Patent Law Blog (Patently-O)

Zyprexa Patent Upheld on Appeal

Eli Lilly v. Zenith Goldline (Fed. Cir. 2006)

Lilly’s patent covers olanzapine (Zyprexa®) and its use for the treatment of schizophrenia. Three generic manufacturers (Zenith (IVAX), Dr. Reddy’s, and Teva) filed an ANDA and Lilly responded with a complaint in the Southern District of Indiana.  After a bench trial, the district court agreed with Lilly that the patent was valid, infringed, and enforceable.  The defendants appealed to the Court of Appeals of the Federal Circuit.

Anticipation: To anticipate the invention, a prior art reference “must disclose each and every feature of the claimed invention, either explicitly or inherently.”  However, in both Petering and Schaumann, prior art references that disclosed the family of the claimed compound were found to anticipate the claimed compound — even though the claimed compounds were not specifically discussed.

Here, the CAFC found that those cases were not applicable because the closest reference to olanzapine did not spell out “a definite and limited class of compounds that enabled a person of ordinary skill in the art to at once envisage each member in this limited class.”

Obviousness: The CAFC agreed that the prior art references did not suggest a the compound. In addition, Lilly provided strong evidence of secondary considerations, including: “(1) a long-felt and unmet need; (2) failure of others; (3) industry acclaim; and (4) unexpected results.”

The record shows a long-felt need for a safer, less toxic, and more effective clozapine-like drug; a decade (or more) of failure to find a replacement for clozapine; a reasonable amount of commercial success for olanzapine; and a number of awards for olanzapine as indicators of industry acclaim.

Public Use: Prior to filing the patent application, Lilly conducted Phase I clinical safety trials. The court found, however, that the trials were well within the experimental use exception:

In this case, Lilly tailored its tests to their experimental drug safety and efficacy purpose, adequately monitored for results, and maintained confidentiality throughout the duration of the study. The trial court did not err in finding no public use.

 

Plumtree: DJ Jurisdiction, On-Sale Bar

Plumtree v. Datamize (Fed. Cir. 2006)

Declaratory Judgment Jurisdiction: The Datamize patents cover software authoring tools for creating software kiosks. Datamize had earlier sued Plumtree for patent infringement and had also told Plumtree that it would be infringing the soon-to-issue continuation application. When the continuation did issue, Plumtree filed a declaratory judgment action — giving the CAFC one last opportunity to opine on its reasonable apprehension test before the Supreme Court issues its MedImmune decision in early 2007.

A declaratory judgment action requires an actual controversy between interested parties. The DJ plaintiff must show (1) some action by the patentee that creates a reasonable apprehension of facing a patent infringement lawsuit and (2) some activity on the part of the DJ plaintiff that could constitute infringement. With a few bright-line exceptions (such as that seen in MedImmune), the court looks to the totality of the circumstances when determining whether a reasonable apprehension of suit exists. 

Here, the court found that the prior suit on similar technology exhibited a “course of conduct” indicating a “willingness to protect [its patented] technology”and thus “created a reasonable apprehension of suit.”

On Sale Bar: Once jurisdiction was established, the CAFC looked to determine whether the Datamize patents were invalid for being on-sale more than one year prior to the filing of the application. Here, the appellate panel found that sale of a kiosk did not violate the on-sale bar because the patents did not cover the kiosks themselves.  The court noted, however, that the on-sale bar would be triggered if either (1) the sales contract required use of the patented method or (2) the patented method was actually used to complete the contract prior to the critical date.  Plumtree, however, could not prove either of those — the agreement “did not unambiguously require use of the patented method” and there was no evidence that the patented method was actually performed prior to the critical date.

Notes: This is the second CAFC opinion involving these two parties. The earlier case involved the same technology but a different patent.  That patent was invalid as indefinite because the claims included the terms “aesthetically pleasing.”

Judge Moore Opinions: Short, Focused, and To-The-Point

In re Hays (Fed. Cir. 2006) (Nonprecedential)

New Circuit Court Judge Kimberly Moore’s first opinion is likely to be predictive of her future work — short, focused, and to-the-point. 

This case involves a pretty neat invention of a tissue holder for an automobile visor. The BPAI had rejected the claims as anticipated, but the PTO later conceded that the cited reference (relating to a golf-tee holder that clips to a lapel) was not anticipatory.

The PTO is fully expected to present a new grounds of rejection.  In all likelihood, the patent will never issue because another round of appeal would be prohibitively expensive for this type of invention.

Vacated and Remanded.

• This does not really count as Judge Moore’s first opinion because it is a non-precedential opinion. In a few weeks, we’ll get the real one.

Microsoft v. AT&T: Transnational Patent Law At The Supreme Court

Microsoft v. AT&T (Supreme Court 2006)

Transnational patent law is a hot topic, and one the Supreme Court cannot ignore. The issue de jour involves the question of unauthorized export of patented software.  AT&T holds the speech compression patent that is infringed by Microsoft Windows. (RE 32,580). Microsoft exports the software code from Redmond to various international locations.  Once abroad, the code is then copied and installed in computers that are then sold abroad.  As the invention is claimed, the code alone does not infringe. Rather, infringement would only occur once the code is combined with the computer hardware. 

Under traditional notions of patent law, Microsoft’s actions are not infringement because the code alone does not infringe the patent, and (for the purposes of this case) the code is not combined with the hardware within the U.S. 

Here, however, traditional notions of territoriality have been supplanted by statute.  Under 35 U.S.C. 271(f), supply of only a portion of a component of a patented invention from the U.S. can be infringement.

35 U.S.C. 271(f) prohibits the “suppl[y] . . . from the United States . . . [of] all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States,” as well as the “suppl[y] . . . from the United States [of] any component of a patented invention that is especially made or especially adapted for use in the invention.” 

Microsoft, of course, wants to avoid infringing the U.S. patent for its activity abroad and gives two separate reasons why its activity of exporting software do not fall within the parameters of 271(f). (I) Software code is an intangible string of information not a “component” as required by the statute. (II) Because copies of the code were used to create the infringing software/hardware combination, no physical particle that Microsoft exported actually became part of the finished product.  According to Microsoft, this means that nothing in the infringing combination was actually supplied from the U.S. as required by the statute. I term these two arguments the tangibility requirement and the molecular conservation requirement.

Microsoft and its supporters have now filed their merits briefs to the Supreme Court, and my reading of their arguments is that there is strong support for molecular conservation, but only weak support for tangibility. The Bush Administration supports this distinction in its brief filed jointly by the DOJ and PTO. 

On tangibility, the Government argues that software can certainly be a component, and that the statute is not limited to “only tangible components” as Microsoft suggests. Although not cited by the Government, Section 271(c) provides a statutorily distinct way of limiting components.  In referring to infringement through importation, that clause identifies only components of certain types of inventions such as machines and compositions.

On molecular conservation, the Government correctly notes that the statute requires that the exported components be the same components that are combined in the infringing manner. “Conduct that merely induces the combination of foreign-made components does not violate Section 271(f).” The statute, according to the Gov’t, leaves foreign manufacturers “free to manufacture and assemble copies of the identical components overseas” so long as none of the components actually assembled were made within the US.  Applying their argument to this case, we know that the software was copied and only those copies were combined with hardware in a would-be infringing manner.

A group of electronics companies led by Amazon filed a colorful brief that also supports the requirement of molecular conservation.

No matter where their unique arrangement was invented or dictated, if each molecule in the machine was supplied from outside the U.S., then no component was supplied from the U.S. In the present case, Microsoft did not supply even a single molecule of the foreign machines at issue.

Amazon also raises the slippery slope issue.  According to the brief, if Microsoft is liable here, then the Court would open the door to infringement for export of blueprints or a CAD/CAM design scheme.  That result, the brief argues, goes against congressional intent. As an aside, Amazon cited Wikipedia but did not include it in its list of “authorities.”  Although they do not cite it, the Pellegrini case holds that plans or instructions for a patented item cannot serve as components under 271(f).

In support of the molecular argument, a group of professors led by professors Lemley (Stanford) and Duffy (GWU), looked appropriately at the language of 271(f):

[A]s a matter of grammar that the phrase “such components” refers back to the components that have been “supplied” from United States. Thus, the plain language of the statute requires that inducing an extraterritorial combination constitutes an act of infringement if and only if the combined components are in fact the same components that were “supplied in or from” the United States.

For the professors, supplying exact copies does not meet the requirement. Most of the briefs come-up with some hypothetical metaphor to explain their situation — a guy memorizing some code and flying on an airplane, a hard-copy print out of some code that runs a fuel-injection system, CAD/CAM instructions, blueprints, etc.  The idea apparently is that if we allow copies of software to be considered components, then these situations necessarily also provide for infringement actions.  More accurately, however, they are just poor hypotheticals.

Software as Patentable Subject Matter: The anti-patent activist group SFLC led by Dan Ravicher and Eben Moglen also filed a brief that may be the dark-horse of this debate.  Their brief asks the Court to take a fresh look at the patentability of software.

Software can not be a “component[] of a patented invention” under 35 U.S.C. § 271(f) because software is not patentable subject matter under 35 U.S.C. § 101. As such, the Federal Circuit’s holding to the contrary in this case is erroneous and should be reversed.

It would be odd for the Court to decide the 101 issue in this case after dismissing LabCorp earlier this year.  However, I expect at least one concurring opinion supporting the ideas in this brief.

Impact on Software Industry: If Microsoft loses here, it will at least have a clear avenue to avoid future infringement. Unfortunately for US business, that avenue is to move all software development activities abroad so that components are never exported. This harmful effect was recognized and discussed in SIIA’s brief. SIIA is an industry group of software & technology companies who want to continue to design products in the US, but manufacture those products abroad. This argument is punctuated by BSA’s questionable hyperbole: “The purpose of patent protection is to encourage domestic innovation, not to drive it overseas.”

Impact in Biotech: Although not yet a viable industry, this could have a potentially large impact on biotechnology patent issues.  Like software, DNA code (or other biologics) could be shipped from the U.S. to be copied abroad and incorporated into an organism in an infringing manner.  Even more abstract, the export may merely involve transmitting a sequence listing that would be used to reproduce the sequence abroad.  Any decision on software should consider the potential impact on these areas as well.

Methods: What Professor Wegner has called the “Bizarre Twist” of this case involves the CAFC’s notion of export of components of method claims. In Union Carbide v. Shell, the court found that methods could indeed have components, and those included items used in the method (such as a catalyst).  Thus, in that case, the defendant could be held liable for exporting a stock catalyst if it intended to use the ingredient in a would-be infringing manner. Shell settled its case with Union Carbide, but has filed an amicus brief in this case, arguing that the Federal Circuit “seriously erred” by declaring that “every form of invention eligible for patenting falls within the protection of section 271(f).” 

Statutory Construction Excludes Methods?: Shell compares the use of the term “component” in 271(f) its use in 271(c) — the section addressing importation.  In 271(c), Congress explicitly limited components to “component[s] of a patented machine, manufacture, combination, or composition,” but also included a provision excluding importation of materials used in a patented process.  Shell’s argument: because 271(f) does not include the provision discussing materials used in a patented process, it cannot cover processes.  Of course, the unstated counter-argument to shell is that components discussed in 271(c) are specifically limited to components of machines, while 271(f) components are not so limited — indicating that “component” in 271(f) should receive a broader interpretation.

International Law: All of the transnational patent issues have an impact on international law issues. FICPI, a Swiss-based organization of patent folks filed its brief asking the the U.S. to keep its patents territorial and avoid stomping on the toes of others (as “young nations” are bound to do). FICPI’s implication that the Supreme Court is bound by the Paris Convention is plainly wrong.  The Paris Convention is not U.S. law. However, their point is well-taken, if 271(f) covers software, it thwarts the efforts of other countries to eliminate software patents.

Documents:

• On the Merits
• Petitioner: Microsoft Brief;
• Amicus: US Government;
• Amicus: Law Professors (Lemley & Duffy);
• Amicus: Amazon;
• Amicus: SIIA (Industry Org.);
• Amicus: SFLC (Moglen & Ravicher);
• Amicus: Shell Oil (Method Claims);
• Amicus: Intel;
• Amicus FICPI;
• Amicus Autodesk
• Amicus BSA (Industry will be destroyed if AT&T wins);
• Amicus Yahoo!.
• On Petition for Certiorari
  • Petitioner: Microsoft Petition
  • Petitioner: Microsoft Petition Appendix
  • Respondent: AT&T Opposition
  • Petitioner: Microsoft Reply in Support
  • Respondent: AT&T Supplemental Brief
  • Petitioner: Microsoft Supplemental Brief
  • Amicus: Software and Information Industry Association in Support of Microsoft
  • Amicus: Government in Support of Microsoft

Important recent 271(f) cases:

• NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
• AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
• Union Carbide v. Shell Oil (Fed. Cir. 2005) (271(f) “component” applies to method claims).
• Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
• Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
• Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

Notes:

• I will be updating this page as more briefs are filed.
• I will be talking about cross-border liability at Santa Clara University’s 25th Annual Computer & High Technology Law Journal Symposium on January 26 in San Jose. Information here.

Even under DOE, "predetermined" combo must be determined beforehand

Planet Bingo v. Gametech (Fed. Cir. 2006).

Planet Bingo is the exclusive licensee of two patents covering a way to play bingo.  This game combines the numbers with an indicator (such as the color red) to give enhanced awards. The patent claims a “predetermined” winning combination, and that is where the dispute lies.

In the accused game of “rainbow bingo,” the color of the first ball chosen serves as the indicator.  Since that color is not known before the game begins, the court found it was not “predetermined.” as required by the claims.

Planet Bingo, however, asserted infringement under the DOE. Although the defendant’s indicator color is not known before the game begins, it is known immediately after the first bingo ball is drawn — something that is equivalent.  The CAFC disagreed, finding that under Warner-Jenkinson, a color that is “predetermined” cannot, as a matter of law, be equivalent to a color that is selected immediately after the game starts.

Here, the court focused particular attention on foreseeability of the asserted equivalent — apparently assuming that most variations in the bingo-arts would be foreseeable.

Unjust Enrichment For Stealing Ideas Does Not Create Patent Jurisdiction

Thompson v. Microsoft (Fed. Cir. 2006).

Thompson sued Microsoft for unjust enrichment under Michigan law.  Arguing that Microsoft stole his idea, patented it, and implemented it in various products. In its motion to dismiss, Microsoft argued that the claim was preempted by federal patent law. (citing Ultra-Precision).

Instead of hearing the appeal, however, the CAFC declined jurisdiction because the case did not arise under federal patent laws as required by Christianson & Holmes v. Vornado.

Thompson’s well-pleaded complaint does not establish that the right to relief necessarily depends on resolution of a substantial question of federal patent law. Thus, the district court’s jurisdiction does not "aris[e] under" section 1338.

In particular, the court noted that preemption alone does not create jurisdiction. An inventorship issue might create an issue, but Thompson’s claim could have theoretically succeeded without proving inventorship (in the strict patent sense).

Case transferred to the Sixth Circuit Court of Appeals.

In Preliminary Injunction Decision, CAFC Forecasts Post-eBay Jurisprudence

Sanofi v. Apotex (Fed. Cir. 2006)

Generic manufacturer Apotex wants to make something similar to Sanofi’s Plavix (clopidogrel bisulfate) and filed an ANDA alleging that Sanofi’s patents were invalid.

The two parties worked together to negotiate a settlement.  The agreement, however, was not accepted by state attorneys general even after new terms were presented. Under provisions of the agreement, the regulatory denial killed the settlement and the parties resumed litigation.

Sanofi then filed a motion for preliminary injunction to stop Apotex from selling its product. Within 21 days, the district court issued a PI. (During that time, Apotex shipped six-months of product). Apotex then appealed the PI.  Preliminary injunction jurisprudence has its own four-factor test that is similar to that of permanent injunctions. The plaintiff must show:

• Reasonable likelihood of success on the merits of the case;
• Irreparable harm if an injunction is not issued;
• Balance of hardships tipped in favor of the plaintiff; and
• Public interest that is not negatively impacted.

The major difference between the factors for consideration in preliminary injunctive relief and those for permanent relief is that preliminary relief requires a showing of a likelihood of success while permanent relief requires success on the merits as a precondition. Thus, the final three factors will give some indication of how the court will rule in post-eBay injunction cases.

Likelihood of success on the merits: Apotex took the odd position of arguing anticipation based on a broadly worded claim of a prior art patent that was examined during prosecution.  The CAFC confirmed that this made the burden of proving invalidity at trial “especially difficult.”  On obviousness, the CAFC confirmed that the unpredictability of enantiomer activity made the claimed dextrorotatory formation nonobvious even if the molecule as a whole was known.

On Irreparable Harm: The settlement agreement between the parties included a provision that capped any damages for infringement by Apotex — seemingly an admission that Sanofi would settle for money damages. The court did not buy-into this argument, but only because of the technicality that the agreement also contemplated an injunction.

Balance of hardships tip entirely in Sanofi’s favor because Apotex chose to launch its product under threat of injunctive relief.  It could have avoided the situation altogether and thus should not benefit from this factor.

Public Interest: The CAFC continued its line of the “importance of the patent system in encouraging innovation.” Interestingly, the court focuses on how the expense of pharmaceutical inventions necessitates strong patent protection. . . . begging the question of whether less expensive innovations (such as software) have less of a public interest in strong patent protection.

Court Retains Article III Jurisdiction To Determine Attorney Fees

Highway Equipment v. Feco (Fed. Cir. 2006).

The district court dismissed the case with prejudice after the plaintiff gave the defendant a covenant not to sue. Just before trial, the plaintiff gave up and granted a covenant not to sue. The district court dismissed the case, but retained jurisdiction to decide the issue of attorney fees (fees denied).

On appeal, the CAFC first decided the issue of Article III jurisdiction — holding that even after dismissing the case major, the lower court properly retained jurisdiction over the attorney fee issue. The appellate panel then agreed that attorney fees were not justified in this case.

Supreme Court: Current Test of Obviousness is "Gobbledygook"

KSR v. Teleflex (Supreme Court 2006, Oral Arguments).

The doctrine of nonobviousness is the cornerstone of American patent law.  I was reminded today by Phil Swain that our nonobviousness statute, section 103(a) of the Patent Act, was drafted by Judge Giles Rich.  Judge Rich is the most celebrated patent judge of this century.  His statutory masterpiece eliminated the amorphous concept of a “flash of genius” and replaced it with our now ubiquitous objective standard of a person having ordinary skill in the art.  In Graham v. John Deere, the Supreme Court reinforced 103(a) with its concept of case-by-case consideration of secondary indicia of nonobviousness as a way to avoid potential hindsight bias. 

Later, as the Federal Circuit developed its own patent jurisprudence, the court hit upon the teaching-suggestion-motivation test as another anti-hindsight rule.  That test requires evidence of some reason to combine various references that each teach part of an invention.  Thus, if there is no evidenced reason to combine the references, then the invention will be deemed nonobvious. The test, known by acronymists as “TSM,” has been labeled as a poster-child for bad patent behavior.  According to opponents of the test, the bright-line test makes patents too easy to obtain — resulting in a glut of patents covering trivial improvements. Those patents, in turn, hold-up industry research and greatly increase transaction costs and legal fees. 

In KSR v. Teleflex, the Supreme Court is questioning whether the TSM test should exist as the sole determinant of obviousness.  Question presented:

Whether the Federal Circuit has erred in holding that a claimed invention cannot be held ‘obvious’, and thus unpatentable under 35 U.S.C. § 103(a), in the absence of some proven “‘teaching, suggestion, or motivation’ that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed.”

Until a few months ago, the common myth of the TSM test was that it required at least some hard evidence that provided at least a minimal reason to combine various prior art references.  It is that myth that provided the impetus for Supreme Court review. In recent months, however, we have learned that the CAFC’s version of the test allows for evidence that is implicit, based on common knowledge, found generally in the prior art as a whole, based simply on the nature of the problem or simple logic, or concluded by experts. See Kahn, Dystar, Ormco, Alza.  This jitterbug by the CAFC actually gives KSR much of what it wanted and smears the edges of the mythical bright-line rule.  Justice Scalia picked up on transition during oral arguments — noting that the recent cases leave the test “meaningless. [The CAFC] essentially said ‘our test simply reduces to what [KSR seeks] in this litigation.’ . . . this is gobbledygook. It really is, it’s irrational.” Justice Alito had a similar concern with the “new” TSM test:

J. Alito: “But what is the difference between asking whether something is implicit in the, in the prior art and simply asking whether it would have been obvious to a person of ordinary skill in the art?:

As discussed earlier on Patently-O, all the major patent bar associations filed briefs that support the current TSM test.  In a brilliant move, KSR neutralized those briefs by implying bias based on “the enormous fees that litigation of invalid patent claims can generate.” KSR Reply Brf. CJ Roberts appeared to buy-in to that analysis, joking that the filings “just indicate[] that this is profitable for the patent bar.” KSR Oral Arg.

One concern of the Court is whether modification of the obviousness doctrine would spoil long-settled rights.  The Justices, however, mentioned on several occasions that over the past year, the CAFC may have already upset any settled rights.

Mr Goldstein [for Teleflex]: “[The CAFC has had decades to look at this to try and elaborate a standard.”
J Breyer: “And it so quickly modified itself.”

Decision in February: Reports from the hearing noted that Justice who used the term “TSM” spoke with disdain and were highly critical of the test.  Although oral arguments are always full of counterfactuals and wild theory testing, the level of criticism supports the conventional wisdom that the TSM test is likely to be eliminated as “the exclusive” test.  Cases will rather be decided on a case-by-case basis using the standards of Graham v. John Deere. Already issued patents will still be given a presumption of validity, although it will be difficult for some courts to do this with a straight face.  The new key to avoiding invalidity will be secondary indicia of nonobviousness. Look for a 9–0 decision in early February.

TSM is not Dead: Much of the oral argument was filled with an attempt to simply understand the TSM test, and to figure out what is meant by a “motivation.”  If they cannot figure-out the test, they would likely completely trash-it as unworkable. Of course, by the time the opinion is penned, they will understand the current test and the test will not be scrapped as a whole. Rather, they will follow the Government’s suggestion that TSM continue to be used as a “valid means of proving obviousness.” In addition, however, flexibility will be added to allow for other ways of determining nonobviousness.

Here are some quotes from oral arguments:

CJ Roberts: “[T]the Federal Circuit’s approach focuses . . . on prior art — as opposed to, I would say, common sense.” 

J Scalia: “And in the last year or so, after we granted cert in this case after these decades of thinking about [the obviousness doctrine, the CAFC] suddenly decides to polish it up.”

J. Breyer: “I’ve read it about 15 or 20 times now, I just don’t understand what is meant by the term ‘motivation.’”

Mr. Hungar [for US Gov’t]: “Construed as the sole means of proving obviousness the teaching suggestion motivation test is contrary to the Patent Act, irreconcilable with this Court's precedents and bad policy. It asks the wrong question and in cases like this one, it produces the wrong answer. It should be rejected and the judgment of the Court of Appeals should be reversed. . . . It’s just foreign to this Court’s precedents as a mandatory prerequisite for obviousness.”

Mr. Dabney [for KSR]: “[T]here is no legal regime that is a greater generator of patent litigation than the teaching suggestion motivation test that is urged by the respondent.” [DDC: Is this true?].

Documents and Links:

• Oral Argument Transcript;
• Commentary from the Gallery on the Oral Arguments:
• Zura;
• Armstrong;
• Miller;
• Kerr;
• ScotusBlog (Run by Teleflex’s Counsel)
• Gordon Smith;
• Patent Baristas;
• LawFont;
• Hawk;
• Brooks;
• Leo Stoller;
• Ebert;
• Law School Innovation;
• DragonFly
• KSR Shifts Obviousness Debate to "Mere Aggregations" and Presumptions of Non-Obviousness;
• Discussion of Response Briefs;
• Discussion of Petitioner and Supporting Amici’s Briefs on the Merits;
• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Professor Wagner and Strandburg debate obviousness in Penn’s new online law reivew:PENNumbra;
• Prof Miller: KSR Lift-off!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious;
• Patent Hawk: Hindsight Problem;
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link];
• Petherbridge & Wagner Empirical Article [link]
• Cotropia Article: [link].
• Shane Popp Article on Section 103 background [link]
• Mark Smith, a student at Santa Clara Law has these three posts in SCU’s great new Tech Law Forum:
  • http://www.techlawforum.net/blogs/a-precursor-to-obviousness/
  • http://www.techlawforum.net/blogs/per-se-or-not-per-se/
  • http://www.techlawforum.net/blogs/hey-teacher-leave-our-test-alone/
• The Patent at issue: [link] [link]

Cite as Dennis Crouch, “KSR Gobbledygook,” Patently-O, available at http://www.patentlyo.com.

Are Design Patents Worthless? Preliminary Injunction Vacated

PHG Tech v. St. John (Fed. Cir. 2006).

PHG’s design patents cover ornamental designs for medical label sheets.  PHG sued St. John’s for infringement and was awarded a preliminary injunction based on the court’s belief that PHG had a reasonable likelihood of success on the merits.

St. John’s appealed the preliminary injunction (PI) to the Court of Appeals for the Federal Circuit (CAFC).

The CAFC reviews a PI grant for abuse of discretion, and only vacates a PI when there is “clear error.”  In general, however, a PI should only issue after weighing "(1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest."

The first factor is a deal-breaker — if the plaintiff does not show a likelihood of eventually succeeding in the case then a PI should not be awarded. Here, St. John’s argued only the first factor based on its argument that PHG’s patents impermissibly cover designs that are primarily functional. 

Functionality in design cases is a tricky beast. 35 USC 171 requires that a design be “ornamental,” and this has been interpreted to exclude designs that are “primarily functional rather than ornamental.”  Of course, every design has some function . . . One way that the court gets at functionality is to see whether there are equally useful alternative designs.  If an alternative design would reduce the utility, then it is “not truly an alternative.”

In this case, the lower court found that there were “a multitude of alternative designs,” but the lower court did not make specific findings as to whether or not those alternative designs altered the utility. St. John’s did, however present expert testimony that the “alternative” designs were not as useful. On appeal, the CAFC was swayed by St. John’s expert and found “clear error” because the lower court (1) did not make any “explicit findings” regarding utility of the alternatives and (2) failed to even mention St. John’s expert report.

“The evidence presented by St. John, in our view, was sufficient to raise a substantial question of invalidity.”  Preliminary Injunction Vacated.

 

In Fractured Decision, CAFC Refuses to Reexamine De Novo Claim Construction

Amgen v. HMR (CAFC en banc denial)

Cybor is the much reviled CAFC decision holding that the construction of patent claim language is a question of law that is reviewed de novo — without any regard to the lower court’s reasoning or ruling.  The Cybor rule is believed by many to have dramatically increased uncertainty in patent litigation as well as likelihood of appeal.  Importantly, the associated reversal rate also demoralizes district court judges who already often struggle with the technical and legal complexity of patent cases.

In Amgen, the appellate panel reviewed construction of the term “therapeutically effective amount” of erythropoietin and, in the process illustrated how Cybor gives the court a “capacity for arriving at its own idiosyncratic construction.” (Quoting Prof. Kevin Noonan). Here, the CAFC panel reversed the lower court’s construction based on its interpretation of the specification. 

HMR’s request for rehearing en banc has been denied, but a contingent of six separate dissenting and concurring opinions show the internal conflict.

Chief Judge Michel, who also dissented from the original panel decision, led the charge against Cybor. “I have come to believe that reconsideration is appropriate and revision may be advisable.”  CJ Michel, who was joined in the opinion by J Rader, cited four practical reasons for eliminating de novo review:

1. High reversal rate;
2. Lack of predictability of outcomes — something that decreases settlement and frustrates lower courts;
3. The disregard of time spent by district court judges in understanding the evidence and patent information;
4. The mind-numbing minutia of claim construction decisions faced by the court in “nearly every patent case.”

Claim construction, although similar to statutory construction is different for many reasons and is intertwined with facts that make the foundation for de novo review questionable. The arguments of CJ Michel are further highlighted by Judge Newman’s dissent.

J Newman focuses on how scientific and technological evidence serve as the backdrop for any claim construction and how claim construction should focus on the invention rather than following formalistic requirements that trip over every statement in a patent application. Finally, Newman argues that a Daubert framework is more appropriate for claim construction.

The Federal Circuit's position that patent interpretation requires more rigorous appellate review than other fact/law issues has not well withstood the test of experience. It is time to reopen the question and to rethink, en banc, the optimum approach to accuracy, consistency, and predictability in the resolution of patent disputes, with due attention to judicial structure, litigants' needs, and the national interest in invention and innovation. (Newman dissenting).

Judge Rader agreed with both CJ Michel and J Newman, but filed his own opinion. Rader gave some legal basis for reviewing Cybor — noting the Supreme Court’s opinion that claim construction "falls somewhere between a pristine legal standard and a simple historical fact." (Markman). Rader maintained his long-standing position that district courts should be given deference because they are better versed in the facts and the issues.

“Trial judges can spend hundreds of hours reading and rereading all kinds of source material, receiving tutorials on technology from leading scientists, formally questioning technical experts and testing their understanding against that of various experts, examining on site the operation of the principles of the claimed invention, and deliberating over the meaning of the claim language. If district judges are not satisfied with the proofs proffered by the parties, they are not bound to a prepared record but may compel additional presentations or even employ their own court-appointed expert." (Rader dissenting in Cybor).

Judge Moore: In what appears to be her first patent opinion, New CAFC Judge Moore also set her target on Cybor — stating that the court should “reconsider its position on deference.” 

Judges Gajarsa, Linn, and Dyk all concurred with the decision not to rehear this particular case, but noted that “In an appropriate case we would be willing to reconsider limited aspects of the Cybor decision.”  In particular, those three judges appear to believe that de novo is still appropriate when the intrinsic evidence (written description and prosecution history) on its face resolves “the question of claim interpretation.”

SUPREME COURT NEXT: This leaves us in the situation where at least eight of the twelve Federal Circuit judges believe that Cybor should be revisited if an “appropriate case” arises. This fractured decision is also ripe for Supreme Court review, and along with the Tamoxifen antitrust cases, are the two most likely to be granted certiorari in 2007.

Details: Judges Michel, Newman, Rader, Mayer, and Moore have all bluntly criticized Cybor. Judges Gajarsa, Linn, and Dyk have a more limited criticism.

Documents:

• AMGEN EN BANC DENIED
• Amgen v. HMR (CAFC Decision)

Obviousness: Skill in the Art Avoids Death Ray

Optivus and Loma Linda v. Ion Beam Apps. (Fed. Cir. 2006).

Focused proton beam therapy offers real promise to cancer victims. Optivus and Loma Linda control rights to several relevant patents including a multi-room proton therapy apparatus. The pair sued IBA for patent infringement as well as various business torts (unfair competition) based on IBA’s marketing of its devices without FDA approval.

The district court granted summary judgment in the defendant IBA’s favor on invalidity, noninfringement, and unfair competition. Optivus and Loma Linda appealed.

Appellate Practice Waiver of Arguments: In their opening brief, appellants argued a lack of motivation to combine various pieces of prior art, but did not raise an argument as to whether the prior art contained all of the claim elements.  They then attempted to raise that issue in their reply brief. The CAFC, however, dismissed that issue as a matter of procedure — holding that the argument was “waived because it was not raised in Loma Linda’s opening brief.”

Death Ray: On motivation to combine prior art, Loma Linda argued that modifying a UW Neutron therapy center by sending protons to the patient would create a “death ray” that would kill the patient. After defining “skill in the art” as familiarity with particle beam technology uses in medical treatment, the CAFC dismissed this “teaching-away” because our PHOSITA would know to turn down the intensity. 

Unfair Competition: Marketing Non-Approved Device: The CAFC reversed the dismissal of the California unfair competition claims — holding that California law provides a right of action on unfair competition even where the claim is based on violation of a law and the law does not provide for a private right of action. 

Doctrine of Equivalents, Avoiding the Tronzo-Trap

Depuy Spine v. Medtronic (Fed. Cir. 2006).

Medtronic won summary judgment of non-infringement for its Vertex spinal implants, but the jury found that its MAS spinal screws were infringing. Both sides appealed, and we discuss two issues here:

Claim Construction:  Depuy tried to get the CAFC to buy into its argument that a the conical wall of the Vertex model was also a spherical wall.  Although impressed with its novel argument, the CAFC did not bite at the elementary calculus or basketball analogy showing how, at the limit, cones and spheres are virtually indistinguishable.

Doctrine of Equivalents and Vitiation: This case seems right-on-point with Tronzo, and the patentee learned the appropriate lesson. In Tronzo, the theory of equivalence would have allowed any shape to be equivalent to “generally conical.”  Here, however, the patentee argued that there was a special nexus between the claimed spherical shape and the alleged equivalent conical shape. The tailored argument made the difference, and the CAFC agreed that equivalents could apply without vitiating the term. The CAFC also found it important to the DOE analysis that the patent does not label other shapes as either prior art or inferior. [Practice Tip…].

• Read the Decision
• Tom Fairhall Discusses the Specific Exclusion Principle in Patently-O

KSR Shifts Obviousness Debate to "Mere Aggregations" and Presumptions of Non-Obviousness

KSR v. Teleflex (Supreme Court 2006).

Section 103 of the Patent Act focuses on “differences between the subject matter sought to be patented and the prior art.”  In the 1976 Sakraida case, the Supreme Court held that simply aggregating old elements together does not pass the patentability test if the elements are each performing the same functions that they were already known to perform.

The “mere aggregation” test of Sakraida, however, has not been followed by the Court of Appeals for the Federal Circuit (CAFC). Instead, the CAFC’s approach has allowed mere aggregations to be patented so long as there is no evidence suggesting that the elements be combined.

The pending case of KSR v. Teleflex squarely addresses this debate. KSR recently filed reply brief closes the written arguments in this landmark case, and oral arguments are scheduled for November 28, 2006.

KSR’s attorneys, including GWU Professor John Duffy, argue strongly that 103(a) has been wrongly interpreted as merely a way to challenge patentability rather than a “condition of patentability” as the section is titled. Under the current suggestion test, claims “cannot be held invalid . . . no matter how trivial might be the differences” from the prior art unless evidence suggesting the difference is found in the art.  As noted by Hal Wegner, the Court’s reaction to this argument could shift the strong presumptions of non-obviousness.

KSR has gone beyond its attack on the Federal Circuit suggestion/teaching/motivation test and raised as a further issue the point that it should win under a preponderance of the evidence standard for challenging patent validity.

In the process, KSR takes a shot at the AIPLA’s “balanced” position.

It is by no means clear why patent bar groups would have a systematic interest in a “balanced” standard of patentability, in view of the enormous fees that litigation of invalid patent claims can generate.

Briefs and Documents:

• On the Merits
  • In Support of Petitioner
    • Petitioner's Brief on the Merits;
    • Petitioner's Reply Brief on the Merits;
    • Government's Brief in Support of Petitioner;
    • Law and History Professors (Sarnoff) in Support of Petitioner;
    • Law Professor (Strandburg) in Support of Petitioner;
    • Electronic Frontier Foundation in Support of Petitioner;
    • Judge Colianni in Support of Petitioner;
    • Intel and Micron in Support of Petitioner;
    • Progress and Freedom Foundation in Support of Petitioner;
    • Cisco and GM in Support of Reversal (Petitioner);
    • CCIA in Support of Petitioner;
    • Business Software Alliance in Support of Petitioner;
    • Time Warner, IAC, and VIACOM in Support of Petitioner;
    • AARP.
  • In Support of Neither Party
    • IBM in Support of Neither Party;
    • Ford & DaimlerChrysler in Support of Neither Party;
    • DC Bar Assn (Eccelston);
    • Professor Hollaar.
  • In Support of Respondent
    • Respondent’s Brief on the Merits;
    • Intellectual Property Owners in Support of Respondent;
    • AIPLA in Support of Respondent;
    • ABA in Support of Respondent;
    • Automotive Suppliers in Support of Respondent;
    • Big Innovative Companies (3M, et. al) in Support of Respondent;
    • Technology Properties Limited in Support of Respondents;
    • United Inventors Association in Support of Respondent;
    • Intellectual Ventures and other Small Companies with Large Patent Portfolios in Support of Respondent;
    • Law Professors in Support of Respondent;
    • Professor Tom Field (Franklin Pierce) in Support of Respondent;
    • IPLAC in Support of Respondent;
    • Harold Milton (attorney who drafted the claims in the Teleflex patent) in Support of Respondent;
    • Tessera, Qualcomm, and Amberwave in Support of Respondent;
    • Science Professors in Support of Respondent;
    • Lee Thomason in Support of Respondent.
    • [Briefs also available at SCOTUS BLOG]
• Petitions Stage
  • Party Briefs
    • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
    • Teleflex’s Brief in Opposition;
    • KSR Reply Brief (314 KB);
    • Teleflex Supplement.
  • Amici
    • Government in support of petition;
    • 24 Law Professors in support of petition;
    • Progress Freedom Foundation in support of petition;
    • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Response Briefs;
• Discussion of Petitioner and Supporting Amici’s Briefs on the Merits;
• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Professor Wagner and Strandburg debate obviousness in Penn’s new online law reivew:PENNumbra;
• Prof Miller: KSR Lift-off!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious;
• Patent Hawk: Hindsight Problem;
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link];
• Petherbridge & Wagner Empirical Article [link]
• Cotropia Article: [link].
• Shane Popp Article on Section 103 background [link]
• Mark Smith, a student at Santa Clara Law has these three posts in SCU’s great new Tech Law Forum:
• http://www.techlawforum.net/blogs/a-precursor-to-obviousness/
• http://www.techlawforum.net/blogs/per-se-or-not-per-se/
• http://www.techlawforum.net/blogs/hey-teacher-leave-our-test-alone/
• The Patent at issue: [link]

Cite as Dennis Crouch, “KSR Shifts Obviousness Debate to ‘Mere Aggregations,’ Patently-O, available at http://www.patentlyo.com.

On the Merits

In Support of Petitioner

Petitioner's Brief on the Merits;

Petitioner's Reply Brief on the Merits;

Government's Brief in Support of Petitioner;

Law and History Professors (Sarnoff) in Support of Petitioner;

Law Professor (Strandburg) in Support of Petitioner;

Electronic Frontier Foundation in Support of Petitioner;

Judge Colianni in Support of Petitioner;

Intel and Micron in Support of Petitioner;

Progress and Freedom Foundation in Support of Petitioner;

Cisco and GM in Support of Reversal (Petitioner);

CCIA in Support of Petitioner;

Business Software Alliance in Support of Petitioner;

Time Warner, IAC, and VIACOM in Support of Petitioner;

AARP.

In Support of Neither Party

IBM in Support of Neither Party;

Ford & DaimlerChrysler in Support of Neither Party;

DC Bar Assn (Eccelston);

Professor Hollaar.

In Support of Respondent

Respondent’s Brief on the Merits;

Intellectual Property Owners in Support of Respondent;

AIPLA in Support of Respondent;

ABA in Support of Respondent;

Automotive Suppliers in Support of Respondent;

Big Innovative Companies (3M, et. al) in Support of Respondent;

Technology Properties Limited in Support of Respondents;

United Inventors Association in Support of Respondent;

Intellectual Ventures and other Small Companies with Large Patent Portfolios in Support of Respondent;

Law Professors in Support of Respondent;

Professor Tom Field (Franklin Pierce) in Support of Respondent;

IPLAC in Support of Respondent;

Harold Milton (attorney who drafted the claims in the Teleflex patent) in Support of Respondent;

Tessera, Qualcomm, and Amberwave in Support of Respondent;

Science Professors in Support of Respondent;

Lee Thomason in Support of Respondent.

[Briefs also available at SCOTUS BLOG]

Petitions Stage

Pharmaceutical Patent Doctrine of Equivalents Survives Challenge

Abraxis (AstraZeneca) v. Mayne (Fed. Cir. 2006).

Mayne attempted to around Abrxis’s anesthetic formulation patent covering DIPRIVAN. The district court, however, found that Mayne’s product still infringed, both directly and under the doctrine of equivalents, despite its replacement of EDTA (“edetate”) with DTPA. 

On appeal, the CAFC reversed the direct infringement based on claim construction, but agreed that there was infringement under the DOE.

Infringement under the doctrine of equivalents is reviewed for clear error.  To infringe under the DOE, the accused device must perform “substantially the same function in substantially the same way to obtain the same result” as the patented invention.

During the design-around, the defendant had attempted to identically match the characteristics and stability function of the Abraxis product.  They eventually chose the DTPA replacement because it is “structurally similar to edetate, [and therefore] product stability is predicted to be unaffected."

Even so, the defendant argued under the modern DOE exclusion principle that the patentee’s use of the “restrictive term edetate,” rather than a more generic term, precluded extension of equivalents coverage as a matter of law. The CAFC disagreed, finding that equivalents could be asserted because the inventors “did not clearly disavow” broader coverage.

There is no evidence that the patentees made a clear and unmistakable surrender of other polyaminocarboxylates, or calcium trisodium DTPA in particular, during prosecution.

Furthermore, because the use of DTPA was admittedly unforeseeable, it is proper to extend DOE.

The defendant also asserted that DOE should not be extended to cover DTPA because Mayne was able to obtain a patent to cover that modification. The CAFC did not buy that argument either. As noted above, the patent shows that the equivalent was unforeseeable at the time of the invention (weighing in favor of DOE).  In addition, the district court’s fact finding of “substantial evidence of equivalence” withstood CAFC scrutiny.

 

Claim Term Limited to "Scoop of the Invention"

Akeva v. Adidas (Fed. Cir. 2006, NON-PRECEDENTIAL)

Akeva's patent covers shoes with a rear sole "secured" to the heel of the shoe.  The patent is clear that the rear sole may be detachable or rotatable.  In order to capture Adidas's activity, Akeva also argued that "secured" could mean permanently secured.  The court disagreed with that claim construction based on the language of the specification:

the language of the '471 specification specifically states that the invention of the '471 patent is an athletic shoe with a detachable heel: "However, in a radical departure from conventional shoes, the shoe of the present invention incorporates a heel structure, including a detachable rear sole, that significantly alleviates heel wear problems associated with conventional soles and provides enhanced cushioning and/or spring.".

Once again describing the "present invention" resulted in the specification serving to limit the scope of the claim terms.  The truth is, however, the seeming requirement of a detachable sole pervades the patent and, in CAFC terminology, was "the scoop of the invention."  The "field of the invention," for instance, was written "as athletic shoes with interchangeable/detachable rear soles."

As could be expected, the boilerplate language at the end of the specification was deemed worthless even though the language asserts that the specification is not limiting in any way.

The court did find this case distinguishable from others because the detachable sole is "not one of several features, it is the primary feature of the invention." 

New Appreciation of Composition's Properties are Not Patentable

Abbott Labs. v. Baxter Pharm. (Fed. Cir. 2006).

Way-back-when, Abbott went through a recall of its inhalation anesthetic sevoflurane because of excess Lewis acid buildup.  Abbott’s scientists figured-out that mixing water in the solution would bind an deactivate Lewis acids, and stabilize the product. Abbott changed its product and also obtained patent protection.

When Baxter filed its Abbreviated New Drug Application (ANDA) to begin selling its version of a sevoflurane inhaler, Abbott sued for infringement.  After a bench trial, the patent was found valid, but not infringed.  Abbott appealed.

The CAFC pointed its laser vision on the question of validity.  A prior reference had indicated that water could be combined with sevoflurane, but had not realized that the composition would work to prevent the acid buildup. Framed in this manner, the prior-art was found to be anticipatory:

Our cases have consistently held that a reference may anticipate even when the relevant properties of the thing disclosed were not appreciated at the time.

The CAFC went-on to find that a claim directed to the newly discovered property of the prior art cannot support a patent because it is inherently disclosed by the art.

This rule holds equally well to process claims:

an inventor may not obtain a patent on a process having the same steps as a prior art process, in which the new process merely identifies a new, advantageous property of the prior art process.

Reversed on validity.

Parallel Finding of Invalidity Did Not Relieve Licensee's Pressure to Pay Royalties for Urinary Catheter Patent

Go Medical v. Inmed (Fed. Cir. 2006).

Go Medical owns a patent on a urinary catheter with a specialized sheath designed to reduce the chance of bacterial contamination. The parties entered into a long-term licensing contract and the defendant began manufacturing and selling the device.  In another lawsuit, Go’s patent was found invalid, but that finding was later reversed on appeal.  Several months after the invalidity finding (but before its reversal), the defendant stopped paying royalties — placing them in escrow. Go eventually sued for infringement, but the patent was found invalid. (invalidity affirmed on appeal).

The defendant then asked for some of its money back — arguing that the it should not have to pay for the licensing of an invalid patent. Under Kohle, however, a licensee is liable for contract damages up to the date “the licensee first challenges the validity of the patent.”

In other words, a licensee "cannot invoke the protection of the Lear doctrine until it (i) actually ceases payment of royalties, and (ii) provides notice to the licensor that the reason for ceasing payment of royalties is because it has deemed the relevant claims to be invalid."

Thus, according to the CAFC, the original invalidity finding did not relieve the defendant of its responsibilities to continue to pay its license fees. Further, the defendant’s movement of payments to escrow was not sufficient to avoid license fees because the defendant did not explicitly state that it was “ceasing payments [because it deemed the] patent to be invalid.”  Merely placing royalty payments in escrow “until the validity of the patent was resolved on appeal” is insufficient to relieve a licensee from license payments.

Notes:

• Zura discusses the best mode issues here. 

Arbitration: Incorporation of AAA rules in license creates clear and unmistakable intent to arbitrate

Qualcomm v. Nokia (Fed. Cir. 2006).

A 2001 license agreement between Nokia and Qualcomm includes an arbitration clause.  The agreement apparently does not cover all of Nokia’s products, and in 2005, and Qualcomm sued Nokia for patent infringement. The parties disputed whether the arbitration clause should apply here. Writing for a two-judge majority, Judge Prost explained that the parties “clearly and unmistakably” intended that the patent questions be arbitrated instead of a court as evidenced by the agreement’s incorporation of the AAA rules.

On remand, the district court will send the dispute to arbitration unless the arguments supporting arbitrability of the issues would be “wholly groundless.”

Notes:

• Read the Opinion
• One-line dissent by Newman

E.D. Tex.: Halliburton's Fragile Gel Patent Found Indefinite

Halliburton v. M-I LLC (E.D. Tex., Oct 18, 2006).

Halliburton decided to take advantage of the E.D. Texas patent excitement and sued M-I for infringing its patents directed to a method of drilling a borehole without losing “fragile gel” drilling fluid. 

On motion, the district court granted summary judgment of invalidity based on indefiniteness. In particular, the court could not find any way to give meaning to the claim term “fragile gel.”

Datamize makes clear that adequate support in the specification can make a purely subjective claim term definite. However, when, as here, the specification provides only a subjective definition for a subjective claim term, there is no "objective anchor" by which skilled artisans can identify the bounds of the claims.

Notes:

• Michael Smith’s Blog Notes

KSR v. Teleflex: In Support of the Status Quo

 KSR v. Teleflex (Supreme Court 2006).

By Dennis Crouch [dcrouch@gmail.com]

Background: Teleflex and its supporters have now filed their briefs in defense of the Federal Circuit’s methodology for determining whether a patent is “obvious.” [Copies of briefs are provided below]. The doctrine of nonobviousness is fundamental to our patent system.  In order to be eligible for a patent an invention must be both novel and non-obvious.  Novelty is generally narrowly applied to cases where the invention is identical to something already in the public domain.  Obviousness, however, is a more difficult beast and is intended to ensure that patent rights are only granted to inventions that move us a significant distance past the prior art. 

Obviousness has always been a “squishy” term, but over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed a somewhat objective nonobviousness doctrine using a teaching/suggestion/motivation (TSM) test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art. One problem with any obviousness test is hindsight bias. It is all-to-easy to look-back and assert that an invention would have been obvious. One purpose of the objective TSM test is to avoid this type of hindsight bias.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.  In an article several years ago, Professor John Duffy identified this obviousness issue as one that should attract the Supreme Court’s attention.

[The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old).

Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Now, Duffy, a former clerk of Justice Scalia, is part of the KSR team that is trying to change the rule of law. The KSR case itself concerns a patent covering a gas pedal for an automobile. KSR makes pedals for GM & Chevy trucks and was sued for infringement of the Teleflex patent.

A discussion of briefs in support of the petitioner are found here: Discussion of Breifs Supporting Petitioner.

What follows is a discussion of briefs in support of the respondent: (i.e., in support of the status quo).

Respondent Teleflex: Brief on the Merits

Settled Law: Respondent begins with a compelling exposition on the power of stare decisis. “Millions of patents” have issued based on the suggestion test, and modifying that test would in Hal Wegner’s words, “threaten the validity of literally hundreds of thousands of existing patents still in force.”

Non-Rigid Test: Respondent defines the suggestion test as a “flexible [test that] looks to any available indication that a practitioner in the art would have had some reason to select the elements of the invention from among the prior art and combine them in the manner claimed by the invention.”  Relying heavily on the CAFC’s very recent obviousness pronouncements of Dystar and Alza, the brief points out that a suggestion does not need to be found in prior art, but rather can be implicit in the nature of the problem, customer demand, similarity between references, knowledge of PHOSITA, wide knowledge of value of feature to be combined, etc.  [DDC: Query whether the broad application of implicit suggestions would constructively eliminate the rule.]

The suggestion test can be contrasted with the “synergy” test proposed by petitioner and the “extraordinary level of innovation” test from the Solicitor General. Those approaches essentially mirror the pre-103 requirement of an “invention.” According to Judge Rich, “The first policy decision underlying Section 103 was to cut loose altogether from the century-old term ‘invention.’”

Intellectual Property Owners Association (IPO) in Support of Respondent:

The IPO is an organizatoin of intellectual property owners. MBHB (where I am of counsel) filed the brief on behalf of IPO. IPO’s brief supports the motivation requirement as an objective but flexible and practical approach to the obviousness problem.  IPO hits on the hindsight problem:

[The test must rely on] objective evidence, not mere unsupported opinion or argument. Otherwise, the inevitable use of hindsight will tend to render meritorious inventions "obvious" by using the inventor’s own teachings as a roadmap to piece together prior art references in ways that would not have been obvious at the time of the invention.

IPO also takes-issue with any “synergy” requirement. Synergy occurs when the "the interaction of elements that when combined produce a total effect that is greater than the sum of the individual elements." There are many patent-worthy inventions, however, that lack true synergy. In addition, the Solicitor General’s proposed "extraordinary level of innovation" requirement goes too far. “Nothing in the patent statute suggests that patents should only be awarded to Nobel laureates.”

Paul Berghoff, Jeremy Noe, and Aaron Barkoff (of OrangeBookBlog) are on the brief.

American Intellectual Property Law Association (AIPLA) in Support of Respondent:

AIPLA’s brief is a fun read — it starts off with quotes from Billy Wilder and King Solomon, both of which give us pause on the question of hindsight.

What has been is what will be,
and what has been done is what will be done;
there is nothing new under the sun.

According to AIPLA, King Solomon wasn’t so wise — perhaps because his vision of the past was colored by hindsight. The CAFC’s test of obviousness is useful because it helps avoid hindsight.

TSM is a well-established, thoughtfully-analytic framework that provides certainty and uniformity in obviousness determinations while allowing proper flexibility. By requiring a showing of why someone of ordinary skill in the relevant art would think the invention obvious, it functions as a critical evidentiary device that prevents arbitrary decisions driven by hindsight.

As is typical of opposition briefs, the AIPLA correctly notes that the CAFC’s suggestion test does not require that the suggestion be explicit or written.

I can concieve of a strong [and thus far unstated] argument that it would be sensible to require that the suggestion be written and explicit.  At this point in history, we have more people writing than ever before and those people are each writing more than earlier writers. At the same time, search costs are dropping dramatically and will continue to drop. In this scenario, why would we need to allow the evidentiary nightmare of giving weight to previously unstated suggestions to find an invention obvious?

Professor Thomas Field of Franklin Pierce in Support of Respondent:

Professor Field looks at the CAFC and its role in the patent process.  Unlike its predecesor CCPA, the CAFC hears both administrative patentability and litigation based cases. That means that the CAFC must “confront the consequences of unwaranted grants.” 

If the problem is the grant of too-many patents, the CAFC has little to say there because the court has no role in granting patents except to occasionally rule that the BPAI’s bases for rejection are unsupported.

Pre- and post-grant opposition proceedings may be the answer, but those decisions are for Congress.

ABA in Support of Respondent:

ABA amicus briefs are always difficult to obtain becauase they need the support of both the IP Section and the entire ABA House of Delegates.  Here, the way to consensus was not to argue that the TSM test is the best test, but rather to note that it is useful, objective, and deeply rooted in the Supreme Court’s John Deere jurisprudence. In addition, the test is well settled, and messing with the test would have a far-reaching and complex impact on the economy and state of innovation.

If some elusive method not based on evidence were to be substituted for the present inquiry, hundreds of thousands of patents granted under the teaching-suggestion-motivation methodology would be immediately placed under a cloud.

Harold Milton in Support of Respondent:

Harold Milton drafted the claims being asserted by Teleflex and has filed a very interesting brief in support of Teleflex.  Interesting because he begins with a statement that the suggestion test is illusory, or at least a misnomer. There is no requirement that there be any specific statement of suggestion in the prior art. Nonetheless, the test is important to maintain an “objective standard of patentability” and “consistent evaluation.”  It also prevents chaos:

Without an objective standard, chaos would be multiplied across thousands of patent examiners, judges, juries, attorneys, etc. and would result in inconsistent decisions on patentability.

According to Milton, the Court should reject the suggestion test and stick to its prior decisions that obvious is found when there is a “mere selection of prior art elements combined to perform the identical function as they did separately in the prior art.”

Lee Thomason in Support of Respondent:

Thomason is a Kentucky-based patent attorney. One interesting aspect of his argument involves the law/equity distinction.  According to Thomason, challenges to validity are equitable in their origins as evidenced both by the recited equitable factors of 103(a) (“as a whole”) and by Blackstone’s recitation of the writ fo scire facias. As such, any changes to the rule should be to review obviousness decisions “according to the standard applied to equitable rulings.” Equitable review requires a full discussion of the record and results in more predictability.

[Please e-mail briefs in support of respondent to me at dcrouch@gmail.com]

Documents:

• On the Merits
• In Support of Petitioner
  • Petitioner's Brief on the Merits; [UPDATED WITH CORRECT VERSION]
  • Government's Brief in Support of Petitioner;
  • Law and History Professors (Sarnoff) in Support of Petitioner;
  • Law Professor (Strandburg) in Support of Petitioner;
  • Electronic Frontier Foundation in Support of Petitioner;
  • Judge Colianni in Support of Petitioner;
  • Intel and Micron in Support of Petitioner;
  • Progress and Freedom Foundation in Support of Petitioner;
  • Cisco and GM in Support of Reversal (Petitioner);
  • CCIA in Support of Petitioner;
  • Business Software Alliance in Support of Petitioner;
  • Time Warner, IAC, and VIACOM in Support of Petitioner;
  • AARP.
• In Support of Neither Party
  • IBM in Support of Neither Party;
  • Ford & DaimlerChrysler in Support of Neither Party;
  • DC Bar Assn (Eccelston);
  • Professor Hollaar.
• In Support of Respondent
• Respondent’s Brief on the Merits;
• Intellectual Property Owners in Support of Respondent;
• AIPLA in Support of Respondent;
• ABA in Support of Respondent;
• Automotive Suppliers in Support of Respondent;
• Big Innovative Companies (3M, et. al) in Support of Respondent;
• Technology Properties Limited in Support of Respondents;
• United Inventors Association in Support of Respondent;
• Intellectual Ventures and other Small Companies with Large Patent Portfolios in Support of Respondent;
• Law Professors in Support of Respondent;
• Professor Tom Field (Franklin Pierce) in Support of Respondent;
• IPLAC in Support of Respondent;
• Harold Milton (attorney who drafted the claims in the Teleflex patent) in Support of Respondent;
• Tessera, Qualcomm, and Amberwave in Support of Respondent;
• Science Professors in Support of Respondent;
• Lee Thomason in Support of Respondent.
• [Briefs also available at SCOTUS BLOG]
• Petitions Stage
  • Party Briefs
    • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
    • Teleflex’s Brief in Opposition;
    • KSR Reply Brief (314 KB);
    • Teleflex Supplement.
  • Amicus Briefs
    • Government in support of petition;
    • 24 Law Professors in support of petition;
    • Progress Freedom Foundation in support of petition;
    • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Petitioner and Supporting Amici’s Briefs on the Merits;
• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Professor Wagner and Strandburg debate obviousness in Penn’s new online law reivew:PENNumbra;
• Prof Miller: KSR Lift-off!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious;
• Patent Hawk: Hindsight Problem;
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link];
• Petherbridge & Wagner Empirical Article [link]
• Cotropia Article: [link].
• Shane Popp Article on Section 103 background [link]
• The Patent at issue: [link]

Cite as Dennis Crouch, “KSR v. Teleflex: In Support of the Status Quo,” Patently-O, available at http://www.patentlyo.com.

 KSR v. Teleflex (Supreme Court 2006).

By Dennis Crouch [dcrouch@gmail.com]

By Dennis Crouch [dcrouch@gmail.com]

Background: Teleflex and its supporters have now filed their briefs in defense of the Federal Circuit’s methodology for determining whether a patent is “obvious.” [Copies of briefs are provided below]. The doctrine of nonobviousness is fundamental to our patent system.  In order to be eligible for a patent an invention must be both novel and non-obvious.  Novelty is generally narrowly applied to cases where the invention is identical to something already in the public domain.  Obviousness, however, is a more difficult beast and is intended to ensure that patent rights are only granted to inventions that move us a significant distance past the prior art. 

Obviousness has always been a “squishy” term, but over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed a somewhat objective nonobviousness doctrine using a teaching/suggestion/motivation (TSM) test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art. One problem with any obviousness test is hindsight bias. It is all-to-easy to look-back and assert that an invention would have been obvious. One purpose of the objective TSM test is to avoid this type of hindsight bias.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.  In an article several years ago, Professor John Duffy identified this obviousness issue as one that should attract the Supreme Court’s attention.

[The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old).

Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Now, Duffy, a former clerk of Justice Scalia, is part of the KSR team that is trying to change the rule of law. The KSR case itself concerns a patent covering a gas pedal for an automobile. KSR makes pedals for GM & Chevy trucks and was sued for infringement of the Teleflex patent.

A discussion of briefs in support of the petitioner are found here: Discussion of Breifs Supporting Petitioner.

What follows is a discussion of briefs in support of the respondent: (i.e., in support of the status quo).

Respondent Teleflex: Brief on the Merits

Settled Law: Respondent begins with a compelling exposition on the power of stare decisis. “Millions of patents” have issued based on the suggestion test, and modifying that test would in Hal Wegner’s words, “threaten the validity of literally hundreds of thousands of existing patents still in force.”

Non-Rigid Test: Respondent defines the suggestion test as a “flexible [test that] looks to any available indication that a practitioner in the art would have had some reason to select the elements of the invention from among the prior art and combine them in the manner claimed by the invention.”  Relying heavily on the CAFC’s very recent obviousness pronouncements of Dystar and Alza, the brief points out that a suggestion does not need to be found in prior art, but rather can be implicit in the nature of the problem, customer demand, similarity between references, knowledge of PHOSITA, wide knowledge of value of feature to be combined, etc.  [DDC: Query whether the broad application of implicit suggestions would constructively eliminate the rule.]

The suggestion test can be contrasted with the “synergy” test proposed by petitioner and the “extraordinary level of innovation” test from the Solicitor General. Those approaches essentially mirror the pre-103 requirement of an “invention.” According to Judge Rich, “The first policy decision underlying Section 103 was to cut loose altogether from the century-old term ‘invention.’”

Intellectual Property Owners Association (IPO) in Support of Respondent:

The IPO is an organizatoin of intellectual property owners. MBHB (where I am of counsel) filed the brief on behalf of IPO. IPO’s brief supports the motivation requirement as an objective but flexible and practical approach to the obviousness problem.  IPO hits on the hindsight problem:

[The test must rely on] objective evidence, not mere unsupported opinion or argument. Otherwise, the inevitable use of hindsight will tend to render meritorious inventions "obvious" by using the inventor’s own teachings as a roadmap to piece together prior art references in ways that would not have been obvious at the time of the invention.

[The test must rely on] objective evidence, not mere unsupported opinion or argument. Otherwise, the inevitable use of hindsight will tend to render meritorious inventions "obvious" by using the inventor’s own teachings as a roadmap to piece together prior art references in ways that would not have been obvious at the time of the invention.

IPO also takes-issue with any “synergy” requirement. Synergy occurs when the "the interaction of elements that when combined produce a total effect that is greater than the sum of the individual elements." There are many patent-worthy inventions, however, that lack true synergy. In addition, the Solicitor General’s proposed "extraordinary level of innovation" requirement goes too far. “Nothing in the patent statute suggests that patents should only be awarded to Nobel laureates.”

Paul Berghoff, Jeremy Noe, and Aaron Barkoff (of OrangeBookBlog) are on the brief.

American Intellectual Property Law Association (AIPLA) in Support of Respondent:

AIPLA’s brief is a fun read — it starts off with quotes from Billy Wilder and King Solomon, both of which give us pause on the question of hindsight.

Harold Milton drafted the claims being asserted by Teleflex and has filed a very interesting brief in support of Teleflex.  Interesting because he begins with a statement that the suggestion test is illusory, or at least a misnomer. There is no requirement that there be any specific statement of suggestion in the prior art. Nonetheless, the test is important to maintain an “objective standard of patentability” and “consistent evaluation.”  It also prevents chaos:

Without an objective standard, chaos would be multiplied across thousands of patent examiners, judges, juries, attorneys, etc. and would result in inconsistent decisions on patentability.

Lee Thomason in Support of Respondent:

Thomason is a Kentucky-based patent attorney. One interesting aspect of his argument involves the law/equity distinction.  According to Thomason, challenges to validity are equitable in their origins as evidenced both by the recited equitable factors of 103(a) (“as a whole”) and by Blackstone’s recitation of the writ fo scire facias. As such, any changes to the rule should be to review obviousness decisions “according to the standard applied to equitable rulings.” Equitable review requires a full discussion of the record and results in more predictability.

[Please e-mail briefs in support of respondent to me at dcrouch@gmail.com]

Documents:

• On the Merits
• In Support of Petitioner
  • Petitioner's Brief on the Merits; [UPDATED WITH CORRECT VERSION]
  • Government's Brief in Support of Petitioner;
  • Law and History Professors (Sarnoff) in Support of Petitioner;
  • Law Professor (Strandburg) in Support of Petitioner;
  • Electronic Frontier Foundation in Support of Petitioner;
  • Judge Colianni in Support of Petitioner;
  • Intel and Micron in Support of Petitioner;
  • Progress and Freedom Foundation in Support of Petitioner;
  • Cisco and GM in Support of Reversal (Petitioner);
  • CCIA in Support of Petitioner;
  • Business Software Alliance in Support of Petitioner;
  • Time Warner, IAC, and VIACOM in Support of Petitioner;
  • AARP.
• In Support of Neither Party
  • IBM in Support of Neither Party;
  • Ford & DaimlerChrysler in Support of Neither Party;
  • DC Bar Assn (Eccelston);
  • Professor Hollaar.
• In Support of Respondent
• Respondent’s Brief on the Merits;
• Intellectual Property Owners in Support of Respondent;
• AIPLA in Support of Respondent;
• ABA in Support of Respondent;
• Automotive Suppliers in Support of Respondent;
• Big Innovative Companies (3M, et. al) in Support of Respondent;
• Technology Properties Limited in Support of Respondents;
• United Inventors Association in Support of Respondent;
• Intellectual Ventures and other Small Companies with Large Patent Portfolios in Support of Respondent;
• Law Professors in Support of Respondent;
• Professor Tom Field (Franklin Pierce) in Support of Respondent;
• IPLAC in Support of Respondent;
• Harold Milton (attorney who drafted the claims in the Teleflex patent) in Support of Respondent;
• Tessera, Qualcomm, and Amberwave in Support of Respondent;
• Science Professors in Support of Respondent;
• Lee Thomason in Support of Respondent.
• [Briefs also available at SCOTUS BLOG]
• Petitions Stage
  • Party Briefs
    • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
    • Teleflex’s Brief in Opposition;
    • KSR Reply Brief (314 KB);
    • Teleflex Supplement.
  • Amicus Briefs
    • Government in support of petition;
    • 24 Law Professors in support of petition;
    • Progress Freedom Foundation in support of petition;
    • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Discussion of Petitioner and Supporting Amici’s Briefs on the Merits;
• Discussion of Government's Brief in Support of Certiorari;
• Discussion of Microsoft’s Amicus Brief;
• Discussion of the CAFC decision;
• Discussion of Law Professors Brief;
• Discussion of In re Kahn;
• Discussion of Petition for Certiorari;
• Prediction Certiorari;
• Professor Wagner and Strandburg debate obviousness in Penn’s new online law reivew:PENNumbra;
• Prof Miller: KSR Lift-off!
• Prof Miller: Discussion of Gov’t Brief;
• Patent Hawk: Becoming Less Obvious;
• Patent Hawk: Hindsight Problem;
• Buchanan: "[O]nce again, patent reform has left the Capitol and walked across First Street to the Supreme Court." [Link];
• Petherbridge & Wagner Empirical Article [link]
• Cotropia Article: [link].
• Shane Popp Article on Section 103 background [link]
• The Patent at issue: [link]

Cite as Dennis Crouch, “KSR v. Teleflex: In Support of the Status Quo,” Patently-O, available at http://www.patentlyo.com.

Documents:

On the Merits

In Support of Petitioner

Petitioner's Brief on the Merits; [UPDATED WITH CORRECT VERSION]

Government's Brief in Support of Petitioner;

Law and History Professors (Sarnoff) in Support of Petitioner;

Law Professor (Strandburg) in Support of Petitioner;

Electronic Frontier Foundation in Support of Petitioner;

Judge Colianni in Support of Petitioner;

Intel and Micron in Support of Petitioner;

Progress and Freedom Foundation in Support of Petitioner;

Cisco and GM in Support of Reversal (Petitioner);

CCIA in Support of Petitioner;

Business Software Alliance in Support of Petitioner;

Time Warner, IAC, and VIACOM in Support of Petitioner;

AARP.

In Support of Neither Party

IBM in Support of Neither Party;

Ford & DaimlerChrysler in Support of Neither Party;

DC Bar Assn (Eccelston);

Professor Hollaar.

In Support of Respondent

Respondent’s Brief on the Merits;

Intellectual Property Owners in Support of Respondent;

AIPLA in Support of Respondent;

ABA in Support of Respondent;

Automotive Suppliers in Support of Respondent;

Big Innovative Companies (3M, et. al) in Support of Respondent;

Technology Properties Limited in Support of Respondents;

United Inventors Association in Support of Respondent;

Intellectual Ventures and other Small Companies with Large Patent Portfolios in Support of Respondent;

Law Professors in Support of Respondent;

Professor Tom Field (Franklin Pierce) in Support of Respondent;

IPLAC in Support of Respondent;

Harold Milton (attorney who drafted the claims in the Teleflex patent) in Support of Respondent;

Tessera, Qualcomm, and Amberwave in Support of Respondent;

Science Professors in Support of Respondent;

Lee Thomason in Support of Respondent.

[Briefs also available at SCOTUS BLOG]

Petitions Stage

CAFC Reverses Medrad Reissue Case

Medrad v. Tyco (Fed. Cir. 2006).

In October 2005, I discussed the district court case involving Medrad.  In that case, the district court held that a Section 251 Reissue can only be used to correct an error in the specification, drawings or claims and cannot be used to correct a procedural error that is not reflected in the patent grant itself. During prosecution, the patentee had filed a second reissue to correct a mistake made during the prosecution of the first reissue. (The patentee failed to file a supplemental reissue declaration in compliance with PTO Rule 1.175). The lower court found that correction of that mistake did not fall within the guidelines of Section 251.

On appeal the CAFC sided with the patentee by giving a broad meaning to the statutory phrase “[invalid] by reason of the patentee claiming more or less than he had a right to claim in the patent.” In particular, the unanimous appellate panel found that the phrase does not literally mean “claim more or less” but rather that the phrase “encompass[es] any error that causes a patentee to claim more or less than he had a right to claim.”  Thus, a reissue can apparently be filed based on any error that would result in invalid claims.

Notes:

• 35 USC 251 reads as follows:

Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall, on the surrender of such patent and the payment of the fee required by law, reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.

PTO's Refusal to Register Temporary Aliens Moves Toward Supreme Court Hearing

Lacavera v. Dudas (on Petition for Certiorari).

Catherine Lacavera is an attorney admitted to practice in New York, Massachusetts, and before the Supreme Court of the United States.  She has litigated patent cases in Federal Courts, drafted patent applications, passed the PTO registration examination, and now is an attorney for Google in California. Unfortunately for Ms. Lacavera, she is Canadian and does not hold a green card.  (Lacavera holds a non-immigrant work visa). 

Under USPTO rules, Lacavera’s “nonimmigrant status is ‘inconsistent’ with [PTO] registration because [the nonimmigrant status] is limited in time and scope whereas registration is not so limited.”  The CAFC agreed with the PTO in denying Lacavera her full registration, and Lacavera has now petitioned the Supreme Court for a writ of certiorari.

The petition presents three questions:

 1. Does the USPTO . . . have the authority to refuse to register nonimmigrant aliens as patent practitioners solely on the basis of their immigration status, where the nonimmigrant aliens are otherwise qualified for registration and authorized by United States Citizenship and Immigration Services ("USCIS") to practice as patent practitioners in the United States?

 2. Did the Federal Circuit, in upholding a USPTO rule denying registration to nonimmigrant aliens, inappropriately apply only a "rational review" standard where it should have applied at least "heightened scrutiny," if not "strict scrutiny," to a federal agency rule that discriminates against nonimmigrant aliens without serving any special national interest?

3. Do bar admission rules, such as the state rule that is before this Court in Leclerc v. Webb and Wallace v. Calogero, and the federal rule that is the basis of this case, that deny aliens lawfully within the United States access to employment opportunities based on the duration and employment restrictions of their current visas, violate the aliens' rights to "equal protection" in the absence of any evidence that the visa restrictions relate to valid state or federal interests in ensuring competency of practitioners?

On the issue of equal protection, Lacavera argues that the CAFC “set a dangerous precedent” by denying equal protection because “the USPTO treats all nonimmigrant alien's the same by refusing to register any of them. Equal discrimination is not equal protection.”

Interestingly, because she is Canadian and a U.S. attorney, Lacavera is the perfect test case.  If she were residing in Canada, the PTO would permit her registration even without any U.S. immigration status.  Additionally, her visa specifically authorizes her to practice as a patent attorney in the U.S.

The Coalition of Service Industries has filed a brief in support of the petition — arguing that we should open our doors to legally admitted temporary residents as a bargaining chip for reciprocity.

The U.S. has for example asked many other nations not to discriminate against American lawyers who provide or wish to provide legal services in foreign countries. Because reciprocity plays a large role in trade negotiations, the USPTO rule adversely affects our legal community in the several important trade negotiations that are currently underway or planned.

The Supreme Court has expressed its interest in the case — requesting that the government file a responsive brief by November 1, 2006.

Notes:

• Interestingly, soon after Lacavera filed her petition for certiorari, her application for permanent residence was granted.  The PTO may end up mooting this issue by granting her full registration.

Documents:

• Discussion of the CAFC case
• Lacavera’s Petition for Certiorari

CAFC OK's Fee-Based Regulation at PTO

The CAFC has now explicitly opened the door to fee-based regulation at the USPTO.

Figueroa v. U.S. (Fed. Cir. 2006).

Fighting a lost cause, Figueroa sued the U.S. government using PTO fees to fund other federal programs (fee diversion). From FY 1991 to FY 2004, for instance, the PTO collected about $11.1 billion in fee revenue and only spent about $10.6 billion.  The remaining $545 million was returned to the general fund.

Figueroa alleged that the PTO fees “exceeded congress’s power under the Patent Clause” of the Constitution and was also an un-apportioned (and thus unlawful) direct tax on intellectual property.

Using a rational-basis test, the two-judge majority found that Congress had plenty of reasons for charging the fees that it did. Most notably, the court found that an acceptable basis for high fees would be to provide incentives against certain types of patent prosecution activities.

[E]ven if fees exceeded the existing and predicted costs of operating the patent system, Congress could also rationally decide to set fees above what is needed to meet the funding needs of the PTO in order to deter the filing and prosecution of certain types of patent applications. The Supreme Court has recognized that Congress may legitimately impose taxes or fees in order to discourage undesirable behavior.

In particular, the court noted that high fees could be used to discourage the filing of applications associated with vanity patents, likely invalid patents, non-commercial uses, and patents designed to inhibit competition.

This gives constitutional backing to the fee-based regulation at the PTO, such as charging large fees for additional claims or continuations. In a recent letter to Jon Dudas, the IPO opposes any “collaborative” or “platinum plated” examinations because those “would discriminate against [patentees] with limited resources, draw the examining staff away from traditional examination, and create different classes of patents in the eyes of the courts.” [IPO Letter]

Links:

• Prior discussion of Figueroa [Court of Federal Claims].
• Information on the case from the prosecuting lawyer.
• Nipper’s discussion of the case.
• AIPLA amicus brief supporting Figueroa at the Court of Federal Claims.

Damages: Jury's Award of Both Patent And Trademark Damages Was Impermissible Double Recovery

Aero v. Intex and Wal-Mart (Fed. Cir. 2006)

Aero has patented an air mattress inflation control system that it advertises using the registered mark “ONE TOUCH.”  A jury found that Intex (and Wal-Mart) were infringing both the patent and the trademark. The judge awarded $5.80 million for willful patent infringement ($2.95 in compensation, doubled for willfulness) and $1 million for the trademark infringement.

On appeal, the CAFC looked at the damage award and found some double-counting.

This case presents the question of whether Aero’s recovery of both patent and trademark infringement damages represents an impermissible double recovery.

Under Federal Circuit, double recovery for the “same injury” is inappropriate.

At trial, Aero had used similar evidence of Intex sales to show damages for both the patent and trademark claims. Because Aero did not show any other harm to its trademark apart from the sales of the patented product, the CAFC found that the injury was identical, and thus cancelled the trademark recovery.

The case is remanded to the district court for entry of judgment in Aero’s favor in the principal amount of $5.9 million. [Still enough for a good night’s sleep]

MedImmune Oral Arguments

MedImmune v. Genentech (Supreme Court 2006, 05–608)

Oral arguments were held today in this important case. Transcript of the arguments are available here.

Links:

• Discussion and copies of briefs filed in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Centocor;
• MedImmune Petition Granted;
• Lear v. Adkins;
• Professor Miller’s comments;
• Supreme Court on the March;
• Supreme Court docket sheet;
• SCOTUS Blog

CAFC: Suggestion-Test Has Been Flexibly Applied For Decades

DyStar v. Patrick Co. (Fed. Cir. 2006).

DyStar’s patent discloses a process for dyeing textiles with catalytically hydrogenated leuco indigo. After a trial, the jury found that Patrick infringed claims 1–4, that the patent was not invalid, and that $90,000 of damages should be awarded.

Patrick appealed the lower court’s denial of a new trial on obviousness grounds.  A new trial should not awarded when “a jury, viewing the evidence in the light most favorable to [DyStar], could have properly reached [its validity] conclusion.” The CAFC reviewed the denial for abuse of discretion. (Level of review based on Fourth Circuit law).

As is often the case, all the elements of DyStar’s invention were already known in the art — the question was whether there was some obvious motivation to combine the prior art together. 

Suggestion to Combine: In recent weeks, we have seen a common thread in CAFC jurisprudence indicating that “the suggestion test is not a rigid categorical rule.” Rather, the suggestion to combine references can be found from “any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself.”

It is difficult to see how our suggestion test could be seen as rigid and categorical given the myriad cases over several decades in which panels of this court have applied the suggestion test flexibly. Obviousness is a complicated subject requiring sophisticated analysis, and no single case lays out all facets of the legal test. DyStar's argument and the above-cited commentary highlight the danger inherent in focusing on isolated dicta rather than gleaning the law of a particular area from careful reading of the full text of a group of related precedents for all they say that is dispositive and for what they hold. When parties like Dystar do not engage in such careful, candid, and complete legal analysis, much confusion about the law arises and, through time, can be compounded.

Holding: Claims are obvious

In a footnote, the Court defends its KSR decision — a decision currently being briefed at the Supreme Court.  

In KSR, we vacated a district court's grant of summary judgment of invalidity for obviousness. The district court found a motivation to combine not in the references but "largely on the nature of the problem to be solved", which we did not deem erroneous. Teleflex, Inc. v. KSR Int'l Co., 119 Fed. App'x 282, 287 (Fed. Cir. 2005) (unpublished). Rather, we vacated because the court did not explain sufficiently its rationale, and failed to make "findings as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention to make the combination in the manner claimed." Id. at 288 (citation omitted).

In an impressive history (that is begging for a full analysis), the CAFC sets out the full scope of the flexibility of the suggestion test and notes how the test is well grounded in Supreme Court jurisprudence and has always been flexible. This is one for the casebooks.

PTO's Claim Construction Given No Weight at CAFC

SRAM v. AD-II (Fed. Cir. 2006).

SRAM cases are always great because they involve interesting mechanical technology.  This one involves a shift actuator for a bicycle derailleur. After claim construction, the district court granted summary judgment for SRAM and issued a permanent injunction against AD-II.

On appeal, AD-II argued that the lower court was too narrow in its construction, and that a proper broad construction of the claims would render them invalid.  The CAFC agreed.  Of note, during prosecution (and three reexamination proceedings) the PTO examiner construed the disputed term in the same fashion followed by the district court. (Not always explicitly). On appeal, the CAFC gave those interpretations no consideration.

[P]aradoxically in this case, the PTO construed the claim narrowly, rather than broadly, by reading in the same limitation as did the district court. In doing so, the PTO erred for the same reasons as did the district court. The Patent Examiner’s actions thus provide no support for SRAM’s argument. Furthermore, this court is not bound by the PTO’s claim interpretation because we review claim construction de novo.

Vacated and remanded.

Notes:

• Although claim construction is de novo this decision appears to rub against notions of prosecution-based-interpretation found in other cases
• For more information on bicycle patents and innovation, check out Patent Attorney Bob Shaver’s Patent Pending Blog.

Section 295 Non-Infringement Burden Shifting: Does Not Require Evidence Where Non-infringement is Clear

Kemin Foods v. Pigmentos Vegetales (Fed. Cir. 2006).

Kemin holds patents related to purifying lutein that is is extracted from plants. A jury gave Kemin the verdict based on infringement under the doctrine of equivalents. The court then issued a permanent injunction and Pigmentos appealed. 

The CAFC decision is essentially a lesson in reasoned deference — the CAFC affirmed each of the district court’s decisions and only overruled one evidentiary decision by the magistrate.

An interesting squib in the opinion involves the permanent injunction.

As is true in many patent cases, the defendant continued to modify its accused process throughout the litigation.  Based on those changes, the district court agreed to shift the burden of proving non-infringement to the defendant.  35 U.S.C. 295 provides statutory support for burden shifting when there is “a substantial likelihood . . . that the [accused] product was made by the patented process” after the plaintiff shows “a reasonable effort to determine the process actually used in the production of the product and was unable so to determine.”

After the decision, Kemin argued that the permanent injunction should apply to “any process run by [the defendant] at any time through the date of the jury verdict.”  Kemin’s reasoning was that Section 295 required the defendant to present non-infringement evidence about any of those processes — and its failure to do so should result in in an injunction to stop the activity.  The CAFC disagreed — simply because the new processes could not lead to infringement because they did not use  propylene glycol as required by the claim language.  The court remanded for a determination of whether the new non-propylene glycol processes lead to infringement of another claim.

The unstated principle that emerges here is that Section 295 burden shifting cannot be used to capture clearly non-infringing activities even if the defense presents no evidence of the non-infringement.

 

Zoltek Patent Takings Rehearing Denied: No Fifth Amendment Protection

Zoltek v. U.S. (Fed. Cir. 2006, en banc denied).

Just last week, Patently-O highlighted Professor Mossoff’s historical analysis of patent-takings jurisprudence.  That article took the CAFC to task for its continuation of the untrue myth that “patents were never secured as constitutional private property in the nineteenth century.”  In fact, argues Mossoff, “nineteenth-century courts applied the Takings Clause to patents, securing these intangible property rights as constitutional private property.” “It is time to set the historical record straight.”

Mossoff’s article was prompted by the April 2006 decision in Zoltek v. U.S. In that case, the CAFC found itself bound by the 1894 case of Schillinger v. United States where the Supreme Court ruled that a patent holder could not sue the government for patent infringement as a Fifth Amendment taking.

In Schillinger v. United States, 155 U.S. 163 (1894), the Supreme Court rejected an argument that a patentee could sue the government for patent infringement as a Fifth Amendment taking under the Tucker Act. Schillinger remains the law.

 With a petition for rehearing, Zoltek gave the CAFC another shot.

Without opinion (as is usual in denials), the petition for rehearing was denied.  However, two opinions were released.  Judges Dyk and Gajarsa filed a concurring opinion arguing first that there is no need for a taking claim because private parties already have a right to sue the government for unauthorized patent infringement under 28 U.S.C. § 1498. Second, the two judges argue that because patent rights are created by relatively recent federal statute, it is difficult to characterize limitations of those rights as a “taking of established property rights.”  

In dissent, Judge Newman laid out the holding in simple terms:

The panel majority holds that there is no jurisdiction [in any court] of a Takings claim for compensation for unauthorized use by the government of a patented invention. This ruling is contrary to decision, statute, policy, and constitutional right. I must, respectfully, dissent from the court's endorsement of this ruling.

 Judge Newman finds that the majority decision only makes sense if we reject the premise that patents are property.

Supreme Court Next: Judge Newman’s set this case up nicely for Supreme Court review on the issue of takings and more broadly what is meant by intellectual property.

Notes:

• Document: En Banc Denial with Opinions
• Document: Panel Decision
• SSRN: Mossoff Article (87 Boston University Law Review ___ (2007)).  
• Patently-O: Discussing Original Decision
• Patently-O: Discussing Mossoff Article
• Patent Hawk: Discussing En Banc Denial
• How Appealing: Discusses Dissent
• Professor Barros: Introduces Case
• Journal of IP Law & Practice (Oxford): Patents holders are not protected from US Government infringement by the Fifth Amendment
• Foley Attorneys: Explain how to avoid being trapped by Zoltek

CAFC: Reissue Recapture Rule is "Objective"

Kim v. ConAgra (Fed. Cir. 2006).

Here’s another case where technicalities of the patent system apparently trapped an unsuspecting patentee.

“[W]e reject Kim’s position that she should be treated differently from other patentees because she was pro se during some parts of the prosecution.”

Potassium bromate has been traditionally used in bread-making, but people are concerned with its carcinogenic effects. Yoon Ja Kim, a chemist, found that a combination of ascorbic acid and food acid could serve the purpose of potassium bromate. (i.e., to “strengthen dough, increase loaf volume, contribute to fine crumb grain, and increase shelf life”). Kim filed a pro se patent application and got her patent.

Kim then sued ConAgra — asserting that “Healthy Choice” brand breads infringed on the patent. A jury then found that the patent was not invalid and infringed. The district court, however granted JMOL of non-infringement in ConAgra’s favor. Kim appealed.

Claim Construction and Infringement: The asserted claims both appeared as follows:

A potassium bromate replacer composition consisting essentially of . . .

Although not defined in the specification, CAFC found the preamble term “potassium bromate replacer” to be limiting to the extent that any infringing composition must “perform essentially the same function in the production of that bread as would potassium bromate.”

Kim, acting as her own expert witness, showed that the accused products included the same ingredients as listed in the claims (and that potassium bromate was not an ingredient).  However, Kim did not prove that those ingredients were functionally active in the accused products. 

Then, the court found that other ingredients, such as vital wheat glutten, ferrous sulfate, and dough strengthening enzymes, might be active.  If that is the case, Kim’s “consisting essentially of” transition language would remove those from the ambit of infringement.

Validity – Recapture: Even though the court found no infringement, it went-on to discuss validity. Kim’s patent is a reissue, and the defense argued that the patent violated the rule against recapture.  That rule forbids a reissue applicant to recapture scope surrendered during prosecution unless it was “erroneously excluded from that patent.” 

Prior precedent made this look like a subjective rule — it is not. “Surrender” means that an objective observer who is later “looking at the prosecution history would conclude that the purpose of the patentee’s amendment or argument was to overcome prior art and secure the patent.”  According to the CAFC, the objective standard gives the public more clarity as to when they can rely on a patentee’s admission during prosecution. Interestingly for Kim, he would have lost under the subjective standard, but wins under an objective standard [for reasons too long to describe here.]

Dissent by Judge Schall: Schall would not have included the extensive functional limitation of the preamble potassium bromate replacer because “Kim acted as her own lexicographer in defining the term ‘potassium bromate replacer’ as ‘a slow acting oxidant that is functional throughout the entire manufacturing process.’”

My question is: Have you looked at the ingredient list of your bread lately?

 

EchoStar v. TiVo Patent Case Stayed Pending Inter Partes Reexamination

First, I’m happy to report that one of my favorite patent blogs, the 271 Patent Blog by Peter Zura is back in business. Welcome back Peter.

I’ve been covering the TiVo v. EchoStar case here. Peter has information about the companion case EchoStar v. TiVo here.  In the first case TiVo sued EchoStar for patent infringement, and in the second, EchoStar sued TiVo for patent infringement. This is great fodder for an antitrust article (or blog post). We have what may be a market duopoly with each side holding potentially essential intellectual property rights.

The take-home for patent attorneys involves the second case — the one filed by EchoStar.  That case was recently stayed pending the outcome of an inter partes reexamination filed by TiVo. In its decision to stay, the magistrate judge gave a good amount of weight to the fact that the reexam was inter partes — thus giving both sides an opportunity to continue the litigation in another form — as well as the statutory litigation estoppel effect against TiVo if the validity EchoStar’s patents are reaffirmed in the reexamination process.  In other words, the fact that the reexam is inter partes made the court more likely to stay the litigation.

• Peter Zura’s Analysis of the stay.
• Can someone e-mail the order to me: and here it is. 
• One of the few really good investigative IP reporters, Xenia Kobylarz has more on the story here at Law.com (subscription req’d).

CAFC and the Nebulous Motivation to Modify

Ormco v. Align Technology (Fed. Cir. 2006).

Align owns a couple of patents covering a system of using a series of sequential orthodontic retainers.  Each retainer in the series is used to shift the teeth a bit.  Claim 1 is typical and, according to the CAFC:

essentially requires (a) three or more appliances with geometries selected to progressively reposition teeth; (b) instructions regarding order of use; and (c) provision of the appliances in a single package to the patient.

On summary judgment, the patent was found not invalid and infringed.  The defendant appealed on obviousness and won.  

The opinion is interesting because the court gives only lip-service to the requirement of proof of motivation to modify the the teaching of prior art to achieve the claimed invention.  The prior art reference taught the progressive retainers, but did not teach the single package provisioning limitation. The only motivation modify provided by the court is as follows:

Under these circumstances, we do not think that the single package limitation makes the device of the ‘611 patent claims patentably distinct. Providing the devices to the patient in one package, as opposed to two packages or three packages is not a novel or patentable feature in the light of the well-known practice of packaging items in the manner most convenient to the purchaser.

The prior art reference actually appeared to teach away from the single package provisioning by stating that each subsequent retainer should be applied by a professional in an office visit.  Here the court dismissed that argument because the supposed teaching away of the prior art (requiring a professional visit for installation) does not necessarily mean that all of the retainers cannot be all packaged together. Although not explicit, this decision appears to diverge from the traditional thought of teaching away as a “suggestion” or implication and moves it to a world where the teaching away is explicitly and definite.

Regarding the instruction limitation — that limitation will never make an invention patentable in the medical field:

statutes and regulations promulgated under the Food, Drug, and Cosmetic Act ("FDCA") generally require instructions for medical devices. Whether or not these regulations apply to the specific orthodontic devices involved here, they supply ample evidence of a motivation to provide instructions as to how to use the devices.

Note: The timing of this case is exceptional.  As the respondent and oppositional amici in KSR are preparing their briefs, this decision appears showing the flexibility of the modification test and its ability to allow the court to bend over backwards to achieve the right results. . . .

KSR v. Teleflex: Rethinking Obviousness

KSR v. Teleflex (Supreme Court 2006).

By Dennis Crouch

The first round of briefs have now been filed in the much anticipated KSR case that will address fundamental questions of patentability. [Copies of briefs are found below] The doctrine of nonobviousness ensures that patent rights are not granted on inventions that are simply throw-away modifications of prior technology.  Questions of obviousness are at play in virtually every patent case, in both proceedings before the USPTO and during infringement litigation.

Obviousness has always been a “squishy” term, but over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed a somewhat objective nonobviousness doctrine using a teaching/suggestion/motivation (TSM) test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.  In an article several years ago, Professor John Duffy identified this obviousness issue as one that should attract the Supreme Court’s attention.

[The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old).

Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Now, Duffy, a former clerk of Justice Scalia, is part of the KSR team that is trying to change the rule of law.

The case itself concerns a patent covering a gas pedal for an automobile. KSR makes pedals for GM & Chevy trucks and was sued for infringement of the Teleflex patent.

Crouch’s notes: In my view, the question is not correctly presented because it focuses on the aspect of “proof.” Of course any decision on obviousness should be based on some sort of proof. I expect that the Court will, as they often do, ignore this particular question and instead answer the broader question of how “a court should go about deciding whether matter claimed in a patent should be deemed ‘non-obvious' subject matter.”  In fact, in its merits brief, KSR implicitly recognizes this more fundamental question in its summary of the case.

It is very likely that the Federal Circuit’s home-grown TSM test will be eliminated.  This leaves us with a gaping hole — the most likely successor is a return to Sakraida that would require a showing of some functional-shift caused by a combination of old elements. 

Petitioner KSR and a group of amici have recently filed their briefs on the merits.  Looking at the Amici thus far, you can see that KSR’s supporters are primarily law professors and large companies likely to get sued for patent infringement.  They are hoping to lower the obviousness standard — making it easier to invalidate a patent during litigation.  It is not clear, however, that the Sakraida standard is actually a higher patentability bar — that all depends on the meaning of a “functional-shift.”  That said, many of the potential defendants will be happy if the law becomes more unsettled — the result at least gives them more reason to appeal and would thus increase the plaintiff’s litigation costs (marginally lowering the number of infringement suits filed).  Notably, none of the major bar associations support the petitioner.

What follows is a brief review of those documents. The original documents themselves are accessible through links at the bottom of the article.

Petitioner KSR’s Brief

KSR’s strongest case is that the way the courts determine obviousness today (the TSM test) is not based on any statutory language nor is it based on any Supreme Court jurisprudence. Rather, the CAFC has created the TSM test out of whole cloth and crafted it in a way that inappropriately rejects Supreme Court precedent.  The extremely well researched and written brief traces the history of obviousness jurisdiction and uses that history as the primary basis for its conclusions.

One interesting argument is KSR’s position that provides 103(a) a condition for patentability rather than a condition for challenging patentability.  This appears to be an argument directed primarily to patent prosecution — that the applicant should be the one making an up-front showing of non-obviousness to satisfy section 103(a) rather than the PTO being forced to open with its rejection.   

Finally, KSR makes clear that the TSM test sets the patentability bar too low and allows too many technically trivial inventions to receive patent protection.

The only thing lacking here is any strong guidance for what obviousness test should arise to replace the soon to be displaced TSM test. KSR argues for little more than “adherence to [the Court’s] precedents.”  The result will certainly be a number of years of turmoil — especially on the side of patent prosecution.

Bush Administration in Support of Petitioner

The Government argues that the CAFC has “inappropriately broadens the category of nonobvious and therefore patentable inventions” by limiting the obviousness determination to a single rigid test. Rather, the Government would return to the rules of Graham v. John Deere, that try to determine “whether the claimed invention manifests the extraordinary level of innovation, beyond the capabilities of a person having ordinary skill in the art, that warrants the award of a patent.”

In particular, the brief points out that the TSM test is not wrong.  Rather, the problem is that the TSM test should not be the only test available to determine whether an invention is obvious. For instance, the Government argues that PTO Examiners should be able to reject claims based on their “basic knowledge” or “common sense.”

Law and History Professors (Sarnoff) in Support of Petitioner

Professor Sarnoff along with six other professors add to the debate by recognizing that the Supreme Court’s precedent, although “sound,” needs to be clarified: The professors

suggest [as a clarification to Graham] that the Court hold that the obviousness inquiry is designed to prohibit patents on inventions that could have been made by those skilled in the art within a reasonable period of time (following the time that the invention at issue was actually made) and within reasonable budgetary constraints.

The professors also suggest several modifications (clarifications) of the burdens of proof of patentability.  Their first suggestion would be to remove the evidentiary burden on the PTO (or challenger in litigation) to satisfy the TSM test. Thus, even if the TSM test remains in effect, the initial burden would presumably be shifted to the patentee to prove that the test is not satisfied.

Another clarification would relate to the presumption of validity.

[T]he Court should clarify that a clear and convincing burden of proof should not apply to issues for which the relevant evidence was not previously considered by the Patent Office.

Progress and Freedom Foundation in Support of Petitioner

PFF is a think tank that supports free markets and usually strong property rights. (Richard Epstein and John Duffy are both members of PFF advisory counsel).  A strong property regime in the patent system means that issued patents should be valid and should clearly show their scope of coverage.  PFF’s contribution is to explore how improper hindsight can be avoided even without strict evidentiary requirements:

But adopting the correct standard does not require that USPTO or the courts give in to subjective whim, because there are administrative mechanisms that can be used to make the exercise of subjective judgment fair and reasonably consistent over time.

For example, USPTO could adopt the current Federal Circuit test as a first cut, because it does indeed represent a crucial benchmark. Any invention which fails the “teaching-suggestion-motivation” test is clearly not patentable. But this need not end the inquiry. If the examiner thinks he/she has a special case in which this test does not capture the reality of the situation, perhaps the matter could be referred to a multiperson review committee, thus eliminating the influence of a single examiner’s whim. Or perhaps boards of outside experts could be established, or community peer review processes conducted over the Internet.

KSR v. Teleflex (Supreme Court 2006).

By Dennis Crouch

The first round of briefs have now been filed in the much anticipated KSR case that will address fundamental questions of patentability. [Copies of briefs are found below] The doctrine of nonobviousness ensures that patent rights are not granted on inventions that are simply throw-away modifications of prior technology.  Questions of obviousness are at play in virtually every patent case, in both proceedings before the USPTO and during infringement litigation.

Obviousness has always been a “squishy” term, but over the past twenty-five years, the Court of Appeals for the Federal Circuit has developed a somewhat objective nonobviousness doctrine using a teaching/suggestion/motivation (TSM) test. According to the test, when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art.

KSR has asked the Supreme Court to rethink that approach and take a fresh look at the obviousness standard for patentability. The petition questions whether obviousness should require any proof of some suggestion or motivation to combine prior art references.

Question Presented: Whether the Federal Circuit erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. sec. 103(a), in the absence of some proven "'teaching, suggestion or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed"?

Interestingly, the Supreme Court has not heard an obviousness since well before the founding of the Federal Circuit. In that case (Sakraida 1976), the Court held that a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a).  Under the Sakraida standard, the Teleflex patent is arguably obvious.  In an article several years ago, Professor John Duffy identified this obviousness issue as one that should attract the Supreme Court’s attention.

[The Federal Circuit’s suggestion] test, which tends to make even seemingly trivial developments patentable, is entirely the Federal Circuit’s product.  It has no basis in the Supreme Court’s case law and may, in fact, be inconsistent with the Court’s most recent pronouncement on the subject (though that precedent is now more than a quarter century old).

Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 S.Ct. Rev. 273, 340-41 (2003).  Now, Duffy, a former clerk of Justice Scalia, is part of the KSR team that is trying to change the rule of law.

The case itself concerns a patent covering a gas pedal for an automobile. KSR makes pedals for GM & Chevy trucks and was sued for infringement of the Teleflex patent.

Crouch’s notes: In my view, the question is not correctly presented because it focuses on the aspect of “proof.” Of course any decision on obviousness should be based on some sort of proof. I expect that the Court will, as they often do, ignore this particular question and instead answer the broader question of how “a court should go about deciding whether matter claimed in a patent should be deemed ‘non-obvious' subject matter.”  In fact, in its merits brief, KSR implicitly recognizes this more fundamental question in its summary of the case.

It is very likely that the Federal Circuit’s home-grown TSM test will be eliminated.  This leaves us with a gaping hole — the most likely successor is a return to Sakraida that would require a showing of some functional-shift caused by a combination of old elements. 

Petitioner KSR and a group of amici have recently filed their briefs on the merits.  Looking at the Amici thus far, you can see that KSR’s supporters are primarily law professors and large companies likely to get sued for patent infringement.  They are hoping to lower the obviousness standard — making it easier to invalidate a patent during litigation.  It is not clear, however, that the Sakraida standard is actually a higher patentability bar — that all depends on the meaning of a “functional-shift.”  That said, many of the potential defendants will be happy if the law becomes more unsettled — the result at least gives them more reason to appeal and would thus increase the plaintiff’s litigation costs (marginally lowering the number of infringement suits filed).  Notably, none of the major bar associations support the petitioner.

What follows is a brief review of those documents. The original documents themselves are accessible through links at the bottom of the article.

Petitioner KSR’s Brief

KSR’s strongest case is that the way the courts determine obviousness today (the TSM test) is not based on any statutory language nor is it based on any Supreme Court jurisprudence. Rather, the CAFC has created the TSM test out of whole cloth and crafted it in a way that inappropriately rejects Supreme Court precedent.  The extremely well researched and written brief traces the history of obviousness jurisdiction and uses that history as the primary basis for its conclusions.

One interesting argument is KSR’s position that provides 103(a) a condition for patentability rather than a condition for challenging patentability.  This appears to be an argument directed primarily to patent prosecution — that the applicant should be the one making an up-front showing of non-obviousness to satisfy section 103(a) rather than the PTO being forced to open with its rejection.   

Finally, KSR makes clear that the TSM test sets the patentability bar too low and allows too many technically trivial inventions to receive patent protection.

The only thing lacking here is any strong guidance for what obviousness test should arise to replace the soon to be displaced TSM test. KSR argues for little more than “adherence to [the Court’s] precedents.”  The result will certainly be a number of years of turmoil — especially on the side of patent prosecution.

Bush Administration in Support of Petitioner

The Government argues that the CAFC has “inappropriately broadens the category of nonobvious and therefore patentable inventions” by limiting the obviousness determination to a single rigid test. Rather, the Government would return to the rules of Graham v. John Deere, that try to determine “whether the claimed invention manifests the extraordinary level of innovation, beyond the capabilities of a person having ordinary skill in the art, that warrants the award of a patent.”

In particular, the brief points out that the TSM test is not wrong.  Rather, the problem is that the TSM test should not be the only test available to determine whether an invention is obvious. For instance, the Government argues that PTO Examiners should be able to reject claims based on their “basic knowledge” or “common sense.”

Law and History Professors (Sarnoff) in Support of Petitioner

Professor Sarnoff along with six other professors add to the debate by recognizing that the Supreme Court’s precedent, although “sound,” needs to be clarified: The professors

The professors also suggest several modifications (clarifications) of the burdens of proof of patentability.  Their first suggestion would be to remove the evidentiary burden on the PTO (or challenger in litigation) to satisfy the TSM test. Thus, even if the TSM test remains in effect, the initial burden would presumably be shifted to the patentee to prove that the test is not satisfied.

Another clarification would relate to the presumption of validity.

CAFC Condones District Court Preliminary Injunction Jurisdiction Despite Ongoing ITC Exclusion Order

Fuji Photo Film v. Benun (Fed. Cir. 2006).

Fuji’s disposable camera patent litigation against Jazz Photo and Benun (Jazz’s owner) is ongoing.  (See, e.g.,  here and here).  The lower court granted a preliminary injunction stopping Benun from importing any otherwise infringing disposable cameras that did not originate from camera shells that were first sold in the U.S.  Because the ITC has an ongoing Exclusion Order for these products, the defendants challenged the district court’s jurisdiction to enjoin the activity.

Benun tied its jurisdiction argument to the ITC’s grant of jurisdiction.  Under 28 U.S.C., 1581(a), the ITC has “exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930.”  As the CAFC aptly found, however, the statute does not “even vaguely suggest[] that the statutory scheme for protesting a seizure . . . divests a district court of jurisdiction to consider an injunction on goods subject to a general exclusion order.” 

According to the CAFC, this distinction makes sense because of the major differences between a general exclusion order and a preliminary injunction to stop patent infringement. Specifically, a general exclusion order is a government action that merely excludes goods from entry.  The district court infringement case, however, can lead to damages and attorney fees as well as potential contempt proceedings for violation of a preliminary injunction.

• Read the decision.

Litigation Misconduct and Enhanced Damages

z4 v. Microsoft (E.D. Tex. 2006).

The Eastern District of Texas has been busy leading the post-eBay anti-injunction craze.  z4’s motion for injunctive relief against Microsoft was denied (see z4), but the small holding company was still awarded $115,000,000 in damages against the software giant.

Now, the court has added another $25,000,000 in enhanced willfulness damages and $2.3 million in costs and attorneys’ fees. z4 and its owner David Colvin successfully played the underdog:

[T]here is ample circumstantial evidence that to Microsoft[,] Colvin and his patent rights were insignificant because Microsoft never thought Colvin would be able to pursue his rights against it. The evidence presented at trial suggests that Microsoft considered z4 a small and irrelevant company that was not worthy of Microsoft’s time and attention, even if Microsoft was potentially infringing its patents.

In economics literature, this potential for "underenforcement" is a classic justification of punitive damages. 

The court then went through a laundry list of examples of Microsoft’s litigation misconduct that formed the basis for the finding of an exceptional case as well as a partial basis for the enhanced willfulness damages.  Some of these are listed below:

The Moncau email. It wasn’t until the Sunday one-day before trial that z4 was finally a able to depose Microsoft’s witness Moncau, and during that deposition Moncau revealed information about an important email that had been sent to two other Microsoft witnesses discussing critical information regarding operation of Microsoft’s product.  That email had never been produced even though Moncau testified that he had provided all his documents to Microsoft’s counsel over one year before the deposition.

Nevertheless, the email had never been produced by Microsoft during discovery despite the fact that it was between three Microsoft employees referenced in the email, all of whom allegedly gave all of their relevant documents to Microsoft’s counsel for production. Making matters even worse, Defendants admit they were aware of the Moncau email several hours before Moncau’s deposition, but still withheld it from z4 until z4 found out about it during questioning during the deposition. This raises a serious question as to whether the email would have ever seen the light of day, had z4 not uncovered it during Moncau’s deposition the day before trial.

At trial, the Court indicated to the Jury that Microsoft had improperly withheld the communication.

The Hughes Database. Microsoft attempted to use a summary chart at trial based on an underlying database.  In his deposition, however, Hughes, the chart’s creator, testified that the database did not exist.  One week after the deposition, Microsoft did, in fact, produce the data stored in file on a CD labeled “Source Code,” but z4 never found the database and, even after z4 asked, Microsoft never corrected Hughes original testimony or informed z4 of the database. 

It also turned out that the summary was an inaccurate representation of the database and that Microsoft had not accurately disclosed the method used to create the summary chart.

The Court determined that Microsoft had attempted to mislead z4, the Court, and the jury and excluded Hughes from testifying with regard to the database and his summary chart.

Voluminous Exhibit Tactic. Microsoft marked over 3,000 exhibits for trial, but only admitted 107 of these.

The Court concludes that Defendants attempted to bury the relevant 107 exhibits admitted at trial in its voluminous 3,449 marked exhibits in the hope that they could conceal their trial evidence in a massive pile of decoys. This type of trial tactic is not only unfair to z4, but creates unnecessary work on the Court staff and is confusing and potentially misleading to the jury.

Etc.

Finally, the Court is greatly disturbed by the repeated instances where Defendants actions go beyond what can be dismissed as a mere appearance of impropriety and collectively appear to represent a pattern which is of disappointment to the Court and a disservice to legitimate advocacy. The repeated examples, some of which are not even mentioned here, of what can be described as nothing less than misleading on the part of Defendants, justify a conclusion that Defendants committed litigation misconduct. This conduct, coupled with the fact that Microsoft was found to have willfully infringed the patents-in-suit results in this case being deemed exceptional. Accordingly, the Court awards z4 reasonable attorneys’ fees and expenses, excluding expenses related to expert witnesses.

Microsoft is expected to appeal this decision.  z4 will likely cross-appeal the denial of injunction.

Patently-O: Judge Takes Stand Against Forum Shopping

Collaboration Properties v. Tandberg ASA, 2006 U.S. Dist. LEXIS 43930 (N.D.Cal. 2006)

Defendant Tandberg waited for six months before moving to amend its answer to add certain defenses and counterclaims.  At about the same time, Tandberg filed its own patent infringement lawsuit (through a holding company) against Collaboration Props in the Eastern District of Texas. Judge Patel of the Northern District of California was clearly peeved at Tandberg’s litigation strategy and forum shopping. 

The court's concerns about gamesmanship have not diminished, particularly in light of Tandberg's ongoing aggressive and arguably frivolous motion practice.

Despite these concerns, Judge Patel granted leave to amend subject to a “reasonable condition” that Tandberg's holding company submit to personal jurisdiction in California and allow the case to be consolidated there.  Tandberg refused and so the court also refused to allow the amended answer and counterclaims.

Note: A reader e-mailed the decision to me because it is apparently the first federal court decision citing Patently-O. In particular, the court cites a draft version of patent reform legislation that I have stored online. At his blog, Ian Best, has compiled a directory of all 27 cases that thus far cite to legal blogs.  (A total of 8 legal blogs have been cited).  Mr. Best has also compiled a directory of all 489 law review articles that cite to legal blogs.  It turns out that Patently-O is in the top-ten with seventeen citations, thirteen of them coming in the past four months.

Presumption of Irreparable Harm

Christiana Inds. v. Empire Electronics, 2006 U.S. Dist. LEXIS 54210 (E.D.Mich. 2006).

One of the first questions likely to be decided post-eBay is whether infringement of a patent provides any presumption of irreparable harm when judging the equitable factors associated with a permanent injunction. In z4 Tech, a Texas district court could find no support for “the application of a rebuttable presumption of irreparable harm with regard to a permanent injunction.”  In Christiana, however, the district court found that such a presumption continues to exist — at least for preliminary injunctions:

Defendant asserts that in Ebay, the Supreme Court eliminated the presumption of irreparable harm for preliminary injunctions upon a showing of validity and infringement. Plaintiff argues, and this Court agrees, that Ebay did not invalidate the presumption

Christiana (Denying motion for reconsideration of order granting preliminary injunction.)

In the recent case of Abbott v. Andrx, the CAFC took a step towards answering that question — loosely (with a double-negative) implying that a presumption of irreparable harm in a preliminary injunction may be established by showing a likelihood of success on the merits.

[W]e conclude that Abbott has not established a likelihood of success on the merits. As a result, Abbott is no longer entitled to a presumption of irreparable harm.

Abbott v. Andrx. Earlier cases have applied the presumption to permanent injunctive relief as well.  For instance, in the 2004 case of Arthrocare v. Smith & Nephew, the Delaware district court held that “[a]s the patentee, Arthrocare presumptively has suffered irreparable harm throughout the duration of Smith & Nephew's infringing activities.” Even the District Court in eBay v. MercExchange found that a presumption of irreparable harm flowed to the patentee, although in that case, the court found the presumption to be rebutted.

Injunction Granted to TiVo; Injunction Denied in Favor of Toyota.

TiVo v. EchoStar (E.D.Tex. 2006)

TiVo has been granted an injunction against EchoStar stopping it from installing or selling infringing DVR’s and ordering EchoStar to disable DVR functionality in the majority of its installed customer equipment. In granting the injunction, the most compelling factor appears to be that TiVo and EchoStar compete head to head in the DVR marketplace.

Defendants compete directly with Plaintiff – Defendants market their infringing products to potential DVR customers as an alternative to purchasing Plaintiff’s DVRs. The availability of the infringing products leads to loss of market share for Plaintiff’s products.

The court did not stay the injunction pending appeal. According to the district court, “[w]ithout a stronger showing that the jury’s verdict will be overturned in its entirety on appeal . . . allowing the ongoing infringement is not within the public’s interest.” However, in an emergency appeal, Chief Judge Michel has granted a temporary stay to “preserve the status quo while the court is considering the parties papers.” Briefing on the Stay will be completed by the end of August.

Paice v. Toyota (E.D.Tex. 2006).

One day earlier, the same Judge (Judge David Folsum) denied Paice its injunction against Toyota. Toyota was found to infringe Paice’s patents on hybrid vehicles under the doctrine of equivalents.  Paice, however, does not manufacture or sell any vehicles, but is geared toward licensing.  Because Paice could not show how its licensing activities would be irreparably harmed from the injunction (and because Toyota would certainly be irreparably harmed) the court denied the request for an injunction. In its findings, the Court made the following rulings:

• A patentee has no presumption of irreparable harm even after the patent is found valid and infringed.
• The patents relate to only a small portion of the Toyota products — thus an injunction would be quite onerous on Toyota.
• Plaintiffs have offered to license the technology to Toyota — a demonstration that money is sufficient.

The court did not explicitly assign any weight to the fact that (1) infringement was only under the DOE and (2) infringement was not found to be willful.  There is some precedential weight, however, to the position that a strong showing of infringement should lead to a greater likelihood of a permanent injunction.

Documents:

• File Attachment: TiVo Final Order.pdf (254 KB)
• File Attachment: TiVo Opinion Granting Injunction.pdf (301 KB)
• File Attachment: TiVo CAFC Order Granting Stay.pdf (35 KB)
• File Attachment: Paice Opinion Denying Injunction.pdf (294 KB)
• Michael Smith’s Comments
• Instapundit: Are patents holding up hybrid technology?

Monsanto's Roundup Ready Patents Survive Appeal

Monsanto v. Scruggs (Fed. Cir. 2006).

Back in 2000, Monsanto sued Scruggs for infringement of its patents covering Roundup Ready (R) soybeans and cotton. Scruggs, a Mississippi farmer, had allegedly replanted seeds that he had grown on his farm. Monsanto won the infringement case on summary judgment and an injunction issued.

First Sale Doctrine: On appeal, Scruggs argued that because he purchased the seeds in an unrestricted sale, he was entitled to use those seeds in an unencumbered fashion under the doctrine of patent exhaustion. Scruggs’ first sale argument failed for two reasons. First, although Scruggs never obtained a license to use the seeds, he was supposed to under Monsanto policy — therefore the sale was not “unrestricted.” Second, as the CAFC held in McFarling, rights to second generation seeds are lost by unencombered sale of first generation seeds.

The fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology. Applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder.

Antitrust Counterclaims: As a countermeasure, Scruggs asserted that Monsanto was misusing its patents and violating antitrust laws through its licensing requirements that include “an exclusivity provision, a no replant policy, a no research policy, . . . the payment of a technology fee,” and use of Roundup brand herbicide (with certain limitations). The CAFC made quick-work of these arguments — many of which were previously decided in the 2004 MacFarling case. By rearguing the previously decided in MacFarling, Scruggs appears to be set-up for a petition for certiorari based on those general principles.

In dissent from the antitrust conclusion, Judge Dyk argued Monsanto’s Roundup requirement to be unlawful tying.  More particularly, the requirement to use Roundup branded herbicide should be considered unlawful tying even if not other manufactuer had regulatory approval because that license term would chill activity of competitors in seeking their own regulatory approval.

A potential herbicide competitor thus would be concerned that, even if it secured government approval of its product, use of the approved herbicide would still be barred under the contracts. The elimination of such potential competition is not permissible under the antitrust laws.

Interestingly, neither the majority nor the dissent questioned the “no research” requirement of the license that prohibited research and/or experimentation on the seeds.  In fact, all three judges explicity agreed that restriction is a legitimate “field of use” restriction.  (Perhaps legitimizing a contract-based anti-circumvention requirement à la DMCA.).

The CAFC appears to have also ignored the State of Mississippi’s amicus brief arguing, inter alia,

Permanent Injunction: The lower court had issued a permanent injunction based on the CAFC’s “traditional rule.”  Based on eBay, the CAFC vacated the permanent injunction and remaneded for a full reconsideration of that final issue.

"Consisting Of" Claim Transition Does Not Exclude Unclaimed Impurities

Conoco v. EEI (Fed. Cir. 2006).

Conoco’s asserted claims were directed to drag reducing agents for gas pipelines.  EEI lost a bench trial and appealed on claim construction.  One claim in particular included the transition “consisting of” rather than the more open-ended “comprising.”

First, the CAFC refused to review the construction de novo because it had not been properly objected to at trial. Reviewing for clear error (substantial evidence) the appellate panel easily found that certain impurities found in the accused product did not allow EEI to escape infringement even though the closed “consisting of” language was used.

[I]mpurities that a person of ordinary skill in the relevant art would ordinarily associate with a component on the "consisting of" list do not exclude the accused product or process from infringement.

Affirmed.

Federal Court Rejects Jurisdiction Over Inventorship Claim

Stevens v. Broad Reach, 79 USPQ2d 1501 (W.D.Mo. 2006).

Feeling he had been slighted by not being listed as the inventor on a patent application directed to a liquid polymer blender, Kirt Stevens sued -- seeking a judgment that he is the inventor of the claimed invention and an injunction forcing an amendment to the pending application.

On motion, however, the court dismissed the claims for lack of subject matter jurisdiction. In particular, the court found that amendment of inventorship in a patent application is governed by 35 U.S.C. § 116.  That statute provides that amendment be made before the PTO and, according to the court "does not provide a private right of action in federal court to resolve inventorship disputes in patent applications."

Case dismissed.

Notes: Of course, Stevens cannot take action under Section 116 without the cooperation of the other side.  Suggestions for Stevens? The application, filed in October 2004, has apparently neither been published nor issued as a patent.

Object when jury instructions include disputed claim constructions

Serio-US v. Plastic Recovery Tech (Fed. Cir. 2006).

The jury found that PRT did not infringe Serio's patents on automatic trash dumpster locks.   

Post-Trial Practice: After the jury's finding, the plaintiff did not move for JMOL or a new trial -- thus forclosing an appeal on the question of infringement except for prejudicial error (which was not found). In addition, the plaintiff did not object to the jury instructions which included the court’s claim interpretations -- without an objection these instructions cannot be overtuned unless they are a "miscarriage of justice."  No miscarriage was found.

Exceptional case: The lower court did not find this to be an exceptional case -- a finding affirmed on appeal:

Exceptional cases usually feature some material, inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Federal Rule of Civil Procedure 11, or like infractions. . . . 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.

Because there was evidence that the case was not brought in bad faith, the refusal to award attorney fees was justified.

Notes:

• Read the case

Noonan's Corner Office: Amgen v. HMR

By Kevin Noonan.

The peripatetic case of Amgen v. HMR has once again been reviewed by the Federal Circuit.  No. 05-1157, decided August 3, 2006.  Once again the Court has failed to lay the several issues in the case to rest.  While affirming infringement and validity of two of the patents in suit, the court has remanded the matter once again to the district court in view of its de novo claim construction, and perhaps predictably disagreed with the lower court and reversed a determination of infringement under the Doctrine of Equivalents.

The case has two interesting aspects.  First, citing the rubrics of Phillips the court came to its own determination of the meaning of the term “therapeutically effective amount” with regard to a claim for recombinant erythropoietin (EPO).  EPO is a naturally-occurring hormone that stimulates the body to produce red blood cells, and its absence (or insufficiency) causes anemia.  The standard clinical measure of anemia is the hematocrit, or the percent of whole blood comprised of red blood cells. In construing the term “therapeutically-effective amount,” the district court had required that EPO falling within the scope of the claim containing the term increase hematocrit and have any other biological properties of naturally-occurring EPO. 

The Federal Circuit disagreed, and in doing so provided a nice illustration that Phillips has not changed the Court’s capacity for arriving at its own idiosyncratic construction.  The Court determined that the lower court had improperly focused on hematocrit, which is one of EPO’s biological properties recited in the specification, to the exclusion of several others, including increasing stimulation of reticulocyte response, development of ferrokinetic effects, erythrocyte mass changes, and stimulation of hemoglobin.  The Court noted in particular that the specification recited that the therapeutic properties of recombinant EPO “included” all of these, and that the specification further stated that recombinant EPO was therapeutically useful even if it lacked some but not all of these properties. 

Of course, the Court seems to have not considered the fact that all of the recited properties are related to the clinical measurement of hematocrit, since they are all part of the biological developmental pathway leading to an increase in the number of red blood cells in blood.  Thus, by cherry-picking the language of the specification, the Court was able to arrive at a facially-reasonable claim construction that seems to run contra to clinical reality.  This portion of the matter has been remanded, for further consideration in view of the Court’s claim construction, on the issue of invalidity over prior art references to EPO preparations that did not increase hematocrit but may have had one of the other recited biological properties.

The second issue is the doctrine of equivalents.  The “predicted” recombinant EPO protein contains 166 amino acids, but as produced naturally (and using HMR’s recombinant process) EPO has only 165 amino acids.  The issue before the Court was whether Amgen was entitled to assert claims to HMR’s recombinant EPO as an equivalent.  The district court twice found in the affirmative, and the Federal Circuit remanded in its first review so the lower court could consider the issue in view of Festo. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 740–41 (2002).  The district court having arrived at the same conclusion, infringement under the doctrine of equivalents, the Federal Circuit reversed, finding estoppel arising during prosecution.  Specifically, the Court held that  preliminary amendments resulting in claim language reciting the 166 amino acid species were not made for reasons tangentially related to the asserted equivalent, as found below, but raised prosecution history estoppel that precluded asserting the claim against HMR’s 165-amino acid species.  The Court’s holding was based in part on Amgen’s cancellation of claim limitations related to “fragments” of the 166-amino acid species, and in part because it found erroneous the district court’s determination that the amendments were made to limit the species to human EPO (the Court noted that if Amgen had intended to so limit the claims the mere addition of the word “human” would have been sufficient).  Finally, the Court rejected the notion that amendments made to avoid a double-patenting rejection were “tangential to patentability.”

For those keeping score, the Court in its two decisions has affirmed the district court’s judgment that two of Amgen’s patents are not invalid and are infringed, also affirmed that another Amgen patent is invalid, reversed a finding of infringement under the doctrine of equivalents (but affirmed that this patent is also not invalid), and for one patent remanded the issue of invalidity to the district court while affirming that if valid this patent is also infringed.  As noted in Judge Michel’s dissent (over the claim construction issue), the district court is now in position to decide whether to grant an injunction, keeping HMR’s competing EPO product off the market until at least the expiration of two of Amgen’s patents.  For the parties, that may be (or have to be) enough.

States Win Two 11th Amendment Immunity Dismissals

Tegic v. U.Texas (Fed. Cir. 2006)

Tegic sued UT in district court in the state of Washington for a declaratory judgment of patent invalidity and unenforceability.  UT had previously sued dozens of Tegic’s cellular phone companies for infringement based on Tegic’s underlying predictive text software. That lawsuit is ongoing.

Despite UT’s participation in similar litigation, the CAFC found that UT was protected from Tegic under 11th Amendment state immunity, and that the similar litigation did not waive such immunity. Particularly of note, the court found that (1) the suit in Texas does not waive immunity to suit in another state; (2) the “customer suit exception” cannot be used to override 11th Amendment immunity; and (3) UT’s issuance of a covenant not to sue Tegic is not a market entry.

The CAFC suggested that Tegic attempt to intervene in the Texas case — of course Tegic’s reason for filing a DJ action in Washington was to get the case out of Texas. . .

Pennington Seed v. Produce Exchange No. 299 and Univ. of Arkansas (Fed. Cir. 2006).

Pennington sued UofA for infringement of patent No. 6,111,170, which claims a new variety of fescue grass. Pennington argued that 11th Amendment immunity here would violate due process because the state of Arkansas provided no other adequate mechanism for pursuing claims against the state.  The CAFC disagreed, citing Florida Prepaid for the proposition that abrogation of state immunity requires a specific abrogation by Congress based on a finding that the available Arkansas procedures are inadequate. Congress has made no such finding.

Pennington also sued university officials in their official capacity.  The CAFC agreed that these persons were immune from a suit for past monetary damages based on actions in their official capacity. In addition, for an injunction to be viable, there must be a direct nexus between the officials and the alleged infringement.  There was none here. Immunity affirmed.

CAFC reopens case for determination on fraudulent expert reports

Venture Industries v. Autoliv (Fed. Cir. 2006).

At trial, damages experts relied on Venture’s financial statements when calculating damages.  It turns out, however, that those statements were at least inaccurate and perhaps fraudulent. Autoliv unsuccessfully moved for relief under FRCP 60(b), then appealed.

60(b)(2): Under Rule 60(b)(2), relief may be granted when new evidence is discovered that clearly would have produced a different result.  This rule rightly presents a high hurdle — requiring prejudice — to reopening a closed case.  After reviewing the potential new numbers, however, the CAFC agreed that despite the original inaccurate information, the final result was not necessarily mistaken.  

60(b)(3): Rule 60(b)(3) relates to fraud, misrepresentation, or other misconduct.

Discovery Misconduct: “Failure to produce material in response to legitimate discovery requests can constitute misconduct under Rule 60(b)(3).”  Even though Venture battled against every discovery request, there was no allegation that it disobeyed the Special Master or district court as would be required.

Reliance on Fraudulent Financial Statements: Unlike its counterpart 60(b)(2), Rule 6(b)(3) does not require prejudice in the result. Rather, when there is fraudulent testimony, relief is appropriate where “a jury might have reached a different conclusion” without the false testimony. (6th Circuit law). Because the lower court had assumed the prejudice standard, it did not address whether the expert testimony relying upon the incorrect financial statements was, in fact, fraudulent.  Thus, the CAFC vacated and remanded for a more complete finding.

Notes:

• Read the opinion here.
• This case arose out of a 1995 settlement of a patent dispute that was, according to Autoliv, being breached by Venture.

 

 

Improper claim structure invalidates patent

Pfizer v. Ranbaxy (Fed. Cir. 2006).

In an infringement suit arising from Ranbaxy's ANDA filing, Pfizer's two patents covering Lipitor (atorvastatin) were upheld as infringed and not-invalid by the district court Judge Farnan. On appeal, the CAFC affirmed on one patent (leaving Lipitor covered), but found the asserted claim of the second patent (the '995 patent) invalid under Section 112, paragraph 4 because of an improper dependent claim structure.

Section 112 of the Patent Act requires, inter alia, that a dependent claim incorporates by reference all the limitations of the parent claim and also specifies a further limitation. 

Pfizer's asserted claim 6 depends from claim 2, which depends from claim 1.  The subject matter of the claims is as follows:

Claim 1: (1) atorvastatin acid; or (2) atorvastatin lactone; or (3) pharmaceutically acceptable salts thereof.

Claim 2: atorvastatin acid but not atorvastatin lactone or a pharmaceutically acceptable salts.

Claim 6: the hemicalcium salt of the compound of claim 2.

Thus, claim 6 fails to "specify a further limitation of the subject matter" of the parent claim (as requred by 112) because the subject matter of claim 6 is completely outside the scope of claim 2.

Consequently, based on violation of the statute, the court found that the claim was invalid.

Although the district court was reluctant to find the fourth paragraph of § 112 to be an invalidating provision, doing so does not exalt form over substance. Rather, it is consistent with the overall statutory scheme that requires applicants to satisfy certain requirements before obtaining a patent, some of which are more procedural or technical than others.

Reversed in part. Pfizer may be able to correct this defect through a reissue application, although there is some question as to whether the defect here falls within an identified category.

Injunction Denied -- Compulsory License Granted

Finisar v. DirectTV Group (E.D. Tex. 2006).

A jury found willful infringement by DirectTV.  However, in the post-trial hearing, the court denied Finisar's motion for injunctive relief and instead granted a compulsory license.

Reasoning from the transcript:

• Patentee has no irreparable harm because it never made or licensed the invention and DirectTV has money to pay damages. [The court found no presumption of irreparable harm.]
• Because there are only two major competitors in the "market" (DirectTV and EchoStar), an injunction against DirectTV could create a de facto monopoly in EchoStar's favor.
• A compulsory license will adequately compensate Finisar -- "especially since Finisar never had the will nor the means to implement the patent itself."
• Hardship to DirectTV would be enormous. Thousands of employees out of work . . . 15 million lose the ability to watch TV . . . ripple effect . . . "some would say this is a blessing."

Documents:

• Kathi Lutton and Ruffin Cordell of Fish & Richardson have provided several key documents here.

Appeals Court orders Eolas v. Microsoft Patent Case to be Reassigned

Eolas v. Microsoft (Fed. Cir. 2006).

Eolas has been after Microsoft since 1999 hoping to collect on its five hundred million dollar patent infringement verdict.  After last year's remand from the CAFC, Microsoft asked the Northern District of Illinois to reassign its case to another judge -- a motion that was denied. Microsoft appealed.

In its motion for reassignment, Microsoft did not assert bias or misconduct, but rather argued that under N.D.Ill. rules, cases on remand should be "automatic." (Local Rule 40.5). In denying the motion, the district court explained that the particular rule had become "mostly dormant."

In its decision to reassign the case, the CAFC also relied upon the Seventh Circuit rule that cases must be reassigned on remand. 

Although the 2005 CAFC decision in this case was largely in favor of the patentee Eolas, Microsoft will now have a new opportunity to present its defenses to an entirely new judge.

Eolas case is now even stronger -- with the recent issuance of a reexamination certificate of the Eolas '906 patent by the PTO. The reexamination provides a further presumption that the patent is valid over a number of additional pieces of prior art, including that submitted by W3C Director Tim Berners-Lee.

Documents:

• CAFC Opinion
• PO: PTO Set To Issue Reexamination Certificate
• PO: Original Eolas CAFC Decision 271(f)

The 271(f) export issue is likely to be taken-up by the Supreme Court in the parallel AT&T v. Microsoft case.

PVPA Not Infringed When Seller Lacked Knowledge

Rewritten Aug 1:

Syngenta Seeds v. Delta Cotton (Fed. Cir. 2006).

In a case involving a variety of soft winter wheat, the CAFC has effectively reversed a jury's finding of infringement and damages under Section 2567 of the Plant Variety Protection Act (PVPA) because the accused seed seller did not have proven knowledge that the seeds were protected. 

Here, Delta was reselling seeds that had been provided by local farmers.  Delta's apparent "don't ask don't tell" policy with regard to the variety of seed enabled it to escape liability under the PVPA. 

Lanham Act: Syngenta also accused Delta of "reverse passing off" because Delta was selling the Syngenta variety of seed under the Delta Cotton name.  Reverse passing off is generally thought of as "misrepresenting someone else's goods or services as [your] own." Dastar.

The CAFC agreed with Syngenta that reverse passing off has no scienter requirement and thus proof of Delta's knowledge would not be required.  However, Syngenta did not show proof that the misidentification of goods caused any harms to Syngenta's business or mark.

Reversed