Patent Law Blog (Patently-O)

Happy Fourth-of-July

The Flawed Nature of the False Marking Statute

A new working paper by Professor Elizabeth Winston (Catholic U) discusses problems in court interpretations of the false marking statute 35 U.S.C. § 292. Professor Winston argues that false marks should be presumptively actionable:

"A party who falsely marks their innovation as patented should be presumed to have done so with the intent to deceive the public, and the burden should rest on the marker to prove that they lacked such intent. Furthermore, the penalty should reflect the culpability of the marking party, taking into account various mitigating factors, including whether the public was actually deceived, the materiality of the marking and the harm to competitors caused by the marking. Only then can the false marking statute ring true as the effective and economically efficient vehicle it was designed to be."

The statute is receiving attention in the courts as well. PubPat has filed suit against Cumberland Packing (Sweet-n-low), McNeil-PPC (Tylenol), Iovate (Xenadrine), and Glaxosmithkline (CITRUCEL) for false marking. Attorney Matthew Pequignot has filed suit against at least Gillette, Arrow Fastener, and Solo Cup for false marking.

Read Professor Winston's Draft Article

Assistant Examiners and Patent Term Adjustment

Newly minted patent examiners play the role of "assistant examiners" at the US patent office. The work of assistant examiners is reviewed by primary examiners, and both are reviewed by supervisory patent examiners as well as quality control specialists.

Of the roughly 160,000 utility patents issued in the past year (June 29,2008 – June 29, 2009), about 37% were examined by an assistant examiner with the remaining 63% handled by primary examiners working alone. This proportion varies according to Technology Center.

Technology Center		Patents Issued 6/29/2008 - 6/29/2009	Percent Handled by Assistant Examiners
1600	Biotechnology and Organic Chemistry	11,667	38%
1700	Chemical and Materials Engineering	16,857	28%
2100	Computer Architecture, Software, and Information Security	16,217	47%
2400	Networking, Mulitplexing, Cable, and Security	3,370	55%
2600	Communications	23,758	42%
2800	Semiconductors, Electrical and Optical Systems and Components	50,812	36%
3600	Transportation, Construction, Electronic Commerce, Agriculture,	18,098	34%
3700	Mechanical Engineering, Manufacturing, Products	18,018	30%
4100	Training Academy	372	98%

 

For applicants who appreciate delay, patents that were handled by assistant examiners are more likely to be eligible for patent term adjustment due to patent office delay. (This results hold true for each technology center). 80% of patents handled by assistant examiners were awarded some PTA while only 72% of those handled solely by a primary examiner. This translates to an expected PTA of 12 months versus 9 months respectively.

Only applications filed after May 29, 2000 are eligible for a patent term adjustment. More than 99.5% of patents issued thus far in 2009 have a PTA qualifying filing date. Over the past four years, the percent of patents with some patent term adjustment has been steadily rising over time.

Notes:

"The patent term adjustment (PTA) provisions of the American Inventors Protection Act of 1999 (AIPA) allow for term adjustment: (1) if the USPTO fails to initially act on an application within fourteen months of its filing date; (2) if the USPTO fails to respond to a reply or appeal by applicant within four months of the reply or appeal; (3) if the USPTO fails to act on an application within four months of a Board of Patent Appeals and Interferences (BPAI) or court decision in an application containing allowable claims; (4) if the USPTO fails to issue a patent within four months of the date the issue fee was paid; (5) if the USPTO fails to issue a patent within three years of its filing date; (6) if issue of a patent was delayed due to imposition of a secrecy order; (7) if issue of a patent was delayed due to an interference proceeding; or (8) if the issue of a patent was delayed due to successful appellate review. This PTA smorgasbord requires the USPTO and applicants to monitor numerous events during the prosecution of the application to determine the appropriate term adjustment, and often results in applicants obtaining patent term adjustment despite the fact that the patent has an unadjusted term of longer than seventeen years from grant.

The purpose of the patent term adjustment provision in the AIPA was to guarantee that diligent applicants would still have a patent term of at least seventeen years from grant under the twenty-year patent term system. If the USPTO issues the application within three years from its filing date, any patent term adjustment operates to overcompensate the patentee. PTA should be limited to the situations in which the USPTO delayed processing or examination of the patent and this delay resulted in the application pending before the USPTO for more than three years." Via USPTO

Bits and Bites: Voting Again

• Today (June 30) is the last day to vote in Gene Quinn’s blog popularity contest. VOTE HERE.
• Great new site by the guys of PriorSmart: http://news.priorsmart.com/.
• I’m going to do an in-depth study of a couple of art units to see the extent of “cherry-picking” of cases out of their usual order. Any suggestions for which art units should be the focus?

Dropping Claim Counts

Earlier, I published the results of a study of rising claim counts in issued patents over time. My data for that study ended in 2005. I have now updated the dataset for patents issued from 2006 to mid 2009. The results – based on the average of all utility patents issued during those years – are shown in the table below.

The median number of issued claims has dropped from 15 claims in 2006 and 2007 to 14 claims in 2008 and 2009. The mode claim number continues to be 20 claims as seen in the histogram below.

Several factors are likely leading to the lower claim counts: (1) increased USPTO fees for additional claims; (2) more frequent restriction requirements; (3) a greater internationalization of the patenting process; (3) greater hourly attorney fees; and (4) reduced economic value of patents; etc.

Centocor v. Abbott: $1.67 Billion Jury Verdict

Centocor (Johnson & Johnson) & NYU v. Abbott Labs (E.D.Tex. 2009)

In what may be the largest patent jury verdict in US history, an Eastern District of Texas jury held Abbott Labs liable for $1.67 billion in damages for infringing Centocor's patents covering antibodies against tumor necrosis factor. Abbott's drug Humira (adalimumab) was found to infringe. That drug is used to reduce treat arthritis, psoriasis, Crohn's disease, and ankylosing spondylitis and had $4.5 billion in sales last year.

In an interesting split, the Jury awarded $1.168 billion in lost profits and also $504 million in a reasonable royalty. Although double recovery is not allowed, there is no reason why the damages cannot be split between the two theories of recovery.

The jury also found Abbott to be a willful infringer.

Judge Ward will now decide whether to uphold the verdict and whether the adjudged willful infringement warrants additional damages.

According to news reports, Centocor is not seeking injunctive relief.

Centocor_Abbott_Verdict_Form.pdf

Prelim: The Association Between Grant Rate and Pre-Filing Searches

In the not too-distant future, the PTO will likely re-invigorate its effort to force patent applicants to conduct pre-filing prior art searches. During his stint as IPO President, Marc Adler suggested that rational patent applicants should already be conducting pre-filing searches in order to assess patentability and define likely claim scope. Marc offered the then unsubstantiated comment that "if the initial search done by the applicant is as comprehensive as the one done by the patent examiner, it should follow that the pendency of the application will be shorter and the patent more likely will be valid." Despite Marc's suggestion, many applicants do not conduct pre-filing searches – largely because of the up-front cost of searching and analysis.

I wanted to test Marc's suggestion that pre-filing searches add value by leading to better patent applications and shorter application pendency. Although applicants do not ordinarily disclose whether a pre-filing search was conducted, this information can be teased-out by looking to see whether an information disclosure statement (IDS) was filed on the same day as the patent application itself. Of course, filing an IDS with the application does not necessarily mean that a pre-filing search was completed since the submitted art may have been obtained other ways. However, the IDS filing at least indicates that specific prior art was considered prior to filing, and I cautiously believe that such an early IDS filing does suggest the existence of a pre-filing search.

Yesterday, I created a set of 3000+ randomly selected patent applications filed in December 2004 and January 2005 and then divided those applications into three groups: Group 1 applications where no IDS was filed during prosecution; Group 2 applications where an IDS filing coincided with the filing of the patent application itself; and Group 3 applications where the first IDS was filed sometime after the application was filed. The data indicates the status of each application (abandoned, patented, or pending) as of June 26, 2009 – about 4 ½ years after filing. For this first pass, I simplified the data by excluding cases that (1) never published as applications (since data is kept secret for most of those cases); and (2) cases claiming priority to a "parent" patent application (since early IDS filing in the child cases provides little indication of whether a pre-filing search was conducted prior to the parent being filed).

Results: Looking 4 ½ years out from the application filing date, 25% of cases fell into Group 1 (No IDS); 26% into Group 2 (IDS filed with application); and 49% into Group 3 (First IDS filed after application). Table 1 shows these results.

		Portion of All Cases
Group 1	No IDS Filed	25%
Group 2	IDS Filed With Application	26%
Group 3	IDS Filed After Application Filing Date	49%
Table 1		±3% margin of error at 99% CI

In my sample, Group 1 applications were much more likely to be abandoned and less likely to be patented within 4 ½ years of filing than the Group 2 applications. Table 2 below shows this result. In particular, 40% of Group 1 (No IDS) applications were abandoned while only 26% of Group 2. Similarly, only 34% of Group 1 applications were patented compared with 46% of Group 2 applications. Pierson's chi-square test of independence results in P=0.000 – indicating that these differences as a whole are statistically significant.

		Abandoned	Patented	Pending
Group 1	No IDS Filed	40%	34%	26%
Group 2	IDS Filed With Application	26%	46%	28%
Group 3	IDS Filed After Application Filing Date*	24%	40%	36%
Table 2

 

Table 2 shows that Group 3 (applications whose first IDS was filed after the application date) had an even lower average abandonment rate than Group 2. That number is likely skewed, however, because of the confounding relationship between keeping an application alive and filing a late IDS.

In looking at prosecution timing, I did not find a statistically significant difference in pendency between Groups 1 and 2. Group 3 applications did take significantly longer to patent/abandon. However, that result is likely skewed by the selection bias noted above.

Association Between Grant Rate and Pre-Filing Searches: These high-level results shown in Table 2 suggest a relationship between an applicant's success rate (patent vs. abandon) and the early filing of an information disclosure statement.

An alternative explanation for the relationship between higher grant rate and early IDS filing may be that both are indicators that applicants recognize higher-quality inventions and consequently work harder for valuable patent protection. In that scenario, there is no cause and effect relationship between a pre-filing search and a higher patent grant rate. If this quality-recognition theory were true, I would expect that applications filed by patent attorneys/agents (and larger law firms) to be more likely to include a pre-filing search. However to the contrary, my data comparing applications associated with one or more registered patent practitioners with applications not so associated shows very little difference in the rate of pre-filing searches. Rather, practitioners appear to focus on IDS filing more as a CYA burden as suggested by the greater likelihood of late-filed IDSs in practitioner filed cases. Practitioner-associated cases are also more likely to be patented and not abandoned.

Operation of the patent office as well as applicant behavior both vary depending upon the technology at issue. Table 3 shows IDS timing for each examination technology center. Applications in TC 1600 (Biotechnology and Organic Chemistry) are often seen as more valuable on a per-application basis. However, TC 1600's applications are less-likely than average to include an IDS filing with the original application. (χ² P=0.000). Consistent with disclosure statements as merely CYA material, however is the fact that TC 1600 has the highest rate of later-filed IDS's.

	IDS Timing
Tech Center	Group 1 No IDS	Group 2 With Application	Group 3 Later
1600	11%	24%	64%
1700	16%	24%	57%
2100	29%	26%	40%
2400	28%	22%	41%
2600	20%	33%	40%
2800	22%	27%	47%
3600	35%	27%	38%
3700	27%	28%	38%
Table 3

 

Notes:

• Of course, this comes with the baggage of a retrospective study.

• This is a continuing project – suggestions are welcome.

Effect of a Stipulated Dismissal

Garber v. Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT) (Fed. Cir. 2009)

Garber first brought his patent infringment suit against the CME and CBOT in 2004. However, he had some trouble finding adequate representation and offered to dismiss without prejudice. The parties then filed an stipulated motion to dismiss without prejudice. 

In his order dismissing that case, Judge Castillo (N.D. Ill.) added a statement that appears to be a typographical error giving Garber one-month “to move to reinstate this case or this lawsuit may be dismissed without prejudice.”  

Two facts indicate to me that that Judge Castillo intended to threaten a dismissal “with prejudice” rather than “without prejudice.” First, the case was already dismissed without prejudice; and second, soon after his deadline had passed, Judge Castillo ordered the case dismissed with prejudice.

In any event, Garber did not re-file until 2008, and Judge Castillo refuesd to re-open the case. On appeal, the Federal Circuit reversed – finding that the joint stipulation of dismissal divsted the court of its power over the case – rendering the court’s dismissal “void ab initio.”

The appellate panel based its decision on Fed. R. Civ. Pro. R. 41(a)(1) which provides that “the plaintiff may dismiss an action without a court order by filing … a stipulation of dismissal signed by all parties who have appeared” and Seventh Circuit law on-point. See Smith v. Potter, 513 F.3d 781 (7th Cir. 2008).

Reversed.

Notes:

• A caution for patentees considering such a stipulation: Rule 41(a)(1)(B) makes clear that the stipulated dismissal is presumably without prejudice only if the plaintiff has not previously dismissed another action “based on or including the same claim.” 
• Garber’s asserted patent No. 5,963,923 is titled “System and method for trading having a principal market maker.”
• Compact Prosecution: The patent application was filed July 1997. The Examiner issued a first non-final rejection in February 1998 and a second non-final rejection in December 1998. The notice of allowance was then mailed in April 1999.
• According to the complaint, Garber has been a Chicago based trader since 1972.

Evidence Based Prosecution: The Status of Applications Filed 4 ½ Years Ago

This morning I created a dataset of prosecution information for 462 randomly selected utility patent applications filed in December 2004 and January 2005 to get a sense of where those applications stand after 4 ½ years of prosecution. Overall, 48% of the applications have issued as patents; 26% have been abandoned; and 26% are still pending. (Note – I excluded the 12% of cases from my sample that were never published as applications because data is not available for most of them).

Table 1 below shows the detailed status for each case as provided by the USPTO's PAIR system. All but two of the pending cases have received at least an initial examination. The two still-unexamined cases are both software-related applications.

High-Level Status	Status	Percent of Cases
Patented	Patented Case	47.8%
Abandoned	Abandoned -- Failure to Respond to an Office Action	25.2%
Abandoned	Abandoned -- Failure to Pay Issue Fee	0.7%
Abandoned	Expressly Abandoned -- During Examination	0.2%
Pending	Non Final Action Mailed	8.9%
Pending	Final Rejection Mailed	6.4%
Pending	Response to Non-Final Office Action Entered and Forwarded to Examiner	5.0%
Pending	On Appeal -- Awaiting Decision by the Board of Appeals	1.0%
Pending	Notice of Allowance Mailed -- Application Received in Office of Publications	1.0%
Pending	Notice of Appeal Filed	0.7%
Pending	Publications -- Issue Fee Payment Verified	0.5%
Pending	Examiner's Answer to Appeal Brief Mailed	0.5%
Pending	Docketed New Case - Ready for Examination	0.5%
Pending	Appeal Awaiting BPAI Docketing	0.5%
Pending	Withdrawn Abandonment awaiting examiner action	0.2%
Pending	Response after Final Action Forwarded to Examiner	0.2%
Pending	Appeal Brief (or Supplemental Brief) Entered and Forwarded to Examiner	0.2%
Pending	Advisory Action Mailed	0.2%
Table 1

An often frustrating aspect of application pendency is that abandoned cases can be kept alive by filing a continuation application. Of those cases that have been either patented or abandoned, 25% have one or more descendents in the form continuation or CIP applications. (I have not determined whether those continuations are themselves still pending.)

Of the cases already completed (no longer pending), the median patent took 2.6 years to issue while the median abandonment did not occur until 3.1 years into prosecution. Along this line, the longer a case was pending, the greater the likelihood that the case was abandoned. Thus, 71% of cases that were pending for fewer than three years were allowed while only 29% of cases that were pending for three to four and a half years were allowed.

The chart below shows the percentage of applications pending as a function of the number of years in prosecution. Although the average time in prosecution for this cohort cannot be calculated yet (because so many cases are still pending), the median time in prosecution – as seen in the chart – is 3.3 years.

The patent office examination corps is divided into various technology centers. In my sample, TC 2800 (Semiconductors, Electrical and Optical Systems and Components) had allowed the highest percentage of cases (70%) and had the lowest rate of applications still-pending after 4 ½ years (3%). TC 1600 (Biotechnology and Organic Chemistry) has the highest abandonment rate (36%) while TC 2600 has the highest percentage of cases still pending (48%).

Timeline of the BPAI Backlog

I used data reported by the Board of Patent Appeals and Interferences (BPAI) to compile the chart above. The chart reports the number of pending appeals each month from October 1997 – May 2009.

Bits and Bytes: In the News

• PTO Funding Emergency: Andrew Noyes reports on an emergency funding bill for the PTO that would allow the agency to use surplus funds from its trademark budget to fund the growing shortfall on the patent side. Link. The current trademark budget surplus is estimated at $60 million. [Diane Bartz’s Reuters article on the same topic]
• John Duffy: Michael Orey of BusinessWeek has published an article recognizing the ongoing contributions of Professor Duffy: A Scholar-Activist Challenges U.S. Patent Law. 
• Todd Dickinson: Joff Wild of IAM recently interviewed former PTO Director Todd Dickinson and posted the 9 minute video on YouTube. [Watch the Video][IAM Blog]. Dickinson walks through the three major priorities for the next director: Priority I: Reestablish the stakeholder relationship with the PTO; Priority II: Pendency & backlog (in the shadow of the financial shortfall); Priority III: Quality.
• False Marking: PUBPAT continues its campaign against false marking. Earlier, I reported on its false marking lawsuits against Cumberland (Sweet'N Low) and Iovate (Xenadrine). Last week, the nonprofit filed a false marking suit against McNeil (Tylenol) and filed an amici brief in Pequignot v. Solo Cup. In that brief, PUBPAT argues that damages should be based on "each falsely marked article." The brief also spells out some of the harms of falsely marked products:

  "The reason why companies mark and advertise their products as patented is because they expect doing so will provide them some benefit in the marketplace, such as by winning over consumers, building a superior brand associated with innovativeness, implying that their product has been reviewed and approved by the federal government, or implicitly threatening actual or potential competitors with allegations of patent infringement. Thus, when products are falsely marked or advertised as "patented" or with the numbers of expired, invalid, or inapplicable patents, such false marking provides these potential benefits to the false marker/advertiser without any commensurate justification and, as such, creates the potential to negatively impact the marketplace, the public interests, and the integrity of the patent system."

• File Attachment: SoloAmiciBrief.pdf (1100 KB)
• File Attachment: PUBPAT v McNeil - Complaint.pdf (321 KB)

 

Patently-O Bits and Bytes

• The AP on Hugo Chavez: Venezuelan officials plan to invalidate some pharmaceutical patents and allow domestic manufacturers to produce licensed medicines, an action that could cause shortages and scare off foreign investment, industry leaders said Sunday. [AP][via PatentHawk]
• BPAI Data: An updated version of yesterday’s paper on BPAI decision data is available online here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1423922. Comments are welcome.
• New Blog: Rocket Docket IP Litigation (E.D. Va. Patent Focus). The blog is edited by the folks at Williams Mullen. Their latest post is an update on the false marking litigation against Solo Cup.
• National Patent Jury Instructions: A comittee assembled by Chief Judge Michel has released its set of model jury instructions. Although Judge Michel assembled the committee, the introduction makes clear that the instructions “have not been endorsed by the Federal Circuit Court of Appeals, and are not “official” jury instructions.”  However, the instructions are likely to serve as the ongoing model. http://www.nationaljuryinstructions.org/.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

By Dennis Crouch     PDF Version of the Article

Abstract:

This study provides an issue-by-issue analysis of decisions on ex parte appeals by the Board of Patent Appeals and Interferences (BPAI) of the United States Patent and Trademark Office (USPTO). All the cases in this study were appealed to the BPAI after one or more of the pending claims were rejected by a patent examiner. 

In the study, I report that most BPAI appeals focus on two or more issues. Of those, the majority of issues (61%) are affirmed and the remainder reversed. When more issues are presented, the case as a whole becomes more likely to be affirmed-in-part. In addition, I find that the likelihood that a case is affirmed has increased over time (Jan 2008 - May 2009).

By far, the most common issue on appeal is obviousness. I find that 87% - 90% of ex parte BPAI decisions decide an issue of obviousness. Only 4% of appeals consider neither obviousness nor novelty. The major aberration of this trend is for cases involving biotechnology and organic chemistry (TC 1600). 18% of BPAI decisions arising from TC 1600 focus on issues other than obviousness and novelty.

In comparing results by issue, I find that obviousness rejections are more likely to be affirmed than are other types of rejections. Most cases (74%) that discuss neither obviousness nor novelty are reversed.

The BPAI is becoming increasingly important. Over the past several years, the BPAI has seen a dramatic rise in the number of appeals being filed. In addition every recent patent reform legislative proposal has included an increased role for the Board.

Bits and Bytes: Kappos & Dudas

From Hal Wegner:

A few weeks ago Dave Kappos was involved in a webinar with Jon Dudas which provides some perspectives on the new Director’s views. It is available at http://www.foley.com/news/event_detail.aspx?eventid=2779. The webinar itself is available at http://www.foley.com/multimedia/multimedia_detail.aspx?multimediaid=58221724.

The May 8, 2009 webinar focuses on patent reform; technology issues; and reexamination.

A final version of the new Patent Case Management Judicial Guide is in print. It is also freely available on SSRN.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

Every proposed patent reform measure includes an expanded role for the US Patent & Trademark Office's administrative patent court - known today as the Board of Patent Appeals and Interferences, the BPAI, or simply the Board. Even without legislation, the role of the BPAI has expanded greatly in the past few years. The number of ex parte appeals in FY2009 is expected to at least double the record-filing of 6,400 appeals in FY2008. I suggest that two factors have led to this short term dramatic rise in appeals: (1) an increase in rejection-rate by patent examiners; and (2) attempts by the PTO to limit non-appeal avenues for achieving full claim scope. These limits include the PTO's proposed rules that would curtail the applicant's ability to file multiple requests for continued examination (RCEs), continuation applications, and a multitude of claims. Although these rules have only been threatened, they impact appeal practice because they may apply to already-pending applications. Although more gradual, two additional influences on the rise in appeals include: (1) the continued perceived value of patent rights and (2) the continued rise in the number of patent application filed each year.

During patent prosecution, an applicant has a right to appeal to the Board after its application is twice rejected. 35 U.S.C. 134. In this short article, I look at how the Board responds to those rejections on appeal. Many appeals involve multiple rejections each of which may be affirmed or reversed. In addition, the Board occasionally introduces a new ground for rejection even after reversing an examiner decision. This analysis opens-up these decisions and provides data issue-by-issue.

My data comes from two primary sources. First, using Westlaw, I downloaded copies of the approximately 6,000 ex parte BPAI decisions issued between January 2008 and May 2009. Using an automated script, I extracted data from each of those appeals, including the holding and the extent of discussion of various issues. (i.e., how often "obviousness" or "enablement" is discussed in the opinion.) In addition, just under 200 ex parte decisions from 2009 were randomly selected and scored by hand to determine how the BPAI decided individual issues within the appeals. Board decisions typically identify a series of issues and then decide each issue. In Ex Parte Cypher, 2009 WL 1162435, 2008-4722, (Bd. Pat. App. Inter. 2009), for instance, the Board identified two issues: "(1) Claims 1-4 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh in view of McFarling. (2) Claims 9-11 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh and McFarling in view of Yeh." In Cypher, both issues were affirmed. As a consequence, the data for this case reflects that two obviousness issues were raised, both of which were affirmed.

Results:

In the hand-scored sample, the average Board decision considered 2.1 issues (median of two issues). Approximately 61% of decided issues are affirmed on appeal and 39% are reversed. (In this study, fewer than 1% of issues were expressly not decided.) The issue-by-issue analysis fits with the overall holdings for cases on appeal. In the hand-scored sample, 59% of the cases were affirmed as a whole, 12% were affirmed-in-part, and 29% were reversed. (This sample parallels the Board's own statistics for FY2009 which indicate that 60% of its decisions on the merits are affirmances, 15% affirmance in part, and 25% reversals). Table 1 shows the issue-by-issue results alongside the overall case-holding for the hand-scored sample.

	Issue-by-Issue Results	Case-by-Case results
Affirmed	61% of issues affirmed	59% of cases affirmed
Affirmed-in-Part	N/A	12% of cases affirmed-in-part
Reversed	39% of issues reversed	29% of cases reversed
Table 1

As you might expect, when there is a strong correlation between the overall case holding of an appeal and the holdings on individual issues at issue in the appeal. When the overall case-holding is affirmed, the vast majority of issues are also affirmed. However, in the hand-scored sample, about 10% of cases that were affirmed included some individual issues that were reversed. Often, the reversed issues were rejections argued by the examiner in the alternative. In Ex Parte Mcquiston, 2009 WL 598537, 2008-3224 (Bd. Pat. App. Inter. 2009), for instance, applicant's claim 1 had been rejected as (1) anticipated by Golds; (2) obvious over Golds; (3) anticipated by Simso; and (4) obvious over Simso. The Board rejected the first three of these rejections, but the claim remained unpatentable as obvious over Simso and the examiner's decision affirmed as a whole.

Table 2 compares the case-holding with the issue-by-issue analysis based on our hand-scored sample of 200 BPAI decisions. As seen in Table 2, when a case is affirmed-in-part, roughly half (on average) of the issues are affirmed and half are reversed. In cases that were reversed, every issue was also reversed. (?² P<.01).

Case Holding	Percent of Issued Affirmed	Percent of Issues Reversed
Affirmed	92%	8%
Affirmed-in-Part	51%	49%
Reversed	0%	100%
Table 2

Number of Issues on Appeal: In Mcquiston, the applicant needed to address each alternate reason for rejection in order to win on appeal. In most cases, however, each claim is rejected for only a single reason - usually obviousness. See infra. The applicant can then choose how to group issues on appeal. If, for instance, claims 1-10 are each rejected as obvious, the applicant could choose to argue each claim separately or cluster the claims into one or more groups that are then argued as a unit. Chart 1 uses the hand-scored data to presents the likelihood of a particular case-holding as a function of the number of issues on appeal.

When only one issue is presented, the result in the case tracks the result of that issue. As more issues are presented, the likelihood of a split affirmed-in-part decision rises dramatically while the likelihood of either complete affirmance or complete reversal drops. Chart 2 is a cumulative frequency for the number of issues presented on appeal. In our sample, the number of claims ranged from 1 to 8. The median was 2 claims and the mode 1 claim. About 94% of decisions discussed four or fewer issues.

The Board is authorized to offer new grounds for rejection, and did-so in about 4% of the cases in the hand-scored study. The most common new ground was for obviousness.

Obviousness: Obviousness is the bread and butter of patent examinations. In this study, I also show that it is the mainstay of BPAI ex parte appeals. 90% of appeals in my hand-scored study included at least one obviousness issue that was decided on appeal. More than half of the appeals (54%) focused only on obviousness. The closest runner-up issue – anticipation – was an issue in 37% of the appeals. Other issues on appeal (each with a frequency of < 5%) included in descending frequency: written description requirement; indefiniteness, patentable subject matter, obviousness-type double patenting, and enablement.

For applicants, the fact that the majority of issues involve obviousness spells trouble for applicants. In the hand-scored data, the Board affirmed obviousness findings much more often it did for other grounds of rejection. Specifically, the Board affirmed 65% of the appealed obviousness issues, but affirmed only 52% of the appeal issues made on grounds other than obviousness. Table 3 compares these results for the hand-scored sample of 200 cases. (?² P<.05).

Issue Holding	Obviousness Rejection	Other Grounds of Rejection
Affirmed	65%	52%
Reversed	35%	48%
Table 3

The pervasiveness of obviousness issues is further confirmed by the larger sample of 6,000 ex parte decisions issued between January 2008 and May 2009. Using a parsing script, I looked for discussions of obviousness issues by counting the number of times that the terms such as "obvious" and "35 U.S.C. § 103(a)" appeared in each opinion. In that sample, 87% of the decisions discussion obviousness while only 13% do not discuss obviousness. Table 4 shows the roughly parallel results.

	Hand-Scored Sample	Automatically Parsed Sample
	(n ˜ 200)	(n ˜ 6,000)
Obviousness at Issue	90% of cases decide an obviousness issue	87% of cases discuss either obviousness or Section 103(a)
No Obviousness Issue	10% of cases do not decide any obviousness issue	13% of cases do not discuss obviousness or Section 103(a)
Table 4

In order to ensure that I was picking up an actual obviousness issue, I created a script that looked for cases where obviousness was more intensely discussed, i.e., where obviousness terms were mentioned at least three times. In those cases where obviousness was intensely discussed, the Board affirmed the examiner's rejections decisions 59% of the time. In cases where obviousness was not discussed at all, the examiner was affirmed in only 37% of cases. Table 5 compares these results for the automatically-parsed sample of 6000 cases. (?² P<.01).

Case Holding	Obviousness Intensely Discussed	No Discussion of Obviousness	No Discussion of Obviousness or Novelty
Affirmed	59%	37%	22%
Affirmed-in-Part	15%	10%	4%
Reversed	26%	47%	74%
Table 5

The far right column of Table 5 provides a compelling statistic. 358 cases in the sample had no discussion of either obviousness or novelty. Of those cases, 74% were reversed on appeal.

Technology Center Specific Results: Patent examination is divided amongst various technology centers. Although the substantive patent laws do not vary across technology lines, patent practice can vary greatly. The BPAI regularly updates a statistical breakdown of its opinions by tech center. [Link]. Table 6 is derived directly from the BPAI statistics for FY2009 through May 2009 and shows the percentage of decisions on the merits from each tech center that arrive affirm, affirm-in-part, or reverse, respectively.

Technology Center	Affirmed	Affirmed-In-Part	Reversed
1600 Biotechnology and Organic Chemistry	59%	15%	27%
1700 Chemical and Materials Engineering	69%	11%	20%
2100 Computer Architecture, Software, and Information Security	63%	13%	24%
2600 Communications	64%	14%	21%
2800 Semiconductors, Electrical and Optical Systems and Components	65%	11%	24%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	47%	22%	31%
3700 Mechanical Engineering, Manufacturing, Products	53%	17%	30%
Table 6

Focusing in on obviousness again, it is interesting to see that appeals from Tech Center 1600 (Biotechnology and Organic Chemistry) are the least likely to discuss obviousness. The most appeal decisions emerge from Tech Center 1700 (Chemical and Materials Engineering), and those appeals are the most likely to include a discussion of obviousness. In particular, a discussion of obviousness is found in 92% of TC 1700 appeals but only 76% of TC 1600 appeals. (?² P<.01). The difference is partially explained by TC 1600's more rigorous application of the Section 112 issues of written description, enablement and indefiniteness. Table 6 is again derived from the automatically-parsed sample of 6,000 Board decisions. For each tech center, Table 7 indicates the percent of cases that discuss obviousness; both obviousness and novelty; novelty; and neither obviousness nor novelty. This table again highlights (1) the focus of the PTO on obviousness issues (and to a lesser extent novelty issues) and (2) the differences of TC 1600 from the rest of patent practice.

	Percent of Cases Issue on Appeal
Technology Center	Obviousness+	Obviousness and Novelty	Novelty+	Neither Obviousness Nor Novelty
All	87%	31%	40%	4%
1600 Biotechnology and Organic Chemistry	76%	20%	26%	18%
1700 Chemical and Materials Engineering	92%	29%	34%	3%
2100 Computer Architecture, Software, and Information Security	82%	29%	43%	3%
2600 Communications	89%	31%	39%	3%
2800 Semiconductors, Electrical and Optical Systems and Components	88%	35%	45%	3%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	87%	30%	40%	2%
3700 Mechanical Engineering, Manufacturing, Products	87%	37%	47%	2%
Table 7

 

Notes:

• Thanks to two of my research assistants – Patrick Barnacle and Jaron Brunner – for helping me to score the individual decisions by hand.

• The BPAI only publishes opinions once the underlying application is either published or issued as a patent. Consequently, this article misses those

David Kappos: Next USPTO Director

Congratulations!

The White House has announced its intent to nominate David J. Kappos as Director of the United States Patent and Trademark Office (USPTO) with the official title of Under Secretary of Commerce for Intellectual Property. Mr. Kappos has spent his entire career with IBM – both as an electrical engineer and later as a patent attorney. Kappos ends his IBM career (at least for now) as Vice President and Assistant General Counsel, Intellectual Property Law. He is a board member of both AIPLA and IPO.

From the get-go, Mr. Kappos has been a rumored frontrunner to replace Director Jon Dudas and Interim Director John Doll.  In a May 2009 article, I announced my support for Mr. Kappos. In that article, I noted the value of having “a patent office director who understands patents and who has been fully involved with all aspects of the patent system for the past twenty years. I believe that Kappos will be a careful shepherd of the system - leaving it better off in six years than it is today.”

As someone who writes daily about US Patent Law, I am excited about the Kappos nomination because he is likely to open access to previously hidden data and information.  He will also work to create systems that work and measures that are meaningful.

I suspect that the biggest challenge for Mr. Kappos will be moving beyond the unique IBM perspective. Big Blue is an atypical patent owner in its internal systems, patenting volume, and licensing power. As I discussed earlier, it will be important for him to spend time understanding how the rest of the patent community operates.

Notes:

• White House Announcement
• Leahy Statement: “The USPTO faces serious challenges in this difficult economic environment, and the office requires strong leadership.  David Kappos is such a leader.  I look forward to working with him on issues confronting the USPTO, including reducing the backlog and pendency of patent applications and modernizing the patent system as Congress considers the Patent Reform Act.”
• EETimes Article: Quoting Mark Lemley: "The PTO is in crisis, and I think Dave Kappos understands that, and will work creatively to try to find ways out of the crisis, I also think he is sensitive to the need for patent reform, which is a good thing."
• March 2009 Testimony of Kappos
• IP Law Insights (Perkins Coie Blog) summarizes an earlier Kappos article: (1) Patent applicants are responsible for the quality and clarity of their patent applications. (2) Patent applications should be available for public examination. (3) Patent ownership should be transparent and easily discernable. (4) Pure business methods without technical merit should not be patentable.
• Patent Prospector on Kappos and the recent poorly researched WSJ Article.
• From the USPTO Website: “If he is confirmed by the U.S. Senate, Kappos will take control of an office that provides incentives to encourage technological advancement and helps businesses protect their investments, promote their goods and safeguard against deception in the marketplace. The office continues to deal with a patent application backlog of more than 770,000, long waiting periods for patent review, information technology systems that are regarded as outdated and an application process in need of reform.”

Preliminary Injunctions and Obviousness in Design Patent Law

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

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

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

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

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

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

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

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

Notes:

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

Appealing BPAI Rejections to the Federal Circuit

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

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

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

Notes:

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

Bits and Bytes: Data, Damages & Deferred Examination

• Data.Gov: As part of the transparent government project, we now have the website Data.Gov with the purpose of "increas[ing]public access to high value, machine readable datasets generated by the Executive Branch of the Federal Government." So far, the PTO has only included two datasets -both of which were already available through the PTO website. Hopefully there will be more to come - including opening access to PAIR. [More here].
• IP Colloquium: Professor Lichtman has released a new edition of his audio-program IP Colloquium. This month's program focuses on reforms of the patent damages laws. [LINK] The program offers CLE Credit.
• Deferred Examination: Comments on a potential deferred examination program are here.
• Deferred Examination: Intel's comments are interesting. The company argues that the success of deferred examination in other countries is a facade. Rather, the high rate of drop-out during prosecution in countries such as Japan, Germany, and Korea is due to the inventor compensation schemes in those countries. So the story goes - companies in those countries tend to file more low-quality local patent applications for the purpose preempting inventors from asserting rights on their own.

"We actually believe that the reason that deferred examination has had little success in the United States is due to the inventor compensation schemes that exist in many countries such as Japan, Germany and Korea.

In essence, under the regimes in these countries, if the company fails to patent the invention, the inventor has the right to file on his or her own behalf. Having inventors file on their own behalf is generally viewed as undesirable. As a result, the companies file disproportionately more applications in their home jurisdictions than normal prudence would otherwise suggest. Since they are filing these in part to pre-empt the inventor’s rights and to avoid having additional inventor compensation issues, we believe that this contributes to an inclination to avoid paying the examination fee and then to abandon the patent application.   

However, outside their home jurisdictions, these companies have a tendency to file a fraction of the patents that they file in their home jurisdictions. Having filed in the home jurisdiction, they have little or no concern that the inventor has the right or will file the application overseas. Apparently, as a result, they do not appear to abandon nearly as high a percentage of the patent applications that they file outside their home jurisdictions as they file in their home jurisdictions.

Of course, the US does not have such inventor compensation statutes. Those foreign companies that file and abandon so heavily in their home jurisdictions exhibit radically different behavior in the US. They file less and abandon much less. Hence, we believe that this helps explain the disparate experience of deferred examination in other countries. It means that the practice in these other countries is not likely to be a good indicator for practice before the USPTO."

BPAI Backlog

In January 2009, I reported on a dramatic rise of BPAI Appeals and the associated backlog. Since then, the backlog has almost doubled to over 10,000 pending appeals. This is the largest backlog on record and tends to explain why the Board is attempting to implement procedures to streamline the process.

At the Board's average rate of 500 disposals per month, the backlog would take over 20 months to eliminate. However, that result requires the counterfactual assumption that no additional appeals will be filed during that period. Rather, though four months remain in FY2009, the number of ex parte appeals filed this year will likely more than double the record-filing of 6400 ex parte appeals in FY2008. Thus, appeals are being filed at a rate about 2 1/2 times faster than the Board's usual work flow rate. In May 2009, for instance, the Board disposed of 523 appeals, but received 1641 new appeals to decide.

See, BPAI WEBSITE; PATENTLY-O POST.

Lack of Standing: Dismiss with(out) prejudice

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

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

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

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

...

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

08-1441.pdf

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

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

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

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

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

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

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

Affirmed in part

Read the Decisions:.08-1600.pdf

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

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

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

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

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

Note:

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

Bits and Bytes

• Comments on Patently-O: I have updated the commenting software. Now there are threaded comments, so it is easier to reply directly to a prior comment. If you sign-up for a free Typepad account then you can personalize the image associated with your moniker.
• Law Firms as Patent Owners: Photo site SmugMug recently filed a declaratory judgment action against the patent holding entity VPS, LLC. VPS previously settled with Pictage earning a "multi-million dollar fee" as well as with Kodak Gallery and Shutterfly. VPS's ownership is interesting. Its managing partners are all patent attorneys: Carl Moore (patent attorney at Marshall Gerstein); Timothy Vezeau (patent attorney at Katten Muchin); and Nate Sarpelli. The VPS patents were originally assigned to Monet, Inc. but subsequently assigned to the Marshall Gerstein firm. In 2002, the law firm assigned the rights to VPS. (See Pat. No. 6,321,231). SmugMug Complaint for Declaratory Judgment.pdf
• Design Patent Customs Registration: The IPO has voted to support a statutory change that would create a design patent registry within the Customs and Border Protection (CBP) bureau of the Department of Homeland Security. The CBP already keeps a registry of trademarks and copyrights to assist customs agents in preventing infringing importation through any of the 317 official ports of entry into the US. [CBP E-Recordation System] (No bill has been proposed.)
• Tivo v. DISH and EchoStar: $190 million.
• Update Your PTO Registration Data Online: Link. Before you can use the system, the OED will first send a letter to you with a User ID. After you respond, you will be sent a password.

Speeding-Up Design Patents

Design patents are cheap and usually involve little prosecution. In a recent report at "Design Day", the USPTO noted that the agency is working to further shrink the timeline. Notably, the average number of days from payment of the issue fee to issuance of the patent has shrunk by 2/3 since 2006. In FY2009 (thus far), the delay averages 52 days while in FY 2006, the delay averaged 140+ days. The average pendency is about 16 months. Applications in the "rocket docket" issue within 6 months on average.

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

Ariad v. Eli Lilly (en banc suggestion 2009)

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

The petition raises the following two questions:

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

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

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

Notes:

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

Tafas v. Doll (En Banc Suggestion)

Tafas v. Doll (En Banc Suggestion)

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

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

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

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

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

Tafas raises similar questions of whether the Federal Circuit:

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

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

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

Fractured Claim Construction

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

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

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

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

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

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

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

Notes:

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

Bits and Bytes

Feigelson has created an interesting graph of Jepson Claims.

Appealing BPAI Rejections: Part I

My keen research assistant Patrick Barnacle pulled up records on 56 ex parte patent appeals that have been decided by the Court of Appeals for the Federal Circuit since March 2005. All of these cases arise from rejections sustained by the USPTO's internal Board of Patent Appeals and Interferences (BPAI). We are working to create a more complete database. In the meantime, I wanted to report some preliminary results on timing.

The median ex parte appeal took just over fifteen months to complete as measured from the date of the BPAI decision until the date of the Federal Circuit decision. As measured from the filing of the CAFC Notice of Appeal, the median appeal took exactly one year (365 days). Some appeals took longer: Comiskey, Ferguson, and Bilski each took more than two years from the NOA, but they were all tied to en banc decisions. About 25% of the appeals took less than ten months from the NOA.

Once oral arguments (if any) are complete, the Federal Circuit is rather quick at issuing an opinion. The median decision was issued 47 days after the oral arguments. (Again, a skewed average of 86 days is driven by the handful of en banc decisions) 30% of the decisions came within one week of oral arguments - most of those took one to two days.

We have not yet analyzed the correlation between delay and results, but it appears that especially quick decisions tend to favor the PTO over the applicant. As you might expect, delays in judgment correlate with longer opinions; opinions marked precedential; dissenting opinions; and opinions with Judge Newman on the panel.

Survey: Swearing behind prior art

Take the survey on a separate page Here.

Take the survey on a separate page Here.

Bilski v. Doll: Reconsidering Patentable Subject Matter

Bilski v. Doll (Supreme Court 2009)

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

Questions Presented:

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

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

Prior Coverage of the Case:

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

Documents:

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

Amicus Support:

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

Bits and Bytes: PTO Director Redux

• Andrew Noyes reported that Congressman Michael Honda is lobbying for Doug Luftman (IP chief at Palm) to become the next director of the USPTO. A photo of Luftman's daughter at President Obama's inauguration was printed in newspapers across the country.  
• There is also some possibility that the current acting PTO Director - John Doll could keep the position for a while. An examiner recently e-mailed saying "John Doll is Fantastic. I really like him." In addition to being well versed in patent law, Doll understands the operation of every part of the Patent Office.

Bits and Bytes: PTO Director

• Nothing to report on the quest for a new PTO director. Although the Obama administration's "fast start" has been reported by the media, he is now slower than President Clinton who nominated Bruce Lehman in April of his first year in office. President Bush nominated Jim Rogan in May of his first year in office. President Obama has two more days to match that benchmark. (My prediction of a May 8 nomination has come and gone...)
• Albritton v. Cisco: The Patent Troll Tracker case continues. Trial in the defamation case is set for September 14 in Tyler Texas. Defendants include Cisco, Richard Frenkel (the Patent Troll Tracker) Mallun Yen, and John Noh.
• Ward v. Cisco: Johnny Ward Jr. (son of Judge Ward) has a parallel case running against Cisco in Texarkana (Arkansas). Ward voluntarily dismissed Frenkel from the lawsuit after Cisco "admitted agency." Discovery is ongoing and the parties have asked for trial to begin December 30, 2009.
• Speaking of EDTX: Last week, the Canadian company i4i won a $200 million verdict for willful patent infringement against Microsoft. Apparently i4i's xml editing software was completely undercut when Microsoft included xml editing software in MSWord. The patent is here. Joe Mullin has more.
• Voting continues for the "best patent blog." (I don't like this survey, but it is still nice to make a good showing.)
• Singulair Patent Reexamination: Earlier this year, ArticleOne asked for prior art on Merck's Singlair patent and two of its "community members" offered seemingly important references. ArticleOne then filed for reexamination of the patent, which was granted on May 20. Today ArticleOne issued press releases related to the reexamination. Peter Ludwig (Darby & Darby) is representing ArticleOne before the PTO. Singulair garnered $4 billion+ in sales last year.
• Information Query: The Singulair patent's reexamination number is 90/009,432. If you were an investor, how would you go about closely following the prosecution history in that case?
• Patent Jobs:
  • Washida & Associates in Tokyo (US Prosecutor in Japan)
  • Cochlear (hearing company) in Sydney (Sr. Counsel)
    
  • Anonymous Big Firm in DC (EE with Prosecution Experience)
  • Akerman Senterfitt (VA or Florida) (EE with Prosecution Experience)

Discovery Misconduct

Boss v. Yamaha (Fed. Cir. 2009)

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

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

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

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

Paragon v. Timex: Claims with Contextual Limitations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes:

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

Patently-O Bits and Bytes: Legally Drawn

I am enjoying Vasanth Sarathy's new legal comics: LegallyDrawn. Sarathy is a patent agent and law student at Boston University.

Declaratory Judgment: Personal Jurisdiction over Foreign Patent Holder

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

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

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

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

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

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

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

Section 293 reads as follows.

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

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

Ranking Patent Blogs

There are now many excellent Patent Law focused blogs. Gene "Quixote" Quinn is trying to rank them. Take his two-question survey:

• Take the survey.
• See Quinn's IPWatchdog site.

Appellate Practice: Working Models for the Court

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

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

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