Patent Law Blog (Patently-O)

Ariad v. Lilly: Federal Circuit Grants En Banc Request to Challenge Written Description Requirement

Ariad Pharmaceuticals, MIT, and Harvard v. Eli Lilly (Fed. Cir. 2009) (en banc)

The Federal Circuit has granted Ariad's motion for an en banc rehearing of its case. The motion boldly asks whether the written description requirement should be eliminated as a doctrine that is separate and distinct from enablement. The questions:

a. Whether 35 U.S.C. � 112, paragraph 1, contains a written description requirement separate from an enablement requirement? and

b. If a separate written description requirement is set forth in the statute, what is the scope and purpose of the requirement?

Ariad's brief is due within 45 days, and Lilly's brief is then due within thirty days of that.

Briefs of amici curiae will be entertained, and any such amicus briefs may be filed without leave of court but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29. The United States is invited to submit an amicus brief.

Value of Amicus Briefs: In its recent Cardiac Pacemaker decision, the Federal Circuit expressly indicated that it was "appreciative of these [amicus] contributions." To make one particular point in the decision, the court emphasized that Cardiac's extreme position was "not even supported by the lone amicus brief we have received in favor of including method patents within Section 271(f)'s reach."

Although the written description requirement is primarily raised in pharmaceutical and biotechnology cases, it is an increasing aspect of software patent litigation. This decision could have a significant impact both on how patents are litigated and on how they are prosecuted. The inventors here discovered an important biochemical pathway and broadly claimed uses of that pathway.

Notes:

• Written Description: Araid Petitions en banc Federal Circuit to Eliminate Separate Written Description Requirement
• Written Description: Pioneering Claims Require More Expansive Written Description
• See Chris Holman's blog for more [Link]
• Other News: Today the court also lifted its stay of en banc proceedings in the Tafas v. Dudas case. Briefs are due in October. However, it is widely expected that PTO Director Kappos will end the litigation by giving up on implementation of the proposed rules.

t minus 50: Microsoft Requests Emergency Stay of Injunctive Relief

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

On August 11, 2009, Judge Davis (E.D.Tex.) issued his final order in the i4i v. Microsoft patent litigation. That final order gives Microsoft 60 days to stop selling, using, or supporting infringing versions of MS Word. By my calendar, the injunction becomes effective October 10, 2009. I4i's patent covers xml capabilities of the MS Word that were implemented in Office '03 and '07. At this point, it is unclear how difficult it would be for Microsoft to eliminate the adjudged infringing capability from its products.

Microsoft has already filed a motion with the Court of Appeals for the Federal Circuit demanding an emergency stay pending appeal. The Federal Circuit clerk immediately denied Microsoft's motion for an "administrative stay." Instead, a merits panel will consider the emergency motion at oral arguments calendared for a special session September 23, 2009. Microsoft's brief-on-point is due August 25; i4i's opposition is due September 8; and any reply is due September 14. If the Federal Circuit makes a decision quickly, Microsoft may have time to appeal directly to the Supreme Court for a midnight stay of execution.

The jurisprudence on stays pending appeal is somewhat lacking – largely because these cases are - by definition - decided in a rush and courts often do not have time to fully explain their decisions. Based on the lower court decision, Microsoft's best arguments for a stay will be based on a combination of (1) its argument on claim construction; (2) the irreparable harm to Microsoft and its customers that would flow from the injunction; and (3) the relatively small amount of irreparable harm that i4i will feel during the few months while the appeal is pending.

Stay of Injunctive Relief Pending Appeal: Unless otherwise ordered by the court, a permanent injunction is not stayed during an appeal. In Hilton v. Braunskill, 481 U.S. 770 (1987), the Supreme Court outlined a four factor test used when determining whether to stay enforcement. The factors are essentially the converse of those used in determining whether to grant a preliminary injunction. These factors include: "(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits [of the appeal]; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies."

Patent Reform on this Issue: In 2006, patent reform legislation introduced in Congress would have added an automatic stay of permanent injunctions after a showing that "the stay would not result in irreparable harm to the owner of the patent and that the balance of hardships from the stay does not favor the owner of the patent." Patents Depend on Quality Act of 2006, H.R. 5096, 109th Cong. §8 (2006) (proposing to amend 35 U.S.C. 283).

Notes:

• Don Dunner (Finnegan) is representing i4i on appeal; Matthew Powers (Weil) appears to continue to lead the team for Microsoft.
• The ABA Journal has an interesting discussion of the trial that focuses primarily on Microsoft's attempts to paint i4i as a troll seeking a 'bailout.' [Link] [Seattle PI]
• Prior Patently-O post on District Court Order.

Federal Circuit Rejects Challenge to Patent Rights Obtained Through Foreclosure

Sky Technologies v. SAP AG (Fed. Cir. 2009)

In an interlocutory appeal, SAP challenged Sky's standing to bring its patent infringement suit – arguing that ownership rights had not been properly transferred. On appeal, however, the Federal Circuit affirmed the decision by Judge Folsom (E.D.Tex.) that title had been "properly transferred by operation of state foreclosure law" even without an affirmative assignment of rights.

Background: The chain of title is somewhat long. Mr. Conkin and his co-inventors assigned rights to the asserted patent to TradeAccess (a company founded by Conkin). TradeAccess later changed its name to Orzo. Orzo, in turn, used the patents as collateral for an investment from Silicon Valley Bank (SVB). SVB assigned its security interests to Cross Atlantic Capital Partners (XACP). Orzo then defaulted and XACP foreclosed. At the foreclosure sale, XACP was the only bidder at a public auction and purchased the patent rights. Then, XACP assigned the patent rights to Sky Technology (another company founded by Conkin and the plaintiff in this case).

Missing from this chain of title is any assignment from Orzo to any other party. Of course, a transfer of rights need not be done through explicit assignment. Interestingly, patent ownership is determined by local (state or foreign) law rather than federal law.

Assignment in Writing: In Akazawa, 520 F.3d 1354 (Fed. Cir. 2008), the Federal Circuit held that patent rights could be transferred through Japanese intestate statute. In the background, however, are (1) 35 U.S.C. Section 261's requirement that all assignments of patent interest be in writing and (2) the 1881 Supreme Court case of Ager v. Murray holding that patent rights could not be transferred to satisfy a judgment without a written assignment. 105 U.S. 126 (suggesting that a trustee be appointed to assign rights if the inventor refused). In Akazawa, the court avoided those requirements by holding that non-assignment forms of transfer (such as intestate transfer) need not be in writing. I.e., "ownership of a patent may be changed by operation of law" without an explicit assignment from the prior rights-holder.

Likewise, in the present case the appellate panel found that the rights had been properly transferred without an assignment based on Massachusetts implementation of Section Nine of the Uniform Commercial Code (UCC).

We find that Akazawa controls in the instant case, and that the district court's reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing. … [A]ssignment is not the only method by which to transfer patent ownership. As noted below, foreclosure under state law may transfer patent ownership. Here, XACP's foreclosure on its security interest was in accordance with Massachusetts law; therefore, Sky received full title and ownership of the patents from XACP providing it with standing in the underlying case.

…

In the instant case the controlling state law is the Massachusetts UCC. Massachusetts UCC § 9-610 permits a secured party to sell the collateral after default, in a commercially reasonable manner, and that same party may purchase the collateral at a public disposition. Section 9-617 of the UCC states that once a secured party disposes of collateral after default, the transferee for value takes all of the debtor's rights in the collateral. Because XACP foreclosed on the patents-in-suit in conformity with these provisions, XACP obtained title to the patents on July 14, 2003.

Patentee, His Heirs or Assigns: Section 154(a) of the Patent Act adds an additional complication. That section indicates that patent rights are always granted "to the patentee, his heirs or assigns." Here, SAP argues that Section 154(a) limits the flow of ownership to only those three categories. The precedent of Akazawa does not create a problem under that theory because that case involved intestate transfer to an heir. Without elaborating, the Federal Circuit rejected that argument – holding simply that "Section 154 does not restrict patent ownership to these three classes of individuals, and moreover, this language fails to specifically address transfers of patent ownership." Thus, although a patent is granted only "to the patentee, his heirs or assigns," it may be latter transferred to other parties. This decision creates a potential implication that a creditor foreclosing on a pending patent application may not be able to enforce the future patent rights. Here, the court should have laid that issue to rest by noting that the Section 154 argument fails because a "patentee" includes any successor in title to the interest in the patent application. The definitions in Section 100 suggest this result, but is written in the Act's typical circular fashion: "The word 'patentee' includes not only the patentee to whom the patent was issued but also the successors in title to the patentee."

Notes:

• The well written opinion was authored by Judge Spencer sitting by designation from the US District Court of the Eastern District of Virginia. Chief Judge Michel and Judge Bryson joined Judge Spencer on the unanimous panel. As noted in the final paragraph, however, the courts continued semantic distinction of an "assignee" needs reconsideration in light of modern securities law.
• Read about the Akazawa decision; See also, How not to divide patent rights during bankruptcy. Morrow v. Microsoft (Fed. Cir. 2007).
• At issue here are U.S. Patent Nos. 6,141,653; 6,336,105; 6,338,050; 7,162,458; and 7,149,724.
• The patents describe and claim various iterations of a "multivariate negotiations engine for iterative bargaining" that allow buyers and sellers to do a deal online.

Inventorship: Conception does not Require Scientific Certainty; Rather, "Proof that the Invention Works to a Scientific Certainty is Reduction to Practice"

University of Pittsburgh v. Marc Hendrick (Fed. Cir. 2009) 08-1468.pdf

The patent at issue (6,777,231) relates to a method of creating stem cells from liposuction residue. In an inventorship dispute amongst former Pitt scientists, the district court held that the Hendrick was not a co-inventor. On appeal, the Federal Circuit affirmed - based primarily on the corroborating evidence found in one of the listed inventor's laboratory notebook.

Inventorship is a question of law, although a challenge to inventorship must be proven with clear and convincing evidence. In a joint invention situation, "each inventor must contribute to the joint arrival at a definite and permanent idea of the invention as it will be used in practice." However, there is no requirement that the inventors actually work together; that all asserted claims be jointly invented; or that all inventors realize that they invented something.

In this case, the timeline is important: The two listed inventors had written evidence (in lab notebooks and elsewhere) from before Hendrick arrived on campus that they believed their liposuction derived stem sells could transdifferentiate into various types of cells such as bone, cartilage, nerves, and muscles. At that time, however, they were not "scientifically certain" that nerve cells had been created. And, almost certainly, the two did not have enough evidence to patent their specific claim to adipose-derived stem cells that can differentiate into nerve cells. Hendrick and his REBAR team of researchers then came along and confirmed that the "highly speculative" suggestions of the original listed inventors was indeed correct.

On appeal, the Federal Circuit held that despite the lack of scientific certainty, the invention had been conceived before Hendrick joined the team.

[Hendrick's] is premised upon a misapprehension of what it means to “know” the limitations of the claims.

Knowledge in the context of a possessed, isolated biological construct does not mean proof to a scientific certainty that the construct is exactly what a scientist believes it is. Conception requires a definite and permanent idea of the operative invention, and “necessarily turns on the inventor’s ability to describe his invention.” Proof that the invention works to a scientific certainty is reduction to practice. Therefore, because the district court found evidence that Katz and Llull had formed a definite and permanent idea of the cells’ inventive qualities, and had in fact observed them, it is immaterial that their knowledge was not scientifically certain and that the REBAR researchers helped them gain such scientific certainty.

Here, the lab notebooks were important to to show that the listed inventors had "sufficiently described to those skilled in the art how to isolate the cells from adipose-tissue ... [and] thus they had disclosed a 'completed thought expressed in such clear terms as to enable those skilled in the art to make the invention.'" Citing Coleman.

Affirmed

When The Infringing Device only Temporarily Meets the Claim Limitations

Gemtron v. Saint-Gobain (Fed. Cir. 2009)

The Michigan-based district court found that Saint-Gobain’s refrigerator shelves infringe Gemtron’s patent No. 6,679,573 and awarded a permanent injunction against further infringement. The shelves were unique – primarily because the glass panel shelf securly snaps into its plastic frame rather than being held by adhesives. The claims required the plastic fram to be “relatively resiliant” so that the glass could snap into place.

The claim construction issue was interesting because it focused on timing. Saint-Gobain’s plastic frame was resiliant while still warm immediately after forming. However, it quickly hardened and became brittle afterward. The accused infringer argued that the limitation “‘relatively resilient’ should not mean ‘temporarily resilient immediately after cooking in an oven and before any opportunity to cool.’”

On appeal, the Federal Circuit affirmed – finding that the purpose of the resiliance (to install the glass panel) “suggests that the claimed resilience of the frame need only be exhibited during assembly.”

There is no discussion in the specification of any purpose for or value of the “relatively resilient” structural characteristic …, other than to facilitate assembly of the shelf. This indicates that the end edge portions of the frame have the claimed structural characteristic—“relatively resilient”—if they are able to deflect at the time the shelf is assembled, to “snap-secure” the glass panel within the frame.

Affirmed.

• Note: The permanent injunction was affirmed without comment.

More False Marking: Forest Group v. Bon Tool

The Forest Group v. Bon Tool

A company that falsely marks or advertises a product as patented "for the purpose of deceiving the public" can be held liable to the government for "not more than $500" for each offense. 35 USC 292. The statute gives standing to "any person" to sue and collect one-half of the award.

Forest Group originally sued Bon Tool for infringement of its patent on stilts used primarily in construction work such as hanging drywall.   Forest's claims were dismissed on summary judgment for lack of infringement.

Based on the court's claims construction, It turns out that Forest Group's stilts are not covered by its own patent either. You see, the asserted patent requires "a resiliently lined yoke" but Forest Group's products (marked as patented) do not include that element.

The court found a false marking elements were met, but refused to find false advertising under Section 43(a) of the Lanham Act because Bon Tool did not prove that the deceptive marking was "likely to influence the purchasing decision" of consumers.

On damages, the court awarded only $500 (with $250 going to the government) because Bon Tool could point to only one factory-order of marked products after Forest Group had "knowledge" that its stilts were not covered by the listed patent.

"That single decision constitutes a single offense for purposes of calculating damages under § 292. The Court assesses a penalty in the amount of $500.00 against Forest pursuant to § 292(b)."

The case is on appeal at the Federal Circuit. Patent Attorney Paul Hletko filed an amicus brief in that appeal arguing that damages should be applied on a per-article basis. Hletko's company Heathcote Holdings sued Church & Dwight for false marking of its Mentadent products.

• District Court Decision 282158.pdf
• Hletko Brief Brief 07-11-09 235833.pdf

False Marking Case Dismissed

Pequignot v. Solo Cup (E.D. Va.)

Judge Brinkema has dismissed Matthew Pequignot’s false marking case against Solo Cup and cancelled the trial previously set to be heard this month. [Order] At oral arguments, the Judge indicated that the ruling is intended to "get [the] case teed up for the Federal Circuit."

In this case, Solo knew that its patents had expired but continued to use the same molds to make its coffee cup lids and other disposable products. During that time - between 20 and 50 billion products were manufactured - each marked as patented. The falseness of the marking was not in serious dispute. Nonetheless, Judge Brinkema ruled that Pequignot did not have any direct evidence to prove that the false marking was done “for the purpose of deceiving the public” as required by the statute. 35 USC 292.

On appeal the Federal Circuit will likely be asked to clarify the level of culpability or intent necessary for a finding of purposeful deception. The choice may follow the same lines of debate as the issue of willful patent infringement. The Federal Circuit recently shifted the law of willfulness to require at least objectively reckless acts of infringement (Seagate) and away from any affirmative duty of caution (Underwater Devices). Professor Winston has argued that intent to deceive should be presumed.

Although the Federal Circuit will probably not be able to reach this issue, the parties hotly dispute the appropriate remedy. The statute calls for a maximum penalty of "not more than $500 for every such offense." Here, the question is whether damages should be calculated based on one offense per product line or one offense per item marked.

[AP Article by Matthew Barakat]

Mexican Yellow Bean Patent Finally Cooked

In re POD-NERS (Fed. Cir. 2009)

Larry Proctor purchased a package of Mexican beans of various colors. He separated-out the yellow ones and spent three years selectively breeding the plants. He then named his line "Enola" and obtained utility patent protection for the bean, its plant, its pollen, and the method of producing it. Pat. No. 5,894,079. Proctor also obtained a US Plant Variety Protection Act (PVPA) Certificate.

Soon thereafter, Proctor's company POD-NERS wrote to importers of Mexican beans asking for a royalty of 6 cents per pound. Mexican government officials identified the patent as "Mexican bean biopiracy" and that they would "do everything necessary, anything it takes, because the defense of our beans is a matter of national interest." The not-for-profit International Center for Tropical Agriculture (CIAT) requested an ex parte reexamination in 2000 (Procter also filed for a reissue so that claims could be added). A non-final rejection was mailed in 2003, a final rejection in 2005, and a BPAI decision affirming the decision in 2008. Now, the Federal Circuit has affirmed the "decision of the Board that all the claims here would have been obvious and therefore that they are invalid."

This decision makes sense - a published article compared the DNA of Enola with ordinary mexican yellow-seeded beans and found them identical.

One of ordinary skill in the art seeking to reproduce (and hopefully improve) the yellow beans that Proctor brought back from Mexico would have done what he did: plant the beans, harvest the resulting plants for their seeds, planting the latter seeds, and repeat the process two more times.   

There is no indication that in taking these steps Proctor sought to provide beans of the particular narrow range of yellow that the claims specified. To the contrary, it appears that all Proctor was attempting to do was to reproduce the yellow beans he had acquired in Mexico, and hopefully to improve them.   

To do so he followed normal and well-established agricultural methods and techniques for doing that. See KSR Int’l v. Teleflex Inc., 550 U.S. 398, 418 (“a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.”) He does not contend that he devised or applied new or unexpected techniques in reproducing the beans.   

Although happy with the outcome, public interest groups have labelled the process a "travesty." "In essence, the U.S. patent system allowed the owner of a flagrantly unjust patent to legally monopolize markets and destroy competition – for close to half the 20-year patent term." [Link]

Sanctions for Frivolous Lawsuit: Fraser v. High Liner Foods

Fraser v. High Liner Foods, et. al. (Fed. Cir. 2009)(non-precedential)

Acting pro-se, Alfred and Paul Fraser sued a handful of fish-stick makers for patent infringement. The Frasers apparently run

The Fraser Patent No. 4,781,930 covers a method of soaking fish in oil before freezing the fillets. The only claim reads as follows:

A method of preparing a fish product comprising filleting a fish to appropriate thickness, immediately immersing the filleted fish in a vegetable oil for a period of 5 to 10 minutes at room temperature to effect absorption of the oil to a depth such as to inhibit excretion of the natural fluids from the fillet and prevent incursion of air and moisture, draining the excess oil from the surface, covering the surface with crumbs and then freezing the fillet.

The district court granted summary judgment in favor of the defendants:

1. Defendant Midship could not be liable because that company was dissolved more than six years before Frasier filed suit. 35 U.S.C. § 286.
2. Defendant Good Harbor was dissolved bankruptcy in 2006. It cannot be held liable.
3. Defendants UNFI and National Fish were never properly served and thus cannot be required to appear in court. The court noted that “A return of service merely noting delivery to ‘girl at front disk’ does not comply with the strictures of Fed. R. Civ. P. 4(h) or Mass. R. Civ. P. 4(d)(2) with respect to service on a corporation.”
4. Defendants Gorton’s, Roche Bros., ConAgra, High Liner, and Pinnacle did not infringe, literally or by equivalents. “None of the five appellees immerse their frozen fish products in a vegetable oil for a period of 5 to 10 minutes at room temperature. Further, none of these appellees begin preparing frozen fish fillets using fresh fillets.”

The Federal Circuit affirmed each of these decisions and then turned to the issue of sanctions:

“The district court noted that Appellants did not provide any of the defendants with any notice of their patent, that they did not question any defendant concerning the manner of fish processing, and in the case of Midship and Good Harbor, that they did not even inquire as to the existence of these defendants prior to bringing suit. The record shows that Appellants proceeded to file suit without ascertaining correct names of some defendants. Despite detailed letters from counsel for various defendants explaining their clients’ processes and pointing out the differences between those processes and the patented process, Appellants continued to press forth the litigation. Appellants continued despite the district court’s clear explanation at a hearing that they could not prove infringement merely by proving the presence of oil as an ingredient on the list of the products at issue.”

In the end, the court affirmed the minimal sanction of only $500 per defendant.

Preliminary Injunctions and Obviousness in Design Patent Law

Titan Tire Corp. v. Case New Holland, Inc. 2008-1078 (Fed. Cir. 2009)

Titan (the patentee) and Goodyear (the exclusive licensee) combined to sue Case for infringement of its tractor tire design patent. (Des. Pat. No. D. 360,862). The district court rejected Goodyear's motion for preliminary injunctive relief - finding that the evidence indicated that the patent claim was probably obvious. On appeal, the Federal Circuit affirmed.

Standard for Preliminary Relief: In order to obtain the "extraordinary" relief of a preliminary injunction to stop infringement before a final judgment, the a patentee must prove that "(1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of a preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest." The likelihood of success requires proof that the patentee "will likely prove infringement, and that it will likely withstand [validity] challenges, if any." When a defendant challenges a patent's validity, the district court must weigh the evidence (both for and against) to determine whether the challenge "raises a substantial question" of validity.

"Thus, when analyzing the likelihood of success factor, the trial court, after considering all the evidence available at this early stage of the litigation, must determine whether it is more likely than not that the challenger will be able to prove at trial, by clear and convincing evidence, that the patent is invalid. We reiterate that the “clear and convincing” standard regarding the challenger’s evidence applies only at trial on the merits, not at the preliminary injunction stage. The fact that, at trial on the merits, the proof of invalidity will require clear and convincing evidence is a consideration for the judge to take into account in assessing the challenger’s case at the preliminary injunction stage; it is not an evidentiary burden to be met preliminarily by the challenger."

The trial court's decision on preliminary injunctive relief is reviewed for abuse of discretion.

Obviousness of Design Patents: Design patent claims are subject to the nonobviousness requirement of Section 103(a) -- asking whether “the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.” However, it is unclear how KSR applies to design patent cases. Unfortunately, this decision provides no answers except that "it is not obvious that the Supreme Court necessarily intended to exclude design patents from the reach of KSR."

Ordinarily, design patent obviousness analysis begins with a primary reference with design characteristics that "are basically the same as the claimed design." Secondary references are then combined so long as the secondary references are "so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other." Here, the lower court did not use the language of "primary and secondary references", but the Federal Circuit found that the lower court's obvious analysis was sufficient to for its denial of preliminary relief.

"[W]e cannot say the trial court abused its discretion in concluding that Titan was unlikely to withstand Case’s challenge to the validity of the ’862 patent on obviousness grounds.

Notes:

• Read the case: 08-1078.pdf
• The court explicitly avoided indicating whether obviousness analysis for design patents should be modified to conform to either KSR or Egyptian Goddess.

Appealing BPAI Rejections to the Federal Circuit

In re Baggett (Fed. Cir. 2009) (nonprecedential)

The Board rejected Bagget's patent claims as obvious. On appeal, the Federal Circuit largely affirmed - holding that the the administrative body's factual findings were supported by the requisite "substantial evidence" and that the Board had properly “articulated [its] reasoning with some rational underpinning to support the legal conclusion of obviousness" as required by KSR. (Quoting KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007)).

The only portion vacated involves an error interpreting the term "memoization." The Board had initially misinterpreted the term as memorization. After a petition for rehearing, the Board corrected its mistake - but only as to one of the four claims containing the term. On appeal, PTO Solicitor Chen explained that Baggett had only addressed the one claim in the petition for rehearing, but offered that a remand would still be appropriate.

Notes:

• This case may serve to emphasize the difficulty in appealing an obviousness decision from the Board of Patent Appeals & Interferences. The "substantial evidence" standard is low, i.e., "more than a mere scintilla of evidence." Likewise, the legal conclusion of obviousness now looks merely for "some rational underpinning."
• In a note, Hal Wegner identifies four Federal Circuit appeals up for review that may focus on obviousness: In re Applied Materials Israel Ltd., Fed. Cir. No. 2009-1083 (argument July 7, 2009); In re Mettke, Fed. Cir. No. 2009-1125; In re Roth, Fed. Cir. No. 2009-1223; and In re Rivera, Fed. Cir. No. 2009-1123.
• Although it may have been amended during prosecution, the original claim 1 reads as follows: 1. A method of producing constructed fares that includes an arbitrary added to a published fare, said method executed in a computer system, the method comprising: determining interior cities that appear with gateway cities in arbitraries for the airline; searching for gateway cities corresponding to the determined interior cities appearing in the arbitraries; and applying an arbitrary corresponding to one of the interior cities to a published fare involving one of the gateway cities to produce the constructed fare.
• Read the decision: 09-1029.pdf

Lack of Standing: Dismiss with(out) prejudice

University of Pittsburgh v. Varian Medical (Fed. Cir. 2009)

The district court dismissed Pitt's infringement action for lack of standing because Carnegie Mellon is a co-owner. Ordinarily all co-owners must join as plaintiffs in an infringement suit, and here Carnegie Mellon did not join. Notably, the district court dismissed the case with prejudice - barring Pitt from later re-filing the lawsuit once Carnegie is on-board.

On appeal, the Federal Circuit took a minimalist approach - holding only that the district court abused its discretion in dismissing with prejudice rather than without prejudice.

Federal Rule of Civil Procedure 12(b)(7) allows a district court to dismiss an action for failure to join a party under Rule 19. However, it is clear that a dismissal for failure to join a party is not an adjudication on the merits, and thus, should not have preclusive effect—i.e. such a dismissal should be without prejudice. See Hughes v. United States, 71 U.S. (4 Wall.) 232, 237 (1866).

...

Fieldturf, Inc. v. Sw. Recreational Indus., 357 F.3d 1266, 1269 (Fed. Cir. 2004) (“Ordinarily, dismissal for lack of standing is without prejudice. On occasion, however, a dismissal with prejudice is appropriate, especially where it is plainly unlikely that the plaintiff will be able to cure the standing problem.”).

08-1441.pdf

Court Costs: $1,000,000 in Translation Costs Awarded to Prevailing Party

Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc. (Fed. Cir. 2009)(Dyk, J.),

In 2005, the Federal Circuit affirmed a district court ruling in this case supporting the validity of Daiichi's Levofloxacin's patent.

Under the Federal Rules of Civil Procedure (R. 54(d)), non-attorney-fee costs are presumptively awarded to the prevailing party. These usually include costs associated with court fees, subpoena fees, transcripts, copying, and translations.

Daiichi calculated its costs as $2.2 million, but the district court reduced those costs to $1.3 million (including $1 million in translation costs). On appeal, the Federal Circuit affirmed these costs.

The one exception to the affirmance involves a parallel case against Teva. Although there was no joint discovery agreement, some depositions were taken jointly by Mylan and Teva for the convenience of Daiichi. Because the Teva case settled, the court in that case did not award any costs. However, Mylan argued that Teva's portion of the costs was implicit in the settlement payment. The Federal Circuit agreed - holding that Mylan should not be required to pay more than 50% of the costs for the joint depositions.

Here it is apparent that Daiichi has in effect already recovered some amount of costs through its settlement agreement with Teva. Although Teva did not actually pay costs to Daiichi in cash, the taxable costs in the New Jersey action (including deposition costs) were unquestionably taken into account by the parties’ settlement, in which Daiichi agreed not to seek actual payment of costs as consideration for Teva foregoing its appeal. Having recovered the value of those costs in the form of the foregone appeal, Daiichi cannot now recover more than its total entitlement by obtaining those same costs again from Mylan. . . . Because the district court here did not apportion costs between the two actions, we vacate the award of costs in this one respect and remand for further proceedings.

Affirmed in part

Read the Decisions:.08-1600.pdf

Injunctive Relief: District Court Abused Discretion by Failing to Consider eBay Factors

Ecolab v. FMC Corp. (Fed. Cir. 2009)

Both Ecolab and FMC sell chemical mixtures used by beef and poultry factories to help protect raw meat from "pathogens, such as E. coli and salmonella." Both parties hold patents on their mixtures, and in litigation each asserted infringement against the other. A jury awarded both parties damages for infringement. However, the district court refused to issue permanent injunctive relief. On appeal, the Federal Circuit invalidated Ecolab's claims and then focused on whether the district court erred in refusing to grant an injunction to stop Ecolab from infringing.

Injunctive relief is awarded according to the traditional principles of equity. In eBay v. MercExchange, the Supreme Court interpreted those principles to require a patentee seeking injunctive relief to demonstrate "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction."

In this case, the district court did not explicitly consider any of the eBay factors. "That is an abuse of discretion." In this instance, the Federal Circuit refused to consider whether – based on the fact at hand – an injunction would be proper. Rather, on remand the district court must consider whether relief is warranted based on a consideration of the four listed factors.

Note:

• While construing claims, the decision distinguishes Chef America's statement that claims are construed "as written, not as the patentees wish they had written it." "Because the claim language at issue in Chef America was unambiguous, that case is distinguishable from the present case. In the present case, the definition of "sanitize" is ambiguous in that it does not indicate when consumption is to take place . . . and the district court did not err when it construed the term "sanitize" to mean that the treated meat has become safe for human handling and post-cooking consumption."

Written Description: Araid Petitions en banc Federal Circuit to Eliminate Separate Written Description Requirement

Ariad v. Eli Lilly (en banc suggestion 2009)

Ariad has petitioned the Federal Circuit for an en banc rehearing - boldly asking the court to eliminate the written description test as a distinct requirement of patentability under 35 USC Section 112, paragraph 1. The petition - drafted by Professors Duffy and Whealan - is essentially a well-formed collage of quotations from Federal Circuit dissents and 19th Century Supreme Court decisions.

The petition raises the following two questions:

(1) Whether this Court has erred by "engrafting . . . a separate written description requirement onto section 112, paragraph 1 .... " Ariad Pharms., Inc. v. Eli Lilly & Co., 560 F.3d 1366, 1380 (Fed. Cir. 2009) (Linn, J., concurring).

(2) What is the proper test to satisfy the requirement in Section 112, paragraph 1, that a patent specification contain "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same"?

Apart from the merits of this case, the brief notes that half of the Federal Circuit judges "have either voted to grant en banc review of this Court’s written description jurisprudence (Newman, Rader, Bryson, Gajarsa, and Linn, JJ.), or have expressly noted that future en banc review may be appropriate because this Court’s written description standards are unsatisfactory. (Dyk, J.).

Notes:

• Ariad Brief: ariadrehearingpetition.pdf
• Federal Circuit Decision
• The original opinion was written by Judge Moore and joined by Judge Prost. Judge Linn wrote a concurring opinion as a reminder of his belief that the written description requirement should be eliminated and enablement be allowed to do its job.
• Patent Docs has more.

Tafas v. Doll (En Banc Suggestion)

Tafas v. Doll (En Banc Suggestion)

Both Tafas and GlaxoSmithKline (GSK) have filed petitions for en banc rehearing asking the Federal Circuit to stop the US Patent & Trademark Office (PTO) from implementing any of its proposed rules on continuations and claims.

The proposed rules can be split into two major categories: Rule 75 (requiring applicants to submit Examination Support Documents (ESD) to accompany any application that includes more than five independent or 25 total claims); Rule 78 (limiting applicants to two continuation applications absent a showing of need for more).

In a split decision, the Federal Circuit held that the limitations on continuations improperly conflict with 35 U.S.C. § 120, but that the remaining limits are "within the scope of the USPTO's rulemaking authority." (Limitations on RCEs do not create a problem).

In the motion for en banc rehearing, GSK raises the the questions of:

1. Whether the Panel majority erred in rejecting the test for determining whether a Patent and Trademark Office ("PTO") rule is "substantive," as set forth in the controlling precedent of Chrysler, supra; Animal Legal Defense Fund, supra; and Cooper Technologies, supra.
2. Whether the Panel majority erred in holding that the challenged Final Rules, 72 Fed. Reg. 46,716 (Aug. 21, 2007), fall within the PTO's limited, non-substantive rulemaking authority.

Tafas raises similar questions of whether the Federal Circuit:

1. misapplied significant binding Supreme Court and Federal Circuit precedent concerning the correct standard for classifying administrative rules as "substantive" versus "non-substantive";
2. failed, contrary to Supreme Court and Federal Circuit precedent, to fully consider evidence that the Final Rules significantly and adversely affect individual rights and obligations under the law;
3. failed to correctly address, as required by Supreme Court precedent, the threshold question of whether the PTO has the jurisdictional authority under 35 U.S.C. § 2(b)(2) to enact the Final Rules; and
4. misapplied Chevron deference to its improper determination that Final Rules 75, 265 and 114 were not "inconsistent with existing law".

The federal circuit majority opinion by Judge Prost included a dissent by Judge Rader (arguing that the rules are substantive) and a concurring opinion by Judge Bryson (arguing that the conflict with Section 120 only applies to continuations that are co-pending with the first-filed application).

The diversity of opinion here gives this case an excellent chance at being heard by the full 12-member court. The important administrative law issues will also be appealing to the Supreme Court when it comes time to petition for certiorari.

Fractured Claim Construction

Agilent Tech., Inc. v. Affymetrix, Inc. (Fed. Cir. 2009)

Agilent's microarray hybridization genetic analysis patent issued in 2003. After seeing those issued claims, Affymetrix amended a pending application by adding identical claims in order to provoke an interference. The Agilent patent has a priority date of 1998 while the Affymetrix application claims priority back to 1995. The Board of Patent Appeals and Interferences (BPAI) awarded priority to Affymetrix in 2006. That holding was upheld by a N.D. California district court in 2008.

Here, the Federal Circuit reverses - holding that Affymetrix cannot claim priority back to its 1995 filing because that original application "does not satisfy the written description requirement for the claims at issue." Written description is particularly relevant in interference cases where one party typically copies claims from another patent document.

Claim Construction in an Interference: Several articles have been written on the complicated and ever-changing scope of a patent claim. At the PTO, claims are usually given their broadest reasonable meaning while in litigation, courts look for how a PHOSITA would interpret the scope, etc.. Phillips teaches that proper claim construction looks at the literal language of the claims as well as supporting information from the specification and prosecution history. In an interference, however, the copied claims originally came from another application.

Faced with a split of precedent, the Federal Circuit here decided to continue with multiple interpretations of an individual claim. Following Spina, the court holds that - for the purposes of the written description requirement - the newly added claims should be interpreted based on the specification and history of the opposing source application. However, following Rowe, the Federal Circuit held that for the purposes of novelty and nonobviousness, the newly added claims should be construed based on the specification and history of the amended application.

To be clear, as this court explained in Rowe, when a party challenges written description support for an interference count or the copied claim in an interference, the originating disclosure provides the meaning of the pertinent claim language. When a party challenges a claim’s validity under § 102 or § 103, however, this court and the Board must interpret the claim in light of the specification in which it appears.

This change in primary interpretative materials allowed the Federal Circuit to also change the claim construction and consequently hold that Affymetrix's application "does not satisfy the written description requirement for the claims at issue."

Notes:

• As a pending application, Affymetrix's claims had no presumption of validity. "Thus, Agilent’s burden of proving a lack of written description in Affymetrix’s Besemer application is a simple preponderance of the evidence. Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1365 (Fed. Cir. 2004)."   

Bilski v. Doll: Reconsidering Patentable Subject Matter

Bilski v. Doll (Supreme Court 2009)

The Supreme Court has granted certiorari in an important case challenging the scope of patentable subject matter. [Order]

Questions Presented:

Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

Prior Coverage of the Case:

• Supreme Court Docket
• Mar 5, 2009: Bilski v. Doll: Round I of Amicus Briefs  
• Mar 1, 2009: Patentable Subject Matter Redux: Bilski 2009
• Jan 30, 2009: BPAI Again Rejects System Claims under Bilski  
• Jan 28, 2009: Bilski Petitions Supreme Court to Decide Issues of Patentable Subject Matter
• Jan 27, 2009: Should Patent Attorneys Support Bilski?
• Nov 18, 2008: Software Method Claims: Bilski in light of Benson  
• Nov 13, 2008: Post-Bilski BPAI Approves of Beauregard Claims
• Nov 10, 2008: Applying Bilski to Metabolite’s Diagnosis Claim   
• Nov 4, 2008: Holman: Applying Bilski to Biotechnology and the Life Sciences
• Nov 2, 2008: Collins: In re Bilski: Tangibility Gone “Meta”
• Oct 30, 2008: In re Bilski: Patentable Process Must Either (1) be Tied to a particular machine or (2) Transform a Particular Article
• May 8, 2008: CAFC Hears En Banc Bilski Case (oral arguments)
• Apr 10, 2008: Ex Parte Bilski: On the Briefs
• Mar 28, 2008: Ex Parte Bilski: Once Again Rethinking the Scope of Patentable Subject Matter   
• Feb 15, 2008: Bilski: Full CAFC to Reexamine the Scope of Subject Matter Patentability

Documents:

• Supreme Court: Bilski Petition for Certiorari
• Supreme Court: Government Opposition to Certiorari, Bilski Government Opposition to Certiorari
• Supreme Court: Bilski Reply in Support of Certiorari, Bilski.reply.pdf
• Supreme Court: Nine Amicus Briefs In Support of Certiorari.
• Federal Circuit: En Banc Decision: 07-1130.pdf
• Federal Circuit: Dozens of Amicus Briefs
• PTO Board of Patent Appeals & Interferences Bilski Decision: BPAI.Bilski.pdf

Amicus Support:

• According to the Supreme Court rule, the petitioner (here Bilski) now has 45 days to file its opening brief on the merits. The respondent's brief is ordinarily due within thirty days of that date. Any amicus brief would be due 7 days after the filing of the brief for the party being supported. This pushes the deadline for the first round of amicus briefs to the week of July 20.

Discovery Misconduct

Boss v. Yamaha (Fed. Cir. 2009)

Boss sued Yamaha for infringement of its patents covering a snowmobile seat. After an unfavorable claim construction, Boss admitted that it could not prove infringement. On appeal, the Federal Circuit affirmed the construction and the verdict of noninfringement.

The interesting portion of the opinion focused on the alleged discovery abuses by Yamaha's counsel. Although a moot point (because Boss did not appeal its motion for sanctions that had been denied), the Federal Circuit felt compelled to at least verbally admonish the attorneys "unacceptable" conduct.

[I]t appears from the record presented to us that Yamaha’s discovery practices were less than commendable. For example, on several occasions Yamaha date-stamped documents to be filed with the district court using the court’s time stamp, but did not actually place the document in the court’s drop-box at that time. Rather, Yamaha actually filed the documents, by placing them in the drop-box, several days after the “filed” stamp was placed on the documents. After the district court realized that this was not an isolated incident, but happened several times, it admonished Yamaha, stating that “[t]his deceitful conduct will not be tolerated” and that this inappropriate practice “is particularly egregious when . . . the court is liberal in granting extensions of time.” The court further noted that “counsel in this case have been admonished before about the gamesmanship that has been taking place in this lawsuit.” In addition, regarding Yamaha’s interpretation of communications with the district court, the court further characterized Yamaha’s actions as “unreasonabl[e]” and “disingenuous.” This type of conduct during litigation is unacceptable and reflects a lack of respect for both the opposing party and the court.

Despite the ruling on misconduct, Yamaha walks away without any sanctions.

Paragon v. Timex: Claims with Contextual Limitations

Paragon Solutions v. Timex (Fed. Cir. 2009)

Paragon's patent covers a GPS/physiologic exercise monitoring system that displays realtime calculated values such as heartrate, altitude, velocity. The components of the invention are divided between a data acquisition unit and a display unit. After an unfavorable claim construction, Paragon stipulated to a non-infringement judgment. On appeal, the Federal Circuit vacated judgment - finding that the district court had improperly construed the terms.

Disavowal of Claim Scope : The district court concluded that the claimed "data acquisition unit" must be a single structure encompassing both GPS and physiologic sensors. That ruling was critical because the accused device (Timex Biolink) physically separates the GPS and physiologic monitors. Although the claim language did not limit the acquisition unit to a single physical device, the district court found that Paragon had disavowed that scope

when it amended the claims to require that the acquisition unit be separate from the display unit.

On appeal, the Federal Circuit agreed that the patentee had clearly disavowed a single structure. However the court could not find a reason that the amendment would limit the acquisition unit to a single device.

We conclude that, read in light of the specification, the claim term “data

acquisition unit” is not limited to a single structure but may comprise multiple physically separate str

uctures, and that the applicants did not make a clear and unmistakable disavowal of multiple physically separate structures during prosecution.

Parallel Construction: In construing claims, courts presume that a term in one claim will hold its meaning throughout the claims. That presumption is overcome when "it is clear from the specification and prosecution history that the terms have different meanings at different portions of the claims." Here, because the claimed "acquisition unit" can be multiple structures, the Federal Circuit found that the claimed "display unit" may also include multiple structures.

Real Time Data: The district court interpreted the claimed "real time" display of data as contextual. For some activities - such as mountain climbing - a thirty second delay may well be "real time." However, for ot

her activities, a thirty second delay would not be considered real time.

On appeal, the Federal Circuit held that this context-dependent definition is not proper in an apparatus claim. “[A]pparatus claims cover what a device is, not what a device does.” Hewlett-Packard v. Bausch & Lomb, 909 F.2d 1464, 1468 (Fed. Cir. 1990).

Absent an express limitation to the contrary, any use of a device that meets all of the limitations of an apparatus claim written in structural terms infringes that apparatus claim. ... Construing a non-functional term in an apparatus claim in a way that makes direct infringement turn on the use to which an accused apparatus is later put confuses rather than clarifies, frustrates the ability of both the patentee and potential infringers to ascertain the propriety of particular activities, and is inconsistent with the notice function central to the patent system.

Consequently, the Federal Circuit modified the construction of “displaying real-time data,” to be “displaying data without intentional delay, given the processing limitations of the system and the time required to accurately measure the data.”

Based on these modifications to the claim construction, the Federal Circuit vacated the finding of non-infringement and remanded for further proceedings. I wonder -- if the specification had clearly indicated that the definition of "real-time" could shift depending on the type of use, would the claim then be held invalid as indefinite under 35 USC 112.

Notes:

• This case could potentially have an impact on pharmaceutical composition claims that include limitations such as "a physiologically sufficient amount." Of course, whether a drug is "physiological sufficient" will often depend upon the individual patient and that patient's particular situation at that time.
• There are two major difference between the Paragon situation and my hypothetical compound claim. First, the real-time display capability in Paragon was seen as a structural limitation while the "physiologically sufficient" amount could be seen as a functional limitation. This difference is important because the Federal Circuit expressly limited its holding to the construction of "non-functional term[s]." However, that distinction is slight because it is unclear what the court meant by "non-functional." (I.e., "a non-functional term" could be a purely aesthetic limitation; it could be a means-plus-function term; it could be a term that defines the purpose of a particular structure; etc.) A second distinction is that Paragon's claim is an apparatus claim not a compound claim. Neither of these distinctions appear compelling.

Declaratory Judgment: Personal Jurisdiction over Foreign Patent Holder

Autogenomics v. Oxford Gene Tech (Fed. Cir. 2009) 08-1217.pdf

The opposing viewpoints of Judges Newman and Moore continues to be seen in Federal Circuit decisions. This appeal arrived at the Federal Circuit after the Central District of California district court dismissed the case for lack of personal jurisdiction over the declaratory judgment defendant (and patent holder) Oxford Gene Technology.Writing for the majority, Judge Moore (joined by N.D. Ill. Judge Gettleman sitting by designation) affirmed the judgment. Judge Newman wrote in dissent.

Even in patent cases, a federal court's personal jurisdiction over parties is based on state boundaries. Here, the case was filed in a federal court sitting in California. When a defendant challenges personal jurisdiction, the court must consider two general factors: (1) whether the forum state’s long-arm statute permits service of process and (2) whether assertion of personal jurisdiction would violate due process." Most states have extended their long-arm statutes to the bounds of due process. Thus, the question collapses to a consideration of the US Constitutional as applied at the geographic state boundaries.

The Constitutional limits of due process can be met by either showing general personal jurisdiction (based on continuous and systematic contacts with the state) or specific personal jurisdiction (based on a defendant's activities in the state that relate to the cause of action.)

Focusing on specific personal jurisdiction, this case is in some ways a repeat of the court's 2008 Avocent holding that a patentee's efforts at commercialization are irrelevant to the specific jurisdiction question. Rather, the minimum contacts for specific jurisdiction must relate to "only enforcement or defense efforts related to the patent." Thus, although Oxford has licensed its patents to several California companies, those licenses do not work toward a finding of specific personal jurisdiction over the foreign company.

DJ Jurisdiction over a Non-US Company: Both the majority and dissent expressed concern that foreign patent holders may often fly under the radar in such a way that no US court would have personal jurisdiction. Of course, the patent statute deals with that potential eventuality. For a non-US patent holder, the District of Columbia Federal Court has jurisdiction "to take any action respecting the patent or rights thereunder" to the same extent "that it would have if the patentee were personally within the jurisdiction of the court." 35 USC 293.

Section 293 makes an exception for non-US patent holders who designate a US person to receive process. The statute does not indicate that such designation serves as consent to personal jurisdiction in the person's home location. However, cases have held that designating a US process agent under Section 293 operates as consent to personal jurisdiction. See In re Papst Licensing, 590 F. Supp. 2d 94 (D.D.C. 2008).

Section 293 reads as follows.

Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.

In the past year, about 11 patent infringement cases were filed in DC District Court.

Appellate Practice: Working Models for the Court

Farrago v. Rawlings Sporting Goods (Fed. Cir. 2009)

Farrago's patent covers a pad for relieving knee stress. The argument focused on whether Rawlings' product has four surfaces (as claimed) or only three surfaces (as Rawlings argues). On appeal, the Federal Circuit quickly affirmed summary judgment of noninfringement without opinion. (A narrowing amendment during prosecution precluded application of the doctrine of equivalents.)

I'll only focus here briefly on the appellate practice. Farrago submitted a sample of the accused product to the appellate court so that the judges and clerks could examine the product prior to oral arguments. During oral arguments, the court thanked Farrago's attorney - noting that the sample "was very helpful." Of course, the court needed only 24 hours to release its opinion against Farrago.

Genentech & Volkswagen: Federal Circuit Splits on Venue Transfer Cases

In re Genentech (Fed. Cir. 2009)(granting mandamus and ordering transfer) 09-M901.pdf
In re Volkswagen of America (Fed. Cir. 2009)(denying mandamus) 09-M897.pdf

Since deciding TS Tech, the Federal Circuit has received a gaggle of Mandamus petitions - most of them asking the appellate court to order cases transferred out of the Eastern District of Texas to more convenient locations. In a pair of opinions - both authored by Judge Linn and released on the same day - the appellate court has provided additional guidance on deciding these transfer issues.

Genentech - Transfer Granted:

• Key Witnesses: Genentech identified several witnesses in Northern California and argued it would be more convenient for them to attend trial in that locale. The district court, however gave little weight to Genentech list because the did not identify location of "key" witnesses. On appeal, the Federal Circuit held that at such an early stage of trial, it is unreasonable to require a defendant to show that potential witnesses are "more than relevant" or face denial of transfer.
• European Witnesses: Several identified witnesses would come from Europe. The Texas court held that it would be more convenient for the European witnesses to travel to Texas than to California because California is further from Europe than is Texas. Here, the district court directly followed the Fifth Circuit's proportionality test that “[w]hen the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled.” On appeal, the Federal Circuit noted that the difference in distance should be given less weight when the witnesses are already traveling a great distance.
• Centralized Location: Although Texas is certainly a more central location, the Federal Circuit held that the factor could not favor a Texas venue because none of the identified witnesses reside in Texas. Rather, the court found that California is more centralized because a number of material witnesses reside within California.
• Convenience to the Parties: Genentech is in Northern California, Biogen (another defendant) is in San Diego, Sanofi (the plaintiff) is in Germany.
• Availability of Compulsory Process: If trial is in Texas, there may be several third-party witnesses that could not be compelled to attend because they are in California - outside the long-arm of Texas jurisdiction.
• Evidence: "In patent cases, the bulk of the relevant evidence comes from the accused infringer." Here, all of Genentech & Biogen's relevant evidence is in California.
• Prior Suit: Genentech has been a plaintiff in the Eastern District of Texas and the district court. On appeal, the Federal Circuit ruled that it would be legal error to consider a prior case that would not otherwise provide for judicial economy.
• California's Jurisdiction over Sanofi: There is some question of whether the California court has jurisdiction over Sanofi. The Federal Circuit held that the potential lack of personal jurisdiction in the transferred venue does not weigh heavily against transfer. "There is no requirement under § 1404(a) that a transferee court have jurisdiction over the plaintiff or that there be sufficient minimum contacts with the plaintiff."
• Court Congestion: This is a speculative factor and given little weight.

In re Volkswagen - Mandamus Denied:

• The plaintiff - MHL - is a small company headquartered in Michigan, but registered in Texas.
• In two lawsuits separate lawsuits (both in the Eastern District of Texas), MHL has sued over thirty US & Foreign automobile companies for patent infrignement.
• VW has asked that the case be transferred from the Eastern District of Texas to the Eastern District of Michigan.
• Multiple Lawsuits: The Federal Circuit identified the "existence of multiple lawsuits" involving the same patents and overlapping issues to be "a paramount consideration when determining whether a transfer is in the interest of justice. ... Although these cases may not involve precisely the same issues, there will be significant overlap and a familiarity with the patents could preserve time and resources. Because the district court’s decision is based on the rational argument that judicial economy is served by having the same district court try the cases involving the same patents, mandamus is inappropriate under our precedents."

Comment: In patent cases, these venue games tend to approach the absurd, and I am surprised that the Federal Circuit has taken these cases so seriously. Defendants want to move out of the Eastern District of Texas because they fear trial and the potential major damage award. The "convenient venue" argument is concocted because the Eastern District of Texas is clearly a "proper forum" with personal jurisdiction over the defendants.

MHL is a patent holding company that registered as a Texas business in June of 2007. That registration appears to have served its purpose - to win the Texas venue argument even though the principles of the business are all located in Michigan. On the other side - it looks like the Federal Circuit refused to consider the two most important facts of convenience in the Genentech case. First, in 2006, Genentech sued MedImmune for patent infringement in the Eastern District of Texas. At that time, Genentech calculated that Texas was perfectly suitable even though neither party was located in the state. Yet, the Federal Circuit held that it was legal error for the district court to consider Genentech's prior activities in the present motion for Venue. The second issues is jurisdiction - it just does not make sense to transfer a case to a new forum without some assurances that the court has personal jurisdiction over the parties.

Disclaimer: I just noticed that my former firm MBHB (who is now a sponsor of Patently-O) is involved in the Genentech case. I do not represent any clients these days. One reason why I have enjoyed having MBHB as a sponsor is that the firm has never tried to exert editorial control over the blog or its content beyond the layout of the firm's ad.

Impact of Merger/Buyout on Prior Agreement to Not Challenge Patent Validity

Epistar v. ITC (and Philips Lumileds Lighting) (Fed. Cir. 2009) 07-1457.pdf

Merger: Lumileds owns a patent covering a light-emitting diode (LED) with an electrically conductive window layer that is both brighter and more efficient than other LEDs. The conductive layer helps spread the flow of electrical current avoid "current crowding."

At issue in this case is the impact of a corporate merger/buyout on a settlement agreement that included a promise to not challenge a patent's validity.

Lumileds and Epistar have signed at least two prior settlement agreements involving the patent at issue here. In those agreements, Epistar agreed to pay a licensing fee for certain products, but reserved its right to challenge the patent if Lumileds asserted the patent against other patents. A third company, UEC, agreed that neither it nor its successors would later challenge the validity of the Lumileds patents.

Subsequently, Epistar purchased UEC, and the patentee argued that UEC's agreement should also bind Epistar. On appeal, the Federal Circuit partially rejected that argument - holding that the UEC settlement continues to bind the parties, but only "as understood and intended by them, according to its ordinary terms." Thus, even though Epistar took on all the legal obligations of UEC, Epistar can still challenge the Lumileds patent if the case does not involve UEC related products.

UEC’s settlement agreement has preclusive effect upon Epistar only “to the same extent as upon [UEC it]self.” Restatement (Second) of Judgments § 43 (1982). The preclusive effect of that agreement, if any, is limited to UEC’s pre–Epistar product lines. To paraphrase this court in International Nutrition v. Horphag Research, Epistar’s acquisition of UEC does not have the effect of limiting Epistar’s rights that are unrelated to the product lines it acquired from UEC. Accordingly, this court overturns the Commission’s final determination that Epistar is estopped from challenging validity of the ’718 patent when asserted against its own products, separate from the UEC–Lumileds settlement agreement.

Here, the court could have done well to cite the Supreme Court's decision of Lear v. Adkins and its statements favoring the ability to challenge patent validity based on on "the strong federal policy favoring the full and free use of ideas in the public domain.”

Patent Licenses Include Inherent Rights Allowing Third-Party Manufacture

Corebrace, LLC. v. Star Seismic LLC (Fed. Cir. 2009) 08-1502.pdf

Corebrace's patent covers an earthquake-resistant brace for steel framed buildings. The original rights-holder (the inventor, Benne Murthy Sridhara from Bangalore) first licensed patent rights to Star. Later, the patent rights were assigned to Corebrace.

Star's nonexclusive license from the inventor grants a right to “make, use, and sell” licensed products. The license also includes a restriction that Star may not "assign, sublicense, or otherwise transfer" its rights - except to an affiliated company. The inventor did already have a relationship with CoreBrace and reserved for that company "all rights not expressly granted" including any improvements created “by a third party whose services have been contracted."

The question on appeal is whether the license grants Star the right to use third-party contractors to manufacture licensed products for its own use. The Federal Circuit answered in the affirmative - holding that absent a clear disclaimer, a patent license includes a right to use a third party manufacturer.

The right to “make, use, and sell” a product inherently includes the right to have it made by a third party, absent a clear indication of intent to the contrary. (Following Utah law)

Patent licensing is complicated because the contracts are interpreted under state law. Here, the contract indicates that Utah law should be followed. There is not Utah decision on point. However, the Federal Circuit noted its own precedent as well as California Supreme Court cases that "have both persuasively held that a 'have made' right is implicit in a right to make, use, and sell, absent an express contrary intent. We consider that the Utah Supreme Court would therefore likely arrive at the same conclusion were it to consider the issue."

Often, exclusive licensees are implicitly granted greater rights than their non-exclusive counterparts. In the non-exclusive setting - allowing the licensee to subcontract undercuts the patent-holder's rights; while in an exclusive licensee scenario, the patentee is presumed to have fully exploited its patent rights in that one contract. In this case, however, the Federal Circuit ruled that the implicit right to sub-contract manufacturing does not depend on any exclusive license status.

Dickson Industries: Inequitable Conduct Holding Vacated

Dickson Industries, Inc. v. Patent Enforcement Team, L.L.C . (Fed. Cir. 2009) (nonprecedential) 08-1372.pdf

Application of inequitable conduct jurisprudence continues to divide the Federal Circuit. Judge Rader has perhaps been the most outspoken critic of the current over-use of inequitable conduct allegations. In this case, Judge Rader was joined by Judges Mayer and Posner (by designation) in vacating a lower court finding of inequitable conduct.

The PET patent covers an apparatus for making drainage grooves at the edge of a roadway. Prior to litigation, PET had argued that the machines for making rumble strips at the side of the road also violate the patent rights. Subsequently, Dickson sued for declaratory relief.

The jury found the patent invalid and found the patent holder liable for $1.5 million for tortiously interfering with with Dickson's business relationships. The court then also (1) found the patent unenforceable due to inequitable conduct during reexamination for failure to disclose material information and (2) awarded attorney fees to Dickson.

On appeal, the Federal Circuit affirmed the anticipation decision, but vacated the decision on inequitable conduct.

The case largely centered around one prior art reference - "Spangler" - which discloses an apparatus to make rumble strips. PET knew about Spangler during reexamination of its patent, but did not disclose that reference to the PTO.

Agreeing with the Jury, the Federal Circuit found substantial evidence indicating that Spangler discloses all the elements of PET's patent - rendering the patent invalid.

Ordinarily, after finding the patent invalid, the court would not need to decide issues of inequitable conduct. Here, however, the appellate panel addressed inequitable conduct because that conduct served as the basis for the lower court's award of exceptional case attorney fees.

Amending Pleadings to Add Inequitable Conduct Charges: Allegations of inequitable conduct are parallel to charges of fraud and ordinarily must be pled with specificity. Thus, in most cases the accused infringer does not have sufficient evidence to allege inequitable conduct in the initial filing of defenses. Here, the court initially denied Dickson's motion to amend its complaint to add IC charges. However, at trial the court changed its mind and allowed the issue to be presented.

On appeal, the Federal Circuit found that PET was "prejudiced" by the inconsistent orders and was thus denied "the opportunity to adequately defend against the allegation of inequitable conduct at trial. For instance, PET was denied the opportunity to introduce evidence of good faith, which militates against a finding of deceptive intent."

The district court’s contradicting positions undermine the legitimacy of its ruling on inequitable conduct. This court cannot say with confidence that the record regarding inequitable conduct is not incomplete. Thus, this court vacates the district’s decision on the issue of inequitable conduct and remands to provide an opportunity to fully develop the record regarding inequitable conduct. Further, this Court vacates the award of attorney fees premised on inequitable conduct as premature.

In a warning to the lower court, Judge Rader again raised the notion that inequitable conduct litigation "has become an absolute plague."

Given the severe consequences of unenforceability when it is imposed on a patent, it is paramount that the district court exercise necessary caution to ensure that the patent owner met its burden of proof with respect to both the materiality and deceptive intent.

Vacated-in-part.

Notes:

• Judges Mayer and Posner (sitting by designation) participated in the panel.
• Update: I have fixed an important typographical error. Judge Rader indicated that inequitable conduct litigation is the problem (not inequitable conduct itself).

Deference to ITC Claim Construction Decisions?

Erbe Elektromedizin v. ITC and Canady Tech (Fed. Cir. 2009) 08-1358.pdf

Erbe's patent appears to cover aspects of a surgical flesh-welding technique known as argon plasma coagulation (APC). After narrowly construing the claimed plurality of endoscopic “working channel," the ITC found no evidence of direct infringement. On appeal, the Federal Circuit affirmed.

I'll avoid the claim construction particulars, but focus here on whether the Federal Circuit can properly review ITC Claim Construction decisions de novo.

Claim construction is a matter of law, and under the Administrative Procedures Act, the Federal Circuit reviews ITC decisions of law for "correctness." However, in the usual course, agency decisions interpreting a matter of law are ordinarily given at least Skidmore level deference. See Christensen v. Harris County.

En Banc Federal Circuit: Infringement of Product-by-Process Claim Requires Practicing the Process

Abbott Labs v. Sandoz (Fed. Cir. 2009) (en banc) 07-1400.pdf

The Federal Circuit had developed two opposing lines of cases for interpreting the scope of a product-by-process claim. Acting en banc sua sponte sub secretum, the appellate body sided with the Atlantic Thermoplatics line in holding that infringement of a product-by-process claim requires practicing the claimed process steps. This decision makes Judge Newman's 1991 Scripps decision no longer good law. (Note, the en banc portion is only Section III.A.2).

[T]his court now restates that “process terms in product-by-process claims serve as limitations in determining infringement.”

The holding here explicitly focuses on claim construction for the purposes of infringement. Based on my first-pass, it appears that the court has left undecided whether this rule applies for validity purposes. I.e., can a product-by-process claim now cover a well known product made through a new process?

Notes

• This is a very interesting decision and more analysis will be forthcoming.
• Perhaps the most interesting portion of the decision is Judge Newman's 39 page dissent.
• Based on this Decision, generic Omnicef will continue to be available.

BPAI Precedential Opinion on Rejecting Software Means Claims

Ex parte Catlin (BPAI 2009)(precedential) fd073072.pdf.

The first-time around, the BPAI found some of Catlin's claims patentable. On rehearing (requested by the SPE), the BPAI reversed course - finding the means-plus-function claims indefinite under 35 USC § 112.

Catlin's claim one reads as follows:

1. A method for implementing an on-line incentive system, said method comprising the steps of:
providing, at a merchant's web site, means for a consumer to participate in an earning activity to earn value from a merchant; and
transferring value from said merchant to said consumer for participation in said earning activity, if said consumer qualifies, without re-directing said consumer away from said merchant's web site, whereby said consumer's focus of activity remains at said merchant's web site.

The Patent Act allows a patentee to claim inventive elements using "means plus function" language. A means plus function term is construed to cover the corresponding structures as described in the specification as well as any equivalents. This rule of construction means that seemingly broadly written means limitations are often quite limited in practice -- especially when the specification is not thoroughly drafted.

If no corresponding structure can be identified in the disclosure, then the claim will be found "invalid as indefinite."

Here, the claim recites a "means for a consumer to participate in an earning activity to earn value from a merchant." On rehearing, the BPAI could not find any corresponding structure in the specification. In particular, the Board was looking for an algorithm for performing the claimed function.

[W]e have thoroughly reviewed the Appellants' Specification and have not been able to locate an adequate disclosure of structure, material, or acts corresponding to the functions of allowing a consumer to participate in an earning activity and earn value from an earning activity. In particular, the Specification does not disclose any specific algorithm that could be implemented on a general purpose computer to allow a consumer to participate in an earning activity and earn value from an earning activity.

Holding: Claims indefinite.

Irreparable Harm of Generic Competition: Federal Circuit Affirms Finding that Generic Entry Does not Cause Irreparable Harm

Altana Pharma & Wyeth v. Teva (Fed. Cir. 2009)

Altana's Patent No. 4,758,579 claims the proton pump inhibitor pantoprazole - the active ingredient the anti-ulcer drug Protonix®. Of course, PPI's were known before Altana's patent and even one of Altana's own prior patents discusses a "compound 12" that is structurally similar to those claimed in the '579 patent.

Teva and Sun filed for permission to begin making generic versions of the drug, and Altana subsequently filed this infringement action. (Altana filed separate actions that were consolidated.)

This appeal stems from the New Jersey district court's denial of Altana's motion for a preliminary injunction. The lower court found that the patentee had failed to prove two critical prerequisites of equitable preliminary relief: (1) a likelihood of success on the merits and (2) irreparable harm.

The equitable test for preliminary injunctive relief requires that the requesting party prove:

1. a reasonable likelihood of success on the merits;
2. irreparable harm if an injunction is not granted;
3. a balance of hardships tipping in its favor; and
4. the injunction’s favorable impact on the public interest.

Although the ultimate grant or denial of preliminary relief is within the "sound discretion of the district court," failure to abide by these four factors would be reversible error. Orders to grant or deny a preliminary injunction are immediately appealable.

Likelihood of Success: The Federal Circuit has held that preliminary relief should be denied if the accused infringer raises a "substantial question" of invalidity of the asserted claims. At the PI stage, the court need not consider the ultimate "clear and convincing" standard. Rather, the focus is on "vulnerability."

Obviousness of Chemical Compound: When considering the obviousness of a chemical compound, courts ordinarily first look for a "lead compound" known in the prior art and then consider whether a chemist would have had some reason to modify the known compound in the particular manner to achieve the new compound. Courts are not rigidly bound by this ordinary approach - thus, for instance, a court may look to multiple lead compounds:

Moreover, to the extent Altana suggests that the prior art must point to only a single lead compound for further development efforts, that restrictive view of the lead compound test would present a rigid test similar to the teaching-suggestion-motivation test that the Supreme Court explicitly rejected in KSR.

Here, the appellate panel found "ample evidence" that a chemist would have chosen "compound 12" as a natural choice for further PPI research. The particular modification of compound 12 was then suggested in articles by Sachs and Bryson who were researching properties of effective PPIs.

Considering this evidence as a whole, the Federal Circuit found it sufficient to raise a substantial question of obviousness.

Irreparable Harm: The district court could not find any irreparable harm of allowing infringement during the course of the litigation. Often, money damages are seen as insufficient when the defendant does not have cash-on-hand. Here, however, Teva and Sun both have plenty. The court also found that Altana almost certainly has a business plan to deal with the launch of generics. During the litigation, Nycomed purchased Altana -- seemingly in the lower court's view, that purchase also indicates that money damages are adequate (since a price can be placed on the company & its patent rights).

Perhaps most harmful to Altana was that the lower court found the patentee's statements of harms "exaggerated" and lacking "credibility." A court sitting in equity righty places a dim light on activities suggestive of unclean hands.

On appeal, the Federal Circuit affirmed without significantly commenting on the merits. Rather, the court made this case about equitable discretion: "the law cited by the district court highlights this court’s deference to a district court’s determination whether a movant has sufficiently shown irreparable harm."

Denial of Preliminary Injunction Affirmed

Judge Newman wrote a short concurring opinion.

Although the evidence presented to the district court does not, in my view, establish invalidity of the patent on the pharmaceutical product pantoprazole, see, Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006) ("the burdens at the preliminary injunction stage track the burdens at trial.") at this preliminary stage deference is warranted to the district court’s weighing of the conflicting expert opinions interpreting the evidence. On this basis, I concur in sustaining this discretionary action.

Obviousness-Type Double Patenting and Splitting Ownership (CAFC Says Don't Do It)

In re Fallaux (Fed. Cir. 2009) 08-1545.pdf

The Fallaux family of patents began with a PCT filing in June 1995. The first US patent issued in November 1999. Three more patents issued from continuation applications in 2001, 2003, and and 2006. The application at issue here was filed in 2003.

The PTO's appellate board - the BPAI - rejected the most recent application under the judge-made doctrine of obviousness-type double patenting. Obviousness-type double patenting is equitable in nature and operates as a mechanism to prevent "unjust extension of patent exclusivity beyond the term of a patent." Thus, an obviousness-type double patenting rejection requires a link between the two applications - either in terms of inventorship or ownership. The doctrine is only relevant when a prior patent cannot be considered prior art as defined by Sections 102 and 103(a) of the Patent Act. (If it is prior art, then the reference is applied under those statutory provisions.)

The change in the patent term and publication of pending applications eliminated most of the need for this judge-made regime. Because patent term is calculated from the filing date, it is now difficult to extend the term while claiming priority. Likewise, published applications ordinarily create a statutory bar that operates to prevent an applicant from extending the term by not claiming priority to an earlier filing. Here, the Federal Circuit recognized the significance of the change in the law, but was not prepared at this juncture to eliminate the doctrine.

It is true that the unjustified patent term extension justification for obviousness-type double patenting has limited force in this case. Indeed, this is surely true of many double patenting rejections today, in no small part because of the change in the Patent Act from a patent term of seventeen years from issuance to a term of twenty years from filing. ... Nonetheless, we do not think that we may disregard all of our cases relying on this justification for obviousness-type double patenting. In some cases there may still be the possibility of an unjust time-wise extension of a patent arising from patent term adjustment under § 154 or patent term extension under § 156.   

Furthermore, there is a second justification for obviousness-type double patenting—harassment by multiple assignees. ... The harassment justification for obviousness-type double patenting is particularly pertinent here because the Fallaux application and the Vogels patents are not commonly owned.

Of course, careful Patently-O readers will realize that the Court's use of mismatched patent term extensions as a justification for a double patenting rejection does not sit well with the law. In 2007, the Federal Circuit in Merck v. HI-TECH held that the patent term extension should apply to further extend the patent term despite a terminal disclaimer. Id. (Holding that a patent term extension under the Hatch-Waxman Act, 35 U.S.C. § 156, may be applied to a patent subject to a terminal disclaimer under 35 U.S.C. § 253, filed to overcome an obviousness-type double-patenting rejection.) The dicta of this Fallaux decision will tend to confuse the issue.

Common Inventorship: As the court notes, in this case, the double patenting rejection is based on second patent family. Both families list multiple inventors, and the link between the families is a single common inventor. Originally, the families were commonly owned by IntroGene, but some of the patents were assigned to Crucell and others to Galapagos Genomics.

No Common Ownership: The division of ownership rights here puts the applicant in a bind. Notably, it could not file a terminal disclaimer because the prior patent and the pending application were not commonly owned.

One Way versus Two Way Test: In most obviousness determinations, the examiner applies a "one way test" - asking "whether the application claims are obvious" over the prior art. This same approach is used in obviousness-type double patenting except that the prior patent is generally not considered "prior art." More particularly, because the focus is on extending patent term, the question is whether the pending claims are only obvious variations of the already patented claims. Occasionally, courts have required a more stringent two-way test where the examiner additionally considers "whether the patent claims are obvious over the application claims.”

The two way test can be required if the PTO "is at fault" for a delay that causes an improvement patent to issue prior to the basic patent. Here, the court agreed with the PTO that

Dr. Fallaux was entirely responsible for the delay that caused the Vogels patents to issue prior to the filing of the Fallaux application. . . . there [is no] evidence to suggest—that the PTO shared any responsibility for the delay. . . . Dr. Fallaux elected to prosecute other applications and delay filing the Fallaux application [for] six years after the [original US] application was filed. During this six year period, the Vogels patents were filed for and issued. In view of the Board’s fact findings, we hold that the PTO was not responsible for the delay.

Because the PTO had not caused the delay in prosecution, it could apply the less stringent one-way test of obviousness. And, as a consequence, the Federal Circuit affirmed the rejection.

Notes:

• The Fallaux panel of Judges Schall, Archer, and Moore* have no overlapping authors with the Merck v. HI-TECH panel of Judges Linn*, Friedman, and Plager. The direct contradiction of this case and the dramatic shift in the statutory law opens it to en banc rehearing.
• Patent term adjustments (due to PTO delay) are definitely limited by terminal disclaimers. Meck ("Section 154(b)(2)(B) expressly excludes patents in which a terminal disclaimer was filed from the benefit of a term adjustment for PTO delays.").

Supreme Court Reverses: Finding that the Federal Circuit has Appellate Jurisdiction to Review Remand to State Court

Carlsbad Tech v. HIF Bio (Supreme Court 2009) 07-1437-1.pdf

This involves the power of a federal appellate court to review a district court order to remand a case back to state court. In its opinion, the Federal Circuit held that it lacked such power. The Supreme Court has now reversed that decision and instead followed lead of the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits.

HIF first sued Carlsbad in California state court seeking a declaratory judgment of ownership and inventorship of various anti-angiogenesis drugs under California state law. The complaint also alleged various issues of slander, conversion, fraud, etc. The case was removed to federal court based on one federal RICO allegation. However, once that claim was dismissed, the district court refused to continue to exercise its supplemental jurisdiction to hear the remaining state claims -- thus remanding the case back to state court. The Federal Circuit refused to review the remand for an abuse of discretion - instead finding that it lacked subject matter jurisdiction to hear the appeal.

The Federal Circuit's outcome makes sense if you look at the statute. 28 U.S.C. §1447(d) says: ‘An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . .’ However, the Supreme Court has clearly moved beyond the words of the statute in this situation. Here, the Supreme Court reversed -- finding that the remand may be appealed in federal court.

When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§1447(c) and (d). The judgment of the Court of Appeals for the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

On remand, the Federal Circuit will need to determine whether the remand was properly within the discretion of the lower court.

Although the decision was unanimous, the decision is accompanied by three concurring opinions by Justices Stevens, Scalia, and Breyer. Justice Stevens was honest about the court's failure to follow the text of the statute: "If we were writing on a clean slate, I would adhere to the statute’s text."

When the Federal Circuit's decision was issued in 2007, I noted that "[t]his case would have a good shot of being granted certiorari. Its impact on patent law, however, is nil." [Link]

Pointing Out the Problem to be Solved or Objects of the Invention

Revolution Eyewear v. Aspex Eyewear (Fed. Cir. 2009) 08-1267.pdf [UPDATED 5/7/09 – To correct a mix-up of parties]

The patents at issue in this litigation focus on eyeglasses configured to be fitted with a second set of sunglass lenses using magnets. Magnetic auxiliary frames were already in the prior art, but the apparent advance is that the magnets are located in projections rather than embedded in the frames -- thus allowing for a stronger magnetic bond. The patent also identified a second deficiency in the prior art: insufficient "stability support."

The district court held that Revolution infringes claim 22 of Patent No. RE37,545.

On appeal, Revolution argued that that the claim was invalid -- raising three separate arguments: (1) failure of written description under Section 112 ¶ 1 because the apparatus as claimed does not address both deficiencies in the prior art; (2) failure to claim the "original" invention in the reissued patent under Section 251; and (3) improper expansion of claim scope in the reissue application under the recapture rule. The Federal Circuit rejected each of these invalidity arguments.

Written Description: The written description requirement is often raised when the issued claims are different than those originally filed. New claims must find support in the original specification in a way that "convey[s] with reasonable clarity to those skilled in the art that, as of the filing date sought, [the inventor] was in possession of the [claimed] invention."

Revolution admits that all of the claimed elements are found in the original drawings. Of course, that is not conclusive for written description. Rather, in cases such as LizardTech and Liebel-Flarsheim, the Federal Circuit found claims invalid even though all the explicitly claimed limitations and arrangements were originally disclosed. The problem with the claims in those cases was that they did not include enough limits.

The invalidity argument in this case is actually more akin to Gentry Gallery. Here, Revolution argues that the patent is invalid because the claimed apparatus does not address both of the stated functions of the invention. The Federal Circuit found that argument lacked legal grounding: "when the specification sets out two different problems present in the prior art, it is unnecessary for each and every claim in the patent to address both problems." Of course, the negative implication of the court's statement is that the claim must address at least one of the stated problems. "Inventors can frame their claims to address one problem or several, and the written description requirement will be satisfied as to each claim as long as the description conveys that the inventor was in possession of the invention recited in that claim." In this case, the claim addressed the magnetic strength problem - and thus satisfied the written description requirement.

Claiming the Same Invention: 35 USC Section 251 focuses on requirements of reissue applications. Under the statute, a reissued patent must be for the same "invention disclosed in the original patent." Here, the Federal CIrcuit found that this requirement is "analogous to the written description requirement." "Because we have held that the written description requirement is satisfied, we similarly hold that claim 22 complies with § 251."

Recapture Rule in Reissue Patents: Reissue patents are intended to correct errors in the originally issued patents. Courts have created the recapture doctrine which would exclude certain intentional acts from the list of correctable 'errors.' In particular, under the recapture rule, an intentional and deliberate act of narrowing claims or disclaimer of claim scope in order move the patent application toward issuance will not be considered an "error" under Section 251. Akin to prosecution history estoppel, "the recapture rule is aimed at ensuring that the public can rely on a patentee's admission during prosecution of an original patent." On appeal, the Federal Circuit could find no admission or disclaimer being recaptured.

Affirmed.

Notes:

• Pointing out deficiencies in the prior art: Most patent attorneys no longer discuss the prior art in the patent application because of the potential problems raised by this and other cases. Almost as an aside, this case also notes that by "pointing out the two deficiencies in the prior art, [the inventor] disclaimed an auxiliary frame that is not stably supported in top-mounting configuration and a primary frame that has embedded magnetic members."

Federal Circuit Applies Phillips to Limit Gift Card Claim Construction

Every Penny Counts, Inc. v. American Express, Visa, Green Dot, MasterCard, First Data, etc. (Federal Circuit 2009)

Dr. Burke is a psychoanalyst who never liked change. I'm not talking Obama style change. No, Burke patented a method for donating leftover change ("excess cash") to charities (or to store it in a separate savings account.)

Burke's company (EPC) sued a host of defendants. who sell gift cards -- alleging that the retail sale of gift cards along with merchandise infringe upon his patents because the gift card sales “loading value onto accounts at a point-of-sale terminal.” EPC's argument was that the purchaser was using "excess cash" to buy the gift card.

On appeal, the Federal Circuit rejected the patentee's argument for a broad claim construction - instead holding that the claimed "excess cash" was an “amount selected by the payor beyond the total amount due at the point of sale.”

Looking at the specification as “the primary basis for construing the claims,” the appellate panel noted that the specification repeatedly described the method's purpose as allowing someone to conveniently donate to charities or to painlessly save money. From the specification:

In current shopping situations a clerk inputs the price of all items in a cash register and the latter totals the price. The consumer offers either the exact amount of cash or a sum exceeding the price, and the clerk enters that amount. The cash register then subtracts the price from the cash.

The excess cash offers the customers an opportunity to save small amounts of money painlessly. It also affords the consumer to donate [sic] small amounts of money to charity.

Interpreting this, the Federal Circuit determined that the claimed "excess cash" must be only what is left over after all items (including gift cards) are paid for. "Where the consumer does not offer a sum in excess of the total displayed on the cash register, then there is no excess cash."

Non-infringement affirmed.

Notes:

• Read the Opinion: 08-1434.pdf.
• The Federal Circuit remarked that EPC wasted its appellate time arguing process - that it didn't get a fair chance to argue claim-construction below. Claim construction is reviewed de novo, and the appellant needs to focus on why it should win on the merits, not on whether the district court was listening. "EPC has surprisingly little to say about what it alleges is substantively wrong with the district court’s construction, or why its proposed construction would be better on the merits. Instead, it attempts to assign error to the district court’s construction on a number of procedural grounds. Principally, it argues that the court erred by (1) spending a portion of the claim construction hearing considering the meaning of the phrase “sales price,” which was not a disputed claim term; and (2) using the accused products to tailor a construction of the patent claims that would make it impossible for EPC to prove infringement. Neither of these arguments has merit."
• As a rule, the Federal Circuit is respectful to both parties as well as their arguments and positions. Here, Senior Judge Cudahy went about as far as the Court ever does by describing Burke's invention only within quotation marks (Burke's "invention") and once referring to the "'invention', such as it is." The court more explicitly showed its disdain by awarding costs to the defendants.
• Some of you may have heard of Bank of America's "Keep the Change" program. According to the company brochure: "Each time you buy something with your Bank of America Check Card, we'll round your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change and grow your savings. What could be easier?" EPC's litigation against BOA continues.

Federal Circuit Revises: Amgen v. ITC

Amgen v. ITC and Roche Diagnostics (Fed. Cir. 2009).

Issues: FDA Safe Harbor; Joint Interpretation of Patent and Tariff Act; ITC Jurisdiction

Section 271(e)(1) of the Patent Act excuses would-be infringing uses of a patented invention that "reasonably relate to the development and submission of information under a Federal Rule which regulates the manufacture, use, or sale of drugs or veterinary biological products." The language of the provision is that those activities will not be considered "act[s] of infringement." In its 2005 Merck decision, the Supreme Court indicated a policy preference for broadly interpreting the exception in order to encourage drug development and FDA approval. Patent cases at the International Trade Commission (ITC) do not derive their authority from the Patent Act. Rather Section 337 of the Tariff Act (19 USC § 1337) authorizes the ITC to halt imports of articles that either (i) "infringe a valid and enforceable US patent" … or (ii) are made … by means of, a process covered by the claims of a valid and enforceable US patent."

The distinction came to light in Kinik (Fed. Cir. 2004). In that case, the Federal Circuit distinguished between the Patent Act and the Tariff Act with regard to importation of a product made by a patented process. Section 271(g) of the patent act includes the caveat such importation is not infringement if the product is "materially changed by subsequent processes." The court held that caveat did not apply to ITC cases based on the differences in the statutes and the explicit limitation in the Patent Act that the 271(g)(1) caveat applied "for the purposes of this title."

In Amgen, Roche hoped to claim immunity under Section 271(e)(1) for its research use of imported EPO. Thus, when the Amgen case arose, the Federal Circuit was forced to decide between the statutory distinctions highlighted in Kinik and the Supreme Court's broad reading of the 271(e)(1) defense. In their 2008 decision, the appellate panel (led by Judge Newman) held that the 271(e)(1) safeharbor applies to the ITC action.

Following the 2008 decision, Amgen petitioned for a rehearing en banc. After some apparent inter-chamber negotiations, the court sitting en banc has vacated the 2008 decision and the original panel has issued a revised opinion. The new opinion again confirms that the 271(e)(1) defense applies to ITC actions. Instead, the new opinion removes all discussion of whether the ITC has jurisdiction over non-sales based "imminent importations" except to note that resolution of that dispute was "not necessary … to decide this case." (Here, Amgen's allegations that Roche had imported IPO was sufficient to create subject matter jurisdiction.)

"In this case, the Commission had jurisdiction as a result of Amgen's allegation that Roche imported an article made by a process covered by the claims of a valid and enforceable United States patent. See 19 U.S.C. § 1337(a)(1)(B)(ii). The Commission therefore was correct to reach the merits of Amgen's claim. We need not and do not address whether the Commission would have had jurisdiction if Amgen had not asserted actual importation and relied instead entirely on its "imminent importation" theory."

The ITC previously held that it did not have jurisdiction without an "importation, sale for importation, or sale within the US after importation."

On remand, the ITC must determine "whether all of the EPO that Roche imported was entitled to the protection of the safe harbor."

Judge Linn's dissent remains unchanged. He argues that the plain language of 271(e)(1) cannot be read to extend to excuse imports of products made by patented process since that activity is not defined as "infringe[ment]" under Section 337.

Federal Circuit Remands Patent Pool Misuse Case: Issue of Improperly Sequestering Alternative Technology

Princo v. ITC (Fed. Cir. 2009) Read the Decision

The ITC found that the CD-R and CD-RW disks imported by Princo violate a handful of Philips patents that cover industry standard compact disk technology. On appeal, the adjudged infringer argued that the patents should be unenforceable under the equitable doctrine of patent misuse. Giving some credence to the argument, the Federal Circuit vacated-in-part and remanded for further proceedings to determine whether Philip's misused its patents by allegedly agreeing with a competitor not to license-out would-be competing technology.

Misuse is an antitrust theory that attempts to restrain a patentee from over-extending the anticompetitive strength of the patent rights in ways "contrary to public policy." In some situations the antitrust authorities allow multi-company patent pooling as a way to promote foundational development and convergence. See Herbert Hovenkamp, Mark. D. Janis & Mark A. Lemley, IP and Antitrust § 34.4, at 34-20.1 (2009) (“Typical procompetitive benefits [of patent pools] include the clearing of blocking positions, the advantages flowing from integration of complementary technologies, and the cost savings from avoiding litigation.”). These agreements may be reviewed under the rule of reason for pro-competitive benefits.

In the early 1990's Philips, Sony, and others formed a patent pool to cover CD-R and CD-RW technology and - in the process - defined the industry standard. Philips licenses the pools (but not individual patents) -- charging a per disk royalty and requiring that the licenses be used only to make CD's that comply with the defined "Orange Book compliant" standards. When Princo refused to pay the royalty, Philips sued for infringement in the ITC.

This appeal focuses on one particular patent in the pool - Sony’s U.S. Patent No. 4,942,565 ("Lagadec"). Lagadec claims a digital process for identifying the laser position. The patent pool also includes a patent covering a similar analog process for identifying the laser position developed by Philips. And, in fact, the defined standard requires that the analog process (not the digital process) be used.

Tying Non-Essential or Non-Used Patent: Princo argued that Lagadec is a non-essential patent and that Philips "improperly used its market power to force manufacturers seeking patents essential to the production of Orange Book compliant discs to also take a license to Lagadec, an allegedly-nonessential and Non-used Sony patent." The Supreme Court saw this type of tying as problematic in Zenith v. Hazeltine, 395 US 100 (1968). In Zenith, the court held that “conditioning the grant of a patent license upon payment of royalties on products which do not use the teaching of the patent [is] misuse.”

Reasonable Claim Construction: Although the final claim scope was not clear, Philips argued under a reasonable broad claim construction, the standard analog process would infringe one of the claims in the Lagadec patent -- thus making that patent "essential" to the pool and immunizing the pool from the tying challenge. Without determining the specific claim construction, the Federal Circuit agreed that misuse may be avoided if at the time of the licensing "it would have been reasonable for a manufacturer to believe a license ... was necessary."

We thus think that perfect certainty is not required to avoid a charge of misuse through unlawful tying. Rather, in this context a blocking patent is one that at the time of the license an objective manufacturer would believe reasonably might be necessary to practice the technology at issue.

The Federal Circuit's "reasonable" approach meshes with the Hovenkamp Antitrust-IP treatise which states:

Indeed, even if the patents are only arguably conflicting, there are strong reasons to permit the settlement of patent disputes by means of a cross-licensing agreement. Not only will judicial economy be served and litigation costs reduced by settling such disputes, but the delay and uncertainty associated with blocking patent disputes may prevent either party from going forward with a commercial product for years while litigation is pending. Where two or more patents are arguably blocking, therefore, settling the dispute by means of cross-licensing is likely to be procompetitive.   

Here, for instance, by licensing Lagadec, a manufacturer has more certainty that licensing the pool will avoid later allegations of infringement -- a major goal of the standard setting operation.

Cutting-off Alternatives: By including Sony's Lagadec patent in the pool but then preventing manufacturers from using the digital process, Princo argued that Philips improperly colluded to sequester the work-around technology from competitive development. In Princo's words "Philips bribed Sony not to use . . . Lagadec to compete against the [Philips dominated standard]." On appeal, the Federal Circuit agreed with Princo that such collusion could be misuse even if the patent included "essential" claims.

It is one thing to offer a pooled license to competing technologies; it is quite another to refuse to license the competing technologies on any other basis. In contrast to tying arrangements, there are no [pro competitive] benefits to be obtained from an agreement between patent holders to forego separate licensing of competing technologies, as counsel for Philips conceded at oral argument. . . . Agreements between competitors not to compete are classic antitrust violations. . . . Agreements preventing patent licensing of competing technologies also can constitute such violations.

On remand, the ITC must determine whether Princo has provided sufficient evidence to show that Sony and Philips agreed not to separately license Lagadec as competing technology and that the digital technology could have been a viable alternative.

Dissent in Part: Dissenting in part, Judge Bryson would have fully affirmed the ITC's findings.

Prior Discussion of the Case:

• Philips Infringement Case Stayed Until ITC Appeals Exhausted
• 271(d)(5) Defines A Patent Misuse Safeharbor, But Does Not Define Misuse Itself
  
• U.S. Philips CD Patent Pool Given Green Light by Court of Appeals

Narrowing Amendment and Prosecution History Estoppel

Felix v. American Honda (Fed. Cir. 2009)

Mr. Felix sued Honda for infringement of his patent covering a truck bed with a storage compartment underneath the bed. The Honda Ridgeline advertises a "lockable In-Bed Trunk®" that appears to serve the same overall purpose. The problem is that Felix's asserted claim is rather narrow and the district court found no literal infringement and no infringement under the doctrine of equivalents. Asserted claim 6 reads as follows:

6. In combination with a vehicle including a vehicle bed, the improvement of a storage system which includes: a) an opening formed in the vehicle bed and including an opening rim; b) a compartment with an interior; c) said compartment being mounted on said bed with said compartment interior accessible through said opening; d) a lid assembly including lid mounting means for mounting said lid in covering relation with respect to said opening; e) a channel formed at the rim of said bed opening and including an inner flange; f) a weathertight gasket mounted on said flange and engaging said lid in its closed position; and g) a plurality of drain holes formed in said channel.

In particular, the accused Honda truck bed has a "weathertight gasket" mounted on the lid rather than to the flange as claimed in the Felix patent.

On appeal, the Federal Circuit affirmed the lower court's judgment of non-infringement – finding Honda did not literally infringe and that Felix's claim under the doctrine of equivalents (DOE) was foreclosed by prosecution history estoppel. Here, I will discuss the DOE dispute.

Doctrine of Equivalents: The patent claims spell out the boundaries of an inventor's claimed invention. However, courts may extend the scope of exclusionary rights beyond the literal claim language to capture equivalent products. In recent years, the doctrine of equivalents has been limited. This case, the doctrine of prosecution history estoppel came into play because Felix had narrowed his claims prosecution. (Actually, the applicant cancelled the broad independent claims and re-wrote the dependent claims into independent form. Under Honeywell, that process has the same estoppel effect as narrowing the independent claim.)

Tangential: The presumption of estoppel can be overcome with evidence that the reason for the narrowing amendment is no more than tangentially related to the equivalent in question. The evidentiary standard for proving the "no more than tangential relationship" is quite high. Here, Felix offered a credible alternative explanation, but the Federal Circuit rejected his argument because (1) he did not prove that his alternative was "the only reason" for the amendment and (2) he did not "explain the entire amendment."

"Because we conclude that Felix is barred by the doctrine of prosecution history estoppel from relying on the doctrine of equivalents to prove that the accused In-Bed Trunk meets the gasket limitation, we also affirm the district court's summary judgment of no infringement by equivalents."

Drafting Strategies: One interesting aspect of this case is that Felix had to go through a couple of rounds of amendments. After first amending to add the gasket, Felix then had to amend again to secure allowance. Although the first amendment did not directly lead to allowance, the narrowing amendment still created a presumption of estoppel:

"The fact that the first amendment did not succeed and that a further amendment was required to place the claim in allowable form, however, is of no consequence as to the estoppel. It is the patentee's response to a rejection—not the examiner's ultimate allowance of a claim—that gives rise to prosecution history estoppel.

We therefore hold that the presumption of prosecution history estoppel attaches when a patentee cancels an independent claim and rewrites a dependent claim in independent form for reasons related to patentability, even if the amendment alone does not succeed in placing the claim in condition for allowance."

Judge Linn also pointed to an "open question" in footnote 4:

"We leave open the question of whether the presumption of surrender would have attached as to the gasket limitation if, in response to the first office action, Felix had cancelled both claim 1 and claim 7, and had rewritten claim 8 in independent form, instead of attempting to secure the broader coverage of rewritten claim 7 as an intermediate step."

[Corrected 3:40 CST]

     

Double Patenting: Proving Distinctiveness Based on Later Developed Evidence

Takeda Pharma. v. Doll (Fed. Cir. 2009)

For several decades, Hal Wegner has been the shepherd of Takeda's family of Cepham patents claiming priority back to 1974. The question on appeal in this case involves double patenting and whether post-filing developments in the art can be used to inform the question of whether two claims are "patentably distinct." Takeda's evidence that its claims were distinct was generated in this decade, but the PTO argued that double patenting must be determined based on evidence pre-dating the priority application. Takeda could file a terminal disclaimer, but that would destroy the valuable pre-GATT patent term.

Obviousness Type Double Patenting is also known as non-statutory double patenting because ... the theory is not based on any statute. Rather the doctrine is a judicially created mechanism designed to prevent a patentee from unfairly extending the term of patent rights through consecutive patents. To the extent this problem existed, much of it was eliminated in the 1995 changes that linked the patent term with the filing date rather than the issue date. Under the doctrine, separate claims with different patent terms will not both be patentable unless their subject matter is "patentably distinct." Today the double patenting issues may arise most frequently when family-member patent terms differ due to patent term adjustments based on PTO delay during prosecution.

Product and Process: Takeda's case involves a change in claim form. The PTO argued that the company's latter manufacturing process claims are not patentably distinct from its earlier product claims. Generally, a product and its manufacturing process are deemed patentably distinct when “the product as claimed can be made by another materially different process.” MPEP § 806.05. Here, the "materially different process" was not known until well-after the applications were filed.

Holding: In its holding, the Federal Circuit compromised: Evidence of distinctiveness can be post-filing, but must be prior to the filing of the secondary application because that filing "actually triggers the potential of an unjustified extension of patent term."   The case is then remanded for a determination of whether Takeda can prove distinctiveness using evidence that predates the second application (which was filed in 1990).

Judge Schall concurred in the judgment of remand, but disagreed with the rule of law that post-filing information should be available to prove distinctiveness. "I believe that tying the inquiry to the invention date is most commensurate with patent law as a whole and the policy goals relating to obviousness-type double patenting." Judge Schall noted that the double patenting doctrine is one of patentability - and thus should be judged based on the date of invention.

Comments: I do not pretend to know the correct rule. However, Judge Rader's decision looks to be incorrect. His judgment was based on the filing date of the second application as being the triggering date for the potential of an unjustified extension of patent term. Of course, the potential having double patenting problems was at least implicitly created in the original filing. If you are looking for an explicit trigger, that might not even be found in the second application as filed since claims are usually amended during prosecution. If selecting a triggering date - I would have chosen the date that the second patent issues. Until that point, there is no double patenting.

Note:

• Judge Moore joined Judge Rader's majority opinion.

In re Ferguson (Answers to Frequently Asked Questions FAQ)

Scott Harris is the attorney who prosecuted, briefed, and argued in re Ferguson at the Federal Circuit. Harris is a former Fish & Richardson partner and is now in solo practice. He is also listed as a co-inventor on the patent application in dispute here as well as 40 other patents and 100+ pending applications. I asked him to provide his perspective on the case. In response, Harris provided the following FAQ.

What is Ferguson’s holding?

In order for a claim to be patentable under 35 USC 101, that claim must recite either a machine, or recite something that is tied to a machine; or the claim must transform some physical thing. The machine or the physical thing being transformed cannot be a paradigm, cannot be a corporation, and cannot be a legal obligation. 35 USC 101 requires that you must be able to “touch” the machine or the thing being transformed.

How does Ferguson differ from Bilski?

The patent application of In re Bilski, 545, F.3d 943 (Fed Cir 2008) related to an improved mathematical way in which hedged commodities were analyzed and managed. Like many of the previous “preemption” cases that had been decided by the Supreme Court and by the Federal Circuit, Bilski’s claims recited a mathematical algorithm. The Federal Circuit holding announced a new test – requiring the claim combination to be either tied to a “machine” (e.g. a computer) , or claiming a transformation of an object. Since there was no “machine” or “transformation”, the court concluded that Bilski’s claims would “preempt” one specific mathematical form of hedging, effectively stopping anyone else from using these mathematical formulas in the same way. The machine/transformation cannot be peripheral to the claim – which means that the machine or transformation cannot be related to data gathering or “mere” post solution activity.

Unlike the “preemption” cases relied on by the Bilski court, Ferguson had no mathematical calculation at all. The Federal Circuit chose to extend the Bilski test beyond the confines of “preemption” to defeat patentability of Ferguson’s pure business method. Ferguson holds that Bilski’s “machine or transformation” test is the sole and exclusive test for determining patentable subject matter, with or without a mathematical calculation.

Ferguson also held

- that the machine prong of the Bilski test must be a physical thing that one must be able to touch, and

- that the “article” to be changed into a different state or thing cannot be a legal obligation – and presumably likewise must be something that can be touched.

What was the Ferguson patent application about?

In a nutshell – software written by the little guy that was marketed and supported as though it had been written by the big guy. We believed that institutions would simply refuse to adopt or purchase any software unless it was supported by a credible company. Someone in their basement could write the best word processor or drawing program ever – but no one would ever know, because few would ever adopt it.

The patent application claimed a way to support a very small software developer or writer - who had the skills to write the software, but did not have the skills or resources to market and support the software. Ferguson claimed a shared marketing force that took a share of the income or profit from the software in return for doing this marketing and support.   

Why did you write claims to a “paradigm”?

In 1999, new forms of patents and claims were erupting. The patent office had decided to accept as statutory Beauregard claims, which recited a sequence of instructions on a readable computer media. I was excited by the prospect of writing a whole new claim form for the business method genre.

I had originally filed Ferguson’s patent application with many claims reciting a “paradigm”, a way in which a business organization would carry out a specific business task. Other claims defined a process of doing that business task. Ferguson was about selling computer software, and that was not something that would normally be carried out on a computer.   

Based on everything I knew at that time, business methods should be patentable. I wanted to see if we could get the patent office to accept a wholly new form of claim adapted to the business method. I called this a paradigm, which Kuhn, in The Structure of Scientific Revolutions defined as “an accepted model or pattern, . . . Paradigms gain their status because they are more successful than their competitors in solving a few problems that the group of practitioners has come to recognize as acute.” A paradigm in this sense, therefore, referred to the successful way in which a problem is solved.

Why did you think you get claims like this?

I believed the Supreme Court when they said that 35 USC §101 allows you to patent “anything under the sun that is made by man". Diamond v Chakrabarty, 447 US 303, 308 (1980).

I believed the Federal Circuit, when they said that "business methods" were patentable. State Street Bank and Trust v Signature Financial Group Inc., 149 F.3d 1368 (Fed Cir 1998).

I did not believe there was any prior art defeating patentability, and indeed, the patent office never found any.

Are Business Methods still patentable after Bilski/Ferguson?

Bilski expressly did not overrule the part of State Street Bank and Trust v Signature Financial Group Inc., 149 F.3d 1368 (Fed Cir 1998), which held that business methods were NOT per se unpatentable.

However, I define a business method as a novel and unobvious way that a business carries out a new business function.

The holdings in Bilski and Ferguson make any such business method unpatentable, unless tied to a machine, or operated to transform a physical object. Therefore, some ways of carrying out the business method may be patentable under Bilski / Ferguson. I do not believe any pure business method could be patented under the holdings of Bilski/Ferguson.

What’s your take away from Ferguson?

Disclose (and claim) interaction with a computer in every patent application that is not a pure mechanical device.

Don’t get your hopes up about the patent office accepting an innovative claim form.

No Stay of District Court Proceedings Pending Appeal of Preliminary Injunction

Fairchild Semiconductor v. Third Dimension (3D) Semiconductor (Fed. Cir. 2009) (nonprecedential order)

Fairchild originally licensed 3D's US and Chinese patents - agreeing to a royalty for all Fairchild products "covered by" a 3D patent. However, after analyzing the patents, Fairchild decided that it need not pay any royalties and then sued for a declaratory judgment that it owed no royalties and that none of its products are covered by 3D's patents.

Restraining License Termination: In a preliminary ruling, the district court granted Fairchild's request for a preliminary injunction prohibiting 3D from terminating the license agreement. The ongoing license serves as a defense to charges of patent infringement by 3D. As the district court held, "termination of the agreement does create irreparable harm in depriving Fairchild of its primary defense to 3D patent infringement litigation.

The threat of such litigation is not speculative: 3D has already filed a complaint in the United States District Court for the Eastern District of Texas and has promised to file an infringement case in China based on the Chinese patents otherwise licensed by the Agreement. Without the Agreement as an affirmative defense to those suits, Fairchild could be forced to endure years of litigation in those other forums despite this Court eventually ruling that Fairchild did not breach the Agreement.

The preliminary injunction is now on appeal to the Federal Circuit. In a recent order, the appellate panel rejected 3D's motion to stay the district court proceedings pending outcome of the appeal. 3D argued that the appeal divested the district court with jurisdiction over the matter. That argument was regarded "without merit."

A preliminary injunction, i.e., an injunction pendente lite, is an injunction issued pending the ongoing litigation. Although a district court may not proceed with matters involved with the injunction itself, e.g., it may not amend the injunction, or make findings to support its injunction while the injunction is on appeal, the district court may proceed with the litigation and permit discovery, enter rulings on summary judgment, or hold a trial on the merits. (internal citations omitted)

Briefing in the appeal will begin in April.

Notes & Docs:

• Federal Circuit Order
• Dennis Crouch, Enforcing Foreign Patents in the US: Distinguishing Voda, Patently-O (Dec. 12, 2008) at http://www.patentlyo.com/patent/2008/12/enforcing-forei.html.

Federal Circuit Awards Sanctions for Frivolous Appeal

E-Pass v. 3Com, Palm, Visa, et al. (Fed. Cir. 2009)

This litigation began in 2000 when E-Pass sued for infringement of its electronic credit card patent. Patent No. 5,276,311. The district court granted summary judgment of non-infringement, which was affirmed on appeal. The district court then found the case exceptional under 35 U.S.C. § 285 and awarded attorneys' fees to the defendants. E-Pass appealed that judgment. In a counter-motion, PalmSource also asked for attorneys fees for the appeal – arguing that the appeal was frivolous as well. The Federal Circuit affirmed the trial court without opinion, but wrote an extensive opinion finding a frivolous appeal.

Frivolous Appeal: An appeal is frivolous if the appellant fails "to present cogent or clear arguments for reversal." In addition, the court may award sanctions based on misconduct or misrepresentations to the appellate court.

Here, the court found that E-Pass did not present any specific argument relating to the attorney fees for one of the defendants – PalmSource. Instead, the plaintiff-appellant focused on its case against the other defendants. E-Pass did not "challenge any finding of the district court relating to litigation misconduct in the case against PalmSource." Furthermore, E-Pass did not change its strategy even after being notified of PalmSource's frivolous appeal argument. Adding to E-Pass's problems are "multiple misrepresentations" to the Federal Circuit – primarily in referring to the defendants collectively when each stood in different situations. Perhaps the straw-that-broke-the-camel's-back was E-Pass's use of the quote that "a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless." With the help of PalmSource and the CAFC clerks, the court easily found that a critical exception to the sanctions rule had been left off. Notably, the full quote reads: "Absent misconduct in the litigation or in securing the patent, a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless."

Sanctions and attorney fees granted against E-Past and its counsel, jointly and severally.

In dissent, Judge Bryson saw serious misconduct, but would not have imposed sanctions.

Accepting that in those regards E-Pass’s briefs on appeal fell short of the standards we expect of counsel in this court, I nonetheless conclude that the shortfall is not so egregious as to call for the imposition of sanctions.

Inequitable Conduct Based on Failure to Submit Rejection in Co-Pending Case

Larson Mfg. Co. v. Aluminart Products Ltd. (Fed. Cir. 2009)

In an earlier post, I discussed the concurring opinion in this case where Judge Linn argued for a restatement of the law of inequitable conduct that makes it more difficult to allege inequitable conduct absent evidence of fraud. This post covers the majority opinion.

Larson sued Aluminart for infringement of two claims of its patent covering a storm door with a moving glass panel. Without reaching the merits of the infringement argument, the district court found the patent unenforceable due to inequitable conduct during prosecution. The district court found that the patentee had improperly withheld documents from the examiners during reexamination of the patent. (The reexamination had been requested by Aluminart). The Federal Circuit provided the following description of the lower court holding:

The [district] court found that Larson failed to disclose to the Reexamination Panel three items of prior art and two office actions issued in the prosecution of a continuation application that grew out of the application that resulted in the ’998 patent [the patent being reexamined]. The court rejected Larson’s argument that the three items of prior art were cumulative of prior art which already was before the Reexamination Panel and therefore were not material, as well as its argument that the office actions were not material because all of the critical references noted in them already had been disclosed to the Reexamination Panel. After finding that Larson intended to deceive the Reexamination Panel, the court balanced its findings of materiality and intent and found inequitable conduct.

On appeal, the Federal Circuit vacated the holding and remanded for a potential new trial on inequitable conduct.

The inequitable conduct charges stem from the PTO's parallel examination of both the reexam of the patent in suit and a continuation application. During the reexam, Larson's patent attorney submitted hundreds of references, district court proceedings, and disclosed the co-pending continuation. However, the patent attorney did not cross-cite two office action rejections from the continuation or one of the prior art references from the continuation (although every other reference from the continuation was cited). In addition, the attorney did not cite two marketing configuration sheets that were later uncovered during discovery.

Law of Inequitable Conduct: Inequitable Conduct requires clear and convincing evidence of at least a threshold level of evidence that the applicant both (1) "made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information" and (2) by that act "intended to deceive the PTO." The materiality of the action is determined based on a reasonable examiner standard - what would a reasonable examiner "consider important in deciding whether to allow the application to issue as a patent?" If an unsubmitted reference is cumulative to information already on hand, then it will not be seen as material. Proof of intent to withhold a reference is not sufficient. Rather, the evidence must show intent to deceive the PTO. That said, intent may be proven by circumstantial evidence. After finding both threshold materiality and intent, the court must determine if the proof is sufficient to find inequitable conduct and consequently hold the patent unenforceable.

What is Cumulative?: After reviewing the submitted and unsubmitted prior art references in detail, the Federal Circuit found that the lower court had clearly erred in finding the art non-cumulative. Notably, the only features found in the non-submitted art that were not in the submitted art were "irrelevant to the claim limitations at issue and therefore could not support a finding of materiality and non-cumulativeness." Although the unsubmitted prior art included a different embodiment than the submitted reference, that difference was not important because the claims were broadly drafted in a way that cover both embodiments.

Disclosure of Office Actions in Related Cases: The examiner of the co-pending continuation filed four office action rejections. The first was used as the basis for the reexamination request. The second was used as a basis for an initial rejection in the reexamination. However, the patentee did not submit the third or fourth office action for consideration. The Federal Circuit agreed with the lower court that the office actions should have been submitted because the rejections contained "adverse decisions about substantially similar claims" that were "not cumulative" to materials already submitted to the examiner.

Because the Third and Fourth Office Actions contained another examiner’s adverse decisions about substantially similar claims, and because the Third and Fourth Office Actions are not cumulative to the First and Second Office Actions, the district court correctly found the withheld Office Actions material.

In its analysis, the Federal Circuit reviewed Dayco Products where it found the patentee had wrongly withheld rejections from co-pending applications.

In Dayco Products, the patentee failed to disclose rejections in a copending application of claims “that were substantially similar in content and scope to claims pending in the applications that issued as the patents-in-suit.” 329 F.3d at 1367. We held “that a contrary decision of another examiner reviewing a substantially similar claim” was material. Id. at 1368. We further explained that, because a “rejection of a substantially similar claim refutes, or is inconsistent with the position that those claims are patentable, [the] adverse decision by another examiner . . . meets the materiality standard.” Id.   

Thus, on remand, the district court must determine whether the patentee failure to submit the two office actions was done with sufficient intent to deceive the PTO. Although seemingly dicta, the Federal Circuit provided four points of explicit guidance to the lower court. First, the district court need not accept any additional evidence; Second, the court should remember that "material does not presume intent, and nondisclosure, by itself, cannot satisfy the deceptive intent element." Rather, if intent is inferred, it must be "the single most reasonable inference able to be drawn from the evidence." Further, intent cannot be inferred based on a decision to withhold if the patentee has plausible legitimate reasons for withholding. Third, good faith on behalf of the applicant must be considered as it "militates against a finding of deceptive intent." One element of good faith here, may be that the patentee notified the examiners of the co-pending application. Finally, although the Federal Circuit agreed that the office actions were material, the court did not opine on how material. Thus, if the lower court does find clear and convincing evidence of a threshold intent to deceive, the court must again determine whether the combined intent and materiality are sufficient to warrant a holding of inequitable conduct.

Notes:

• This case is rather silly because the defendant Aluminart was closely following the reexamination. I can almost guarantee that Aluminart realized that the documents had not been submitted even before the reexamination certificate was issued. Certainly, the company could have brought the omission Larson's attention if it truly was material.

Judge Linn Calls for En Banc Restatement of the Law of Inequitable Conduct

Larson Mfg. Co. v. Aluminart Products Ltd. (Fed. Cir. 2008)

Larson's patent covers a specially designed outside. The appeal focuses on inequitable conduct and the Federal Circuit vacated a district court judgment that the asserted patent was unenforceable. I will return to the decision in a later post, but wanted to focus attention on the concurring opinion by Judge Linn and his call for an en banc review of inequitable conduct jurisprudence. Linn's concerns could be addressed by the Supreme Court in Aventis Pharma v. Amphastar Pharmaceuticals, which is pending certiorari.

I write separately … to express my view that this precedent has significantly diverged from the Supreme Court's treatment of inequitable conduct and perpetuates what was once referred to as a "plague" that our en banc court sought to cure in Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc). …

Symptoms of this plague are apparent from the facts of this case. The patent-in-suit has undergone examination twice in the PTO, and the patentee has been accused of inequitable conduct on each occasion for allegedly withholding material information. During original prosecution, the PTO considered 143 references, 135 of which the submitted two more IDSs in the reexamination, each within approximately one month of the application's Office Actions. The IDSs contained all references relied on in those rejections but did not include the Office Actions themselves. With full knowledge of the co-pending application, the PTO confirmed the patent, which survived reexamination without substantive change to the litigated claims. When the litigation resumed, the accused infringer again charged the patentee with inequitable conduct, this time based on conduct in the reexamination. This second inequitable conduct allegation was the sole issue at trial. Following remand today, the litigation will continue to focus on inequitable conduct, to the exclusion of the patentee's infringement contentions.

The ease with which inequitable conduct can be pled, but not dismissed, is a problem of our own making. The Supreme Court's three inequitable conduct cases involved overt fraud, not equivocal acts of omission. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 809, 819 (1945) ("patent claims infected with fraud and perjury" where assignee knew that its employee "gave false dates as to the conception, disclosure, drawing, description and reduction to practice" during interference proceeding and then "secured the perjured . . . application and exacted promises from the other parties never to question the validity of any patent that might be issued on that application"); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 243 (1933) (false affidavits and deposition testimonies obtained "for valuable considerations" averring that the prior art use "was an abandoned experiment" and "to keep secret the details of the prior use"); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 240, 243 (1944) (false trade article procured from "an ostensibly disinterested expert" in exchange for $8,000 to gain patent issuance in spite of previously "insurmountable Patent Office opposition"), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976).

We clarified en banc that the "two elements, materiality and intent, must be proven by clear and convincing evidence," and that "'gross negligence' does not of itself justify an inference of intent to deceive." Kingsdown. But in seeming contradiction with Kingsdown, a standard even lower than "gross negligence" has propagated through our case law. This standard permits an inference of deceptive intent when "(1) highly material information is withheld; (2) 'the applicant knew of the information [and] . . . knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding.'" Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1313-14 (Fed. Cir. 2008).

This test is problematic. First, the "high materiality" prong of the intent element simply repeats the materiality element. Conflating materiality and intent in this manner is inconsistent with the principle that "materiality does not presume intent, which is a separate and essential component of inequitable conduct." Manville Sales Corp. The second, "should have known" prong sets forth a simple negligence standard, lower even than the "gross negligence" standard that was expressly rejected in Kingsdown. I also question whether a fact-finder who has deemed information to be "highly material" would not also be compelled to conclude that a reasonable patentee "should have known of the materiality," at least when the patentee "knew of the information," as prong two requires. Third, the "credible explanation" prong effectively shifts the burden to the patentee to prove a negative: that it did not intend to deceive the PTO. But it is the "accused infringer"—not the patentee—who "must prove by clear and convincing evidence that the material information was withheld with the specific intent to deceive the PTO." Star Scientific, Inc. As to this third prong, we have also explained that "[t]he patentee need not offer any good faith explanation unless the accused infringer first carried his burden to prove a threshold level of intent to deceive by clear and convincing evidence." Id. As explained above, however, the first two prongs are not evidence of deceptive intent. The first is evidence of materiality; the second is evidence of negligence. These two prongs are therefore insufficient as a matter of law to establish a clear and convincing "threshold level" of deceptive intent before the third prong can ever properly come into play.

As it now stands, the test generally permits an inference of deceptive intent to be drawn whenever the three prongs are satisfied. This is in tension with the rule in Star Scientific that "the inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence." Id. It cannot be said that deceptive intent is the "single most reasonable inference" when all that prong two shows is that the patentee "should have known" that the information was material. An equally reasonable inference under this test is that the patentee incorrectly believed that the information was not material, or that the patentee was negligent, or even grossly negligent. None of these gives rise to deceptive intent under Kingsdown, nor is deceptive intent the "single most reasonable inference" under Star Scientific.

For the foregoing reasons, I respectfully submit that the test for inferring deceptive intent, as it currently exists, falls short of the standard "need[ed] to strictly enforce the burden of proof and elevated standard of proof in the inequitable conduct context." Star Scientific. The facts of this case suggest that the time has come for the court to review the issue en banc.

Improper Summary Judgment on Doctrine of Equivalents; Marking Products that Perform Method Claims

Crown Packaging v. Rexam Beverage Can (Fed. Cir. 2009)

On summary judgment, the district court held that Rexam did not infringe Crown's patent beverage can-top patent. The lower court also found that that Crown did not infringe Rexam's beverage can "necking" patent. On appeal, the Federal Circuit reversed both rulings.

The Doctrine of Equivalents: Over the past two decades, the doctrine of equivalents been pushed out of the usual infringement discussion. Part of the doctrine's downgrade is due to restricted application due to prosecution history estoppel (Festo) and tighter doctrine (Warner-Jenkinson). Perhaps equally important in the decline of the DOE has been the rise of claim construction as the primary variable of patent litigation. Rather than arguing for infringement as an equivalent, applicants are instead arguing for broad construction of the claim terms. Finally, patent drafters are – on average – better today than they were twenty years ago and spend more energy on considering how to draft claims that capture literal infringement. In a 2007 paper, Professors Lemley and Allison found something similar – that since the late 1990's (even before Festo), that "equivalents claims usually failed, most often on summary judgment." Their paper title - "Demise of the Doctrine of Equivalents" – overstates its case. The DOE is sometimes valuable.

Function-Way-Result Test: There are at least two alternate tests for infringement under the doctrine of equivalents. The function-way-result test considers "on a limitation by limitation basis" whether "the accused product performs substantially the same function in substantially the same way with substantially the same result as each claim limitation of the patented product."

Summary Judgment on DOE: Here, the issue was not so much the law of the DOE, but rather the requirement for summary judgment that there be no remaining material issue of fact. Crown's patent claims an "annular reinforcing bead," while Rexam's product uses a reinforcing fold. The lower court found those different enough to avoid infringement under the DOE. On appeal, however, the Federal Circuit reversed – finding at least one unresolved material issue of fact that precluded summary judgment. DOE requires expert testimony to step through the function-way-result test. And, here, the patentee's expert stepped through each element and his testimony had not been completely indicted or even refuted.

Because Crown provided evidence in support of its position that the annular reinforcing bead of claim 14 of the '826 patent had only one function, and because we must resolve any reasonable factual inferences in favor of the nonmoving party, we conclude that there is a material issue of fact regarding the function of the claimed bead. Accordingly, we reverse and remand the district court's grant of summary judgment of noninfringement.

This decision by Judge Moore is in line with the court's 2008 Voda case which was affirmed after parsing expert testimony to ensure that the elements had been properly proven. (In Voda, the court used the alternative "insubstantial difference" test.)

Unmarked Sales by Licensee: In a scenario reminiscent of the recent Quanta v. LG case, Rexam licensed its patents to Belvac to make "neckers" used to stretch out the top of the can bodies. Under the license, Belvac was required "to notify its customers that they would require a separate license from Rexam to perform the smooth die necking method" that is claimed in Rexam's patents. The license did not require Belvac to mark the machines that it sold. And, in fact, Belvac did not mark them with the Rexam patent number. Crown then used the machine to make over one hundred billion cans.

Marking under 35 U.S.C. § 287(a): The district court found that this past infringement was not actionable because Crown was not on notice of the patent. That decision seemingly follows from 35 U.S.C. § 287(a). Under that provision, a patentee who does not properly mark a patented article "is not entitled to damages for infringement prior to actual notice." (quoting CAFC decision).

Marking of Method Claims: Rexam's trick here was to assert only method claims. On its face, Section 287 applies to "any patented article," and Federal Circuit precedent has clearly stated that the marking requirement does not apply when only method claims are asserted. With palpable regret, Judge Moore writes:

"The law is clear that the notice provisions of § 287 do not apply where the patent is directed to a process or method. Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. Cir. 1983). In Hanson, 718 F.2d 1075 (Fed. Cir. 1983)—we held that 35 U.S.C. § 287(a) did not apply where the patentee only asserted the method claims of a patent which included both method and apparatus claims. Hanson is factually identical to this case, and we are therefore bound by the rule of Hanson."

Thus the patentee is free to claim damages back six years under Section 286 even without marking or providing actual notice. This decision thus provides an additional reason to include method claims in a patent application. Now, it would be improper to conclude that there is no reason to mark products that perform method claims. In the 1993 American Medical Systems case, the Federal Circuit ruled that marking would be required if "both apparatus and method claims" were asserted and there is a "tangible item to mark." In this case, the patent claimed both a method and apparatus, but Rexam sued only on the method claims.

The Essential Element Test and ICU Medical

In discussing the recent ICU Medical case, I noted that Judge Moore's decision did not rely on the "essential element" test or even cite Gentry Gallery. In Gentry Gallery, the patent covered a sectional recliner. During prosecution, the patentee had amended its claims to drop any reference to the location of the recliner controls. The Federal Circuit held those later-drafted claims invalid because the location of the controls was an "essential element" of the invention that must be included in the claims – otherwise, the claim scope would be unduly broad. Following Gentry Gallery, however, the Federal Circuit stepped-back from the essential element language– instead narrowing the case holding to the well trod notion that claims should be limited to the supporting disclosure. In both Johnson Worldwide, and Cooper Cameron, for instance, the Federal Circuit explicitly denied that Gentry Gallery created any new requirement.

"[W]e did not announce a new 'essential element' test mandating an inquiry into what an inventor considers to be essential to his invention and requiring that the claims incorporate those elements." Cooper Cameron, 291 F.3d 1317 (Fed. Cir. 2002)

In parallel fashion to Gentry Gallery, ICU had included a "spike" in every embodiment and each original claim. During prosecution, and apparently after seeing competing products, ICU amended its claims to drop the "spike" limitation. This was important because the market had moved to a spikeless version of IV valves. This district court in ICU discussed Gentry Gallery and the essential element test, but found no need to base its ruling on that "disfavored" theory. Rather, the court based its analysis on the traditional notion that claims must be described in the specification.

"[T]he Court's analysis employs the accepted rule that the claims may be no broader than the supporting disclosure, or, conversely, that claims are invalid when the entirety of the specification clearly indicates that the invention is of a much narrower scope. By focusing on the language of the Common Specification in a manner that highlights the function of the "spike" element, and the frequency and ubiquity with which it is referenced, the Court is only attempting to discern the breadth and substance of the invention ICU actually disclosed in the original 1992 Application."

Although the district court denied its application of any "essential element" test, it went on to hold that any valid claims must include a spike:

"The pervasiveness of the "spike" element in the invention description clearly informs the Court, and would inform any reasonable juror, that what was disclosed and claimed as the invention in the 1992 Application was a needleless medical valve with at a minimum, a "body," a "seal" and a "spike.""

Likewise, the Federal Circuit's version denies an omitted element test, but held that any valid claim must include a spike limitation because "a person of skill in the art would not understand the inventor ... to have invented a spikeless medical valve."

Notes:

• ICU Medical Part I
• ICU Medical Part II
• ICU Medical Part III
• The essential element and omitted element test are largely interchangeable, although some logical distinction could perhaps be made.

Written Description: Federal Circuit Again Invalidates Broadened Claims

ICU Medical v. Alaris Medical System (Fed. Cir. 2009)

This is the second post on the ICU case. Part I discusses the $4.6 million award of attorney fees to the accused infringer based on the patentee's litigation misconduct.

The district court found several of ICU's claims invalid for lack of written description under 35 U.S.C. § 112, ¶ 1. On appeal, the Federal Circuit affirmed. (Judges Michel (CJ), Prost, and Moore; Opinion by Moore). Although similar to enablement, the written description requirement pushes an applicant to "convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the invention." Most often, written description arises in cases where new matter is added to the claims during prosecution. That is also the case here - during prosecution ICU amended its claims to include "spikeless" claims -- directed to a valve mechanism for adding drugs to an IV without using needles.

To be clear - the original claims included the "spike." That element was removed during prosecution - seemingly broadening the claims. As the court stated "we refer to these claims as spikeless not because they exclude the preferred embodiment of a valve with a spike but rather because these claims do not include a spike limitation—i.e., they do not require a spike." It is that failure to include any discussion of a spike in the claim that lead to the claim being held invalid for lack of written description.

The Federal Circuit does not cite Gentry Gallery or the infamous "omitted element" or "essential element" theories. However, the court does rely heavily on LizardTech. In that case, the court did not point to any claim limitation that was not sufficiently described. Rather, the court found the claim invalid because an embodiment arguably covered by the claim was not sufficiently disclosed.

We addressed a similar issue in LizardTech . . . We explained that "the specification provides only one method for creating a seamless DWT, which is to 'maintain updated sums' of DWT coefficients. That is the procedure recited by claim 1. Yet claim 21 is broader than claim 1 because it lacks the 'maintain updated sums' limitation." We determined, however, that "[a]fter reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by 'maintaining updat[ed] sums of DWT coefficients.'" We therefore concluded that claim 21 was invalid under the written description requirement of § 112, ¶ 1.

In LizardTech, the court explicitly rejected the argument that the written description requirement "requires only that each individual step in a claimed process be described adequately."

In this case, ICU's original disclosure focused on spiked embodiments, but the more generic claims are not so limited.

ICU's asserted spikeless claims are broader than its asserted spike claims because they do not include a spike limitation; these spikeless claims thus refer to medical valves generically—covering those valves that operate with a spike and those that operate without a spike. But the specification describes only medical valves with spikes.

Since all the embodiments included the "spike," the court concluded that "Based on this disclosure, a person of skill in the art would not understand the inventor ... to have invented a spikeless medical valve."

Invalidity affirmed

Notes:

• This case also includes an important discussion of claim differentiation that will be dissected in a later post.  
• Of course, this case suggests the best patent drafting practice of providing multiple embodiments of each claim element, and considering whether each and every limitation in the broadest original claims are necessary.
• ICU broadened its claim by dropping a limitation -- did ICU introduce new matter?
• In a powerful rhetorical approach, Judge Moore chose to refer to the broad claims as "spikeless claims." As mentioned, those claims do not include a "spikeless" limitation. Rather, they simply omit a "spike" element. As it turns out more than 99.9% all patent claims issued in 2008 are silent about "spikes," and under the traditional interpretation of the "comprising" transition - all those claims would literally cover embodiments without spikes. The holding here cannot be that all those claims are invalid. I believe that the holding here is largely a result of the fact that the accused device was in-fact spikeless. Unfortunately, this decision does not provide helpful guidance as to when it will apply. Rather, it appears to simply be an additional vague tool available to defense attorneys.
• The court did not mention enablement - since it was easy to remove the needle from a syringe and the disclosure includes a preslit seal that could arguably work with a spikeless syringe. That modification would have been enabled based on the original disclosure.

Federal Circuit Affirms $4.6 million award for litigation misconduct

ICU Medical v. Alaris Medical System (Fed. Cir. 2009)

ICU's patents covers technology for using syringes to add drugs to an IV. The district court granted summary judgment of invalidity and also awarded attorney fees and found a violation of Rule 11 of the Federal Rules of Civil Procedure. Alaris was awarded $4.6 million in attorney fees and sanctions. On appeal, the Federal Circuit affirmed.

Section 285 of the Patent Act provides for the award of attorney fees to the winning party in "exceptional cases." In Brooks Furniture, the Federal Circuit discussed a two-part test for whether attorneys fees may be awarded due to litigation conduct. The test requires that "both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” A district court fee award will be affirmed absent clear error.

The problem - ICU argued that the claim term "spike" could be a non-pointed structure such as a tube even though the specification "repeatedly and uniformly describes the spike as a pointed instrument." The claim construction was not ICU's only problem:

For example, the district court found that ICU made “multiple, repeated misrepresentations . . . to the Court regarding its own patents in an effort to conceal what are now characterized as errors in order to rescue the TRO/PI from denial.” These misrepresentations related to (1) ICU’s assertion of claims in the ’509 patent that were identical to claims in the ’592 patent (i.e., assertion of double-patented claims); (2) ICU’s assertion of more double-patented claims from the ’509 patent even after Alaris and the district court warned ICU of the double-patenting issue; (3) ICU’s misrepresentation of Federal Circuit authority; (4) ICU’s representation that figures 13 and 20–22 of the common specification “clearly” disclosed a spikeless embodiment, only to later acknowledge that these figures do not disclose such an embodiment and state that its representation was an “honest mistake.”

Although the Brooks Furniture rule discusses objectively baseless "litigation," that rule is not construed to focus on the litigation as a whole. Rather, attorney fees may be assessed if any portion of the litigation is brought in bad faith and in an objectively baseless manner. Here, the Federal Circuit found that the lower court had "appropriately exercised its discretion in awarding attorney fees only for [a] portion of the litigation."

Notes:

• Federal Circuit Decision 08-1077.pdf
• District Court award of Fees: 232495.pdf. Bottom line: "The Court finds that Alaris is due $4,587,622.44 in attorney fees and $164,721.19 in costs for the reasons set forth below. . . . This represents a reasonable lodestar calculation for Alaris’ work . . . , and it constitutes a reasonable pro rata amount of Alaris’ total expenditure of $11,000,000 in attorney fees and $2,000,000 in costs overall in this case."
• District Court decision to find a Section 285 exceptional case and Rule 11 sanctions. 232494.pdf. Money Quote: "[The submitted declarations] do not substantively justify or excuse ICU’s litigation tactics or show its good faith. These declarations were prepared by ICU’s litigation counsel for the purpose ofopposing the Rule 11 and Fees Motions, and comprise mostly self-serving assertions of good faith by interested witnesses, such as ICU’s CEO (Dr. George Lopez), trial counsel (Fulwider, Patton, Lee & Utecht; Paul Hastings; or Pooley & Oliver), patent counsel (Knobbe Martens) and its paid experts (Dr. Maureen Reitman and Bob Rogers). These materials lack the indicia of credibility provided by declarations or opinions from outside, independent counsel or experts, particularly outside patent, as opposed to litigation, counsel. Most of the materials appear to have been “memorialized” in retrospect, providing marginal support compared to, for example, an ex ante documented and vetted analysis that preceded the litigation or that, al minimum, preceded the TRO/PI request and the inclusion of the “spike” claims in the amended complaint."
• Although the district court decision appears to identify the Fulwider firm as "trial counsel," that appears to have been a mistake made by the court. A Fulwider attorney has indicated that their firm "was never one of ICU's trial counsel in that matter, and thus made no representations to the court on ICU's behalf." In fact, ICU appears to be somewhat of a toxic client. According to the court documents, Fulwider represented ICU in the 1990's. At some point ICU dropped the firm as a client and sued for malpractice based on Fulwider's representation of alleged ICU competitors. Fulwider did not admit wrongdoing, but a 2007 press release by ICU claims that ICU "will be paid $8 million in settlement of its claims against Fulwider."

In re Nature's Remedies: Foreign Regulatory Submission Invalidates Patent Under 102(b)

In re Natures Remedies (Fed. Cir. 2009) (nonprecedential)

In October of 2005, a third party (Jemo-Pharm) submitted a request for ex parte re-examination of Natures Remedies patented claim covering an herbal composition of guarana, damiana, and yerbe-mate claimed to cause weight loss. More than one year before Remedies' filing date, an anticipating composition had been submitted to a Danish regulatory organization as part of a request for approval for clinical testing. (The decision is unclear, but implies that the submission was done by Remedies).

A Danish official provided testimony that the submission was a public record and was open for inspection since its date of submission. Remedies' expert, however, argued that a Danish trade-secrecy law would have prevented such inspection. The BPAI accepted the open-access line of argument and found the submission invalidating prior art under 35 USC 102(b). The patentee appealed - arguing that the official submission was not sufficiently publicly accessible to be considered 102(b) prior art.

On appeal, the Federal Circuit affirmed - finding that the regulatory submission was publicly available more than one year before Remedies filed its application. The court began by recognizing that the official's testimony created a prima facie case that the submission was publicly accessible - shifting the burden to the patentee. Of course, BPAI factual findings such as this will be affirmed with a finding of "substantial evidence."

Because [the Danish Official's] declaration established a prima facie case of public availability, the onus was on Remedies to demonstrate that the [regulatory submission] was not accessible to interested members of the public. Remedies, however, failed to carry its burden.

Under the Danish trade-secrecy law, the regulatory submissions are kept secret when they are of "material importance" to a company's "economy." It appears that Remedies could have proven its case but failed to provide evidence to the Board.

Attorney argument, however, cannot take the place of record evidence. See In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); Johnston v. IVAC Corp., 885 F.2d 1574, 1581 (Fed. Cir. 1989). Here, the evidence of record does not establish that Remedies intended to keep the formulation of the Medi-Tab capsule confidential until after the study had been completed and a patent application had been filed.

Rejection affirmed

Notes:

• 102(b) looks at prior art that was "described in a printed publication" more than one year prior to the date of application for the US patent. Implicit within 'publication' is a notion that the material is publicly accessible. Notably, however, there is generally no need to prove that the material was actually accessed. Thus, in this case, there is no discussion of whether the regulatory submission was ever seen by anyone.
• Read the case
• Reexam No. 90/007,785 (look it up in PAIR).
• In some ways, this case is simply an extension of the Pivonka v. Axelrod case where the Federal Circuit held that the applicant has waived arguments by failing to present them at the Board of Patent Appeals.

In re Ferguson: Patentable Subject Matter

In re Ferguson (Fed. Cir. 2009)

Scott Harris has been discussed several times on Patently-O. Harris is a former Fish & Richardson partner. Fish handles the most patent litigation of any firm in the country. In addition to being a patent attorney, Harris is an inventor. He has contracted with the plaintiffs firm Niro Scavone in several actions to enforce patents against Google and other companies. Harris is one of the named inventors of the Ferguson application and he handled the [futile] appeal.

The claimed invention focuses on a "method of marketing a product" and a "paradigm for marketing software." These claims focus on methods and structures for operating a business.

Methods Under Bilski: Claim 1 reads as follows:

A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company, so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

Under Bilski, this case is open and shut. The claim is not even arguably tied to a machine -- especially under the Nuijten construction of machine to be a "concrete thing, consisting of parts, or of certain devices and combination of devices [including] every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result." (Quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863)). Thus, the 1863 touchability definition of machine appears to hold weight. On the second Bilski prong, the claim does not require transformation of any article into a different state or thing. The only transformation is that of legal rights and organizational relationships that were explicitly excluded in the Bilski decision: "transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

Harris asked the court to consider a different test of patentable subject matter: “Does the claimed subject matter require that the product or process has more than a scintilla of interaction with the real world in a specific way?” The CAFC panel rejected that proposal primarily based on the precedential value of Bilski: "In light of this court’s clear statements that the “sole,” “definitive,” “applicable,” “governing,” and “proper” test for a process claim under § 101 is the Supreme Court’s machine-or-transformation test, see Bilski, passim, we are reluctant to consider Applicants’ proposed test." The court went on to determine that the "scintilla" test would create too much ambiguity as well.

Non Method Claims: The application also included claims directed to a "paradigm for marketing software" made up of a marketing company that markets software in return for a contingent share of income. Although "instructive," the Federal Circuit did not directly follow Bilski. Rather, the court looked to determine whether the claimed paradigm fit within one of the four statutory classes listed in Section 101:

Inventions Patentable: "... any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof..."

In a gentle Koan, the Court stated that it "need not resolve the particular class of statutory subject matter into which Applicants' paradigm claims fall, [however], the claims must satisfy at least one category." In fact, the court did attempt to resolve the particular class, but was unable to fit the paradigm claim into any of the four.

Applicants’ paradigm claims are not directed to processes, as “no act or series of acts” is required. Nuijten, 500 F.3d at 1355. Applicants do not argue otherwise. Applicants’ marketing company paradigm is also not a manufacture, because although a marketing company may own or produce tangible articles or commodities, it clearly cannot itself be an “‘article[]’ resulting from the process of manufacture.” Nuijten, 500 F.3d at 1356. Again, Applicants do not argue otherwise. And Applicants’ marketing company paradigm is certainly not a composition of matter. Applicants do not argue otherwise.  

Again applying the touchability notion of machine, the Court also rejected the notion that the company paradigm could be a machine:

Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” Nuijtent, and as Applicants conceded during oral argument, “you cannot touch the company.”

Ending in a flourish, the court found that in fact, the Ferguson paradigm claims are "drawn quite literally to the paradigmatic abstract idea." (quoting Warmerdam).

Judge Newman offers a poignant concurring opinion.  

Bilski v. Doll: Round I of Amicus Briefs

Bilski v. Doll (on petition for writ of certiorari 2009)

In a 2008 en banc decision, the Federal Circuit affirmed a Patent Office ruling that Bernard Bilski’s claimed method of hedging the risk of bad weather through commodities trading was not patent eligible under Section 101 of the patent act. The Court applied a “machine-or-transformation test” as the only test to be used in determining whether a claimed process is eligible for patenting under § 101. The decision holds that a claimed process either (1) be tied to a particular machine or apparatus or (2) transform a particular article into a different state or thing. Although the Court identified the Bilski test as the only test, it added two corollaries: (1) the addition of a mere field-of-use limitation without other meaningful limits on claim scope will not render a method claim patent eligible; and (2) insignificant extra-solution limitations will not render a method claim patent eligible.

Bilski has petitioned the Supreme Court to hear its appeal and look at the question of patentable subject matter for the first time in a generation. Diamond v. Chakrabarty and Diamond v. Diehr together opened the door for broader patent eligible subject matter. Notably, Justice Stevens – author of the Diehr dissent – is the only justice still on the bench. Bilski’s petition asks two questions:

1.       Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing … despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

2.       Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

The first round of Amicus briefs – those supporting the petition – have now been filed. The PTO’s briefs and briefs in opposition to the petition are due in early April.

Amicus Briefs Supporting the Petition (I have not reviewed all of these, but wanted to post them for public consumption):

• AIPLA: “There is no support in this Court’s precedent for the Federal Circuit majority’s conclusion that this Court enunciated a definitive ‘machine or transformation’ test for determining the patent eligibility of a claimed process under § 101.” The statute should be interpreted to promote new areas of technology.   File Attachment: aiplaamicus.pdf (148 KB)

• Boston IPLA: The “machine-or-transformation test” conflicts with Supreme Court precedent. File Attachment: bostonamicus.pdf (142 KB)

• Borland Software: File Attachment: borlandamicus.pdf (158 KB)

• Koninklijke Philips Electronics: File Attachment: philipsamicus.pdf (162 KB)

• Anne Barschall: The Supreme Court appears to have some “prejudice against electronic devices [as evidenced by] both Benson and Morse.” Its not magic, it is engineering. You can’t see electricity or quantum particles but that does not make them abstract ideas. File Attachment: barschallamicus.pdf (217 KB)

• Medistem: Bilski has considerable bleed-through to non-business method patents. File Attachment: medistemamicus.pdf (109 KB)

• Accenture and Pitney Bowes: The Federal Circuit's "only one test" rule is too rigid and goes against the Supreme Court's precedent that demonstrated flexibility in the Section 101 inquiry. [DDC Comment: The flexibility theme is strongly present in the past several years of Supreme Court patent cases. In eBay, MedImmune, and KSR, the Supreme Court saw a rigid Federal Circuit rule and made it more flexible.] File Attachment: accentureamicus.pdf (122 KB)

• Franklin Pierce Law Center: File Attachment: fplcamicus.pdf (128 KB)

• John Sutton: File Attachment: suttonamicus.pdf (120 KB)