Qualcomm Inc. v. Broadcom Corp (Fed. Cir., Dec. 1, 2008)

"This patent infringement case involves the consequence of silence in the face of a duty to disclose patents in a standards-setting organization ("SSO")."

Qualcomm participated in the "Joint Video Team" to set standards for video compression technology. During those meetings, Qualcomm did not disclose that it held two patents that covered technologies required to comply with the standards being developed.

Under participant agreements, however, disclosure was required to help ensure "a simple royalty free baseline profile." And, under Rambus, even non-explicit disclosure requirements can create a duty to disclose patent rights during standard setting discussions.

Because the patentee intentionally failed to disclose its patents, the court agreed that the patents were unenforceable under the equitable doctrine of implied waiver. However, the court limited the scope of the waiver only to products that were compliant with the new (H.264) standard.

Notes:

• The court cites Mark Lemley's 2002 SSO paper

The structure of the US Constitutional is designed to separate governmental powers. In patent law, separation of powers issues continue to arise – largely because the executive branch (PTO) and the judicial branch (Federal Courts)* decide many of the same patent law issues. Post-grant procedures such as reexamination and reissue complicate the scene because those avenues allow for parallel decisionmaking by the two bodies. Notably, most inter partes reexaminations involve parallel patent infringement litigation. Usually, a district court will reach its result before the PTO, and questions then arise as to the PTO's subsequent power to affirm or deny patentability.

Although it appears to be more of a statutory construction issue, BlackBoard recently sued the USPTO (Dudas) in a case involving these issues. Originally, BlackBoard sued Desire2Learn for patent infringement and Desire2Learn subsequently requested inter partes reexamination of the asserted patent. In February 2008, a Texas jury found the asserted claims valid** and infringed. (**i.e., not invalid). The District Court did not issue its final judgment until May 2008. That case is pending appeal at the Federal Circuit. In the meantime, in March 2008, the PTO issued an initial rejection of the claims and has, more recently, refused to end the reexamination.

Under 35 U.S.C. §317(b), an inter partes reexamination must be stopped by the PTO if the requestor's invalidity argument is rejected in a civil action and a "final decision has been entered."

BlackBoard argues that the final decision by the Federal Court in Texas strips the PTO of authority to maintain the inter partes reexamination. The PTO, on the other hand, maintains that the litigation is not really final until Desire2Learn exhausts all appeals.

Notes:

• In addition to the PTO and Courts, the International Trade Commission (ITC) is a third decisionmaking body that is considered a quasi-judicial governmental agency. There are some cases where the same patent and same parties have been simultaneously involved in disputes in all three forums.
• BlackBoard complaint
• Desire2Learn Patent Infringement Blog
• As a work-around, Desire2Learn has its servers located Canada. The only valid BlackBoard claims are "method" claims, and, under RIM v. NTP, a method claim is only infringed if each step of the method is performed in the USA.

Ex parte Halligan (BPAI 2008)

Halligan's patent application claims a "programmed computer method" that operates to identify trade secret information. (Claim 119). In essence, the computer program has the common law rules of trade secrets hardcoded, and those rules are applied to determine whether particular information is a "trade secret." Applying the machine-or-transformation test of Bilski, the Board of Patent Appeals and Interferences (BPAI) rejected Halligan's claims as lacking patentable subject matter under 35 USC § 101.

Under Bilski, "[a] claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." To avoid preemption the Federal Circuit emphasized that "the use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility;" that "the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity;" and that the transformation "must be central to the purpose of the claimed process."

Transformation: As in Bilski, the transformation here involves legal rights and "does not represent physical and tangible objects." Therefore, it fails the transformation prong of the test.

Machine: Claim 119's only tie to a machine is the preamble statement that the method is a "programmed computer method." The BPAI listed several reasons why that recitation is insufficient to satisfy the machine prong of Bilski:

Means-Plus-Function language: A second set of claims were directed to the "programmed computer." Functional elements of the software were described as "means for ___." The structure of a means plus function element is presumably particular enough to constitute a "particular machine." However, the BPAI expressly did not reach that issue – rather, the Board rejected those claims under 35 USC § 112 as indefinite for lacking any description of particular structure in the specification. Following Aristocrat, the opinion noted that software-type means should include a disclosure of an algorithm. "The Appellant has failed to disclose any algorithm, and thus has failed to adequately describe sufficient structure, for performing the recited functions of claims 1 and 121 so as to render the claims definite."

Notes:

• Read the decision
• Open Government: Not yet. The BPAI opinions are stored on the site http://des.uspto.gov. Unfortunately that site is not crawled by web indexes such as Google or Yahoo. The problem is that the site includes a "robots.txt" file that excludes such activity. See http://des.uspto.gov/robots.txt. Robots are also blocked from crawling the USPTO patent database (http://patft.uspto.gov/robots.txt) and the PAIR site (http://portal.uspto.gov/robots.txt). Also blocked from crawling is this site: http://www.uspto.gov/web/gifs/ - what is that?
• The inventor Mark Halligan is a Trade Secret expert and partner at Lovells and adjunct professor (teaching trade secret law) at John Marshall Law School in Chicago.

• Poor Economic Forecast and Patent Prosecution:
  • Bad: Patent value is based on potential market for patented products when the market shrinks, so does the value of the patents;
  • Bad: Patent prosecution is generally a cash-heavy endeavor, and many firms are low on cash/credit;
  • Bad: The smaller market and lack of cash may also depress research & development expenditures – potentially leading to a time-lagged depression in patent applications.
  • Good: When times are tough, folks save their scraps. Patents are one way to do that;
  • Good: Patents are something that can be more easily sold or licensed (as compared with trade secrets, for instance). Companies looking for alternative cash streams; to sell-off portions of the corporation; or to retain some value in bankruptcy may look to patent protection.
• I spent a summer at Heller Ehrman while in law school. The firm dissolved earlier this fall. Using Patent Buddy, I graphed the number of registered patent practitioners at Heller over the past several years. Their patent department shows problems stretching back to 2007.

• Figure 2 below shows the same information for the law firm of Akin Gump. Patent Buddy's data comes directly from the PTO's enrollment database. That database is usually a bit outdated because many patent attorneys are slow to update their records.

• Obama's Choice as the next head of the Department of Commerce is New Mexico Governor Bill Richardson. Gov. Richardson was Energy Secretary under Clinton.
• New Blogs (new to me):
  • http://www.tangible-ip.com/
  • http://greatdomainname.wordpress.com/
  • http://ipfinance.blogspot.com/
  • http://coderights.com/
  • http://boswellip.com/blog
• Some places are hiring patent attorneys: Apple; Ultradent; Quine IP Firm; Invention Law Group (IV); MoFo; Roche; Wenderoth; Connolly Bove; Gordon Reese; GWU; Ward & Smith Firm; Myers Dawes; Young & Thompson; Pacific Biosciences; Amin Hallihan.

The Court of Appeals for the Federal Circuit generally follows its own set of "internal operating procedures." Although these are not citable rules, they do represent the usual standard practice for the court. The court provides them to the public to try to steer appellate practice away from a purely old boy system and allow the public to understand the court's process. Transparency is especially important for the Federal Circuit. Although located in Washington DC, the court's jurisdiction reaches across the nation. And, lawyers from across the country come to DC to argue on behalf of their clients. The Federal Circuit – especially Judge Michel – should be commended for its work toward a more open system that is more transparent than ever. The court has done an excellent job with its online public release of new opinions that provides equal access to new information. That system is especially important when a case involves a major product (such as a blockbuster pharmaceutical) of a publicly traded company. The audio files have also been useful for non-Washington insiders to understand the impact of particular oral arguments. The court is working on the next step –immediate online access to briefs and other pleadings.

Back to the new procedures: Anyone planning to practice before the court should read the internal operating procedures. In a recent update, the court provided two additional bits of information about its operation. The first statement describes the process of selecting three judge panels. According to the court, the three-judge panels are randomly selected, subject to the availability of each judge.

The second new discussion in the IOP explains how pre-release precedential opinions are circulated to all Federal Circuit judges and the "senior technical assistant" prior to publication. Non-panel members have seven working days to provide comments or request that publication be held pending en banc poll.

Notes:

• Revised IOP [PDF file]
• Mark Davies Book on Federal Circuit Appellate Procedure:

I understand that design patents are worth only a fraction of their utility patent namesakes. Each year, the number of design patent applications are only a small fraction of the number of utility patent applications filed., and design patents are – on average – less valuable than utility patents.

I do believe that utility patent law can learn something from design patent law. Let's start with the recent en banc design patent case of Egyptian Goddess v. Swisa. In that case, the Federal Circuit defined the meaning of "infringement" of a design patent. The test created by the court looks to whether an "ordinary observer" who is "familiar with the prior art" would find an accused design "substantially similar" to the patented design. Thus, the test looks for substantial similarity in the context of the prior art.

Another way of interpreting the Egyptian Goddess test is that the scope of infringement varies inversely with the scope of prior art. When a patented design is in a field crowded with similar prior designs, the only infringing designs will be those that are strikingly similar to the patented design yet different from the prior art. Alternatively, when the patented design stands alone as a breakthrough design, the potential variety of infringing activity actually increases.

I like the idea of rewarding breakthrough innovations that go beyond ordinary invention. Here, Egyptian Goddess does that by increasing the potential claim scope when the invention goes well beyond the prior art. The question here is whether the law of utility patents can be arranged to likewise provide the best rewards for the most innovative creations.

• FTC Hearings on the "evolving IP marketplace" http://www.ftc.gov/opa/2008/11/ipmarketplace.shtm. December 5. How it will play out: In the next year, the FTC will likely publish a new report on the state of patent law in the US. That report will serve as the basis for any patent reform measures in 2010.
• Interesting article by Jim Klaiber in IP Today. He writes about a recent nonprecedential CAFC that seemingly expanded the limitations on claim amendments during reexamination. His piece is titled: Reexamination Amendments Made for an Improper Purpose – A New Basis For Invalidity Under 35 U.S.C. § 305.
• I am now on twitter: http://twitter.com/patentlyo. tweet tweet.
• The Federal District Courts in New Jersey are contemplating new local patent rules. IPO offers its "six principles" for local patent rules:
  • (1) early identification and mutual mandatory disclosure of essential infringement and validity-related discovery and consideration of staying non-essential discovery until after a claim construction decision is issued in a case;
  • (2) early disclosure and appropriate staging of detailed infringement and invalidity contentions;
  • (3) early supplementation of detailed infringement and invalidity contentions supported by identification of specific evidence produced in the early mandatory disclosures;
  • (4) scheduling any claim construction procedure early in the case but after detailed contentions have been exchanged;
  • (5) identification of claim limitations most important to the outcome of the case; and
  • (6) consideration of dispositive motions as early as appropriate to narrow issues or resolve cases without non-essential discovery.
• TIME: Best Inventions of 2008
• Wish List 2008: For the past few years, I have assembled a top-ten list of holiday gifts for patent attorneys and agents. I have heard from several spouses that actually used the list. So – let Santa's helper (me) know if there are any particular machines or articles that should make the list.

In re Bilski and Gottschalk v. Benson

It is important to remember that the Supreme Court's decision in Gottschalk v. Benson is still controlling law. In that 1972 decision, the Supreme Court held unpatentable a method of converting a signal from "binary coded decimal" into "binary." The Benson method operates by using a "reentrant shift register" – a particular electronic memory circuit of the day. The rejected claim reads as follows:

In Bilski, the en banc court struggles with Benson because – on its face – the rejected Claim 8 from Benson satisfies the machine-or-transformation test of Bilski. The claimed BCD conversion method is tied to a particular machine. The Bilski majority admits as much: "the claimed process operated on a machine, a digital computer, but was still held to be ineligible subject matter." According to the en banc panel however Benson's claim still fails the machine-or-transformation test because the claimed physical limits were "not actually limiting." In particular, since the only uses of the BCD converter would be on a computer, tying the claims to a computer offered no practical limitation to the otherwise preemptive claim of an algorithm.

Thus under Bilski/Benson, tying a software algorithm to particular computer hardware may well be unpatentable subject matter if the patent would still preclude all practical uses of the otherwise unpatentable algorithm.

Notes:

• Patently-Unobvious suggests that careful drafting could have avoided the whole problem for Benson: "If only the inventors had been less forthcoming, more obtuse, and called their claim a method for operating a shift register, who would have seen that the machine-implemented signal processing method surprisingly also happens to convert a binary coded decimal signal into a binary coded one?"

Anderson v. Pella (Fed. Cir. 2008)(non-precedential)

Anderson sued Pella and WL Gore for infringement of its window screen patent. Apparently, the patented screen allows ventilation and blocks insects, but is easier to see through than traditional screens. The claims focus on the diameter and strength of the screen wires and as well as on the screen's "transmittance" and "reflectance" properties.

Prior to KSR, the district court had rejected the defendant's summary judgment motions on obviousness – finding that the prior art references lacked a motivation to combine. After KSR, the district court reversed course – this time granting summary judgment of invalidity based on obviousness of the claimed screen. In its analysis, the district court asked and answered the following question: "would an insect screen manufacturer of ordinary skill have found it obvious to use the [prior art] screening material, decrease its reflectance value, bond it, and place it in a window frame? The answer, plain and simple is 'Yes.'" According to the lower court, the prior art mesh was the "heart" of the claimed invention, and it was a "simple act of common sense" to slightly modify the mesh and apply it to a window. Although secondary factors of nonobviousness were shown, the lower court found they were not enough to rebut a strong showing of obviousness.

Analogous Arts: On appeal, the Federal Circuit vacated – finding material facts that prevent summary judgment of obviousness. In particular, the appellate panel found that the prior art mesh might not count as nonobviousness type prior art because it "outside the scope and content of the prior art." The court based its decision on three issues: (1) the prior mesh was not in the same "insect screen manufacturing field"; (2) there was some evidence that the prior mesh would not be useable for an insect screen (teaching away); and (3) the PTO specifically considered the reference before granting the patent and should be given some deference.

Teaching away and price feasibility: One of the 'teaching away' arguments accepted by the Federal Circuit was that of price infeasibility. Anderson had argued that the prior mesh would not have been considered by a designer because it was quite "extraordinarily expensive." In its holding, the appellate panel gave backing to the notion that a high price would discourage consideration of a potential prior art reference.

Summary judgment vacated.

The Secretary of Commerce (with the advice of the PTO Director) has named three new member of the Patent Public Advisory Committee (PPAC): Marc Adler; Stephen Pinkos; and Maureen Toohey. Mr. Adler is well known in the patent community as the past president of both the IPO and the ACPC. Adler has called for patent quality reforms that put more responsibilities on both the PTO and Applicants. Stephen Pinkos is a former deputy director of the PTO where he managed daily operations of the office. Maureen Toohey has her own law firm in Boston. She has apparently represented Dean Kamen in the past and clerked for Judge Rader.

The committee's purpose is to advise the PTO Director on the management of operations of the Office. The nine-member PPAC is on a three-year rotating schedule. Each year three new members are appointed. For each day of actual service, the PPAC members will be paid the equivalent of an Executive Level III salary (annual rate of about $150,000).

Wright v. Renaldo, 279 Mich. App. 526 (Mich. Ct. App. 2008)

Wright sued Renaldo and her firm for legal malpractice involving the prosecution of his patent directed to an absorbent mat. Renaldo allegedly erred in (1) failing to remove the name of an originally listed co-inventor; (2) "improperly drafted documents submitted to the patent office, and (3) failed to recognize and take steps to correct the patent because it did not adequately protect Wright's invention."

Without reaching the merits of the malpractice claim, the court agreed that the claim was barred by a Michigan two-year statute of limitations. Under Michigan law, a plaintiff "must file a legal-malpractice action within two years of the attorney's last day of service to the plaintiff or within six months of when the plaintiff discovered or should have discovered the claim, whichever is later." Here, there was evidence that Wright had been planning a malpractice claim for over two years after White revoked her power of attorney and hired different counsel.

A dissenting judge argued that the two-year time line had not expired because Renaldo had not learned of the revocation of the power of attorney until much later.

Although the patent attorney won this case, it should serve as a reminder to counsel to promptly memorialize a disengagement.

In re Baselle Poliolefine Italia (Fed. Cir. 2008)

Nobel Prize winning chemist Giulio Natta filed for patent protection in 1954 on a process for polymerizing ethylene. One of Natta's continuation patents issued in 2002. Later that year, the PTO initiated a Director-ordered reexamination based on obviousness type double patenting. Later, the BPAI affirmed the rejection. On appeal, the Federal Circuit affirmed the rejection in a 2-1 split. The majority held that the one-way obviousness type double patenting rejection was appropriate. Judge Newman dissented – arguing that the reexamination was conducted illegally and that the court's findings were unsupported by the evidence.

The interesting legal issue here is the reminder that the obviousness determination for double patenting may be different than Section 103(a) obviousness.

Of historical interest here is the timeline:

• 1954: Natta files Italian Appn. No. 25,109.
• 1955: Natta files US Appn. No. 04/514,098 patented in 1971 as No. 3,582,987.
• 1955: Natta files US Appn. No. 04/514,097 (now abandoned) claiming priority to the Italian appn.
• 1958: Natta files US Appn. No. 04/710,840 (now abandoned) as divisional of the '097 appn.
• 1958 – 1983: "multiple interferences."
• 1983: Natta files US Appn. No. 06/498,699 (now abandoned) as continuation of the '840 appn.
• 1986: Natta files US Appn. No. 06/906,600 (now abandoned) as continuation of the '699 appn.
• 1990: Natta files US Appn. No. 07/607,215 (now abandoned) as continuation of the '600 appn.
• 1991: Natta files US Appn. No. 07/719,666 (now abandoned) as continuation of the '215 appn.
• 1992: Natta files US Appn. No. 07/883,912 as continuation of the '666 application.
• 1999: CAFC decides in re Natta, 194 F.3d 1333 (both parties agreed to further examination).
• 2002: PTO issues Patent No. 6,365,687 based on '912 appn.
• 2002: PTO orders reexamination of the '687 patent based on double patenting.
• 2008: CAFC affirms invalidity of the '687 patent based on obviousness type double patenting (as compared to the '987 patent).

Ron Katznelson has become a leading patent data guru. In a recent talk at UC Davis Law School, he presented is ideas that the next focus of patent reform should be on USPTO Operations. His focus remains on (1) pendency and (2) quality without limiting patentee rights. Katznelson calls for an optional deferred examination for those applicants willing to go slow. In his schema, a third party worried about a pending application could request examination of a deferred application. With some financial incentives (such as a substantial examination fee), many voluntary deferred applications may become voluntary abandoned claims due based on obsolescence or low market potential (creating a "substantial workload reduction").

As shown below –the pendency problem is growing.

Katznelson also discussed the enjoined PTO continuation & claim rules. The beautiful graph below helps illustrate the significant number (about 30%) of patent applications having more than 5 independent or 25 dependent claims.

On the continuation side, Katznelson had to resort to a logarithmic axis to show the continuity chain distribution at the PTO.

Notes:

• These are reprinted with permission
• Download Ron Katznelson presentation

Based on the USPTO's most recent numbers on examination, I created an updated table of the average delay until a first office action is mailed from the PTO. These numbers reflect an average for each technology center as it operates today.  The 3.7 year delay in Fuel Cell and Battery Technology (TC 1795) means that the applications receiving first office actions from that TC during the past three months were filed 3.7 years ago on average — taking us back to early 2005.  The numbers do not necessarily reflect how long it would take for an application filed today to make it through. (Although it is perhaps one of the better estimates that we have on hand.).

Earlier in the week, I wrote about Bilski in relation to the recent diagnosis patent case of LabCorp v. Metabolite. Metabolite's claim 13 reads as follows:

I asked the following question to Patently-O readers and received a response from about 200 readers: It reads as follows:

The response can be broken down as follows: 31% of responses would find the claim to include patentable subject matter while the remaining 69% would reject the claim under Section 101. Of those who would find the claim patentable, the vast majority (89%) reason that the claim includes a transformation. In my discussion of the case, I indicated one argument for showing how the assay step could be considered a transformation. The remaining 11% of those who would find the claim patentable say that it is tied to a particular machine or apparatus. None of the responses indicated that the claim satisfied both the machine and transformation prongs of the test.

Of the 69% of "unpatentable" responses, the majority (72%) saw the claim unpatentable as neither a machine nor a transformation. 43% of those asserting unpatentability saw the claim as unpatentable under the revived mental steps doctrine of bilski. Included in these figures is the 16% who saw the patent violating both the revived mental steps doctrine and the machine-or-transformation test.

The survey did not ask demographic data. However, of those responses using a USPTO IP address, 86% would find the claim unpatentable under Section 101.