Federal Circuit: State of the Court

On May 15, 2008, Federal Circuit Chief Judge Michel presented his “State of the Court” address at the well attended Federal Circuit Judicial Conference.  As usual with the Chief Judge, his remarks were upbeat but unsatisfied.  Several particular issues were emphasized:

• Aging of the CAFC Judges: Within two years, eight of the twelve regular active CAFC judges will be eligible for senior status. 
• Settlements: About half of all CAFC appeals settle prior to decision.
• Speeding Up: “Expedition is a top priority.” Median time from docketing to disposition was nine-months for FY07. The current inventory of cases is now just over six months.
• More Clerks: Judge Michel has requested a fourth law clerk for each judge to keep up with the complexity of the appeals.
• En Banc and Supreme Court Review: Continue to be exceedingly rare. “Despite news reports of a surge in the last three years in the Supreme Court review of our patent cases, the data shows little change. I believe these data illustrate how well our panels do in nearly all appeals. We can all be proud of the work of the Federal Circuit.”
• Read the remarks. Judge Michel’s charts are reproduced below. (Click to expand).

 

 

 

 

 

 

Phillips Claim Construction: Changed Methodology but Unchanged Results

Mangosoft v. Oracle (Fed. Cir. 2008)

Mangosoft’s patent covers a networked virtual memory system. The virtual memory is formed by pooling storage capacity on the local networked computers (nodes) rather than relying on a primary server.  Oracle’s Real Application Clusters do something similar – but use a cluster of memory devices (akin to a RAID).

The appeal focuses on the definition of a “local” storage device.  The CAFC agreed with the district court that the “local” limitation requires that the storage device be individually linked to a computer to form a network node.

Here, the district court had relied on a technical dictionary for its definition (in a pre-Phillips opinion). On appeal the CAFC again affirmed that dictionaries are still useful in claim construction. More particular to this case, however, the court found that virtually any system of claim construction would reject the patentee’s proposed broad construction.

“Having found support for the district court’s claim construction in the claim language, the specification, and the prosecution history …, we note that this construction is also consistent with the technical dictionary definition proffered by Oracle.”

Summary judgment of non-infringement is affirmed.

This case could be seen to emphasize the point that for the majority of claim construction decisions, Phillips altered the methodology but not the ultimate result. 

Notes:

• Mangosoft had originally sought $500 million in damages from Oracle.

 

 

CAFC Gives Patentee Leeway in Claiming Priority and Correcting PTO Mistakes

E.I. du Pont v. MacDermid Printing (Fed. Cir. 2008).

Rapid Appeal: The first thing that is surprising about this opinion is the quick decision pace. The N.J. district court denied DuPont’s preliminary injunction on August 13, 2007. The CAFC heard oral arguments on April 9, 2008 and then issued its precedential opinion on May 14, 2008. The decision time is well under half of the average in-process time for precedential CAFC opinions. Knowing that, it is not surprising that the opinion was written by Chief Judge Paul Michel and included CIT Judge Pogue sitting by designation. One of Judge Michel’s top priorities as Chief is to speed the appeal process and help avoid serious detriment caused by delay.

Summary: The CAFC vacated a lower court’s denial of preliminary relief — finding that the lower court had improperly refused to recognize DuPont’s patent priority claim to an earlier provisional application.

Claiming Priority: DuPont first filed a provisional application; followed eleven months later by a non-provisional utility application claiming priority using non-standard language. (“This application is a non-provisional of provisional 60/273669 2001-03-06 WHICH IS PENDING.”) The issued patent did not reference the original provisional until after DuPont obtained a certificate of correction.  To complicate the matter, DuPont’s litigation counsel originally made “incorrect statements as to the priority date” — apparently forgetting the legal effect of a provisional application.

35 U.S.C. § 119(e)(1) provides four requirements to claim priority to a provisional application:

1. The provisional must adequately disclose the claimed invention;
2. The non-provisional must be filed within 12–months of the provisional;
3. Inventorship must overlap; and
4. The non-provisional must include a specific reference to the provisional.

Overlapping Inventorship: The specification of the provisional and non-provisional were identical. However, the provisional named only one inventor while the non-provisional named five. The defendant here argued that the provisional application should have been amended to properly identify the five inventors. On appeal, the CAFC rejected that argument in two steps: First, the appellate panel held that – as a matter of law – inventorship overlaps when both applications include at least one common inventor. Second, the panel re-affirmed that correction of inventorship for a provisional application is only necessary to establish an overlap of inventorship. See MPEP § 201.03. 

Specific Reference to the Original: DuPont used non-standard language in the non-provisional application data sheet (ADS) to claim priority to the provisional. On appeal, the CAFC held that there are no “magic words” required by MPEP § 201.11.  Rather, the standard is whether a “reasonable person reading the language … would have concluded that the applicant was claiming priority to an earlier provisional application.”  There is no question here that the language used by DuPont conveys the proper message.

Notice of PTO Error: The prosecution history included evidence that the PTO did not originally recognize DuPont’s priority claim. MacDermid argues that once an applicant is on notice of a PTO error — it should be required to ensure that the error is corrected before the application issues. In essence, MacDermid argues that the error in failing to reference the provisional in the originally issued application was DuPont’s error because the company was on notice of the PTO mistakes. On appeal, the CAFC rejected the notion that an applicant’s failure to diligently prosecute converts a PTO error into an applicant error.

“We hold that a lack of diligence during prosecution, at least under the facts of this case, does not convert a PTO error into an applicant error for the purpose of seeking a post-issuance certificate of correction. . . . It is, of course, desirable to have applicants correct the PTO’s mistakes in pending applications as soon as possible so that the correct information is reflected in published applications and issued patents. Nevertheless, nothing in the statute conditions eligibility for a certificate to correct PTO error on the applicant’s diligence in correcting the mistake, and the statute does not set any time limit for seeking such corrections.”

Vacated and Remanded

Patently-O Bits and Bytes No 34

• PPAC Nominees: Due by May 30. Three new PPAC members will be appointed by the Secretary of Commerce for a three year term. [LINK]
• Design Patents on Automotive Parts: Perhaps the most controversial subject matter for design patents involve automotive parts.  Many of the car companies are using design patents to help ensure that body shops use “authorized” parts when repairing a crash-damaged vehicle. Deputy Director Peterlin is looking for input from folks on the issue. [LINK]
• PTO web-site may be down until sometime May 15. www.uspto.gov. (UPDATE: Partially working again)

 

Patent Infringement Claim Preclusion: Only When Accused Device is "Essentially the Same" as Prior Adjudicated Device

Acumed v. Stryker 07–1115 (Fed. Cir. 2008)

Acumed and Stryker have been battling for years over patented orthopedic surgery equipment.  The original suit ended with a final judgment in April 2006 for Acumed. This second suit, filed in May 2006, alleges that one of Stryker’s new orthopedic nails infringes the patent.  The new version (named T2) was developed and put on the market during the original litigation, and Acumed deliberately chose not to include allegations against that product for fear of delaying the first trial.

The Oregon federal district court dismissed Acumed’s second lawsuit – finding the claim precluded by the prior judgment on the merits.

On appeal, Acumed successfully argued that its second infringement action is not precluded by the first action even though (1) the original action was concluded by a final judgment on the merits; (2) the parties and patents of the second suit are identical to those of the original suit; and (3) Acumed was in a position to assert infringement against T2 in the original suit but consciously chose not to pursue an infringement claim against T2. 

Claim Preclusion: Following a final judgment on the merits, claim preclusion binds parties from re-litigating the merits presented and also from raising “any other admissible matter which might have been offered” on the merits.  Although the particular elements of claim preclusion may vary, the Ninth Circuit finds preclusion only when the original litigation was terminated by a final judgment on the merits and second action has the same parties or privies as the original and the same claim or cause of action.

Taking a narrow view of “same claim or cause of action” – the Federal Circuit held that in patent law, claim preclusion can only be found where the accused products in the two actions are “essentially the same.”

‘[C]laim preclusion does not apply unless the accused device in the action before the court is "essentially the same" as the accused device in a prior action between the parties that was resolved by a judgment on the merits… Accused devices are “essentially the same” where the differences between them are merely “colorable” or “unrelated to the limitations in the claim of the patent.”…Finally, the party asserting claim preclusion has the burden of showing that the accused devices are essentially the same.’ 

In its opinion, the court rejected a “could have” defense — instead holding that “claim preclusion does not bar a claim merely because it could have been raised in a prior action between the parties that was resolved by a final judgment on the merits.”  Along this same line, a patentee therefore does not lose rights by filing suit against only some of an accused infringer’s products (because “two claims for patent infringement do not arise from the same transactional facts unless the accused devices in each claim are ‘essentially the same’”).

Stryker admitted that the T2 was not essentially the same as its prior product — thus eliminating any possibility of claim preclusion. Stryker’s admission is the result of a tough litigation decision. To win on claim preclusion, it must argue that the new product is the same as the old product. However, if it did not win on claim preclusion, that argument would place the defendant’s non-infringement argument in serious peril. 

Notes:

• As the court noted, claim preclusion refers to a legal action rather than a patent claim.
• 2006 Acumed appeal on claim construction

 

Patently-O Bits and Bytes No. 33: Supreme Court

• Patentable Signals at the Supreme Court: In Nuijten, the CAFC held that transitory propagating signals are not patentable subject matter because they do not fit within any of the four statutory invention categories of “process, machine, manufacture, or composition of matter.” Now, Nuijten has petitioned the Supreme Court for certiorari in a case captioned Nuijten v. Dudas. The petition focuses on the CAFC’s decision that arguably requires patentable inventions be (1) tangible; (2) non-transitory; and (3) measurable without “special equipment.” [Petition][About Nuijten]
• Design Patents at the Supreme Court: In Calmar v. Arminak, the design patent holder is asking the Supreme Court to reverse the Federal Circuit’s narrow infringement analysis. ISDA has filed an amicus brief arguing that the CAFC’s application of the “ordinary observer” test improperly excludes the most natural ordinary observer – a retail customer. [Brief][About Calmer]
• These two pending Supreme Court petitions are both important and well argued.  The fact that they are well presented also makes it more likely that the follow–on cases of Bilski and Egyptian Goddess will receive attention from the Supreme Court.

 

RIM v. NTP Continues to Trouble Patent Office

Although NTP v. RIM settled years ago, the PTO’s reexamination of NTP’s patents have continued to plod along. In the background are allegations by NTP that PTO officials improperly (and covertly) met with RIM CEO Jim Balsillie and other RIM representatives regarding the ongoing (ex parte) reexaminations.

During ex parte reexaminatoin, third-party communications are strictly forbidden.  It is clear, however, that in the months leading up to the NTP settlement, the PTO was feeling a tremendous amount of political pressure from RIM as well as Congress and the Senate.

Now, Congressman Howard Berman has demanded information from the PTO regarding these meetings “hand-delivered” by “May 19, 2008.”

“Did this meeting [with Balsillie and counsel] take place? What was discussed at this meeting? What is the USPTO’s policy concerning ex parte communications between senior USPTO officials and parties who have an interest in the outcome of proceedings before the office? In what other instances, if any, did senior USPTO officials engage in similar ex parte communications with parties that had an interest in the outcome of a proceeding being conducted before the Office?”

Hopefully the Office will be able to provide Chairman Berman with a tidy set of evidence to clarify the rules and exactly what happened.

Documents:

• NTP’s Allegations (8 MB) Check out pp 74+ and also pp 61 – 74.
• Time Article by Daren Fonda.
• Thanks to Hal Wegner and Greg Aharonian for the tip.

US Court Refuses to Stay Pending Outcome of Parallel Canadian Inventorship Litigation

Wyeth v. Dr. Wolfe, 08-0754 (E.D.Pa. May 8, 2008)

Dr. Wolfe holds a patent on a low dose progesterone therapy.  Wolfe and Wyeth worked together for several years to bring Wolfe’s product to market. Later, Wyeth filed at least one similar patent application without listing Wolfe as an inventor. As a Canadian, Wolfe filed suit in Canada requesting that he be listed as the inventor and also requesting compensation for breach of contract, etc.

Wyeth then filed a declaratory judgment action in the Eastern District of Pennsylvania.

On May 8, the court denied Wolfe’s motion to stay the later-filed US proceedings. Without going into the merits of the stay or any patent specific law, the court looked to its own precedent holding refusing to stay where the foreign litigation is still “in its incipiency.” 

“Here, the Canadian actions are not far enough along in the process to warrant a stay in this Court. In the case filed in the Ontario Superior Court of Justice, there is a pending Motion to Dismiss, which that Court will not rule on until June 25, 2008. Similarly, the case filed in the Federal Court of Canada is also in its beginning stages. While some evidence has been submitted on the matter, the case has not yet been scheduled for hearing. Thus, it is unlikely that either Canadian case will soon be resolved. Staying the proceedings in this Court would, therefore, only serve to delay the progress of this action. As such, the Court finds that a stay in this Court is inappropriate at this time.”

Parallel US & foreign patent litigation is an increasingly common occurrence.  In addition to the cost, these cases raise important issues of inconsistent application of laws.

CAFC Hears En Banc Bilski Case

May 8th’s en banc oral arguments in Ex parte Bilski reveal a court clearly grappling with the difficult problem of defining the scope of patentable subject matter in a way that is both administratively workable and supportive of future innovation and technology surges.  The Federal Circuit’s leeway is limited by Supreme Court precedent. The en banc panel notably focused on Diamond v. Diehr, 450 U.S. 175 (1981), and the meaning of “transformation.” 

Hitting upon an argument found in several amici briefs, the court questioned whether the statutory limits of Section 101 are necessary at all — given the administrability of Sections 102, 103 and 112. No counsel presented clear “harms” of an overbroad interpretation of a statutory “process.” (The potential issues were best described in Prof Sarnoff’s brief.)

Notes:

• Listen to the oral argument in the en banc hearing of In re Bilski here for Part One and here for Part Two.
• Economist.com
• Quinn

Tea leaves (FWIW):

• PTO’s decision will be affirmed by shaping the facts (e.g., by calling the invention an abstract idea).
• State Street will not be overruled.
• The court will not implement a “machine test.”

Tafas v. Dudas: PTO Announces its Intent to Appeal

The Patent Office has filed a notice of appeal in the case of Tafas v. Dudas. This case involves the PTO’s attempt to limit the number of continuation applications and the number of claims per patent that may be filed based on an original disclosure.  In April, 2008, District Court Judge Cacheris granted plaintiffs motions for summary judgment — finding that the new rules are an improper extension of the PTO’s statutory authority.

“Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as ‘otherwise not in accordance with law’ and ‘in excess of statutory jurisdiction [and] authority.’ 5 U.S.C. § 706(2).”

The appeal will be heard by the Court of Appeals for the Federal Circuit.  The basis of the original declaratory judgment action is that the PTO’s proposed rules violate the PTO’s limited rulemaking authority granted by 35 U.S.C. § 2(b). Thus, there is no question that this case arises under the Patent Act and, consequently, that the Federal Circuit has exclusive jurisdiction on appeal.

Notes:

• PTO Notice of Appeal.
• Patently-O Discussion of the April 1 decision.

John McCain and Patents

John McCain today announced the members of his “Justice Advisory Committee” — a group of fifty leading attorneys and law professors in the country.

Members include Ed Reines who is president of the Federal Circuit Bar Association and a senior partner at Weil Gotshal; Professor John Duffy who will be arguing later this week in the en banc Bilski case; Professor Michael Abramowicz who has written several articles about patent law and most recently proposed an auction system for extending patent terms; and Professor Eugene Volokh of the Volokh conspiracy. Chuck Fish, former Chief Patent Counsel at Time Warner, is apparently working full-time for the campaign. 

This is a very strong group that tends to provide solid, practical advice. I speak with some experience – having received advice from each of these members about various aspects of the law.*

Notes:

• * Prof Volokh’s advice came from his book.

 

Canons of Claim Construction: Cancelled Claims Narrows Construction for Asserted Claims

PSN Illinois v. Ivoclar Vivadent, et al. (Fed. Cir. 2008)

PSN’s patent claims a method of making porcelain veneers. PSN sued fourteen companies for infringement, most of whom settled early. The remaining defendants successfully argued that their veneer process was non-infringing.

On appeal, the CAFC looked at claim construction. In a passing breath, the court made the distinction that Phillips applies to “undefined” claim terms:

“We determine the ordinary and customary meaning of undefined claim terms as understood by a person of ordinary skill in the art at the time of the invention, using the methodology in Phillips v. AWH Corp., 415 F.3d 1303, 1312-19 (Fed. Cir. 2005) (en banc).”

Here, the court needed to determine the meaning of the undefined term “ready for mounting.” Relying upon the patentee’s use of the word ‘MAY’ in describing the claimed process, the CAFC held that the term should be rather broadly construed to optionally include ‘finishing’ steps. (Specification: “While still on the statue, the veneer casing may be subject to a finishing treatment to improve the esthetics.")

The appellate panel noted that, within reason, claims should normally be construed to cover the described embodiments. The panel cautioned however, that each claim does not necessarily cover each embodiment. To the contrary, in some cases unasserted or cancelled claims directed to a particular disclosed embodiment may actually serve as evidence that the scope of remaining asserted claims does not extend to that embodiment.

“[C]ourts must recognize that disclosed embodiments may be within the scope of other allowed but unasserted claims. Likewise, during prosecution, an applicant may have cancelled pending claims but not amended the specification to delete disclosure relevant only to the cancelled claims. In such cases, unasserted or cancelled claims may provide ‘probative evidence’ that an embodiment is not within the scope of an asserted claim.”

Here, although the CAFC reversed on claim construction, it still found that summary judgment of non-infringement was proper.

Patently-O Bits and Bytes No. 32

• IP for Wireless & New Media: The World Research Group (WRG) is hosting its The 2nd Annual Summit on Intellectual Property for Wireless Tech & New Media — June 17–18 in San Francisco. It appears to be a great conference both for networking and for learning about IP strategy & IP practice.  The conference is expensive, but we have a $300 discount for Patently-O readers (Code: SMS775). www.worldrg.com/ip. WRG has become a “Media Partner” with Patently-O Jobs.
  
• Recent Patent Law Jobs:
• Patent Agent - Large Corporation - Dublin, Calif.
• Patent Counsel - Johns Hopkins University - Baltimore, Md.
• Patent Agent/IP Technical Specialist - Law Firm - Irvine, Calif.
• Business Method Patent Attorney/Student - Remote
• Patent Attorney - Law Firm - Austin, Texas
• Paralegal - Law Firm - Seattle, Wash.
• Patent Attorney/Agent - Law Firm - Tysons Corner, Va.
• Patent Attorney/Agent - Law Firm - Seattle, Wash.
• Patent Counsel - Large Corporation - San Diego, Calif.
• Chemistry Patent Attorney/Agent - Small Corporation - San Francisco, Calif.

Purchasing Canadian Drugs & Patent Infringement

In the recent Litecubes case, the Court of Appeals for the Federal Circuit (CAFC) held that a product may be considered “sold” in the US even though title is transferred abroad.  [Background] A broad restatement of the court’s focus is that the sale is “within the United States” whenever the selling act would be sufficient to create personal jurisdiction over the accused infringer.  That conclusion is bolstered by the CAFC’s continued reliance of personal jurisdiction cases in its analysis.

One astute Patently-O comment by patent attorney Paul Morgan queried whether Litecubes could open the door to patent infringement litigation against Canadian pharmacies who sell to US customers who cross the border to purchase cheaper drugs.  There are some strong parallels between Litecubes and the pharmacy example that should give some reason to believe that such a lawsuit has some merit — especially if Canadian drug sellers knew they were selling to US nationals for transport back to the US. However, direct infringement would be a stretch from the facts of Litecubes:

“Since the American customers were in the United States when they contracted for the accused cubes, and the products were delivered directly to the United States, under North American Philips and MEMC there is substantial evidence to support the jury’s conclusion that GlowProducts sold the accused cubes within the United States.”

Litecubes focused on the issue of direct infringement.  Canadian sellers might alternatively be liable as indirect infringers under theories of inducement and/or contributory infringement.

Some have suggested that the a patentee should not be allowed to block importation of drugs that the patentee sold abroad.  I.e., if Pfizer sells Lipitor in Canada at a low price, the patentee should not be allowed to control the downstream free market — even if the result is US imports that undercut the company’s US price.  In patent lingo, this follows the theory of patent exhaustion.  However, US Courts have made clear that a patentees foreign sales do not exhaust its US patent rights.*

This type of case may never come to pass. However, that result may be more due to politics and difficulties in detection and enforcement rather than a lack of a strong legal case.

Notes:

• Patent Exhaustion is currently being considered by the Supreme Court in a case titled Quanta v. LGE.
• * Jazz Photo v. ITC, 264 F.3d 1094 (Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002)("United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent.").

Forging A Patent Document

18 U.S.C. § 497 creates a the felony crime of forging a patent document. According to the statute:

“Whoever falsely makes, forges, counterfeits, or alters any letters patent granted or purporting to have been granted by the President of the United States; or Whoever passes, utters, or publishes, or attempts to pass, utter, or publish as genuine, any such letters patent, knowing the same to be forged, counterfeited or falsely altered--

The punishment is “not more than ten years” of federal prison.  I was unable to find any reported decisions that apply or even interpret Section 497.  Unlike the marking statute, there is no provision that would allow a private action against under this statute. 

A general fraud claim would create standing for a civil action. However, the plaintiff would need to show particular harm — unlike a Section 292 plaintiff.

Patently-O Bits and Bytes No. 31

• In re Volkswagen(5^th Cir. en banc). A self-titled “ad hoc committee of intellectual property trial lawyers in the Eastern District of Texas” have filed a brief in the pending VW case arguing on the substance that the E.D.Tex. courts do not excessively retain cases in a way that is any different from other jurisdictions.  The AIPLA amicus brief in the same case argues that too many cases are being heard in Texas. [Trial Lawyer Brief] [More Info].
• The non-profit IP Hall of Fame is asking for nominations for inductees in the 2008 IP Hall of Fame.  The award is designed to honor individuals who have made significant contributions to today’s Intellectual Property System. www.iphalloffame.com. The award will be limited to five inductees this year. A couple of notes: (1) The Hall of Fame is non-profit, but sponsored by the for-profit IAM-Magazine. (2) I am a member of the Hall of Fame Academy and will vote on the inductees. (Being on the academy is different from being an inductee).
• John Doll (Commissioner for Patents) will be taking questions on May 13 (11:00 am CST) as part of a webinar sponsored by Kirkpatrick & Lockhart. It appears that you must pre-register for this FREE event. LINK.
• While much of the proposed patent reform legislation has been directed toward easing pain felt by major corporations being sued for patent infringement, one proposed measure would move inequitable conduct issues to the PTO for a decision. NY Times discussed this last week as a battle between Innovator and Generic Pharma – with the lobbyists winning. [LINK]
• USPTO Publishes Common Application Format for EPO and JPO  [Via IP/Updates]
• Pfizer's Lipitor '893 Patent Survives Reexamination [Via Patent Docs]
  

 

 

CAFC Rejects Patent on Invention to Overcome the Second Law of Thermodynamics

In re Speas (Fed. Cir. 2008)

In a short non-precedential opinion, the CAFC affirmed the PTO’s rejection of Speas patent application as both non-enabled and lacking utility. The application claims:

"all devices and systems which operate in such a manner as to violate the second law of thermodynamics as it is currently understood.”

The CAFC briefly described operation of an embodiment:

‘According to the specification, the invention raises a ferrofluid out of a reservoir by a magnetic column into a mass. The ferrofluid then escapes a "gradually decreasing magnetic field which holds it up against gravitational force" and is drawn away via tubular element by a capillary force aided by Brownian motion. At the end of the tubular element, drops of this ferrofluid accumulate and drop back into the reservoir below, spinning a wheel along their downward paths. Thus, the movement of the ferrofluid imparts mechanical energy upon the wheel. Speas claims that because this ferrofluid is moved and adds energy to the paddle wheel "without input into the system other than ambient thermal energy," it is proof that the second law of thermodynamics is not inviolate – an object of the invention.’

Notes:

• Although this type of case is fun to read, it also provides an interesting lesson — that the patent office has tools to reject inadequate patent applications on their merits without resorting to broad exclusions of particular subject matter. 
• Speas is the inventor of several issued patents covering more practical applications such as an internal combustion engine and an adjustable bicycle drive mechanism. His home of record is in the town of Haiku on the island of Maui.

False Marking

A US patentee can only recover damages for patent infringement activity that occur after the infringer is “notified of the infringement.”  35 U.S.C. 287(a). The major exception to this limit on damages is through marking of goods. Goods that are properly marked as protected by a particular patent serve as a constructive notice to the world that the item is patented. Id.

Although marking serve as a benefit, the patentee must also be wary of statutory false marking. Under 35 U.S.C. 292, false marking includes marking unpatented product as “patented” or marking a product as “patent pending” when no patent is pending. These false marking activities are only actionable if done “for the purpose of deceiving the public.”

Section 292 is a criminal provision with only a monetary penalty - usually payable to the government.  The statute also spells out a qui tam right for “any person” to sue for false marking. One-half of any damages would then be awarded to the civil plaintiff, and the US Government collects the other half. Damages are limited to “not more than $500 for every such offense.” Some courts* appear to interpret “every such offense” broadly. Thus, for example, 100,000 mislabeled cups, would be seen as 100,000 offenses. The text from Section 292 has remained remarkably fixed since the Patent Act of 1870 the primary differences being that the old statute included a minimum penalty of $100 per offense and used the word “moiety” instead of “one-half.”

Recently, a Washington DC patent attorney, Matthew Pequignot, filed at least two Section 292 lawsuits in the Eastern District of Virginia alleging false marking. These include Pequignot v. Solo Cup and Pequignot v. Gillette and P&G.

In the first case, Pequignot alleged that Solo Cup marks its paper products with patents that had expired more than ten years ago. In a motion to dismiss, Solo Cup argued that marking with an expired patent cannot be considered false marking. Furthermore, the defendant argued, it should not be held liable because the markings were written in the tentative voice: indicating that the products “may be covered” by various patents.

Holding: Judge Brinkema denied Solo Cup’s motion to dismiss, holding: (1) that, as a matter of law, listing of expired patents may constitute false marking; and (2) the use of permissive language (“may be covered”) in the marking does not create a safe harbor against liability for patent marking. In his Treatise, Don Chisum addresses this point — finding “little authority on whether continued use of a patent number of an article after expiration of the patent constitutes culpable mismarking.”

The complaint against Gillette and P&G similarly lists over thirty products being marked by those companies with expired patents or patents that do not cover the marked product.

Documents:

• File Attachment: Pequignot v. Solo Cup Decision (2667 KB)
• File Attachment: Pequignot v. Gillette Complaint (376 KB)
• Section 287(a) reads as follows: “In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.”
• * Updated to add my own permissive language of “some” courts.

Trade Secret Information can be Purely Mental

Al Minor & Assoc v. Martin, 2008 Ohio 292 (2008)

One aspect of the upcoming Bilski considers whether “mental methods” can be patentable. There are various types of mental methods — running from the most innocuous situation where a portion of a process could be performed in the human mind to the most questionable situation where an entire process must be performed in the human mind.

Opining on Patent’s legal cousin – trade secret law – the Ohio Supreme Court has held customer lists compiled by former employees strictly from memory can be the basis for a trade secret violation.

“[W]e have concluded that the client information at issue in this case did not lose its status as a trade secret, or the protection of the UTSA, because it had been memorized by a former employee.”

As part of his employment contract with AMA, Martin was not required to sign a noncompete agreement or even an employment contract. When he left AMA, Martin was careful not to take any documents belonging to AMA. However, Martin did remember the names of 15 AMA clients and solicited their business.

In its decision, the Ohio court could not find any legal or policy reason to “distinguish between information that has been reduced to some tangible form and information that has been memorized.” (Noting that the statute makes “no mention of writings or other physical forms that such information might take.”

One real problem is that “employee will of course have memories casually retained from the ordinary course of employment.”  In response to this problem, the court gave the unsatisfactory statement that former employees can use their non trade secret memories. “The [UTSA] does not apply to the use of memorized information that is not a trade secret.”

This decision follows the “modern trend” amongst most states to eliminate any “written-memorized distinction.” See Pooley, Trade Secrets (7th Ed.2001).

Bilski Hearing to Include Amici Arguments

En banc oral arguments for Ex parte Bilski will be held at 2:00 pm May 8 at the CAFC Courthouse in DC. [Calendar] Room 201 is expected to be filled to capacity for this important case.

In addition to the parties, the CAFC has requested oral arguments from two amici: Regulatory Datacorp (RDC) and the “Financial Services Industry” group of seven that includes Bank of America, Morgan Stanley, and Wachovia.

Professor John Duffy will argue for RDC. Over the past several years, Duffy has firmly established himself as the country’s leading conservative patent thought leader.  RDC’s amicus brief makes the point that applied economics falls well within any reasonable definition of “useful arts.”  According to Duffy, statutory subject matter should only limit claims that are directed to abstract ideas, physical phenomena, or principles of nature.

On the other hand, BOA argues that State Street and its progeny are unduly broad both as written and as interpreted. BOA rejects any “technological arts” requirement that would allow a token inclusion of a ‘machine’ to render a claim patentable subject matter. Bill Lee, Managing Director of WilmerHale will make this argument.

Notes:

• Although not confirmed, I believe that David Hanson of the Webb Law Firm will handle Bilski’s case while Ray Chen from the PTO Solicitor’s office will argue for the PTO.
• File Attachment: bilski amicus order.pdf (72 KB)
• RDC’s Brief: http://www.patentlyo.com/patent/bilski.duffy.pdf
• BOA’s Brief: http://www.patentlyo.com/patent/bilski.fsi.pdf
• The rest of the briefs: http://www.patentlyo.com/patent/2008/04/ex-parte-bilski.html