision on point. However, from a factual standpoint I suspect that HTC is absolutely correct – the lack of disclosed structure could-have been entirely solved by further disclosure of specific hardware designed to achieve the claimed function and without any further disclosure of the particular algorithm. Thus, the disclosure of a video graphics processor would likely serve as sufficient structure for a computer graphic processing function with a known solution even without disclosing the particular algorithm used for the processing. In the same way a nail could serve as the structure of a fastening claim even without a description of the particular process for hammering the nail into place. Likewise here, a particularly designed and disclosed circuitry could serve as the structure for achieving the claimed reactivating function even without disclosing its process flow per se. The fact that the Federal Circuit here chooses a different structure that should-have-been disclosed does not suggest that HTC waived its argument that the claimed function lacked sufficient structure. This leads me to a second and broader point about the accused infringer's role in the invalidation process. It is not normally the accused infringer's role to identify what the patentee should have invented or disclosed. Rather, invalidity is more simply based on a showing that the patentee did not do enough. In this sense, the accused infringer takes on a role parallel to a food critic who can identify poorly presented food even if she herself cannot cook. In my world, this is akin to my own low level spelling prowess. I usually know when a word is misspelled. However, I can only rarely posit the correct spelling formulation without assistance. Thus, the Court's ruling here leaves a bad taste because it puts a new burden on accused infringers to take the additional step of identifying what the patentee should have said in the patent and then binds them to their suggested counterfactual.

Harmless Error on Remand: The Federal Circuit identified an error in the lower court's judgment but, because of waiver, did not require the lower court to re-open this issue on remand. Odds are that the lower court will not stick to its original opinion that has now been adjudged legally incorrect. Instead the court will more likely assert its discretionary power to take a fresh look at the issue of indefiniteness. This is especially likely if the district court broadly considers Supreme Court precedent such as Leer v. Adkins and the associated policy that "bad patents" should be invalidated even if that means bending some of the norms of civil procedure.

Court of Appeals: For Judge O'Malley (the opinion's author), the waiver portion of the opinion appears to be written as a reminder to patent litigators that the Federal Circuit is a Court of Appeals rather than a trier of fact or court of first instance. This legal reality continues to be lost on some of her colleagues on the appellate bench.

Means-Plus-Function in Combination: A final MPF issue that could also create trouble for IPCom involves the fact that the Federal Circuit's new construction of the claim includes only one element and that element is a means-plus-function language. The basis for means-plus-function claiming is found in 35 U.S.C. § 112¶6. That paragraph includes an apparent limitation that MPF elements are available only in "a claim for a combination." The result: single element claims may not use MPF language to define that lone element. In re Hyatt, 708 F.2d 712 (Fed. Cir. 1983).

Ford Krippelz

By Dennis Crouch

Krippelz v. Ford (Fed. Cir. 2012)

This case involves an interesting 20+ year history between Mr. Krippelz and Ford Motor Company, including 14 years of litigation over a mirror lamp. Ford has won what appears to be the final round.

* * * * *

Back in 1991, Mr. Krippelz sent Ford Motor Company a copy of his patent covering a downward-facing side-mirror light and a license inquiry. Ford was not interested in a license, but in 1997 began selling cars with downward-facing side-mirror lights. Krippelz sued in 1998. A paper battle continued over the next decade and even after Mr. Krippelz death in 2010. During that time, the USPTO confirmed the patentability of the asserted claims in a reexamination, the judge awarded summary judgment of infringement, the jury the patent valid and awarded $23 million in damages; and the judge boosted that figure to $56 million based upon pre-judgment interest and enhanced damages for willful infringement.

On appeal, the Federal Circuit has reversed – finding the patent invalid as anticipated by a 1951 French Patent invented by Charles DuBois of the former French West African colonial territories.

A court may find issued patent claim invalid as anticipated only when presented with clear and convincing evidence that a single prior art reference discloses each and every element of a claimed invention.

The focus here was on the Krippelz patent's claimed "conical beam of light" and whether that beam was disclosed by DuBois. In construing the claim, the district court held that the conical limitation required that "the filament of the light bulb is at or near the focal point of an optical reflector." DuBois included a statement that his system may also include "a bulb at the focus of the reflector." In reviewing the difference, the appellate panel found that any reasonable jury would find the asserted claim invalid based upon DuBois and that the district court had abused its discretion in denying the motion for Judgment as a Matter of Law.

Most appellants in Ford's position would have appealed claim construction because of the lower standard of review. Here, Ford may have lost that right by not previously objecting to the claim construction. That said, the motor company was able to roll a hard eight to overcome the strong presumption of validity and the deference given to the jury determination.

Patently-O Bits & Bytes by Lawrence Higgins

2012 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 25, 2012 at 4:00 EDT. [Link]

New IP Message Board

• IPtalk.pro is a new intellectual property law message board for the discussion of patents, trademarks, copyrights, trade secrets, and IP careers. It promises no spam, no downtime, and sensible moderation. [Link]

Intel buys IP for 120 million

• Intel recently acquired about 190 patents, 170 patent applications, and video codec software from RealNetworks for 120 million dollars. Intel states that, the acquisition will enhance their ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media. [Link]

Next Patent Office Location

• Many cities would like to be the next location of USPTO's next satellite office, including Austin, Texas, Denver, Boston, Silicon Valley and now Las Vegas. It seems that the USPTO has set a deadline for groups and individuals to submit written pitches for why their cities should get a satellite office. The patent office, in soliciting proposals, listed five areas that would play a large role in the selection. Those areas included improved recruiting and retention of examiners that would hinge on factors such as cost of living and number of attorneys in the field, contributions toward speeding and improving the process, and access to innovators as judged by measures such as the number of patents already held by residents in the area. Senator Majority Leader Harry Reid and others will draft their letter to the USPTO, explaining the advantages of Las Vegas. [Link]

Patent Jobs:

• Nelson Mullins is searching for 1 or more new or lateral associates with a background in CS or EE to work at their Boston office. [Link]
• Verenium is looking for a patent agent with a BS in molecular biology or biochemistry and a minimum of 5 years of experience to work at their San Diego location. [Link]
• Vista-IP-Law-Groups is seeking a patent attorney with a background in ME or EE and at least 2 years of experience to work at their San Jose office. [Link]
• Sterne, Kessler, Goldstein & Fox is seeking electrical IP attorneys with 1-4 years of experience to work at their Washington, DC office. [Link]
• International IP Law Group is searching for an associate, Of Counsel to prepare and prosecute patent applications at their Houston office. [Link]
• International IP Law Group is looking for a patent engineer/agent with 2-3 years of technical experience to work at their Houston office. [Link]
• Microsoft is seeking a patent attorney with a BS in CS or EE and at least 5 years of experience to work in their Redmond, Washington location. [Link]
• Toler Law Group is searching for patent attorneys with a BS in EE or CS and 0-2 years of experience to work in their Austin, Texas office. [Link]
• Kilyk & Bowersox is looking for a biochem/chem patent agent with at least 4 years of experience to work in their Warrenton, Virginia office. [Link]
• The Webb Law Firm is seeking an associate with a BS in chemistry or chemical engineering and at least 3 years of experience as an IP attorney to work at their Pittsburgh office. [Link]
• Klarquist Sparkman is searching for lateral litigation associates with 1-2 years of experience to work in their Portland office. [Link]
• Klarquist Sparkman is seeking a patent attorney or patent agent with an advanced degree in organic chemistry and 3+ years of experience to work in their Portland office. [Link]
• Roberts Mlotkowski Safran & Cole is searching for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]

Upcoming Events:

• The Synopsis under IP/Patents Telecom Sourcing (SUITS) Conference will take place January 31-February 3 in Miami, Florida. The SUITS Conference was launched to advance the knowledge innovators of telecommunications including developers, implementers, licenses, licensors, end users, carriers and enterprise patents. Guest speakers include: Jeffery Dalton, Christopher Douglas, Loren Pearson, Keith Bergelt, Todd Juneau, Michael Rouleau and many others. [Link]
• The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
• AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
• The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
• The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
• The 7^th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
• LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]
• C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conference brings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
• American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
• American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]

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

Recap of Recent AIA-related PTO Activities

By Jason Rantanen

The America Invents Act contains several provisions that require the PTO to (1) issue new rules and (2) report back to Congress on specific patent-related issues.  In addition to the proposed Supplemental Examination rules I discussed yesterday, the PTO also recently published four other proposed sets of rules and completed two of its reports. 

Proposed Rules
Submissions to the PTO: Two related sets of rules address submissions to the PTO, one implementing the preissuance submissions by third parties provision of the AIA and the other addressing post-issuance submissions.  Paul Morgan recently wrote a guest post discussing these proposed rules.  The Federal Register sections are available here: http://www.uspto.gov/aia_implementation/77fr448.pdf and http://www.uspto.gov/aia_implementation/77fr442.pdf, and the rules are open for public comment until March 5, 2012.

OED: On January 5, the PTO also published its proposed rules to implement the statute of limitations provision for office disciplinary proceedings.  Dennis's discussion of these rules is available here, and the full set of rules is available at http://www.uspto.gov/aia_implementation/77fr457.pdf.  The comment period for these rules runs until March 5, 2012. 

Inventor's Oath: The following day, the PTO published its proposed changes to the rules relating to the inventor's oath or declaration.  The public comment period for those proposed rules runs until March 6, 2012, and the rules are available at http://www.uspto.gov/aia_implementation/77fr982.pdf

AIA-Mandated Studies
International Patent Protections for Small Businesses: As required by the AIA, earlier this month the PTO submitted to Congress a report on international patent protections for small businesses.  Based upon its study, the PTO declined to recommend a program of taxpayer-funded financial assistance to support small business foreign patenting at the present time. The report is available at http://www.uspto.gov/aia_implementation/20120113-ippr_report.pdf.

Prior User Rights: The PTO also recently completed its report on prior user rights.  The report essentially concludes that there is an insufficient basis to recommend a change to the prior user rights scheme chosen by Congress, and is available at http://www.uspto.gov/aia_implementation/20120113-pur_report.pdf.

Genetic Testing: Earlier this week, the PTO published a Request for Comments and Notice of Public Hearings in connection with its study on genetic testing.  Public hearings will be held on Febuary 16, 2012 in Alexandria, Virginia, and on March 9, 2012 in San Diego, California.  Written comments will be accepted until March 26, 2012.  The announcement is available at http://www.uspto.gov/aia_implementation/2012-1481_genetic-testing-hearing-notice.pdf. 

PTO Announces Proposed Rules for Supplemental Examination

By Jason Rantanen

Yesterday, the United States Patent and Trademark Office announced the proposed rules for supplemental examinations and proposed revisions to ex parte reexamination fees.  These proposals detail the supplemental examination process, including the information that requesters must submit, as well as the substantial fees that will be associated with post-grant review in the future.  The PTO will accept comments on the proposed rules until March 26, 2012. 

The relevant Federal Register section is here: http://www.uspto.gov/aia_implementation/77fr3666.pdf.

Major points include:

• The request must be filed by the patent owner.  Only the patent owner will be permitted to participate in the supplemental examination or any reexamination ordered as a result. (§ 1.601)
• Each supplemental examination request may identify up to ten items of information to be considered, reconsidered, or corrected.  Multiple supplemental examination requests may be filed at one time. (§ 1.605)
• The cost for filing a supplemental examination request is steep: $5,180 for the initial request plus $16,120 for the ex parte re-examination fee. (§ 1.20(k))  Both must be paid at the time of initial request, and the $16,120 will be refunded if no re-examination is ordered in the supplemental examination certificate.  (§ 1.26(c))  In addition, there are substantial fees associated with documents over 20 pages, as well as with petitions filed in connection with the proceeding. 
• The supplemental examination request must include ((§ 1.610(b)):
  
  1. a cover sheet;
  2. an identification of the patent for which supplemental examination is requested;
  3. a list of each item of information and its publication date, if applicable;
  4. a list identifying any other prior or concurrent post patent Office proceedings involving the patent to be examined;
  5. an identification of each aspect of the patent to be examined;
  6. an identification of each issue raised by each item of information;
  7. a separate, detailed explanation for each identified issue;
  8. an explanation of how each item of information is relevant to each aspect of the patent to be examined and of how each item of information raises each identified informaiton;
  9. a copy of each item of information; and
  10.  summary of the relevant portions of any submitted document, other than the request, that is over 50 pages in length.

The full requirement for item 8 is:

(8) A separate, detailed explanation for each identified issue, discussing how each item of information is relevant to each aspect of the patent identified for examination, and how each item of information raises each issue identified for examination, including:

(i) Where an identified issue involves the application of 35 U.S.C. 101 (other than double patenting) or 35 U.S.C. 112, an explanation discussing the support in the specification for each limitation of each claim identified for examination with respect to this issue; and

(ii) Where an identified issue involves the application of 35 U.S.C. 102, 35 U.S.C. 103, or double patenting, an explanation of how each limitation of each claim identified for examination with respect to this issue is met, or is not met, by each item of information. The detailed explanation may also include an explanation of how the claims distinguish over the items of information.

(Proposed § 1.610(b)(8)).  Note that if the PTO concludes that an examination request is not in compliance with the content requirements, it will not be entitled to the original filing date.  Rather, the filing date will be the date the corrected request is received.  (§ 1.610(d),(e))  This appears to mean that the PTO's three-month deadline for issuing a supplemental examination certificate will not begin until the corrected request is received and the safe-harbor provisions of 35 U.S.C. 257 may not be triggered even if a request is filed should the PTO conclude that requirement 8, for example, is not met.

The proposed cost to file an ex parte reexamination will increase from the current $2,520 to $17,750.    Given both this increase and the substantial cost to file a supplemental examination request, I'm skeptical of the PTO's prediction that it will receive about 800 ex parte examination requests and 1,430 supplemental examination requests annually.  The latter number, especially, seems to be based on some highly dubious assumptions.

 

United States Intellectual Property Organization?: Curing a Fractured Administrative Structure

By Dennis Crouch

Most operating businesses that rely on intellectual property (IP) rights do not focus on a single form of rights but instead take a layered approach that includes patent law along with trademark, copyright, contractual limitations, and design rights, for instance. Each form of IP has weak points and overlapping coverage provides a greater level of certainty that any underlying market value can be protected.  Of course, overlapping rights create difficulties for users that rely upon the public domain and fair use. The bulk of governmental money spent on administering intellectual property rights goes through the US Patent & Trademark Office (PTO) — an executive agency housed within the Department of Commerce.  Although the PTO only administrates patent and trademark issues, the Director of the USPTO also serves as the Undersecretary of Commerce in charge of Intellectual Property and has the role of advising the President and other federal agencies on all aspects of intellectual property – including copyright law.  Of late, this role is shared somewhat with the White House Office of the U.S. Intellectual Property Enforcement Coordinator.

Whither the Copyright Office: There is a clear structural reason why the President and executive agencies cannot rely on the US Copyright Office for advice about copyright law.  The Copyright Office is housed within the Library of Congress, which itself is managed by Congress rather than the President.  Thus the US Copyright Office does not officially represent the Administration or shape Administration policy.  This is an odd setup — especially with the rising and overlapping market role for intellectual property rights.  From a theoretical standpoint, it is unclear whether the fractured administrative structure leads to rights that are either too strong or too weak.  What we can tell is that the structure leads to a lack of coordination in administration of the various IP systems within the US.

In his 1995 Congressional testimony on the topic, Bill Patry identified the fractured structure as "an historical anomaly."

It is not the result of a judgment that the legislative branch is where the Copyright Office belongs. It occurred solely because there was a very clever, ambitious Librarian of Congress who figured out that rather than relying upon appropriated funds, which is not a great way for agencies to fund themselves, he would get free books. He got free books by convincing Congress to require publishers and authors to give the Library free books. That is how the Copyright Office got into the Library of Congress.

The answer: In 1995, the Senate proposed a solution – a United States Intellectual Property Organization (USIPO). (S. 1961).  Although the Bill did not emerge from committee at the time, the newly proposed organization would fall in line with many of our trading partners, including the UK IPO, the Canadian IPO, and the World Intellectual Property Organization (WIPO).

Back in 1995, then Register of Copyrights Marybeth Peters commented that such a move may unduly politicize the Copyright Office. Peters was also concerned that the historic and humanist value of the copyright registry would be soiled if joined with the commerce-focused patent and trademark administrators.

Bill Patry testified before the Senate in support of the concept of the USIPO and argued that the Copyright Office functions are executive not legislative:

Well, the Office doesn't perform any legislative functions. Why should it remain in the legislative branch? The answer that you are given is essentially that is the way it has always been and we like it that way. But if you have go the two other forms of intellectual property … why should the third one be over here and on the other side of the Potomac? It is really a quaint sort of nostalgia for the past. It is an obstacle for the future.

Members of Congress also expressed reticence about giving up direct control of the office. At the time, the Intellectual Property Owners Association and AIPLA suggested "further study."

In the years since 1995, we have seen a great convergence in the marketplace role of the various intellectual property schemes. It seems to me that the time is ripe to consider the issue once again.

Falana v. Kent State University

By Jason Rantanen

Falana v. Kent State University (Fed. Cir. 2012) Download 11-1198
Panel: Linn (author), Prost and Reyna

This case raises an important issue for developers of chemical compounds: when is an inventor's contribution to the method of making a claimed compound an inventive contribution?

The plaintiff in this Section 256 action, Dr. Olusegun Falana, was a post-doctoral researcher hired by Kent State and Kent Displays, Inc. to synthesize organic molecules in connection with a project to develop a temperature independent, high helical twisting power chiral additive for use in portable liquid crystal displays. During his employment, Dr. Falana developed a synthesis protocol for making a novel class of chemical compounds. Dr. Falana used this process to synthesize a compound within this genus designated "Compound 7." While Compound 7 possessed some of the desired characteristics, and represented "significant progress," it did not completely satisfy the project goals. Dr. Falana subsequently resigned from KDI and Kent State to take another position.

A few months after Dr. Falana's resignation, the Kent State professor who had selected Dr. Falana used Falana's synthesis protocol to synthesize another member of the novel class, "Compound 9." Compound 9 possessed the desired degree of temperature independence, and KDI and Kent State filed an application that led to Patent No. 6,830,789; the patent did not list Dr. Falana as in inventor.

Upon learning that he was not listed as an inventor, and after receiving an unsatisfactory response from the Chief Science Officer at KDI, Falana filed a Section 256 action to correct inventorship. The district court ruled in Falana's favor following a bench trial, further finding that the case was exceptional and awarding attorneys fees in an amount to be determined.

On appeal, the Federal Circuit concluded that Dr. Falana had contributed to the conception of the claimed invention. Drawing upon established law, the court first noted that "[c]onception of a chemical compound 'requires knowledge of both the specific chemical structure of the compound and an operative method of making it.'' Slip Op. at 12 (quoting Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997). Here, Dr. Falana contributed to the method of making the claimed compound in a way the required more than the exercise of ordinary skill. The court recognized an important limitation on its holding, however:

"[This] does not mean that such an inventor necessarily has a right to claim inventorship of all species within that genus which are discovered in the future. "Once the method of making the novel genus of compounds becomes public knowledge, it is then assimilated into the store-house of knowledge that comprises ordinary skill in the art." Id. at 15-16.

Comment: The court was also careful to limit its holding in another way. It could have concluded that Falana was inventor simply due to his contribution to the method used to make Compound 9. It did not. Instead, the panel held "that a putative inventor who envisioned the structure of a novel genus of chemical compounds and contributes the method of making that genus contributes to the conception of that genus." Id. at 15 (emphasis added). It was able to articulate the rule in this way because it agreed with the district court that the patent's independent claims do not include a temperature independence limitation - in other words, the claims as construed were not limited to Compound 9, but rather encompassed the genus of compounds produced using Falana's synthesis protocol. Falana thus contributed both to the method of making the genus as well as the structure of the genus itself. The opinion implies that the outcome could conceivably be different if the claims had been limited to Compound 9. See, e.g., Slip Op. at 17.

Finality of Judgment: Federal Circuit practitioners may want to pay particular attention to the section at the end of the court's opinion in which it concluded that the district court's exceptional case determination was not before it in this appeal. Although the court's ruling on the issue of inventorship represented a final judgment, the court concluded that absent a determination of the attorney fees, the exceptional case determination did not. Nor, the court concluded, was there a basis for it to exercise pendent appellate jurisdiction over the issue.

Patently-O Bits & Bytes by Lawrence Higgins

Microsoft and LG Sign Patent Agreement

• Microsoft and LG singed a patent agreement that provides coverage under Microsoft's patent portfolio for LG's tablets, mobile phones and other products that runs on the Android Platform. Microsoft claims that more than 70% of all Android smartphones sold in the US are now receiving coverage under Microsoft's patent portfolio. It has been estimated that more than 700,000 Android based devices are sold every day and analyst have predicted that the number will reach 2.5 million devices per day. [Link] Microsoft most likely receives anywhere from $5-$15 dollars per device sold, meaning Microsoft makes $2.45 million-$7.35 million every day from Android operated phones. [Link]

Wal-Mart and Entrepreneurs

• Wal-Mart has launched a "Get on the Shelf" contest to find the next new thing to put on their shelves. The contest is limited to categories that Wal-Mart carries, which makes the contest open to all kind of entrepreneurs. There will be 3 winners picked and their items will be sold on Walmart.com, with the grand prize winner being featured on the site's home page and stocked n select Wal-Mart stores. The public will vote for their favorite products, similar to other contest such as American Idol. [Link]

National Medal of Technology and Innovation

• The PTO is seeking nominations for the 2012 National Medal of Technology and Innovation. The medal is presented by the President and is the highest award for technological achievement in the US. The medal is awarded to individuals, teams of up to 4, or companies for their contribution to America's economic, environmental, and social well-being. [Link]

Patent Jobs:

• Cardinal Intellectual Property is seeking a patent search attorney to work at their Evanston, Illinois location. [Link]
• Roberts Mlotkowski Safran & Cole is looking for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]
• Cardinal Intellectual Property is searching for patent search professional to work remotely. [Link]
• DIRECTV is seeking a senior patent analysis counsel with 6+ years of experience to work at their El Segundo, California location. [Link]
• Dority & Manning is seeking patent attorneys with 1-4 years of experience and a BSEE or BSME to work at their Greenville, SC office. [Link]
• The Sughrue Firm is searching for patent agents with 1-2 years of experience and backgrounds in computer science of software to work in their Silicon Valley office. [Link]
• Whirlpool is seeking a patent agent with a minimum of 2 years of experience and a BS in engineering to work at their Saint Joseph, Michigan location. [Link]
• Hiscock & Barclay is seeking patent agents/attorneys with a minimum of 3-5 years of experience to work at their New York offices. [Link]
• Steptoe & Johnson is searching for IP associates with a minimum of 4 years of experience in patent litigation and a technical background to work in their DC or Chicago offices. [Link]
• Edell, Shapiro & Finnan is looking for a patent attorney with 2+ years of experience and a degree in EE or physics to work at their Rockville, Maryland office. [Link]
• Michael Best & Friedrich is seeking a biotech associate with 5+ years of experience and a Ph.D. to work at their Madison, Milwaukee or Chicago office. [Link]
• Intellectual Ventures and Invention Law Group is looking for a Chief Policy Counsel with 15+ years of experience to work at their Bellevue, Washington location. [Link]
• Telesign is seeking a IP analyst with 2+ years of experience to work at their Marina Del Rey, California location. [Link]

Upcoming Events:

• The American Bar Association Section of Intellectual Property Law, Young Lawyers Division, ABA-IPL Young Lawyers Action Group and the ABA Center for Continuing Legal Education will sponsor a webinar on January 20 at 1 p.m. Eastern time. The webinar, Prosecution Strategies: Tackling USPTO Obviousness Rejections will explore how the KSR standards have been applied in various technology areas and provide guidance for effective avenues of argument based on the technology area. Speakers include: Janet Hendrickson, Gregory Hillyer, Michelle O'Brien, and Zachary Stern. [Link]
• American University Washington College of Law Administrative Law Review will be hosting an afternoon symposium on January 25 on the creation and administration of a new trial-like review procedure, more commonly known as post-grant patent opposition, at the U.S. Patent and Trademark Office, titled Regulating Innovation: How the Patent and Trademark Office Intends to Create Adjudication From Scratch. The symposium will explore the rulemaking that will be required of the agency, the implementation of the post-grant review process, and industry reaction to the proposed changes.
• International IP- Is the IP World Flat? Santa Clara Computer & High Tech Law Journal is hosting its annual symposium January 27 on SCU Campus. The symposium will include the following 4 panels: (1) International Patent Harmonization; (2) Non Practicing Entities: Going Global; (3) The Rise of Chinese IP; and (4) Comparative e-Privacy Regimes. Speakers include: David Abrams, Colleen Chien, Nancy Kremers, Francois Gilbert and many others. Also, PatentlyO's Dennis Crouch will be a Speaker discussing International Patent Harmonization. [Link]
• The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
• AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
• The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
• The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
• The 7^th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
• LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]

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

Upcoming Events: Santa Clara

On Friday, January 27, I'll be speaking at the Santa Clara Computer & High Technology Law Journal's annual symposium at SCU's Locatelli Center.  The event is focusing on global intellectual property issues.  My morning panel will discuss the future of patent harmonization and cooperation amongst the world's patent systems.  Professor Chien's panel will raise the prospect of the global reach non-practicing intellectual property owners.  Ken Korea from Samsung is a great speaker and will keynote.  Ken may answer the symposium's titular question: Is the IP World Flat? Afternoon panels will address IP in China and comparative electronic privacy regimes.

• $95 for 5 hours of MCLE. $15 for registration without MCLE credit.
• http://www.chtlj.org/symposiums/v28. 
• See you there - Dennis

 

The New Choice: Inequitable Conduct or Copyright Infringement

Many patent applicants enjoy the fact that the USPTO lists all cited and considered references on the face of each patent. That listing provides an apparent presumption that the newly patented invention is a step beyond anything found in those references. Economists have even shown that patents with more cited references tend to be relatively more valuable. Patent applicants are also under a duty to submit prior art references that are material to patentability. 37 C.F.R. §1.56.

A negative side of citation is now emerging. Recently, copyright owners have begun trolling non-patent prior art citations to see whether any of their works were copied and submitted to the USPTO. Of course, following standard law firm practice additional copies were likely generated for the file and for review by the inventors or attorneys. These copies may be hard copes or electronic versions, but as MegaUploads can now attest, that makes no difference in copyright law. Statutory damages for copyright infringement range from $750 to $150,000 per work. The exact figure is largely within the discretion of the judge and is based upon what the "the court considers just" and whether the infringement was willful.

A number of scientific journals have begun to threaten law firms and their clients for submitting copies of journal articles to the USPTO.  The typical cease & desist letter that I've seen says something like the following:  

"We've been trolling through USPTO records and found that you submitted a copy of one of our articles articles to the USPTO and we suspect that you maintained other copies in your files and distributed additional copies within your organization. These actions constitute copyright infringement and are not fair use.  We will sue you unless you come into compliance with our CCC licensing scheme."

To be clear, the focus in the letter is on copies being submitted to the USPTO as well as copies retained in the file and distributed internally.

I looked-into the CCC automated licensing system and found that they offered the right to make copies of a NATURE article (one of the journals taking action) for $32 per copy. 

USPTO Response: In a surprisingly bold statement, the USPTO's General Counsel Bernie Knight released a statement late last week indicating the USPTO's belief that submission of unlicensed copies of copyrighted materials to the USPTO for the purpose of complying with Rule 56 cannot create copyright liability because that action is fair use under 17 U.S.C. 107.  This issue previously arose when the USPTO was building the PAIR electronic record system.  It was because of potential copyright concerns that the USPTO decided not to make available non-patent prior art through the PAIR system. However, the USPTO has offered its position that it is fair use for the agency to charge a fee to make and distribute paper copies of the copyrighted works (as part of the file history).

The USPTO took no position on whether applicant's creation of file-copies and internal distribution of copies also qualify for the fair use defense. In addition, applicants who have obtained limited licenses to works may be under a contractual duty to avoid making further copies even if those copies would have been fair use.

How much money?: On an annual basis, I would estimate that at least five hundred thousand journal articles are submitted to the USPTO for consideration.  Each submission probably results two local copies for the file & review by the attorney, inventors, and others in addition to the submitted copy.  That takes the annual licensing market to around $50 million.  Not a tremendous amount for a nationalmarket, but that may be enough to save the struggling scientific journal industry.

Fair Use: An interesting aspect of fair use analysis is that the outcome can change based upon market conditions and general custom.  Here, for instance, if it is very easy to obtain a license by simply paying a fee online and a number of patent applicants begin paying that fee regularly, an action that was once considered fair use may again fall under the copyright infringement umbrella. 

How will your firm respond? Should your engagement letter be amended? 

En Banc Federal Circuit To Reconsider Scope of Intervening Rights Defense

By Dennis Crouch

Marine Polymer Tech. v. HemCon, Inc. (Fed. Cir. 2011)

The Court of Appeals for the Federal Circuit has announced that it will hold an en banc rehearing of the Marine Polymer Tech case. Straying from its recent practice, the Court has not suggested any particular questions that it will address nor did the Court offer to receive friend-of-the-court briefs filed without leave. Thus, under the Federal Circuit rules of practice, any amicus curiae may file a brief only with either (1) leave of court or (2) leave of all parties to the appeal. (Fed. Cir. R. 29).

The initial appellate decision focused on the potential for intervening rights created by patentee arguments made during reexamination. Here, the court held that that a narrowing claim construction argument made by the patentee in a reexamination gives rise to absolute intervening rights for an accused infringer's products made or sold prior to the reexamination request. An important quirk of the case is that the narrow construction that the patentee suggested to the PTO was the same construction that had been ordered by a district court in this case. Thus, at the time, the argued-for construction was seen as the true construction rather than a narrowing construction. However, the argued-for construction became narrowing after-the-fact once the Federal Circuit rejected the lower court's construction as unduly narrow.

The majority opinion was written by Judge Dyk and Joined by Senior Judge Gajarsa. Judge Lourie filed a dissent that looked to the patent statute for guidance on the legal scope of intervening rights. He argued that the statute does not create intervening rights based upon arguments but rather only apply to "amended or new claims." See 35 U.S.C. §§ 307(b), 316(b), and 252.

The question suggested by the plaintiff-appellate Marine Polymer follows Judge Lourie's dissent:

Whether arguments made regarding a patent claim during reexamination of a patent give rise to intervening rights under 35 U.S.C, §§ 307(b) and 252, where the patent claim in question is neither "amended" nor "new" in the reexamination.

Intellectual Ventures filed a brief supporting the en banc rehearing – noting its "concern[] with the panel's redefining of the term 'amended claim' to include original claims that have not been textually altered."

In response, HemCon argued that Marine Polymer's formalistic argument does not make sense. In particular, HemCom noted that it would be odd "to adopt a rule under which intervening rights would apply when claims are substantively changed during reexamination by altering the actual language of the claims, [but] would not apply when claims are substantively changed through arguments made to the USPTO."

There is some tension between this decision and that of Bettcher Industries v. Bunzl USA (Fed. Cir. 2011). In Bettcher Industries, the court held that the estoppel provisions of 35 U.S.C. § 315(c) only apply once all appeal rights have been exhausted. In addition, the case is directly in tension with Laitram Corp. v. NEC Corp., 163 F.3d 1342 (Fed. Cir 1998). In that decision (penned by Judge Lourie), the court followed a two step process to determine whether intervening rights applied. First, the court looked to determine whether the text of the patent claim had changed. Since the text had changed in that case, the court then looked to see whether the change was "substantial."

My expectation is that this decision will be reversed by a strong majority on rehearing.

Supreme Court Affirms Broad Congressional Authority to Offer Intellectual Property Rights for Public Domain Works

By Dennis Crouch

Golan v. Holder (Supreme Court 2011)

As widely expected, the Supreme Court today affirmed a lower court ruling that the "Copyright Clause" of the U.S. Constitution does not prevent Congress from providing copyright protection to public domain works. As also expected, Justice Breyer (joined by Justice Alito) dissented from the 6-2 decision.

The case was filed after Congress restored the copyrights to a thousands of foreign-authored works that had fallen into the public domain based upon the authors' failures to observes pre-Berne Convention formalities such as registration and notice ©. Many of the restored works had been known to be in the public domain for decades before the 1994 passage of the statute - the Uruguay Round Agreements Act. (Picasso's 1937 Guernica painting reproduced without a license below is an example of a work whose copyright was restored by the statute). The Supreme Court opinion is written as a further extension of the 2003 Eldred decision that affirmed Congressional power to extend copyright by an additional 20-years as part of the Sonny Bono Copyright Term Extension Act (CTEA). I had suggested to my students last semester that the best conceivable outcome for petitioners would be that the Court would determine that heightened scrutiny should apply to adjudge the free speech impact of the expansion of copyright law. However, the court also rejected that path.

The Supreme Court opinion authored by Justice Ginsburg rejected the three primary arguments made by petitioners:

1. The Court held that allowing works from the public domain to be later copyrighted does not result in the potential for perpetual copyright in violation of the "limited terms" language of the Constitution. In its opinion, the court rejected any notion that the public has a "vested" right in works from the public domain. "Once the term of protection ends, the works do not revest in any rightholder. Instead, the works simply lapse into the public domain."
2. The purpose of copyright law – to "promote the Progress of Science" – should be broadly interpreted to include both promotion of the creation of new work as well as promotion of knowledge and learning more generally. And, inducing of the dissemination of existing works is a permissible means to promote science. In addition, providing for access to foreign markets by acceding to treaty obligations can also provide an incentive for creation of new works and therefore promote the progress.
3. In Eldred, the free speech rights embodied by the First Amendment to the U.S. Constitution do not limit Congress from modifying copyright law within its "traditional contours." Petitioners argued that the removal of elements from the public domain was outside of these traditional contours and that, under Eldred, the Supreme Court should use a heightened level of scrutiny to determine whether the new law offends free speech concerns. The Court rejected that analysis based upon its conclusion that Congress has, on several occasions, removed elements from the public domain and that, therefore, this action is within the traditional contours of copyright policy. In addition, the Court held that the impact of the particular law at issue was simply to place the foreign works in the copyright position that they would have occupied if the current copyright regime had been in place at the time. From that perspective, the new law fits well within the traditional contours of copyright law.

Impact on Patent Law: Copyright and patent share the same constitutional underpinnings and each is purposed to "promote the Progress" of their respective fields. This leads me to the conclusion that the reasoning in Golan would be equally applicable to Congressional expansions of patent law. In its decision, the Court explicitly refers to historic patent restoration bills as "informing" the inquiry into the scope of the clause as it applies to copyright. The converse should also be true. Thus, perhaps Congress would have authority to extend patent terms based upon a patentee's provision of data additional testing data or its promise to manufacture the product in the US.

An interesting caveat comes from the Court's 1996 Graham decision. That opinion includes the line that "Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available." In distinguishing that line, the Court wrote that the passage does not speak "to the constitutional limits on Congress' copyright and patent authority" but instead it addresses "an invention's very eligibility for patent protection." (quoting Eldred). The seeming distinction here is that Congress has more latitude in determining patent (and copyright) term or duration and less latitude in determining subject matter eligibility.

In dissent, Justice Breyer wrote, inter alia, that the "newness" requirement has always been a necessary and fundamental element of intellectual property (copyright and patent) protection. This newness requirement is offended by allowing copyright protection to be offered for works created long ago and already known to be in the public domain.

The political setup of this case is somewhat interesting because the government's pro-property position could be conceived as the conservative approach while Golan's more liberal position is suggesting that anyone should be able to use these works without payment to the creator. At the same time, the liberal Golan's legal argument was based upon the traditionally conservative suggestion of strong Constitutional limits on the powers of the federal government.

Note:

• At several points in this article I would have linked to Wikipedia, but the site is not generally available today because of its ongoing protest against an expansion of intellectual property law that would require services such as Wikipedia and Google to remove links to sources of pirated material.

New Track I Prioritized Examination for RCE Applications

Guest post by Baltazar Gomez, PhD. Dr. Gomez is a Patent Agent at Teva Pharmaceuticals USA.

The United States Patent and Trademark Office published final rules on December 19, 2011 to implement a prioritized examination program for applications in which a Request for Continued Examination (RCE) has been filed. The Office expects that this program will provide patent applicants with added flexibility to accelerate processing of their RCE applications. An application is eligible for this program if only one RCE has been filed for the application.

The effective date for the program is December 19, 2011, and will apply to any patent application in which a proper RCE has been filed before, on, or after December 19, 2011. The requirements, set forth in 37 C.F.R. 1.102(e)(2), are the following.

1. The RCE is for an original utility or plant nonprovisional application or a U.S. national stage application.
2. The request for prioritized examination is filed electronically using request form PTO/SB/424. The request may be filed with, or after, the filing of the RCE. The request must be filed before the first Office Action after the RCE.
3. At the time of the request, the application must contain or be amended to contain no more than four independent claims, no more than thirty total claims, and no multiple dependent claims.
4. The request is accompanied by the prioritized examination fee ($4800), the processing fee ($130), and if not previously paid, the publication fee ($300).
5. The request is one of 10,000 for the fiscal year.

The limit on the number of requests includes requests for prioritized examination for initial examination and requests for prioritized examination after filing an RCE. As of January 3, 2012, 1,694 Track I petitions have been filed. The Office has issued decisions on 1,231 requests, granting 1,218 (98.9%) of the requests it has decided. A first Office Action has issued in about 31 days after approval of the request, and about 66 days after filing of the request. The first patent on a Track I application issued on January 10, 2012 (U.S. Pat. No. 8,094,942), which was filed on September 30, 2011.

An application accorded special status after filing an RCE will be placed on the examiner's special docket throughout its entire course of continued prosecution before the examiner until a final disposition is reached in the application. An application under prioritized examination, however, would not be accorded special status throughout its entire course of appeal or interference before the BPAI, or after the filing of a subsequent RCE. The goal of the program is to provide a final disposition within twelve months of prioritized status being granted. A final disposition is any of the following: mailing of a notice of allowance; mailing of a final Office Action; filing of a notice of appeal; completion of examination under 37 C.F.R. 41.102; filing a subsequent RCE; or abandonment of the application.

Filing an amendment in the application that results in more than four independent claims, more than thirty total claims, or a multiple dependent claim is not prohibited, but it will terminate prioritized examination. An Applicant will not receive any refund of the prioritized examination fee if prioritized examination is terminated.

The new prioritized examination for RCE applications differs from that for an original application in at least two ways. First, a U.S. national stage application in which an RCE has been filed is eligible for this program. Such an application is not eligible for the basic Track I program (37 C.F.R. 1.102(e)(1)). Second, a request for prioritized examination can be filed after an RCE has been filed. In the basic Track I program, a request must be filed at the same time the application is filed.

The new prioritized examination for RCE applications appears to mitigate some effects of previous changes to Office procedures for handling RCE applications. These previous changes to RCE handling at the Office have significantly delayed examination of many RCE applications.

The Role of In-House Patent Counsel in Prosecuting Patents

Query: When a law firm is hired to prosecute patents, should the in-house patent counsel be included in the list of patent attorneys with power of attorney over pending patent applications?

My informal conversations suggest to me that most major patent applicants want in-house patent professionals listed as having power of attorney in their pending cases. Smaller companies – even when they employ an in-house registered patent professional – are much less likely to be listed on the power-of-attorney roll.

When associated with a customer number, the power of attorney allows in-house counsel to access unpublished application materials through the USPTO's electronic "Private PAIR" system. In addition, the in-house counsel would then have the right and authority to discuss the case directly with patent examiners and file papers with the Office.

On the other hand, some in-house counsel want to avoid complicating prosecution control and keep all filing duties in the hands of the law firm experts. This allocation of duties can also help to shift blame to a law firm when problems arise or when information fails to reach decision makers. When in-house counsel holds power of attorney, I could conceive of a law firm potentially avoiding a malpractice claim by showing that the in-house counsel failed in its role as "backup."

Guest Post: Should you Submit Third-Party Prior Art?

By Paul Morgan

Introduction and Summary

On January 5 the PTO proposed a new 37 CFR §1.290 in the Federal Register for third party pre-issuance submissions of prior art in patent applications of others. The new rule is needed to implement the new statutory provision - 35 U.S.C. §122(e) – found in Section 8 of the AIA [Leahy Smith America Invents Act]. 35 U.S.C. §122(e) will be effective as of September 16, 2012, and will be usable against any pending applications [including reissues but not reexaminations] filed before or after that date. It will permit anyone to submit patents, published patent applications, or other printed publications, to the USPTO for consideration and inclusion in the record of a patent application as long as the submission includes a "concise statement of relevance" and meets some other paperwork requirements, which need not be discussed here since they will be clearly spelled out in the final PTO rules. As discussed below, §122(e) includes a significant expansion of the time period for submitting prior art documents to be put into someone else's pending application. The statute also expands what you can say about the documents (accompanying explanations and arguments) well beyond the present limitations found in 37 CFR §1.99. The submission process will remain cheap and simple, but it will still present the same conundrums as to whether or not you should use it?

In the same Federal Register is the proposed PTO rulemaking for amending 37 CFR §1.501 to accommodate the amendment of 35 U.S.C. §301. This amendment will slightly expand what information anyone can submit to the USPTO for inclusion in an already issued patent file when accompanied by a written explanation regarding the "pertinency and manner of applying" the information to at least one patent claim. That expand [new] information which can be put into an issued patent file will include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent. But the Office's use of such written statements will be limited to determining the meaning of a patent claim in reexamination proceedings and post grant review proceedings. This provision is also effective on September 16, 2012.

The Present Situation [PRE AIA]

First keep in mind that the PTO considers it to be actionable unethical conduct to put any papers into anyone else's ex parte [normal] patent application file unless there is an express statutory basis for doing so. Furthermore, papers attempted to be filed in a reexamination in which you are not a party [other than just the initial request papers for an ex parte reexamination], will not be entered. Adverse prior art submissions for anything in the PTO are quite restricted.

37 CFR §1.291 "Protests by the public against pending applications" and 37 CFR §1.292 "Public use proceedings" have existed for many years, but have been rarely used, and I suspect that few PTO practitioners or PTO personnel have ever seen one. Some senior PTO officials I asked at a CLE meeting several years ago doubted if there had been more than a handful per year. The rare Rule 292 proceedings are mostly used in connection with a parallel interference. Rule 291's potential usage was significantly restricted when the statute providing for U.S. 18 month application publications went into effect, ending Rule 291 "protest" filing opportunities after an application publication date.

The PTO at that time also put severe rule constraints that were not statutorily required into a 37 CFR §1.99 limiting what could be submitted and when. Rule 99 has a short time limit of only two months following the application publication date. Rule 99 also expressly states at (d) that a "submission under this section shall not include any explanation of the patents or publications, or any other information. The Office will not enter such explanation or information if included in a submission under this section." There is also a limit of 10 submitted documents. The PTO even threatened to reject submitted prior art patent copies if they were merely marked or high-lined to show the examiner where the relevant teaching or disclosure was buried in the patent! It seemed obvious to me at that time that the PTO did not really want to be bothered with any extra examiner work from third party prior art submissions. [The AIA has now at least made it clear that that is not quite what Congress has in mind.] An English language translation must be provided for all relevant portions of any listed non-English language document to be considered by the examiner, and that requirement will continue under the proposed new rules. Some patent attorneys reportedly consider it preferable to just send prior art to an applicant's patent attorney by registered mail and rely on the inequitable conduct concerns of that patent attorney to get that patent attorney to file the prior art the application, or to set up an IC defense if they do not.

35 U.S.C. §301 above [with its original 37 CFR §1.501] was enacted years ago accompanying the first [ex parte] reexamination system. It is simply to allow people to place prior art in an issued patent file without having to initiate a reexamination, so that the art might hopefully be considered if anyone subsequently requested a reexamination. It is understood that §301 has rarely been used, and I am not aware of any PTO statistics to the contrary, even though §301 says that it can be done anonymously. My very limited experience was that the PTO clerical staff did not know what to do with the [rare] §301 submittal and it was not placed in the patent file until we made follow-up efforts. [A copy of the PTO submittal mailed to the patent owner was helpful for a licensing discussion, but I wouldn't count on that happening often.]

What's New?

New 35 U.S.C.122(e)(1) and its proposed new rule 37 CFR §1.290 will greatly expand when you can legally put prior art into someone else's pending application file. As shown below, that is awkwardly expressed as "before the earlier of .. or the later of" three events in an application. But clearly it will normally be available for a much longer time period than the mere 2 months after a patent application is published of present Rule 99. It may be submittable for several years for applications not yet having a first office action with a claim rejection, as long as there is as yet no notice of allowance. Nor can the present unreasonable Rule 99 prevention of any explanations or comments on the submitted art remain, since "a concise description of the asserted relevance of each submitted document" is specifically required by this new statute:

(e) Preissuance Submissions by Third Parties-

(1) IN GENERAL- Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of--

(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or

(B) the later of--

(i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or

(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.

(2) OTHER REQUIREMENTS- Any submission under paragraph (1) shall--

(A) set forth a concise description of the asserted relevance of each submitted document;

(B) be accompanied by such fee as the Director may prescribe; and

(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.

As noted, the proposed amended 37 CFR §1.501 for the AIA amendment of 35 U.S.C. §301 will just slightly add to the information can be submitted to the PTO to merely put into an issued patent file. That information can now comprise or include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent, and that information can supposedly be used in subsequent actual reexaminations. However, even if that made sense tactically or strategically in some situation, perhaps in anticipation of a potential ex parte reexamination initiated by the patent owner itself, I fail to see how that kind of material can affect that many reexaminations? The Fed. Cir. requirement that claim scope in a reexamination apply a "broadest reasonable interpretation" test is not the same as claim interpretation in patent litigation.

But Do You Really Want To Do It & How Likely Is the Overall Usage?

How likely is it that this somewhat increased opportunity to cite prior art in applications or patent files of others will be used? That depends largely on whether you think doing so is really a good idea or not. That obviously includes guessing how likely is a regular examiner in normal ex parte patent examination [not a reexamination] going to consider and apply that prior art to reject claims? A prior statistical study published by Prof. Crouch on his Patently-O blog of a low examiner usage rate of prior art cited by the applicants themselves is not encouraging. But perhaps a novel third party submission is more likely to get an examiner's attention and claim rejections than routine applicant IDS dumps?

Even if that effectiveness was predictable, there is clearly a serious risk in third party submissions of art into applications of others under any system. It will case the application owner to think that someone else thinks their patent application is important enough be worth attacking its claim scope. That is logically going to cause the patent application owner to put extra effort into getting that application allowed, with broad and variable scope claims, including possible RCE's and appeals if necessary, and possibly filing and keeping divisionals and continuations pending. Furthermore, the claims can be amended to distinguish the third party cited art without incurring "intervening rights" as would be the case in a reexamination. While the third parties citing the prior art do not face dangerous estoppels [as in inter partes reexaminations or PGR] they do risk greatly strengthening the enforceability of the resultant patent against that or similar prior art if not all potentially infringed claims are finally rejected.

The rare use of any of the present third party prior art submission systems does not suggest their likely future use, [unlike the increasing use of reexaminations]. The PTO has apparently never kept statistics on the number of prior art filings in other peoples patent applications under present 37 CFR 1.99 (in force since 2000), or otherwise. But I was cognizant of a docketing operation that was handling thousands of pending patent applications, and only one such third party prior art submission was ever identified as being filed against any of those thousands of U.S. applications [excluding those in interferences] and it was not successful in getting any claims rejected.

Perhaps there will be somewhat higher usage and success rates for the new 35 U.S.C.122(e)(1) and 37 CFR §1.290 because it will allow attached explanations of the relevance of the cited art. But until that is demonstrated, the conservative tendency of patent attorneys to save prior art defenses until they think they can be used more effectively later, especially in an inter partes reexamination [where the patent owner cannot make completely unchallenged ex parte arguments against the cited art] seems likely to prevail.

There is of course an academic myth, supported by some companies presumably for its PR value, that was at play in the lead-up to these AIA changes. Namely a strange inherent assumption that large numbers of the public have nothing better to do with their time and money than to undertake the tens of thousands of prior art searches and claim-relevant submissions that would be needed to have any significant effect on patent examination quality for the more than 500,000 patent applications a year, even though they are not aware of any that could ever threaten any of their products. A mere couple of hundred patent applications were provided with prior art submissions under a pilot "Peer to Patent" system, despite all its publicity, of which only a minority resulted in claims being rejected using the submitted prior art.

As usual, I would appreciate comments from others with relevant information on these subjects.

How does the USPTO Investigate Allegations of Misconduct?

by Dennis Crouch

In this post, I discuss the process that the PTO follows in investigating allegations of attorney or agent misconduct. In addition, I review two recent disciplinary decisions. Both involve the submission of information disclosure statement. In one case, the attorney improperly submitted documents subject to a litigation protective order. In the other case, the attorney improperly submitted prior art documents without properly reading and reviewing the documents.

In the recent proposed rule on the statute of limitations for USPTO disciplinary proceedings, new Office of Enrollment and Discipline director William Covey provided a nice summary of the process that his office uses to investigate allegations of improper conduct by registered patent practitioners.

Generally speaking, there are four steps taken by the OED Director prior to the filing of a Sec. 11.32 disciplinary complaint against a practitioner:

1. Preliminary screening of the allegations made against the practitioner, see Sec. 11.22(d);
2. requesting of information from the practitioner about his or her alleged conduct, see Sec. 11.22(f)(1)(ii);
3. conducting a thorough investigation after providing the practitioner an opportunity to respond to the allegations, see Sec. 11.22(a); and
4. submitting the investigated case to the Committee on Discipline for a determination of whether there is probable cause to bring charges against the practitioner, see Sec. 11.32.

The first step is the preliminary screening of allegations to evaluate whether they merit providing the practitioner the opportunity to address them. Allegations are often incomplete and do not provide the OED Director with a full picture of what may have transpired. In other words, mere allegations do not necessarily provide the OED Director with a reasonable basis for automatically seeking information from the practitioner regarding a possible ethical violation; therefore, the OED Director always conducts an initial review of the allegations. Moreover, the OED Director recognizes that issuing a request for information to the practitioner--the second step--typically triggers anxiety for the practitioner, may interfere with the practitioner's practice, and may cause the practitioner to incur legal expenses in responding to investigative inquiries by OED. For this reason also, OED does not contact the practitioner automatically upon receipt of information alleging a practitioner committed an ethical violation. In short, the OED Director seeks the practitioner's side of the story, if at all, only after the OED Director preliminarily screens the information and determines that possible grounds for discipline exist. See 37 CFR 11.22(d).

During the preliminary screening process, an OED staff attorney reviews the allegations to determine whether they implicate any of the Disciplinary Rules of the USPTO Code of Professional Responsibility. To this end, the attorney may seek out additional evidence (review Office records, request additional information from the person making the allegations or from third persons, etc.) to ensure that the matter is disciplinary in nature and the allegations are supported by objective evidence.

The OED's preliminary screening may obviate the need to seek information from the practitioner because the screening often reveals that the allegations do not present a basis for filing a Sec. 11.32 disciplinary action against the practitioner. Under such circumstances, the OED Director closes the case without contacting the practitioner. Hence, the preliminary screening helps ensure that a practitioner is not subjected to a premature request for information or its attendant stress, turmoil, and cost. The screening also ensures that the Office does not expend its limited resources seeking information from a practitioner unnecessarily.

After the preliminary screening, if the OED Director determines that the allegations establish possible grounds for discipline, the OED Director seeks the practitioner's side of the story--the second step prior to filing a Sec. 11.32 action. Specifically, the OED Director requests information or evidence from the practitioner pursuant to Sec. 11.22(f)(1)(ii). The practitioner will then have an opportunity to respond to the allegations levied against him or her. Typically, the OED Director does not and cannot have sufficient information to complete a thorough investigation--the third step--before the practitioner has had the opportunity to present his or her side of the story.

Based on current caseload and staffing levels, the OED Director has set a goal to complete the preliminary screening and issue a Sec. 11.22(f)(1)(ii) request, when warranted, to the practitioner under investigation within 60 calendar days of the initial receipt by the OED Director of information suggesting possible misconduct. OED will allow the practitioner 30 calendar days to provide a complete, written response and, as discussed below, may grant a reasonable request for an extension of time to respond.

A complete response to an initial Sec. 11.22(f) request frequently raises factual issues that require further investigation before the OED Director can determine whether actual grounds for discipline exist. Hence, after the OED Director receives the practitioner's response to the Sec. 11.22(f)(1)(ii) request, the OED Director moves to the third step: conducting a thorough investigation of the allegations to uncover all relevant incriminating and exculpating evidence. The third step is time-consuming because it involves the OED Director undertaking a thorough fact-finding (e.g., reviewing issues raised for the first time by the practitioner, obtaining information from any person who may be reasonably expected to provide information or evidence in connection with the investigation pursuant to Sec. 11.22(f)(iii) and from non-grieving clients pursuant to Sec. 11.22(f)(2)) and performing legal analyses of issues. It is in the interests of the public as well as the practitioner under investigation that OED conduct a thorough investigation prior to determining whether the matter should be submitted to the Committee on Discipline pursuant to Sec. 11.32. Hence, such additional follow-up investigative and legal work can take several months to complete.

After completing an investigation of the allegations against a practitioner, the OED Director has the authority to close the investigation without pursuing disciplinary action, issue a warning to the practitioner, enter into a proposed settlement agreement with the practitioner, or convene the Committee on Discipline to determine whether there is probable cause to file a Sec. 11.32 action against the practitioner. See 37 CFR 11.22(h). Based on current caseload and staffing levels, the OED Director has set a goal to submit a matter to the Committee on Discipline for a probable cause determination--the fourth step--within 10 months of the initial receipt by the OED Director of the allegations that a practitioner engaged in misconduct.

Over the past year, the USPTO OED has issued 38 Disciplinary Orders.  Most of the disciplinary problems come from mishandling of client funds, failure to communicate with clients, unauthorized practice of trademark law (for patent agents), and criminal convictions. However, two recent disciplinary orders relate directly to patent practice decisions relating to difficult issues that regularly arise for patent practitioners. Neither case involves any morality judgment, but both resulted in the (stipulated) finding of a violation of the USPTO's code of conduct.  

Conflict created by Parallel Litigation and Reexamination: One recent order involves a "public reprimand" of John Janka. Janka was put a tough position because his client's patent was being simultaneously litigated and reexamined (inter partes). Janka prepared and caused-to-be-filed an IDS in the reexamination that contained material subject to a protective order in the litigation. In addition, Janka sent the confidential documents to another patent practitioner (and asked him to file the IDS) without first obtaining guidance from the district court regarding the protective order. The district court later ruled that these actions violated the protective order. As part of a settlement, Janka agreed with the USPTO that these actions show a violation of 37 C.F.R. § 10.77(b) (handling a legal matter without preparation adequate in the circumstances).

This is a tough case because Janka is obviously under conflicting duties—to both obey the district court's protective order and to disclose material information to the USPTO. The best course of action in this situation would have been to ask the court to lift the protective order regarding the material information. If the court refuses, the patent attorney may have to withdraw from the case. (As an aside, the patentee won both the litigation and the reexamination).

Submitting IDS without reading documents: In a related OED settlement, William Bollman agreed to a 24-month probationary period. Bollman – himself a very experienced patent prosecutor – was the attorney who actually filed the IDS for Mr. Janka.  Bollman admitted that he did not actually read, review, or inspect the six boxes of documents that he received from Janka and filed at the PTO. The order includes the following statement: 

Pursuant to 37 C.F.R. § 11.18(b)(2)(i)[], a registered practitioner who presents a paper to the Office [implicitly] certifies to the best of his or her knowledge, information, and belief formed after an inquiry reasonable under the circumstances that, inter alia, the paper is not being presented for any improper purpose. A practitioner who submits an information disclosure statement without inspecting the submitted documents -i.e., merely acts as a conduit for another person - is considered to have made a false certification to the Office.

This rule follows former OED director Harry Moatz's 2008 statements regarding the submission of papers without proper inspection by the patent law professional responsible for the filing. 

Have you submitted an IDS without reading and reviewing the submitted documents?

The text of of the rule is provided below.

37 C.F.R. § 11.18(b). By presenting to the Office ... any paper, the party presenting such paper, whether a practitioner or non-practitioner, is certifying that—

(1) All statements made therein of the party's own knowledge are true, all statements made therein on information and belief are believed to be true, and all statements made therein are made with the knowledge that whoever, in any matter within the jurisdiction of the Office, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or knowingly and willfully makes any false, fictitious, or fraudulent statements or representations, or knowingly and willfully makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 and any other applicable criminal statute, and violations of the provisions of this section may jeopardize the probative value of the paper; and

(2) To the best of the party's knowledge, information and belief, formed after an inquiry reasonable under the circumstances,

(i) The paper is not being presented for any improper purpose, such as to harass someone or to cause unnecessary delay or needless increase in the cost of any proceeding before the Office;

(ii) The other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;

(iii) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(iv) The denials of factual contentions are warranted on the evidence, or if specifically so identified, are reasonably based on a lack of information or belief.

Abbott Loses Patent Rights Due to Gap in Consultant Contract

Abbott Point of Care v. Epocal (Fed. Cir. 2012)

Abbott and Epocal both sell products used for point-of-care testing of blood samples. In 2009, Abbott sued Epocal in the Northern District of Alabama alleging infringement of its U.S. Patent Nos. 6,845,327 and 6,896,778 and asking the court to determine the legal title holder of the patents.

The patents list Dr. Lauks as the inventor and were filed in 2001 shortly after Lauks founded Epocal. The USPTO assignment database include a 2003 assignment from Lauks to Epocal and another assignment filed in 2009 shows the invention was assigned from Lauks to Abbott's predecessor company (i-STAT) vis-à-vis a 1984 employment contract. (Lauks himself did not sign another assignment). These assignments foreshadow the dispute: both Abbott and Epocal claim title to the patents.

It turns out that Lauks was an i-STAT employee in the 1980's and up through 1999 (apparently in New Jersey). He resigned in 1999 but took a position from 1999-2001 as a consultant to i-STAT. His employment agreement included a statement that he "hereby assign[s]" to i-STAT all rights to any invention that he "may make or conceive during [his] employment by … or which relate to any present or prospective activities of Integrated Ionics."

In reading this provision, the Federal Circuit first determined that the assignment clause ended in 1999 when Lauks resigned and the new consulting agreement signed by Lauks did not require that IP rights be transferred. And, in fact, the consulting contract included a provision that Lauks could also work on his own behalf. The Federal Circuit found such a clause to be in conflict with an automatic assignment. The court then concluded that - absent an agreement with i-STAT to assign his rights – Lauks was under no obligation to assign his patent rights to the company.

Because the 1999 Consultation Agreement is silent with respect to any assignment of Lauks' rights in inventions, improvements, or discoveries made or conceived during the consultation period, Lauks had no obligation to assign inventions from the consulting period to i-STAT. Thus, as the district court correctly concluded, the contract does not convey all substantial interest in the '328 or '772 patents.

These holdings were stated as being based upon New Jersey law (apparently the site of the contract). However, the court did not cite to New Jersey statute or precedent that would lead to these conclusions.

The appellate panel did look to New Jersey precedent in affirming the district court's refusal to allow Abbott additional discovery regarding the circumstances of the consulting contract. The court found the contract's plain language clear and unambiguous and that additional extrinsic evidence could not change that determination.

Chief Judge Rader penned the majority opinion, which was signed by Judge Lourie. Judge Bryson filed a dissent.

In dissent, Judge Bryson identified some ambiguity in the 1999 consulting contract as to whether the assignment provisions in the prior employment agreements were incorporated by reference. Based upon that ambiguity, Judge Bryson would have allowed Abbott additional rights of pre-judgment discovery.

The case did not address whether Abbott may have "shop rights" to practice the invention.

Estimate: Fewer than 26,000 Active US Patent Attorneys & Agents

by Dennis Crouch

USPTO records identify about 41,800 active registered patent practitioners.  That number is obviously wrong because many folks have retired from the practice of patent law or even passed-away in the many years since the many years since the USPTO last conducted a survey of active practitioners. Because the PTO has no CLE requirement or regular registration fee, non-practitioners often stay on the rolls even when they should have been dropped.

The Office of Enrollment and Discipline (OED) has a new director — William Covey — who has initiated a new survey of practitioners that will attempt to refresh the rolls. The USPTO will begin mailing survey letters later this month to practioners whose registration numbers are below 25,000.  A response must be returned to the PTO within 45–days in order to remain on the rolls.  Questions can be sent to: OED@USPTO.gov.

In addition to this survey, I am looking to find the rough number of patent attorneys that are actively practicing before the PTO.  As a first cut, I decided to identify all of the registered practitioners associated with one or more recently filed patent applications.  To do this, I pulled up the PAIR files of 47,000 of the patent applications that published in the calendar year 2011. (This represents about 15% of the applications published that year).  Using those documents, I identified all of the patent attorneys associated with each application (usually by PTO customer number). 

It turns out that this group of 47,000 patent applications is associated with about 21,500 patent practitioners — just over half of the 41,800 practitioners on file at the PTO.  Based on my rudimentary stats, this projects-out to an estimate of fewer than 26,000 patent practitioners associated with at least one application published in 2011.

As an aside, about 82% of these active practitioners are registered as attorneys and the remaining 18% as agents.  Not surprisingly, agents have a much greater drop-out rate than attorneys. About 8% of the applications listed no professional.

Notes:

• I'm planning to work these numbers up a couple of different ways and would appreciate comments or suggestions. dcrouch@patentlyo.com
• If anyone would like to help with the population estimate based on my sample, please let me know. The problem is a bit tricky because each attorney may be associated with any number of applications and each application may be associated with any number of attorneys. You can download the raw data listing each attorney for each application in my sample. [qryExportFile.zip]

  

Streck v. Research Diagnostic Systems: Dismissal of Invalidity Counterclaims, Written Description, and Enablement

By Jason Rantanen

Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2011) Download 11-1044
Panel: Newman, O'Malley (author), and Reyna

Streck, Inc. sued Research & Diagnostic Systems, Inc. for infringement of three patents relating to hematology control technology using integrated reticulocyte controls.  In response, R&D counterclaimed for declaratory judgment of noninfringement and invalidity.  During the district court litigation, R&D argued that the claims were unsupported by adequate written description, that they were not enabled, and that it was entitled to priority.  The district court granted summary judgment in Streck's favor on written description, JMOL in Streck's favor on enablement, and a jury ruled for Streck on the issue of priority.  Following trial, the district court entered a permanent injunction.

Dismissal of Invalidity Counterclaims:  On appeal, the CAFC concluded that the district court properly dismissed R&D's invalidity counterclaims against unasserted claims.  During the litigation, Streck submitted a series of infringement contentions in which it progressively limited the specific claims asserted, while R&D amended its invalidity contentions to ultimately encompass all but one claim of the patents-in-suit.  When R&D moved for summary judgment of invalidity on two of the unasserted claims, the district court dismissed the invalidity counterclaims for those claims citing a lack of "reasonable apprehension" of suit on R&D's part as to those claims.

On appeal, the Federal Circuit agreed with the District Court's dismissal.  Even in the wake of MedImmune, a declaratory judgment plaintiff must show the existence of a case or controvery, as evaluated on a claim-by-claim basis. Drawing upon the reasoning of a New Jersey district court opinion addressing the same issue, Hoffman-La Roche Inc. v. Mylan Inc., No. 2:09cv1692, 2009 U.S. Dist. LEXIS 114784, at *17-18 (D.N.J. Dec. 9, 2009), the Federal Circuit held that "consistent with MedImmune, a counterclaimant must show a continuing case or controversy with respect to withdrawn or otherwise unasserted claims."  Slip Op. at 20.

The CAFC further concluded that R&D failed to satisfy this requirement.  Although the district court technically erred by relying exclusively on the reasonable apprehension of suit test, "there is no evidence that R&D met its burden of showing a continuing case or controversy with respect to the unasserted claims."  Id. at 23. Nor was the court persuaded by R&D's arguments based on Scanner Technologies Corp. v. ICOS Vision Systems Corp., 528 F.3d 1365 (Fed. Cir. 2008):

"unlike the situation in Scanner Technologies, where all of the claims were at issue and were never withdrawn or altered by either party, here, both parties were on notice from the start of litigation that the scope of claims at issue was only a subset of the full patents-in-suit and, significantly, did not include Claim 3 of any patent."

Id. at 22.

Written Description Satisfied: Streck v. Research Diagnostic is also notable for its reliance on the knowledge of a PHOSITA in the context of written description.  In this instance, the asserted claims covered both the use of a "true" reticulocyte or an analog of a reticulocyte in the claimed control composition.  The two parties' technical lineage differed based on this distinction: the inventor of Streck's patents used only a reticulocyte analog when he reduced the invention to practive, while R&D developed its composition using a true reticulocyte.  Leveraging this distinction into a written description argument, R&D contended that the patents-in-suit failed to provide adequate written description for a true reticulocyte integrated control.

On appeal, the CAFC agreed with Streck and the district court that the patents contained sufficient disclosures to support claims encompassing the use of true reticulocytes when combined with the knowledge of a PHOSITA, namely, that "use of true reticulocytes in stand-alone controls was well-known in the prior art."  Slip Op. at 28.  Based on the disclosures of the patents, "one skilled in the art would have recognized that the claimed integrated controls could be made using either true reticulocytes or reticulocyte analogs." Id.

Enablement: Focus on the "Novel Aspect" of the patents-in-suit: The CAFC also affirmed the district court's grant of JMOL of enablement, agreeing with Streck's claims that the "novel" aspect of the invention was an integrated control using both reticulocytes and white blood cells and that true reticulocytes are "virtually indistinguishable" from analogs.  While "the specification, not the knowledge of those skilled in the art, 'must supply the novel aspects of an invention,'" id. at 32-33 (quoting Automotive Technologies v. BMW, 501 F.3d 1274 (Fed. Cir. 2007), the court apparently did not view the type of retriculocytes as a novel aspect of the invention in this case.  "Here, there was unrebutted evidence that true reticulocytes and Ryan’s reticulocyte analogs 'work in exactly the same way in a hematology control, and are virtually indistinguishable, even to one skilled in the art.'”  Id. at 33.

The CAFC also affirmed on the issue of priority, citing its earlier and controlling decision in Streck, Inc. v. Research & Diagnostic Systems, Inc., 659 F.3d 1186 (Fed. Cir. 2011), and concluded that the wording of the permanent injunction was not overly broad. 

Patently-O Bits & Bytes by Lawrence Higgins

Kodak accuses HTC and Apple of patent infringement

• Kodak is trying to prohibit Apple's iPhones, iPads, and iPods and HTC's smartphones and tablets, from entering the US because they claim that the products infringe their patents on its digital imaging technology. Kodak has filed suit at the ITC and in the Western district of New York against Apple and HTC. [Apple Complaint][HTC Complaint] 
• Kodak has been in the news lately with the threat of bankruptcy. However, Kodak has a very large number of patents in their portfolio and from the looks of the pending patent infringement suits; they plan to enforce their patents. This could be the start of a busy year for Kodak and their patent attorneys, if they plan on going after all potential infringers. Could Kodak's patent portfolio potentially save the company from bankruptcy? Only time will tell.

USPTO will host educational roadshows

• USTPO officials will travel to seven educational roadshows regarding the America Invents Act, allowing the public to speak with the USPTO officials about the implementation of the Act. Discussions will mainly focus on the USPTO's recently proposed rules regarding provisions of the Act. The locations that USPTO officials will hold the roadshows are Alexandria, VA, Sunnyvale, CA, Salt Lake City, Dallas, Ft. Lauderdale, Boston, and Chicago. [Link]

The Nuts and Bolts of Federal Circuit Practice

• On January 19, at 3p.m. eastern time, the Federal Circuit Bar Association will hold the Nuts and Bolts of Federal Circuit Practice. The webcast will provide a practical "How To" discussion of the rules and issues that practitioners and companies must face when appealing to the Federal Circuit. Many questions will be answered such as: How does the Court handle the many highly technical issues that come before it? What are the time limits for filing a notice of appeal and briefs? The panelists for the event are Pamela Twiford, Jan Horbaly, and James Benjamin. [Link]

Patent Jobs:

• A patent firm is seeking a contract patent attorney/agent with at least 4 years of experience and a background in CS. (telecommuting option) [Link]
• Stoel Rives is seeking a patent attorney with 3-5 years of experience to work in their Portland or Seattle office. [Link]
• NSIP Law is searching for a patent attorney with at least 3 years of experience to work at their Washington DC office. [Link]
• Hiroe & Associates is seeking a patent attorney with 2-5 years of experience to work in Japan. [Link]
• Alston & Bird is seeking a patent prosecution associate with 2-3 years of experience and a background in electrical engineering to work at their Charlotte office. [Link]
• Google is searching for a patent litigation counsel with 3 years of litigation experience to work at their New York office. [Link]
• The USPTO is seeking patent examiners with engineering backgrounds and experience in the patent field. [Link]
• Ice Miller is looking for a patent attorney with 2+ years of experience to work at their Indianapolis office. [Link]
• Ice Miller is seeking a 2012 law school graduate eligible to sit for the patent bar. [Link]

Upcoming Events:

• What You Need to Know About… The New ND Cal Patent Pilot Program, session will be hosted by Stanford Law School on January 18. Guest include Chief Judge Randall Rader, Jeff Fehervari, Laura Storto, Judge Nathanael Cousins, Judge Elizabeth Laporte, Judge Lucy Kohand many others.
• The American Bar Association Section of Intellectual Property Law, Young Lawyers Division, ABA-IPL Young Lawyers Action Group and the ABA Center for Continuing Legal Education will sponsor a webinar on January 20 at 1 p.m. Eastern time. The webinar, Prosecution Strategies: Tackling USPTO Obviousness Rejections will explore how the KSR standards have been applied in various technology areas and provide guidance for effective avenues of argument based on the technology area. Speakers include: Janet Hendrickson, Gregory Hillyer, Michelle O'Brien, and Zachary Stern. [Link]
• The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
• The 7^th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
• LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]

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

Celsis: Federal Circuit Upholds Preliminary Injunction over Dissent

by Dennis Crouch

Celsis In Vitro v. CellzDirect and Invitrogen (Fed. Cir. 2012)

This case is important because it provides an important incremental analysis of when a validity challenge is sufficiently substantial to lead a court to reject a motion for preliminary injunctive relief.

Majority opinion by Chief Judge Rader (author) and Judge Prost. Dissent by Senior Judge Gajarsa.

Celsis owns Patent No. 7,604,929 — claiming as its invention a method and system of freezing and preserving human liver cells using multi-cryopreservation.  In a split opinion, the Federal Circuit affirmed the lower court's preliminary injunction order stopping the defendants from practicing the invention. 

When appealed, a preliminary injunction is reviewed for abuse of discretion that requires clear error, either in “judgment in weighing relevant factors” or in the exercise of “discretion based upon an error of law.”  A decision on preliminary relief is immediately appealable. 

Dissent on Substantial Question of Obviousness: Writing in dissent, Judge Gajarsa argued that this case is not amenable to the “extraordinary and drastic remedy of a preliminary injunction” because the defendants “raised a substantial question as to the validity” of the asserted patent.  Focusing on the burden of proof, Judge Gajarsa noted that a preponderance of the evidence is sufficient to prove the “substantial question” and that “it is unnecessary to prove a substantial question of invalidity by clear and convincing evidence.”

The the key dispute between the majority and dissent was on the issue of obviousness.  Judge Gajarsa wrote:

In my judgment, the district court abused its discretion in finding that Celsis had demonstrated a likelihood of success on the merits because the claimed invention is nothing more than a repetition of steps already known in the art.  Moreover, the majority perpetuates this error, and in so doing applies the wrong standard for obviousness and rationalizes the issuance of the preliminary injunction because it would prevent competition with a patented process which may be proven to be invalid. 

In particular, Judge Gajarsa argued that the district court and majority improperly rejected the obviousness argument by seeking some teaching or suggestion (TSM) in the prior art that would lead someone to attempt to combine the known elements of the claimed invention.

In particular, the majority wrote that the key prior art does not disclose “micro-cryopreservation” as claimed nor does it suggest this step as a solution to problems known in the art.  Chief Judge Rader wrote “This court has not seen [the Defendants] identify any teaching, suggestion, or motivation in the [prior art] that multiple rounds of freezing would somehow increase rather than decrease cell viability.”  The majority agreed with the lower court that the obviousness argument lacked credibility because "not a single one of that astonishingly large body of literature was devoted to the subject of multi-cryopreservation of hepatocytes."  Judge Gajarsa felt this fact was inconsequential because multi-cryopreservation simply involved repeating steps that were already known.  

DDC Comment: The TSM test for combining prior art was eliminated by the Supreme Court KSR v Teleflex in much the same way that the MOT test for patentable subject matter was eliminated in Bilski. In both cases, the strict tests remain probative, if inconclusive, tools.  However, in the context of a preliminary injunction a defendant's failure to provide a motivation to combine prior art may well be sufficient find a patent “likely nonobvious.” 

Although identified as a “factor”, the likelihood of success factor turns out to be a necessary element of a successful motion for preliminary relief.  In other words, if the plaintiff is unable to prove that it has a sufficient likelihood of success on the merits of the case then the district court will deny the preliminary injunction motion.  This case provides some assistance in determining when that threshold has been met.

Motivation versus Long Felt Need:  Chief Judge Rader is known for playing logical games with the secondary indicators of nonobviousness. Here, the accused infringers provided evidence of a “market need” for the solution and argued that those market forces would prompt the variation found in the patent.  That argument follows the statement in KSR that “market forces can prompt variations” of known design elements.  Judge Rader flipped the argument and instead noted that such market need is when “properly linked to the claimed invention, is actually probative of long felt need under objective criteria analysis and supportive of non-obviousness.”

Preliminary Injunction Standards: A preliminary injunction is decided on a four-factor test that is almost identical to the test outlined for permanent injunctions in eBay v. MercExchange.  Namely, a court must consider (1) likelihood of success on the merits, (2) irreparable harm, (3) balance of hardships, and (4) public interest.  In the context of permanent relief, the likelihood of success on the merits is no longer a factor because permanent relief is only determined after the patentee wins on the merits. In eBay, the Supreme Court included an additional factor –  that monetary damages are insufficient.  However, that factor is likely wholly subsumed by the “irreparable harm” factor.

Here irreparable harm was shown by expert testimony and evidence of "price erosion, damage to ongoing customer relationships, loss of customer goodwill (e.g., when an effort is later made to restore the original price), and loss of business opportunities." And, the public interest factor is normally presumed to be met in patent cases because the public interest favors enforcement of valid patents.

New Detroit Office

The USPTO has announced that the new Detroit Branch of the USPTO will be located in the old Parke-Davis Lab on River Place Drive and next to the Detroit Riverwalk. The office is expected open by July 2012 and emply about 100 individuals –  mainly patent examiner.  Prospective employees can e-mail detroitHiring@uspto.gov.  The new site is next-door to an Omni Hotel.

The City of Detroit has a population of about 700,000 -- that includes only 21 active patent practitioners. General Motors is the only entity with a significant patent-attorney presence in the city proper.  However, the surrounding suburban area is thick with patent law professionals.  The Detriot site makes economic sense because the of the access to highly-trained but under-employed engineers, low cost of living, and low cost of commercial real estate. 

The USPTO is in the process of selecting two additional satellite offices.  Public comments on the location of the next two satellite offices is due by January 30, 2012 to satelliteoffices@uspto.gov.

 

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Preliminary Report on Track I: Prioritized Patent Examination Program

By Dennis Crouch

The USPTO's new Commissioner for Patents is Peggy Focarino. In a recent post to Dir. Kappos Blog, Commissioner Focariono provided a report on the PTO's "Track I Prioritized Patent Examination Program." Under Track I, a patent applicant can complete a simple one page form and pay a $4,800 fee to have their patents processed quickly. The goal is that patents will be "processed to completion" within 12-months of an application entering the Track I program. Track I was authorized by the Leahy-Smith America Invents Act that was enacted on September 16, 2011. The program became effective on September 26, 2011.

As of January 3, 1,694 Track I petitions applications had been filed and the Office has granted 99% of the petitions it has decided. First office actions are being sent – on average – about one month after approval of the petition. So far, the longest delay has been 70 days from grant of the petition to mailing of the first office action.

* * * *

This morning I identified the first Track I patent issued thus far – U.S. Patent No. 8,094,942 owned by Google and directed to a method and system of character recognition for overlapping textual user input. The application was filed on September 30, 2011 along with a Track I request. The request was granted on November 1, 2011. The applicant then filed an IDS and a proactive terminal disclaimer associated with a parent case. The case was handled by a primary examiner who had handled the parent case and who allowed the claims with examiner-proposed amendments following an interview.

* * * *

Commissioner Focariono added the following note to her post: "For those applicants or practitioners concerned about whether Track I applications will be treated differently from others in terms of grant/denial rate, our examiners are being given exactly the same training, credits and incentives to accurately examine Track I cases as for all other cases, and no training, credits or incentives are being given to bias examiner decisions in any way. And as for the data, given the statistics provided above, so far there is no basis to believe there is any difference in result for Track I versus non-Track I processing, other than the significantly faster responsiveness."

USPTO Notice and Comments

The USPTO currently has nine published notices and proposed rule changes that are open for comment. Most of these involve changes to USPTO procedure that implement aspects of the Leahy-Smith America Invents Act (AIA). Under the AIA, the USPTO has been granted broader authority through this notice-and-comment period.

• Proposed Rule: Eliciting More Complete Patent Assignment Information – Comments Due January 23, 2012. The USPTO is proposing a rule that would require the timely recordation of patent and application ownership and changes to ownership. [DDC: This appears to be a straw-man proposal and will likely be significantly changed or dropped based upon public input.]
• Proposed Rule: Revision of Patent Term Adjustment Provisions Relating to Appellate Review – Comments Due January 27, 2012. [DDC: The new rule would largely lengthen PTA, but in some circumstances would reduce PTA depending upon the results of your appeal to the BPAI.]
• Notice: Request for Comments on Additional USPTO Satellite Offices for the Nationwide Workforce Program – Comments Due January 30, 2012. The USPTO is planning to open additional satellite offices in 2012-2013 and is seeking input on the proper location.
• Proposed Rule: Changes to Implement the Pre-issuance Submissions by Third Parties Provision of the Leahy-Smith America Invents Act – Comments Due March 5, 2012. Third party submissions will be allowed beginning in September 2012. The proposed rules sets up requirements that such a submission must include "a concise description of the asserted relevance of each document submitted." The proposed rule suggests that a fee of $180 for the submission of up to ten documents. In order to promote submissions, the Office has proposed a fee exemption for the first submission by each third-party for each application (with a limit of three documents in that submission). Under the new rules, submissions must be filed by the later of: (i) Six months after the date on which the application is first published by the Office or (ii) The date the first office action.
• Proposed Rule: Implementation of Statute of Limitations Provisions for Office Disciplinary Proceedings – Comments Due March 5, 2012. The AIA sets a new statute of limitations for USPTO disciplinary proceedings at the earlier of (i) 10 years after the date on of the alleged misconduct; or (ii) one year from the date on which the misconduct was made known to an officer or employee of the USPTO. The rule proposed by the PTO would further define the one-year deadline as being triggered only once the USPTO has completed a preliminary review of the case and received a "complete, written response" from the accused practitioner. Depending upon the circumstances, the one-year deadline may otherwise be triggered by the OED's receipt of a certified copy of a record of censure from another Bar or conviction of a serious crime. [DDC: The USPTO's interpretation of the one-year deadline appears to be in tension to the text of the new statute, but the PTO may be fine because of the deference for OED matters under Lavacara v. Dudas.]
• Proposed Rule: Changes to Implement Miscellaneous Post Patent Provisions of the Leahy-Smith America Invents Act – Comments Due March 5, 2012.
• Proposed Rule: Changes to Implement the Inventors Oath or Declaration Provisions of the Leahy-Smith America Invents Act – Comments Due March 6, 2012.
• Notice: Changing the USPTO's Collection of Information in Matters Related to National Medal of Technology and Innovation Nomination Application – Comments Due February 6, 2012.
• Notice: Changing the USPTO's Collection of Information in Matters Related to Patent Appeals – Comments Due March 5, 2012.

Chief Judge Rader & Band DeNovo to “Rock” San Diego’s House of Blues

Guest Post by Ted Sichelman, Professor, University of San Diego School of Law

Aside from his international and national speaking tours, Chief Judge Rader recently embarked on a musical “tour” with his band, DeNovo. After playing a few IP-related events and a recent Federal Circuit holiday party, DeNovo—which also includes Professor Sean O’Connor of the University of Washington and Matthew Bryan of WIPO—is hitting the big time by playing at the House of Blues in downtown San Diego on Thursday, January 19. Bands from NuVasive and Qualcomm will open, and Dean for IP Studies at George Washington School of Law and former SG of the USPTO, John Whealan will MC. The bands are performing as part of University of San Diego’s Second Annual Patent Law Conference (click here for more info), taking place Friday, January 20. Chief Judge Rader will give the keynote address—other panelists include Judge Marilyn Huff, Judge Janis Sammartino, and Magistrate Judge Cathy Ann Bencivengo (Southern District of California), as well as Professors Colleen Chien, Mark Lemley, Robert Merges, Shine Tu, and John Whealan, and distinguished local attorneys.

Patently-O as Incontestable?

My mark “PATENTLY-O” was registered with the USPTO back in January 2006. That means that I am about to hit the deadline for filing a Section 8 trademark renewal application (declaration of use –  $100 fee). I'll also be eligible to file a Section 15 declaration of incontestability ($200 fee).

Here's the question: (1) Should I file these? (2) Should I file for protection internationally as well?

Reviewing the New USPTO Post Grant Review System with Reference to EPO Oppositions

by Dennis Crouch

Time is flying and the newly revamped host of USPTO administrated post-grant patent procedures is on its way.  As we speak, the USPTO is continuing to develop its rules and internal operating procedures for handling the new options.  This post focuses on the new post-grant review (A.K.A. opposition proceeding), which is being created by splitting the current inter partes reexamination system into two parts: post-grant review and inter partes review.  Current reexamination practice focuses solely on questions of novelty and obviousness based upon prior art in the form of printed publications. The new post-grant review system broadens the bases for review to virtually any validity challenge.   However, post-grant reviews will only be available during a 9–month window following patent issuance. 

Full implementation of the post-grant review system will not be until 2013 & 2014 because the review is only available for patents with a priority date on or after March 16, 2013. The 2013 date is also the implementation date of the new Filing-Date-Priority rules. We will, however, get a preview of the PGR system once it becomes available to go against Business Method patents beginning September 16, 2012.

EPO Opposition Popularity: Europe has a popular opposition system and there is a natural comparison between our new post-grant review and their oppositions.  Around 5% to 7% of EPO-issued patents are opposed during the 9–month post-grant window.  This figures are an order-of-magnitude greater than the proportion of US patents that go through the inter partes reexamination system.

Obstacles to US Post-Grant Popularity: I do not expect that the US system will see the same level of utilization –  at least for some time.  The major legal impediment to filing a post-grant review is the tough new threshold that requires a showing “that there is a reasonable likelihood that the petitioner will prevail with respect to at least one claim challenged.”  If the threshold is not met, the petition for review will be rejected. This threshold is substantially greater than the USPTO's historic standard requiring a “substantial new question of patentability.” The EPO does not have a similar threshold. Rather, so long as certain formalities are met, the opposition proceeds with a full review with opportunity for appeal, etc.  That said, the EPO opposition proceeding results in cancellation or at least amendment in about 75% of cases.

The other major roadblock to popularity for US post-grant review will be cost.  Current behind-the-scenes discussion peg the USPTO filing fees at over $40,000 for a post-grant review. The equivalent fee for an EPO opposition is under $1,000 (€705).  The availability of limited discovery suggest that the legal fees for post-grant oppositions will also be fairly high.

Patent Law Blogs and the ABA

I am pleased to announce that Patently-O was selected by the American Bar Association (ABA) Journal as their favorite IP Law blog for 2011. It is an honor that Patently-O has been chosen as one of the top-100 legal blogs by the ABA Journal each year for the past five years. This year, the list includes two patent law focused blogs: Patently-O along with Gene & Renee Quinn's IP Watchdog. Gene was running his popular site and working as a law professor even before I started law school. IP Watchdog was a great resource for me during law school both for Gene's straightforward explanation of the law as well as his practical guidance for those new to the profession.

Along with the listing of top-100 blogs, the ABA also conducts a public voting for the most popular blogs. In 2010, IP Watchdog was the winner, this year Patently-O won with a 49% to 41% final vote. Thanks to everyone who supported our cause! It is a great sign of the community and cooperative spirit associated with patent law professionals that both of our sites received more votes than 99% of the other law blogs. (I.e., only one site received more votes).

Of course, the Patent Law "blog-o-sphere" is not limited to our two sites. A few excellent sites that would have made my list include PatentDocs (Noonan, Zuhn, et al.), FOSSPatents (Mueller), IPKat & PatLit (Phillips, et al.), Biotech IP Blog (Holman), Inventive Step Blog (Osenga), PharmaPatents (Brinckerhoff), IP Spotlight (Singer), Just-a-Patent-Examiner, Patent Librarian (White), Green Patent Blog (Lane), All things Pros (Hazzah), TacticalIP (ZWM), Kappos Blog (Kappos), Gray on Claims (Gray), and Patent-Post-Grant, Chicago IP Litigation (Donoghue), SpicyIP, and ReexamAlert. (I apologize for missing a few good ones here). In my view, two holes are the absence of Joe Mullen's Prior Art blog and Frankel's Patent Troll Tracker. Although they don't have "blogs" per se, Hal Wegner and Greg Aharonian both deserve honorable mention here as the Deans and perhaps the Dons of patent blogs.  

2011 Patent Grants: A New Record

By Dennis Crouch

The USPTO issued more utility patents in calendar year 2011 than in any year in history. The 2011 total – just shy of 225,000 issued patents – is only a small increase over 2010, but towers above all other historic figures. The previous record was set in 2006 with about 173,000 issued utility patents. The dramatic rise in issuance rate is not tied directly to an increase in filings (although there has been a small increase in new application filings). Rather, the two-year increase appears to be the result of regime changes instituted by USPTO Director David Kappos who took office mid-year 2009 after being nominated by President Barack Obama.

Notes:

• 2010 Patent Grant Rate
• Are Patent Filings Increasing or Decreasing?

Loser Pays: Federal Circuit Affirms $4 Million Award of Attorney Fees and Costs

By Dennis Crouch

MarcTec LLC v. Johnson & Johnson and Cordis Corp. (Fed. Cir. 2012) (O'Malley, J.) on appeal from the Southern District of Illinois

In this decision, the appellate panel (Judges Newman, Prost, and O'Malley) focused on the question of whether the district court properly found the case "exceptional" leading to the award of attorney fees and expenses of over $4 million. Its answer –  Yes.

The patents in suit are directed to various surgical implants heat-bonded to antibiotic-containing polymer material. The district court construed the term "bonded" in a way that excluded the accused Cordis devices and thus resulted in a summary judgment of non-infringement. That decision was affirmed on appeal in 2010.

On remand, the district court determined that the case was "exceptional" because the patentee MarcTec's attorneys had "engaged in litigation misconduct." The particular misconduct was that MarcTec alleged theories of claim construction and infringement that were clearly incorrect.

MarcTec engaged in litigation misconduct when it: (1) misrepresented both the law of claim construction and the constructions ultimately adopted by the court; and (2) introduced and relied on expert testimony that failed to meet even minimal standards of reliability, thereby prolonging the litigation and the expenses attendant thereto.

Regarding its claim construction argument, the court found that MarcTec had improperly argued for a plain meaning interpretation of the term “bonded” despite clear language in the specification and prosecution history that contradicted the plain meaning being advanced. In the process, MarcTec misrepresented the law on claim construction and encouraged the court to ignore the specification unless it found an insoluble “ambiguity” in the claim language.  This mischaracterization of the law coupled with its unsupported allegations of infringement was sufficient to support the conclusion of litigation misconduct.

Patented or Described in a Printed Publication

By Dennis Crouch

The newly revised 35 U.S.C. § 102 states that no patent shall issue if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…" 35 U.S.C. §102(a).

My question for the hour is whether (or not) the word "patented" in this fundamental provision is entirely superfluous. In other words, when is a claimed invention "patented" but not described in a printed publication? I should note at this point that the pre AIA Section 102 also includes the statement that an invention is not patentable if it was already "patented or described in a printed publication."

Patented but not Published: It is largely safe to assume that patents are published and, therefore, any disclosure found in a patent should also be considered to be "described in a printed publication." A narrow exception to this aforementioned assumption can be derived from regular SNAFUs that occur in patent offices around the world that allow for patents to issue without actually being published. Historically, some countries also granted patentee's a period of post-grant secrecy. US courts have ruled that these foreign patents still count as patented under the statute so long as the secrecy is only temporary and the patent is eventually and meaningfully "laid open for public inspection." See In re Kathawala, 9 F.3d 942, 28 USPQ2d 1789 (Fed. Cir. 1993) and In re Carlson, 983 F.2d 1032 (Fed. Cir. 1992). The statute covers patents issued in any country and because the US has no direct control over how any particular country publishes its patents, the "patented" clause has the potential of potentially becoming meaningful if countries decide to again limit publication.

Patented but not Described?: There is also some potential that, even when a patent is published, a particular element in the prior art will covered by the patent claims but not sufficiently described to qualify under the "printed publication" leg of the clause. The enablement and written description requirements of 35 U.S.C. § 112 (as well as their worldwide equivalents) largely eliminate this possibility. However, the truth is that patents regularly issue that are directed to particular inventions but that are not fully enabled by the specification. In those cases it is quite possible that an invention be "patented" without being "described in a printed publication." (Of course, this may be unlikely because US courts have placed such a low enablement requirement on prior art).

Thoughts?

2011 Recap: The Practically Important Elements of the America Invents Act of 2011

As a new year begins, Paul Morgan reflects on the practical importance of the Leahy-Smith America Invents Act of 2011 – the major patent reform effort that was enacted in September 2011. Although admittedly oversimplified (like any short-list), Paul's list provides some food for thought for patent strategists. He looks forward to comments.

By Paul Morgan

1. Regarding the hyper-hyped "first inventor to file" replacing of "first to invent" -- the number of situations in which two different parties file patent applications on the same or substantially the same invention, and the second to file obtains valid dominant patent claims, is miniscule (now less than 20 a year). Cases involving invention "derivation" are a small percentage of even that miniscule number. In other words, the removal of alleged prior "invention date" arguments is not a significant AIA change.

2. The most significant AIA changes, which will affect almost every patent applicant, are in the definitions of what counts as prior art. The AIA provides a considerable simplification (albeit with a few ambiguities). Also, most prior art will now become instant "bars-to-patentability." U.S. application foreign priority filing dates and foreign public disclosure dates both becoming U.S. prior art dates will provide a significant prior art increase. The ending of PTO Rule 131 alleged prior invention dates declarations "swearing behind" earlier prior art dates will have a limited effect on some patent grants, but little or no effect on successfully litigating patents. [Rule 131 declarations are ex parte, uncontested, and often inadequately examined, so they rarely survive litigation challenges and easily raise inequitable conduct issues.]

3. Delaying filing patent applications after publicly disclosing one's invention is foolishly dangerous now, and will remain so. It will also continue to destroy foreign patent rights. There is a [sole remaining] one year "grace period" for doing that, but that grace period is ambiguous as to its disclosure extent requirements and effect. Delaying the filing of at least provisional applications for new products still under development will become more dangerous even if kept secret, due to the above changes in prior art and its effective dates.

4. The AIA significant increases the value of trade secrecy protection (instead of or even in addition to patenting) for any inventions which can be kept secret while being commercially exploited. There is potential dual IP protection from the AIA elimination of "best mode" defenses. Even more so if disputed ambiguities in AIA 102(a)(1) are held to overrule the long-established Metalizing Engineering doctrine that "forfeits" patenting after having already commercially exploited an invention, which would allow tacking on full term patent protection after unlimited years of trade secrecy protection. A rather surprising impact of "patent" legislation.

5. The ability to eliminate any inequitable conduct defense before patent litigation is provided in the new "Supplemental Examination." [An ex parte reexamination solely for patent owners to request and participate in, and thus a potentially powerful new tool for patent enforceability, although its PTO rules and actual usage remain to be seen.]

6. Ending the "false marking suits" plague and the naming of numerous defendants in the same patent suit [to avoid venue transfers] is already accomplished. Also, there is a new "virtual" marking system that really ought to be used.

Finally, the practical effects of many other text-extensive AIA changes, such as the new or amended and Board-run inter partes reexaminations and 9 month only PGR opposition systems, are too soon to predict. Especially given their potentially dangerous estoppels, predictable higher costs, un-issued PTO rules, and the limited number of them that the PTO will accept each year.

Judge Newman Rejects Reexamination following Validity Verdict (in Dissent)

by Dennis Crouch

There is a significant and growing overlap between patents in reexamination and patents in litigation.  These parallel processes raise practical issues priority and precedence between decisions by a court compared with actions by an executive agency.  In her recent dissent in the appellate decision of In re Construction Equipment Company (CEC), —- F.3d ----, 2011 WL 6224539 (Fed. Cir. 2011), Judge Newman argued that a reexamination proceeding requested by an accused infringer (PowerScreen) after a court had already finally rejected the accused infringer's obviousness defense should be considered an an unconstitutional violation of separation of powers and a violation of principles of res judicata and issue preclusion.  The majority (Judges Prost and O'Malley) affirmed the PTO determination on reexamination that CEC's claimed invention is obvious and therefore unpatentable.

The facts of the case are simple:

Litigation: In 1996, CEC sued PowerScreen for infringement. PowerScreen argued that the patent was invalid as both obvious and anticipate. However, the district court rejected those arguments and upheld the patent's validity and issued a permanent injunction. The Federal Circuit affirmed that decision in 2000. Powerscreen then unsuccessfully petitioned the Supreme Court for a writ of certiorari.

Reexamination: In 2007, PowerScreen decided to take another bite at the apple and filed a reexamination request - identifying the same prior art references rejected in the district court decision as well as a few others. See Reexam No. 90/008,447 (Fed. Cir. 2011).  The examiner rejected the claim, BPAI affirmed, and CEC appeal to the Federal Circuit. 

Back to Litigation: Based upon the reexamination results, PowerScreen would like for the district court to lift the permanent injunction.

Judgment:

The Majority rejected Judge Newman's contentions largely based upon the Federal Circuit's 2008 Swanson decision.  In that case, the court allowed a reexamination to proceed even though the requesting party had unsuccessfully asserted some of the same prior art in litigation of the same patent.  There, the court explained the general principle that issue preclusion does not apply to patent validity judgments (although it does apply to patent invalidity judgments).

Open door to estoppel: Although the majority agreed that the patent was properly invalidated during the reexamination, it refused to opine on whether the adjudged infringer “might or might not be entitled to seek abrogation of the injunction” based upon the reexamination results.

Invalidity affirmed.

Notes on the Case:

• As an aside, at oral arguments, Judge O'Malley asked the patentee to explain the “points of novelty” of the invention.
•  Scott A. McKeown writes that under this case “the infringer could attempt to 'undo' the effect of the earlier, final, court judgement by invalidating the patent via the EXP filing.”
• Michael Barclay writes “Judge Newman sure likes patents.”
• PHawk writes that the “ruling is merely exemplary of the present policy to eviscerate patent protection for all but large corporations.”

Guest Post: Supplemental Examinations and the Client-Practitioner Relationship

Guest Post by Professor Lisa A. Dolak

Pursuant to the America Invents Act, supplemental examination will be available as of September 16, 2012.  Patent owners will be able to ask the U.S. Patent and Trademark Office “to consider, reconsider or correct” information that was not considered (or was inadequately considered) during a prior prosecution.  And the courts will be barred from holding a patent unenforceable based on information that was considered during a supplemental examination (and any resulting USPTO-ordered reexamination).

The introduction of supplemental examination raises many questions, and our understanding of the implications of this new opportunity will develop as the USPTO rule-making unfolds and as patent owners, litigants and the courts gain experience with it.  But some potential implications concern the relationship between practitioners and their clients, and may prompt new thinking about that relationship on the part of each.

Inherent in the design of supplemental examinations is the opportunity for the patent owner to liberate the patent from any taint resulting from misconduct in its procurement.  The supplemental examination proceeding is designed, in fact, to divorce the patent owner’s property right from any actual or alleged past misconduct on the part of the patent owner or its representative.  In particular, as illustrated by the legislation’s “carve out” for USPTO-detected “material fraud”, the enforceability of a patent that has undergone supplemental examination is a separate issue from the obligations of registered practitioners, inventors, and others who participate substantively in patent prosecution to disclose (and refrain from misrepresenting) known material information to the USPTO.   It is this opportunity to detach the enforceability of the patent from any misconduct in its procurement, in particular, that has the potential to impact the client-practitioner relationship.

From the perspective of the patent owner, supplemental examination provides an opportunity to have the USPTO consider, reconsider or correct information relating to patentability, and to remove that information as a potential basis for a viable inequitable conduct challenge in the courts.  In some cases, at least, it can be expected that the patent owner’s primary or even sole consideration, then, will be the “cleansing” of the patent.

However, as noted above, the very legislation that creates this opportunity for patent owners requires the USPTO to refer suspected material fraud to the United States Attorney General.  And, as is expressly preserved by the AIA, the USPTO retains its authority to discipline registered practitioners.  Thus, where misconduct such as an intentional candor violation did occur or might reasonably be suspected to have occurred, supplemental examination could lead to disciplinary or even more serious consequences for practitioners.  Accordingly, the interests of patent owners and the practitioners who assisted in the procurement (or a prior examination) of the patent as they relate to the use of supplemental examination have the potential to diverge – significantly.

For those patent owners who are themselves not potentially subject to criminal or disciplinary investigation or sanction, this possibility should not present a problem.  Patent owners are free, of course, to hire different counsel for supplemental examination than they used to prosecute the patent in the first place.  And, given that deceptive intent is irrelevant to supplemental examination and that any consequences for misconduct unearthed in supplemental examination will effect only the person(s) suspected of being involved in that misconduct, a patent owner (it appears) need not be concerned about whether a supplemental examination request suggests such misconduct.  But practitioners may find such a situation disconcerting, as they may have concerns about being thrown under the proverbial bus, even where the patent owner did not so intend.

For one thing, by definition, a practitioner who is not asked file a supplemental examination request relating to a prior prosecution in which she was involved will not have the opportunity to participate in the development of such a request.  But a practitioner who is engaged to request supplemental examination regarding a patent he prosecuted may have an additional or different concern, namely, whether the circumstances create a conflict between his client’s interest in cleansing the patent and his personal interest in his reputation and good standing.

Much in this regard will depend on what information the USPTO requires or permits (or receives) in supplemental examination requests, and whether supplemental examinations ultimately lead to any conduct-related investigations or charges.  Although we’ll learn something about the former from the upcoming USPTO rule-making, the latter, at least, will take some time to develop.  In the meantime, the potential effects of supplemental examination relating to the relationship between clients and practitioners are among the questions raised by this proceeding.

Vote for Patently-O Today - Get Free Books! :)

(Click here to vote)

In the final two days of voting, Patently-O needs another 150 votes to win the American Bar Association's "Favorite" IP law blog. Gene & Renee Quinn's excellent IP Watchdog took the lead in the voting during the Holiday weekend with an offering of a free patent bar review course for votes in their favor. (Nobody reads Patently-O during the Holidays). 

What can I offer?: Free books!  I receive lots of interesting and excellent books in the mail. Two that I recently received from Oxford University Press (OUP) are the U.S. Patent Prosecutor's Desk Reference by Graham and Marlow and Patent Litigation in China by Douglas Clark. Each are listed at $225. 

To enter a drawing for the books, just vote for Patently-O in the IP Law Category and let me know via e-mail by Saturday (12/31) (dcrouch@patentlyo.com).

To vote, direct your browser to http://www.abajournal.com/blawg100, complete the 15-second registration form (anon registration OK); locate the IP Law Category; and Vote.  

(Click here to vote)

 

For Republicans, think of this as a warm-up for next week's primary season.  For everyone else, this may be your most meaningful vote until November. 

PS: Get a second entry into the drawing by letting me know that you have posted the following to your Facebook or Twitter account: "Vote for Patently-O http://www.abajournal.com/blawg100 and mail @patentlyo to win $450 in patent law books.  Requires 15-second anon registration."

Patents, Litigation and Reexaminations

By Jason Rantanen

The number of patents involved in litigation
The number of patent suits filed each year is well known.  But what about the number of patents involved in those cases?  Mark Lemley and others have estimated that about 1-2% of all issued patents have ever been litigated.  To test this estimate, I searched the LEXIS utility patents database using the LIT-REEX field to identify all patents that were flagged as the subject of litigation filed in the year 2009.*  I ended up with 3404 patents, or approximately 2% of the average number of utility patents that the PTO issued annually over the previous decade. 

This result provides further confirmation of the conventional belief that the vast majority of patents are never litigated - especially since I suspect it overstates the percentage of patents involved in litigation, as it assumes that the litigation flag is limited to just infringement suits (as opposed to inventorship disputes, for example) and it does not take into consideration the fact that some patents are the subject of multiple suits filed in different years.  

How old are these patents?
The below chart shows the age of the patents involved in suits filed in 2009.  More than half (55%) of these patents were at least five years old as of the litigation filing date; 24% were over ten years old. 

What about reexamination requests?
The above chart also shows the number of patents involved in suits filed in 2009 that have ever been the subject of a reexamination request.  Of the 3404 total patents, LEXIS reports that reexams were requested at some point for 578 (17%).  Many of these requests were filed in 2009 or later (likely as part of a litigation strategy): 398, or 11% of the total number of patents involved in suits filed in 2009 were the subject of a reexam request in 2009, 2010, or 2011.

*I used 2009 because the 2010 and 2011 results were affected by the numerous false marking suits filed in those years.  

CAFC & TTAB: No (Excess) Leeway for Pro Se

Benedict v. Super Bakery (Fed. Cir. 2011)

by Dennis Crouch

Mr. Benedict from British Columbia holds the U.S. trademark registration for the mark G THE GOODYMAN – U.S. Trademark Registration No. 2,966,255, granted on July 12, 2005.

Super Bakery holds U.S. Trademark Registration No. 2,930,398, granted on March 8, 2005 for the word mark GOODY MAN.  Both marks are registered in International Class 30 with Benedict specifying, inter alia, “cookies, cakes, tarts, rice cakes, strudels, and donuts” and Super Bakery specifying “bakery products, namely cupcakes.”

In 2007, Super Baker filed a petition with the TTAB for cancellation of Benedict’s mark. During discovery, Super Bakery requested a number of documents and Benedict (acting pro se) failed to either object or provide the documents. Super Baker then filed a motion to compel discovery that went unopposed, followed by a motion for default judgment.  Based upon Benedict's failure to comply, the TTAB awarded Super Bakery a default judgment and cancelled Benedict's mark. 

On appeal, the Federal Circuit affirmed. Writing for the unanimous court, typically pro-applicant Judge Newman agreed that "The remedy of default judgment was within the Board’s discretion in view of Benedict's repeated failures to comply with established and reasonable procedures orders.” 

Although the Board did give some leeway to Mr. Benedict as a pro se applicant, Judge Newman agreed that the rules can only bend so far.  "The possession of a trademark registration places a routine obligation on the possessor [even a pro se trademark owner] to participate in reasonable procedures concerning rights or interests affected by that registration."  Here, default judgment and cancellation was appropriate based upon Benedict's "repeated failures to comply with established and reasonable procedures orders."

Notes: 

• Read the 2010 Federal Circuit decision in this case.

In Memory: Gideon F. "Frank" Rothwell, IV

A longtime leader of the patent bar, Gideon F. "Frank" Rothwell, IV, passed away on Christmas day near his home in Naples, FL. Frank was a graduate of the University of Missouri (1949) as well as GWU Law and is from a small town near Columbia, Missouri. One year out of law school, he co-founded what is now the Sughrue Mion firm. In 1981, he founded the Rothwell Figg. Frank was long a supporter of Patently-O, and we had a great conversation about Mizzou during a recent IPO meeting. His namesake (GFR I) was also a Mizzou graduate and a member of Congress.

Hal Wegner reports that GWU will host a memorial ceremony at the Law School in the Faculty Conference Center. A reception will follow.

Patently-O Bits & Bytes by Lawrence Higgins

USPTO news

• On December 20^th the USPTO released its updated website. The new website seems to be more user friendly and the design is more attractive than the previous website design. [Link]
• The USPTO in cooperation with the Center of Excellence for Collaborative Innovation (COECI) launched the USPTO Innovation Challenge, a $50,000 prize to develop new algorithms to aid in patent examination. [Link]

Chisum Patent Academy

• The Chisum Patent Academy will hold its next Intensive Patent Law Training Seminar in New York City on Feb. 22-24, 2012. Topics to be addressed include the America Invents Act of 2011, recent nonobviousness decisions, inequitable conduct post-Therasense, and the continuing schism in the Federal Circuit over patent claim construction. The Chisum Patent Academy offers what CLE providers and patent bar review courses simply can't: premium-quality patent law education in a unique seminar-style setting. Co-taught by leading patent law scholars Donald Chisum and Janice Mueller, the intensive three-day seminars are limited to ten (10) participants and conducted in roundtable, interactive style. [Link]

Student Writing Competition

• Georgia State University College of Law will hold its first annual Intellectual Property Student Writing Competition in 2012. The GSU Intellectual Property Writing Competition seeks papers addressing legal issues and challenges in the intellectual property field. Winners will have the opportunity to have their paper published in the conference materials for the 2012 Corporate IP Institute (CIPI) and also win a cash prize. [Link]

Evil Twin Debate

• On November 18, the University of Richmond School of Law hosted the Fifth Annual Evil Twin Debate, featuring Professor Daniel Crane of University of Michigan Law School and Professor Michael Carrier of Rutgers University School of Law at Camden. The video of the event has been posted on YouTube and is very entertaining. [Link]

Patent Jobs:

• Zagorin O'Brien Graham is seeking patent attorneys with 2+ years of experience and a degree in electrical engineering to work in their Austin, Texas office. [Link]
• Pioner is searching for IP attorneys with 5-7 years (or more) prior experience in patent prosecution and a background in life sciences to work at their Iowa location. [Link]
• Bristol-Myers Squibb is seeking an IP Counsel with 5+ years of patent attorney experience and a background in molecular biology or biochemistry to work at their New Jersey location. [Link]
• Guntin Meles & Gust is looking for patent attorneys with2+ years of patent prep and prosecution experience and a degree in EE or CE to work at their Chicago office (remote locations may be considered). [Link]
• Steinfl & Bruno is seeking a patent agent with 2-3 years of experience and a degree in EE or related fields to work in their Pasadena, California office. [Link]
• Klarquist Sparkman is searching for an IP litigation associates with 1-2 years of experience in IP to work at their Portland office. [Link]
• Klarquist Sparkman is looking for a patent attorney/agent with an advanced degree in organic chemistry and 3+ years of experience to work at their Portland office. [Link]
• Roberts Mlotkowski Safran & Cole is searching for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]
• Roberts Mlotkowski Safran & Cole is searching for a patent attorney with 2-4 years of experience and a degree in chemical engineering to work at their McLean, Virginia office. [Link]
• Clements Bernard is seeking a patent attorney/agent with a degree in electrical/computer engineering to work at their Charlotte office. [Link]
• Wells St. John is looking for a patent attorney with 4+ years of experience in all aspects of IP to work at their Spokane office. [Link]
• An IP firm in Northern Virginia is seeking a patent attorney/agent with at least 3 years of experience and a background in semiconductor inventions (telecommuting option). [Link]

Upcoming Events:

• The American Bar Association Section of Intellectual Property Law, Young Lawyers Division, ABA-IPL Young Lawyers Action Group and the ABA Center for Continuing Legal Education will sponsor a webinar on January 20 at 1 p.m. Eastern time. The webinar, Prosecution Strategies: Tackling USPTO Obviousness Rejections will explore how the KSR standards have been applied in various technology areas and provide guidance for effective avenues of argument based on the technology area. Speakers include: Janet Hendrickson, Gregory Hillyer, Michelle O'Brien, and Zachary Stern. [Link]
• The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
• The 7^th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]

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

Injunctive Relief and the Public Interest at the ITC

by Dennis Crouch

The U.S. International Trade Commission is a branch of the U.S. government designed to protect and serve U.S. interests.  The ITC handles a variety of international trade issues, including passing judgment on whether importation of accused products constitutes actionable patent infringement. These Section 337 disputes have become more important as more expensive and high-technology products are being imported rather than being manufactured in the US and because of legal changes that have made injunctive relief relatively more likely in an ITC proceeding as compared with federal court litigation.

Although both the patentee and accused infringers have standing to argue their respective cases, ITC proceedings are administrative in nature with a focus on whether a domestic industry deserves protection.  Thus, rather than being captioned Apple v. HTC, the recent dispute between the two parties has the title: In the Matter of CERTAIN PERSONAL DATA AND MOBILE COMMUNICATIONS DEVICES AND RELATED SOFTWARE, 337-TA-710.

In its decision on the case, the Commission concluded that HTC’s Android phones violated Apple’s Patent No. 5,946,647 (Claims 1 and 8) and that the HTC phones do not infringe the asserted claims of Apple’s Patent Nos. 5,481,721, 6,275,983, or 6,343,263.  Commentators have noted that HTC should have little trouble designing around the the ‘647 patent. This is especially true because the Commission gave HTC four–months to alter its product before injoining further importation. 

In federal court litigation, a court can only award injunctive relief after considering teh four equitable factors outlined in eBay v. MercExchange. The ITC is not bound by eBay, but is required to consider the impact that an injunction (or “exclusion order”) would have on competition and consumers.  Interestingly, the ITC order follows a recent NYTimes editorial, by Professors Mark Lemley and Colleen Chien who argued for delay in exclusion orders in order to serve the public interest.

If the ITC continues to give more weight to the public interest factor, the result is that ITC exclusion orders may begin to parallel the injunction that a court would have ordered under eBay. Although the ITC still does not directly consider the first three eBay factors, it does require a domestic industry being harmed by the alleged importation.  That harm is often the type of harm that would help a patentee prove its case under eBay.

Notes:

• The ITC does not have power to award damages. This could suggest that the ITC decisions automatically satisfy the first-two eBay factors.
• In the Apple v. HTC case, the full decision on the merits that discusses the public interest factors has apparently been held as classified (or at least under seal).  The US President has the statutory right to disapprove of the decision within the next 60 days.
• Claim 1 of the infringed ‘647 patent is the broadest of the infringed claims and is directed to a system of detecting structures in data and then performing some action on the structures. The claim reads as follows: 1. A computer-based system for detecting structures in data and performing actions on detected structures, comprising: an input device for receiving data; an output device for presenting the data; a memory storing information including program routines including an analyzer server for detecting structures in the data, and for linking actions to the detected structures; a user interface enabling the selection of a detected structure and a linked action; and an action processor for performing the selected action linked to the selected structure; and a processing unit coupled to the input device, the output device, and the memory for controlling the execution of the program routines.
• These patents were all filed in the mid-1990’s and no, Steve Jobs is not listed as an inventor of any of them.
  

Patent Stats: Abandoning Provisional Patent Applications

By Dennis Crouch

Provisional patent applications have become the primary initial-filing for US-based patent applicants. In FY2011, more than 150,000 provisional patent applications were filed in the US. In order to take advantage of a provisional application's priority date, the patent applicant must take action within one year to file either a non-provisional patent application or an international patent application (PCT).

A provisional application that is abandoned without being relied upon for priority is kept secret from the USPTO and never published or distributed publicly. Thus, it is somewhat difficult to study these "failed" patent applications.

In a FOIA request, I asked the USPTO for information regarding the reliance on provisional applications for priority. The results are not surprising – a substantial number (around 41%) are abandoned without being relied upon for priority. Thus, from FY2000-FY2010, about 1.2 million provisional patent applications were filed and, of those, about 500,000 were abandoned. The percentage of applications abandoned has grown somewhat in recent years. As the chart shows below, in FY2010 (the last year for which abandonment data is available) about 48% of provisional filings were abandoned without being relied upon as priority documents.

In my Michigan (MTTLR) article, I suggested that provisional applications have increasingly been serving as a more reliable substitute to the one-year pre-filing grace period available under 35 U.S.C. § 102(b). These figures lead to the additional potential conclusion that applicants are filing provisional applications at a very early stage in the patenting process, and the one-year timeline is being aggressively used as a decision-point.

Note: An applicant can "convert" a provisional to a non-provisional application within the one-year deadline. A relatively small number of applicants use this conversion procedure (< .1%) and so, for the purposes of this post, I have simply included the converted cases with totals for those with non-provisional priority claims.

Assignment of US patents

 

Merry Christmas and Happy Holidays

I thought I would send out this holiday greeting before everyone escapes from the office. Let us hope that next year is filled with love, good friends and beneficial inventions. – Dennis Crouch

# # # # #

Patently-O needs about 200 50 more votes at the ABA Journal: http://www.abajournal.com/blawg100 (20-second registration; IP Law category).

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Inter Partes Re-exam Requests Continue To Rise, For Now

By Jason Rantanen

Some of the most touted changes of the America Invents Act are its modifications to ex parte and inter partes reexaminations, modifications that are intended to fine tune these post-grant review mechanisms.  Both ex parte and inter partes reexam requests have been on the rise for the past decade, as shown by the following two graphs:

Inter partes reexaminations, in particular, saw a dramatic increase in popularity over the last few years. 

The above data may paint an overly rosy picture of reexams, however.  Especially with respect to inter partes reexams, I am dubious that their rapid growth will continue.  One of the AIA's most significant changes to inter partes reexams (inter partes review starting on September 16, 2012) is to raise the standard for successfully initiating a reexam from "a substantial new question of patentability" to "a reasonable likelihood that the requester would prevail."  This change took effect when the AIA was enacted, and may lead to a decrease in the number of inter partes reexam requests filed - or at least, a slowing down of the rapid growth in this area. 

Inter partes reexam requests may also plateau for another reason.  The PTO reports that 70% of the patents involved in inter partes reexams are known to be in litigation.  If the initiation of re-exams is largely a function of litigation, there is a soft cap on the number of potential reexams that will be initiated.  In addition, AIA limitations on inter partes reexam requests involving patents that are the subject of infringement litigation, although easily avoided with foresight, may have a depressing impact on the number of requests filed.

Source data for reexams: http://www.uspto.gov/patents/stats/Reexamination_Information.jsp

The above graphs are corrected from an earlier version.  The original graphs treated the PTO's fiscal year as running from January to December.  It runs from October of the preceding year to September of the identified year.

Claiming Priority to Provisional Applications

As the following chart demonstrates, provisional patent applications are increasingly relied upon by US patent applicants.  More than 1/3 of recently issued utility patents of US-origin claim priority to at least one provisional application. (Here, I defined US-origin as patents that do not claim priority to any prior foreign or international applications). Of applications that claim provisional priority, most (~80%) claim priority to only one provisional application.  

I have written previously that provisional applications are serving their intended role of adding 1-year delay to the prosecution process. By design, the US 20-year patent term does not begin until the filing of a subsequent non-provisional application. Thus, a provisional application has the dual benefit of (1) establishing an early priority date for patentability while (2) shifting the patent term one-year later.

For the cumulative frequency chart below, I created a dataset of about 165,000 patents that have issued since January 2005 and that claim priority to at least one provisional patent application. For each patent, I identified the number of days between the filing of the earliest provisional application and the subsequent non-provisional application. According to the Patent Statute, a non-provisional application must be filed by the 12-month deadline or else be deemed abandoned. About 40% of the non-provisional applications were filed within one day of the 12-month deadline. About 70% were filed within two-weeks of that deadline.

Guest Post: Where do Processes of Nature End and Processes of Human Invention Begin?

The following excerpt comes from Professor Robin Feldman's forthcoming Harvard University Press book Rethinking Patent Law which will be released in 2012. The excerpt is reproduced with permission from Harvard and Professor Feldman.

Looking from the perspective of preemption can be helpful in developing an approach to many of the questions generated by the emerging field of personalized medicine. Personalized medicine is an area of applied research devoted to developing tests that operate on biological and clinical data from a patient (e.g., protein levels, genetic mutations, medical history) to provide diagnoses, prognoses, and treatment regimens specific to the patient. Cases arising in this field include LabCorp, which concerned correlating elevated homocysteine levels with certain deficiencies, and Prometheus, which concerned determining metabolite levels after administering a particular class of drugs for gastrointestinal disorders and adjusting the dosage of the drug based on the metabolite levels.

As discussed earlier, the Federal Circuit's decision in Prometheus seemed to suggest that most life science inventions would satisfy the requirements of patentable subject matter, while the PTO's application of Prometheus could lead to the rejection of numerous inventions in this arena. Neither extreme is necessary if one focuses on preemption of laws of nature and natural phenomena as the primary concern.

For example, LabCorp was a relatively simple application of personalized medicine. It involved one biomarker and a reasonably straightforward correlation for treatment. In contrast, most personalized-medicine diagnostics are developed using whole genome expression or sequencing arrays to identify hundreds or even thousands of biomarkers that can be used to diagnose a specific disease state. The machine learning algorithms used to identify these markers do not operate on statistical concepts as simple as linear correlation, which for some of us is complicated enough. Machine learning algorithms employ statistical models to identify different combinations or "patterns" of markers that correlate with a specific disease state. Usually these markers are selected and statistically modeled to compensate for human genetic and environmental variation.

Thus, most personalized-medicine programs are tremendously complex compared even to logistic regression and other simple forms of statistical analysis. They are not simply a reflection of a natural phenomenon; they are an interpretive model of nature. Nor are they analogous to or preemptive of human thought. It would be quite improbable for a physician to be able to sit down with a pen and paper and work out a diagnostic by applying a machine learning algorithm or logistic regression to hundreds of biomarker levels.ⁱ

Consider the first person who discovered that human chorionic gonadotropin (hCG) levels indicate pregnancy when they are elevated above a certain level, and assume that the inventor also created a home pregnancy test for measuring the hCG. One could think of this as a simplistic personalized diagnostic device in which a particular nongenetic marker is measured to identify a state of health. The inventor could certainly patent the kit, which would consist of the physical device with its particular components. The inventor should not, however, be allowed to patent the process of testing human urine for an elevated level of hCG and correlating that level with the state of pregnancy. The core of the invention, the fact that hCG above a particular level confirms pregnancy, is a simple reflection of nature rather than an interpretive model. To understand the difference, compare the process of measuring one marker by looking for a simple level to the average personalized invention. The modern personalized invention may utilize hundreds of biomarkers analyzed by means of statistical patterns. Even if the complex process involved in identifying the relevant biomarkers yields a limited number of biomarkers to consider for a relevant patient, that information does not relate directly to anything. For example, with a personalized medicine invention involving only a few biomarkers, each of those markers generally has confidence intervals assigned to indicate the likelihood that the presence or absence of a factor or the particular level of that marker will translate into a particular diagnosis or successful treatment. Once biomarkers are collected from a relevant patient, they must be processed by statistical modeling to determine how the various factors and confidence levels for this particular patient should be interpreted. The complexity and variability of individual humans ensures that a model like this can never be a simple reflection of nature. Rather, it is no more than an interpretation of nature, albeit one that is extremely important in the treatment of a specific disease.

In contrast, the inventor of the method of measuring hCG is looking at only one marker, and it is a marker that is elevated in the same range for pregnant women in general. Thus, it requires no complex modeling and is a direct reflection of a phenomenon of nature. As a result, it would not be patentable subject matter on the grounds that the core of the invention is no more than the discovery of a natural phenomenon.

The hCG invention should also fail on the grounds that performing the test is no more than a mental step. The method does not require complex computer analysis to interpret the data; it requires observing a particular level of a substance and reaching a conclusion from that level. Preventing human beings from looking at information and concluding something threatens to preempt simple thought.

Personalized medicine, with its marriage of biology and computer technology, provides a wonderful opportunity to understand and tease out some of the threads of patentable subject matter. These inventions demonstrate how early misconceptions about the nature of computer programs and the nature of mathematics are causing problems in modern case law.ⁱⁱ

Part of the difficulty can be traced to confusion between the content of something that is being expressed and the language in which it is expressed. For example, we know that laws of nature are not patentable. Some of these laws are familiar to us in the formulaic language in which we normally see them expressed. Most people, for example, would recognize one of Einstein's laws of physics expressed as E = MC2. One could express that same law in prose, however, rather than formulaic language by explaining the way in which matter and energy are interchangeable.

The choice of language is irrelevant.ⁱⁱⁱ We disallow patenting of E = MC² not because it is expressed in mathematical form but because it represents one of the building blocks of scientific exploration and endeavor. Patenting that law would preempt scientific exploration by occupying a basic concept.

In addition to laws of physics, other things can be expressed in formulaic language. Expressing something in formulaic language, however, does not mean that what is being expressed is a law of nature. Thus, the fact that computer programs are expressed in a formulaic language that looks somewhat like math to the layperson does not mean that the concepts underlying a particular program are analogous to math, let alone analogous to a law of nature. Two things expressed in the same language or the type of same language are not necessarily analogous. Comic books and the Constitution are both expressed in the English Language, but they are hardly analogous. Our focus should remain on the content of what is being expressed and on the preemptive effect that might result from patenting that type of content.

Some unfortunate language in the Supreme Court's Diehr opinion, which flows from this misperception, makes it more difficult to properly separate software claims that should be patentable from ones that should not. In searching for logic to explain why the rubber-molding invention at issue was patentable while other apparently similar inventions had failed, the Court made the following comment: "A mathematical formula as such is not accorded the protection of our patent laws, and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment."^iv

Other courts have jumped on the language to declare that so-called field of use restrictions cannot save software patents.^v Even the recent Supreme Court opinion in Bilski wandered into the same territory when referencing its earlier decision in Flook:

Flook established that limiting an abstract idea to one field of use . . . did not make the concept patentable. That is exactly what the remaining claims in petitioners' application do. These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation. Indeed, these claims add even less to the underlying abstract principle than the invention in Flook did, for the Flook invention was at least directed to the narrower domain of signaling dangers in operating a catalytic converter.^vi

It is true, as a general matter, that if one were to claim a law of nature, the claim would not be rendered patentable by limiting use of that law of nature to a particular field. Thus, for example, an inventor could not save a claim to all uses of E = MC² by limiting the claim to "all uses of E = MC² in the construction field."

Sliding the analogy over to software, however, involves logical errors. The logic that appears to have been used is the following. Computer programs are mathematical formulas, and mathematical formulas are laws of nature. We know that laws of nature cannot be rendered patentable by limiting their application to a particular field of use. Computer programs, therefore, cannot be rendered patentable by limiting their application to a particular field of use.

This sequence contains a number of logical errors. Computer programs may be expressed in a language that looks like math, and some do involve calculations, but they are not necessarily analogous to mathematical formulas. Most important, they are not analogous to natural laws just because both are expressed in formulaic languages. One must look to the content of the computer program and its potentially preemptive effect to determine patentability.

As described earlier, the term "algorithm" in computer science means a series of steps performed on input data by a computer. This process may or may not raise preemption concerns. Some computer "algorithms" are based on properties inherent in types of input and output data. Such broad, generic algorithms, which can be used on a variety of types of input data, may raise threats of preemption. In other words, if an inventor asks for a patent on a software program that works with whole sets of numbers or entire types of data, such a patent would not be patentable subject matter. Particularly in light of the bargaining potential that would come with such a grant, the patent would risk tying up entire types of data rather than constituting something applied.

This does not mean that all software is unpatentable. Claims to programs that are applied to a specific type of data in the pursuit of particular types of outputs do not present the same level of preemption threat. For example, a personalized medicine algorithm (i.e., series of steps) that employs a specific type of statistical model using a fixed set of markers to produce a very specific diagnosis would not threaten to preempt other methods of performing the same diagnosis that use different markers or novel types of statistical models. Such an invention should be patentable.

Computer programs may be many things, including methods of creating useful models of the world around us, methods of providing interpretations of information, and methods of sorting information. When methods of creating a particular type of model are described at a very general level, they may threaten to preempt the broad activity of exploration. However, when claimed at the level of a specific method of sorting a particular type of information for a particular pursuit, they should constitute an applied invention. Such specificity is the hallmark of what separates unpatentable abstractions from applications of those abstractions in the useful arts in a way that is worthy of patent protection.

* * * * *

ⁱ One scholar has suggested that even LabCorp could have survived as patentable subject matter if the claims drafter had chosen a narrower description. See Patricia Dyck, "Post-Bilski Personalized Medicine: At Home on the Range" (forthcoming) (manuscript on file with author) (presenting an empirical survey of the most frequently claimed biomarkers in personalized medicine and discussing problems in allowing claims for sets of biomarkers that are small and not limited to the diagnosis of a specific disease state or condition).

ⁱⁱ I have discussed some of the misconceptions described here in the context of patenting genes. See Feldman, "Whose Body Is It Anyway?" 1400–1402.

ⁱⁱⁱ One could easily argue that all math is invented. It is a human-made method of imposing order and structure on the natural world. For an interesting and accessible discussion of Wittgenstein's view that all mathematics is a human invention and various responses to that argument, see Ludwig Wittgenstein, Wittgenstein's Philosophy of Mathematics §3.1, http://plato.stanford.edu/entries/wittgenstein-mathematics.

^iv Diamond v. Diehr, p. 191 (citation omitted).

^v See, e.g., In re Bilski, p. 957 (noting that mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent eligible).

^vi Bilski v. Kappos, p. 3231.

Design Patent Pendency

The prosecution timeline for design patents continues to be relatively fast.  For both 2010 and 2011, the majority (54%) of design patents issued within one year of the application filing date. The most common delay in issuance is due to some error in the drawings leading to a 31 U.S.C. 112 issue. Very few design patent applications are ever rejected on prior art grounds. Apple's design patents have been at the center of its lawsuit against Samsung. As I wrote in an article a few years ago, design patents are really being used as an overlay for trade dress protection. 

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Guest Post on Myriad by Prof. Megan La Belle

Guest Post by Megan M. La Belle, Assistant Professor at Catholic University of America, Columbus School of Law.

Last Wednesday was an eventful day for patent cases at the Supreme Court.  In addition to oral arguments in Mayo v. Prometheus, the plaintiffs in Ass’n for Molecular Pathology v. USPTO (Myriad Genetics) – another high-profile case concerning patentable subject matter – filed their petition for a writ of certiorari.  The petition presents two questions.  Predictably, the first question addresses the limits of patentable subject matter and asks the Court to decide whether human genes are patentable.  The second and less obvious question focuses on plaintiffs’ standing to sue.  Specifically, the petition asks: “Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)….?”  Some might be surprised that plaintiffs are challenging standing, since the Federal Circuit held the Myriad case justiciable and decided it on the merits.  Yet, as I argue in Standing to Sue in the Myriad Genetics Case, 2 Cal. L. Rev. Circuit 68 (2011), the Federal Circuit’s decision in Myriad raises compelling questions about standing in patent declaratory judgment actions that warrant the Court’s attention. 

In MedImmune, the Supreme Court held that there is standing to bring a patent declaratory judgment action if “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”  In announcing this all the circumstances standard, the Court criticized the Federal Circuit’s longstanding bright line test for standing, which required plaintiffs to show that: (1) the alleged infringer had a reasonable apprehension of suit at the time it filed the action; and (2) the alleged infringer is conducting infringing activity or has made meaningful preparations toward conducting infringing activity.

Initially, the Federal Circuit responded to MedImmune by abandoning its bright line test and announcing that it would use the all the circumstances standard instead.  More recently, however, the Federal Circuit has backpedaled.  In Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329 (Fed. Cir. 2008), the Federal Circuit held that “proving a reasonable apprehension of suit is one of multiple ways that a declaratory judgment plaintiff can satisfy the more general all-the-circumstances test.”  Similarly, in Cat Tech LLC v. Tubemater, Inc., the court concluded that plaintiffs still must satisfy the second prong of the old test – i.e., the “meaningful preparations” prong – to establish standing.  And finally, with its decision in Myriad, the Federal Circuit has come full circle and is evaluating standing in patent declaratory judgment actions according to a bright line test that is strikingly similar to the one utilized before MedImmune.

In Myriad, twenty plaintiffs filed a declaratory judgment action asking the court to declare certain gene patents invalid.  The trial court held that all twenty plaintiffs had standing.  On appeal, the Federal Circuit affirmed there was standing to sue, but only as to one plaintiff – Dr. Harry Ostrer – and on far narrower grounds.  The Federal Circuit concluded that Dr. Ostrer was the only plaintiff who had suffered an injury-in-fact, a prerequisite for standing in federal court.  In reaching this conclusion, the Federal Circuit claimed to be following MedImmune, yet in reality it had applied a bright line rule:

[T]o establish an injury in fact traceable to the patentee, a declaratory judgment plaintiff must allege both (1) an affirmative act by the patentee related to the enforcement of his patent rights, and (2) meaningful preparation to conduct potentially infringing activity….

Myriad, 653 F.3d at 1344.  The Federal Circuit then found that none of the other plaintiffs had standing, either because they failed to allege “affirmative patent enforcement actions directed at them by Myriad,” or because they had not made “meaningful preparation to conduct potentially infringing activity.”

This return to a formalistic test for standing in patent declaratory judgment actions not only violates the letter and spirit of MedImmune, but it is problematic because it makes it more difficult for plaintiffs to challenge potentially bad patents.  For years, the Supreme Court has adopted flexible legal standards that facilitate lawsuits brought by parties challenging patent validity, in view of the public benefit created when bad patents are eliminated.  More recently, Congress and the President have signaled their intent to encourage patent validity challenges by enacting the America Invents Act, which provides for certain post-grant review proceedings.  Yet, despite these strong messages, the Federal Circuit has heightened the standing requirements and created a procedural bar for many alleged patent infringers.  Although the Supreme Court addressed this standing question just a few terms ago in MedImmune, it seems the Court needs to remind the Federal Circuit of the purpose of declaratory relief and its essentiality to a well-functioning patent system.