Patent Law Blog (Patently-O)

Can Bloggers "Out" JGR Acquisitions?

From TheoDP, an anonymous reader:

Pssst, wanna make $10? It's yours if you go to Google Answers before Jan. 7 and identify who's behind JGR Acquisition, the mysterious company that paid $15.5M to acquire key Web Services patents at a Commerce One liquidation auction. Thus far, posters have correctly pegged recently-registered Delaware firm JGR Acquisition as the buyer (confirmed by this SEC filing). JGR's registered DE agent shares the same phone number and address as the firm of Morris, Nichols, Arsht & Tunnell, whose representative client list includes Amazon.com, AT&T, Citibank and CyberCash.

Federal Circuit: Court Erred in Finding Case "Exceptional"

Spectrum Labs v. Tech International (Fed. Cir. December 29, 2004).

Spectrum sued Tech Int'l for infringement for its patent related to a method of removing unwanted substances from human urine samples.  The purification method allows urine to be tested without interference from the unwanted substances.  The Nevada District Court granted summary judgment of non-infringement to Tech and granted Tech's motion for attorney's fees -- noting that the suit was frivolous and in bad faith. 

Tech appealed the award of attorney's fees.

On appeal, the Federal Circuit reversed -- finding that the case was not "exceptional" under the statute (35 USC 285).

The CAFC listed types of cases that may create an "exceptional" circumstance: inequitable conduct before the PTO, litigation misconduct, vexatious and otherwise bad faith litigation, frivolous suit or willful infringement.  However, the Appeals Court found "none of those circumstances present" in this case.

A district court must provide reasoning for its determination that a case is exceptional for us to provide meaningful review. Further, an exceptional case finding is not to be based on speculation or conjecture but upon clear and convincing evidence.  The facts cited in the section 285 order do not provide clear and convincing evidence that Spectrum’s investigation and credit check constituted vexatious behavior. The section 285 order merely highlighted the fact that the credit check and background investigation occurred after issuance of the summary judgment order. Section 285 Order, slip op. at 3. The district court’s open speculation about the purpose of Spectrum’s investigations adds no support to its finding.

The Law: The determination whether to award attorney’s fees under section 285 involves a two-step process. First, the district court must determine whether Tech proved by clear and convincing evidence that this case is "exceptional." . . . Second, if the court finds the case to be exceptional, it must then determine whether an award of attorney’s fees is appropriate.

Comment: This case is really a commentary on claim construction jurisprudence.  In my view, the court could not call this an exceptional case because of the uncertainty associated with claim construction.

Anheuser-Busch loses patent infringement appeal: case remanded to district court

Anheuser-Busch v. Crown Cork & Seal (Fed. Cir. Dec. 23, 2004) (unpublished)

In an unpublished decision, the Court of Appeals for the Federal Circuit (CAFC) has revived Crown's case against Anheuser-Busch -- sending the patent dispute back to the Wisconsin district court to determine whether A-B's aluminum cans violate Crown's patent No. 6,065,634.

Specifically, the Appellate Court disagreed with the lower court's claim construction -- finding that the district court erred by importing a limitation into the claims that was not required by the specification. 

The patent does not indicate that the shape of the chuck wall is necessary to accomplish the [strength] goal.  THus, no basis exists for the court to import the "flat" limitation from the preferred embodiment into the claims.

The district court must now re-construe the claims and determine whether the new construction alters its prior conclusion that Anheuser-Busch did not infringe Crown's patent.

The CAFC also affirmed the dismissal of Anheuser-Busch's claim that Crown violated A-B's design patent No. D387,987.

Patently-O Blog Takes A Vacation

I'm taking off the next couple of weeks and headed to Kansas to spend time with family.  My dad and I are planning to build three lean-to barns to protect his horses and cows from the winter winds that sweep across the plains.  That is the kind of vacation that I like!

UPDATE ON THE BLOG:

Today marks day 246 of this 'Patently-O' website. What began as a simple toy project has evolved into a modestly successful site. During this time, I* have written a brief summary of each patent law appellate opinion. In addition, many interesting unpublished appellate and published district court decisions have been reviewed. The result is about one case brief every two days.  I write about other patent law news too -- so far a total of 521 posts -- averaging out to more than two per day or about three articles per day if I take weekends off.

*While I have written the vast majority of the posts, I have not been alone in the process.  Other writers who have contributed include Don Zuhn, Baltazar Gomez, Mark Chael, and Joe Herndon.  I hope to get more people involved in 2005.

A couple of months ago, we have moved from a cheesy low-class web address: patentlaw.typepad.com to a cheesy high-class web address: patentlaw.typepad.com.  For those of you who don't know, this move costs about $8 per year from godaddy.com.

COSTS:

This blog is cheap.  Typepad.com hosts the blog -- I pay them $15 per month -- that includes the blog templates and software for manipulating the various elements and sidebars.  I like Typepad, although some people prefer to use Blogger because it is free.  I also paid $20 (one time fee) for BlogJet, a "weblog client for Windows that allows you to manage your blog without opening a browser."  Finally, I pay the $8 per year for patentlaw.typepad.com domain name. 

STATS:

For those of you who are interested: Free stat-counters are not worth much, but mine is approaching 180,000 hits.  As expected, the blog is getting many more hits now than it was in the beginning.  On weekdays, we can expect about 1500 hits.  Ask your IT manager how many hits your Firm website gets each week.

The (incomplete) visitor list includes over 1000 corporations, 150 universities, 70 government agencies, and 250 law firms. This total does not include visitors who reach the site through a "feed reader" such as bloglines or Kinja. 

I am also very happy with the 550+ individuals who receive the Patently-O Newsletter on a daily basis.

Major Referrers (past 1000 visitors):
www.google.com
news.google.com
search.yahoo.com
nip.blogs.com
www.IPNewsFlash.com
search.msn.com
www.techlawadvisor.com
www.becker-posner-blog.com
underneaththeirrobes.blogs.com
www.lawlawlaw.com

Most Popular Search Terms (past 1000 visitors):
duragesic; eolas; patently obvious; "cold fusion"; patent; crouch blog; patent blog; and uspto 

-- Dennis Crouch

Changes at the Federal Circuit.

The Federal Circuit has announced several changes:

LINK: The Federal Circuit has made a change to its rule 27(h)(4), that authorizes the court clerk to grant consented to or unopposed motions to extend the time for filing a principal brief for not more than 60 days.  The clerk has already been delegated authority to extend, for up to 30 days, the time for taking any other action permitted by the rules.

By statute, the chief judge of the Federal Circuit shall serve for a seven-year term.  Chief Judge Mayer's term is coming to an end, and Judge Paul Michel is reported to be in line replace Mayer before the new year.  Read Judge Michel's Top Ten Patent Claim Drafting Tips.

LINK: The Federal Circuit has given notice of a proposed rule change to Federal Circuit Rule 28(a)(5) and requests public comment.  The proposed change would require that the jurisdictional statement accompanying a brief include a representation that the judgment or order appealed is final, or, if not final, the basis for appealability. (e.g., preliminary injunction, Fed. R. Civ. P. 54(b) certification of final judgment as to fewer than all of the claims or parties, etc.).

Thanks to Bill Heinze for the links.

USPTO Expected to Name David Freeland as new Chief Information Officer

According to a report from Federal Computer Week (FCW), the U.S. Patent & Trademark Office is expected to name David Freeland as its new chief information officer.  Freeland, a systems chief with the Texas Department of Human Services, is still awaiting clearance from the Office of Personnel Management.

The position of CIO is critical for the PTO as the office is undergoing a transfer to a paperless office.  Doug Bourgeois, Freeland's immediate predecessor, is credited with initiating the move to electronic format: 

LINK: If it weren't for Doug Bourgeois, his colleagues say, patent examiners would still be examining paper submissions as they had for 200 years.

According to the budget for fiscal year 2005, the U.S. Patent and Trademark Office officials will have about $300 million to spend on information technology projects, reportedly a 45 percent increase.

(Thanks to Florence Olsen at FCW for the reports).

The Scoop on Geico v. Google

Geico v. Google

(E.D. Va. Dec. 15 2004) (On Oral Arguments).

Summary:

Google's use of a trademarked term for advertising keywords does not create customer confusion -- and thus does not violate the Lanham Act.  However, the use of the trademarked term itself in sidebar ads does create customer confusion and may violate the Lanham Act.

More Details:

Geico has sued Google for trademark infringement.  Geico is upset that Google users may find a competitor's ads after searching for "Geico."  Essentially, the issue is whether the use of trademarks as keywords for paid advertising violates the Lanham Act.  A bench trial began last week in U.S. District Court in Alexandria Virginia.

As plaintiff, Geico first presented case-in-chief (excluding damages).  At the close of Geico's case, Google asked the court to grant judgment as a matter of law under Rule 52(c).

Federal Rules of Civil Procedure Rule 52(c) Judgment on Partial Findings. If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue . . . Such a judgment shall be supported by findings of fact and conclusions of law.

In its oral decision on the motion, the court sided with Google in-part.  First, the court noted that Geico had not established that the "mere use of its trademark" as an advertising keyword violates the Lanham Act. 

Having heard the plaintiff's case, the Court is satisfied that the plaintiff has not established that the mere use of its trademark by Google as a search word or keyword or even using it in their AdWord program standing alone violates the Lanham Act because that activity in and of itself, there's no evidence that that activity standing alone causes confusion.

However, on the issue of whether Google's sponsored ads that actually use GEICO's name in the title or text of the ad, the court found that the plaintiff had presented sufficient evidence of confusion to allow the case to continue.

However, as to the narrow issue of whether the plaintiff has presented sufficient evidence at this point to let the case continue on the issue of whether Google is liable for violating the Lanham Act for those sponsored ads using GEICO's name in either the title or the text that appear next to a -- and a GEICO organic listing as a result of the AdWord program, at this point, there has been enough evidence of confusion as a result of Dr. Ford's report to deny the motion and to allow the case to continue so the Court can consider the defendant's evidence as to whether or not this situation creates a likelihood of confusion in the marketplace and, if so, what damages might be appropriate.

When presenting its case Google will continue to argue that it has a policy in place to prevent the use of the GEICO trademark in competitor's ads -- and that Google should not be held liable when those competitors violate the policy.

The case has been stayed until early January -- awaiting the judge's written decision.

Comment:

Is Google a stand-up company or what!  Most defendants who are being sued over their core technology would take any available legal self-help measures.  Is anyone surprised that a Google search for Geico still turns up Geico?  [Link]

Links:

• Transcript of the oral decision. [txt];
• Google's Memo in Support of their Motion [pdf];
• Geico's Answer [Unavailable -- filed under seal];
• Google's Reply [pdf];
• Who Represents Google & Geico.

Patent Office Asks Congress to Amend Patent Act to Create Better Options for Post-Grant Review and Inter Partes Reexaminations

Under the American Inventors Protection Act (AIPA), the Patent Office is required to submit a report to Congress evaluating the success of the newly enacted inter partes reexamination proceedings.  Today, the PTO released its Report to Congress on Inter Partes Reexamination [PDF].

Over the past several years, the buzz surrounding inter partes reexamination has increased.  However, the report notes that the growth of such re-exams has been slow.  For example, only 27 inter partes reexaminations were filed in 2004.

Based upon a review of the statute and comments from interested parties, the USPTO released a set of recommendations for amending the Patent Act in order to improve inter partes reexamination.  The PTO points to three areas that need improvement:

• Clarifying the inter partes reexamination estoppel provisions.
• Permitting the requester of an inter partes reexamination additional opportunities to provide input as to Office actions.
• Extending the requester’s statutory for comment (currently 30 days) after the patent owner responds to an Office action, or to permit the USPTO Director to set the period for comment by rule.

In addition, the Patent Office noted that their Post-Grant Review proposal offers "a comprehensive and desirable way to address patentability issues after a patent has been awarded."  Generally, the proposed Post-Grant Review would provide a more comprehensive review model and allow a more adversarial review presided over by USPTO administrative patent judges. The Review would include closely controlled discovery and cross-examination upon the challenger’s presenting sufficient grounds that one or more of the patent claims are unpatentable.

Agriculture Patents: Bt-Corn patents judged invalid and not infringed

Syngenta v. Monsanto and Dow AgroSciences (D. Del. 2004) (J. Robinson).

Bt-corn is a genetically modified variety of corn that is resistant to the European Corn Borer, an insect that causes billions of dollars of damage to the U.S. corn crop each year.  Bt corn hybrids produce an insecticidal protein derived from the bacterium Bacillus thuringiensis, commonly called Bt.  The variety has been accepted by U.S. farmers and now represents around a quarter of the corn market.  Syngenta seeds holds several patents on producing Bt-corn (transgenic maize). (For example, U.S. patent No. 6,403,865).  Syngenta sued the major seed dealers for infringement of these patents.  The defendants included Dow AgroSciences, Mycogen Seeds, Monsanto, Pioneer Hi-Bred and DeKalb Genetics Corporation. 

According to a report from an attorney involved with the case, Pioneer Hi-Bred settled on the eve of trial, leaving Dow AgroSciences and Mycogen Seeds, Monsanto and DeKalb as the remaining defendants. Because of several pre-trial rulings, Syngenta Seeds came to trial with three patents, two of which had been found to be valid on summary judgment, and with the Defendants' key piece of prior art excluded. Just prior to the commencement of trial, however, Judge Susan Robinson reversed her grant of summary judgment on validity, and reinstated the Defendants' key prior art reference.

On the last day of trial Delaware District Court Judge Robinson held two patents not infringed as a matter of law, leaving one patent for the jury to decide. After two days of deliberations, the jury invalidated all claims of the one remaining patent "because the subject matter of the patent was not actually invented by Syngenta." -- Seemingly a complete victory for the defendants.  Additionally, the jury found the patent invalid due to obviousness.

Syngenta has vowed to appeal the decision to the Federal Circuit.

Links:

• News;
• UMN's discussion of Bt-corn and the European Corn Borer.

Federal Circuit: Pieczenik v. Dyax

Pieczenik v. Dyax (Fed. Cir. December 16, 2004) (Unpublished Opinion).

George Pieczenik owns several patents relating to a method of inserting DNA sequences into DNA vectors.  (For Example, U.S. Patent No. 4,528,266-A).

In an infringement lawsuit against Dyax, the district court granted summary judgment in favor of Dyax -- ruling that Dyax did not infringe the asserted patents. 

After the close of the case, Pieczenik filed a motion for reconsideration under Rule 60(b).

Rule 60(b): "On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding” under specified circumstances, including: “(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b).”

Pieczenik alleged that he had uncovered new information that established the falsity of an affidavit of Dyax's Senior VP that had been submitted in support of its motion for summary judgment.  The district court denied the motion to reopen the case. 

On appeal, the Federal Circuit affirmed -- finding that (i) the evidence presented was not "newly-discovered" because it would have been available to Pieczenik if he had followed through with discovery; and (ii) Pieczenik did not show how the new evidence would alter the district court's claim construction.

Will the PTO soon be issuing Search Reports?

Back in the day, when you filed a patent application, you would send in a filing fee that covered filing expenses, searching, and examination -- all for one low price of around $700 (less for small entities).  In the recent rash of Fee Changes, the filing fee has been reduced to $300!  "Hold-on now," you're saying, "patent office (and attorney) fees are never reduced."  The trick is that the PTO added a search fee $500 and an examination fee $200.  Bringing the total due on filing to $1,000.

This break-down of the fees suggests that the PTO may also change its practice.

Is there some chance that the PTO will adapt to the PCT practice of providing a search report?  What a grand idea.

Iron Grip v. USA Sports: Three-Hole Weight Plate Obvious

Iron Grip Barbell v. USA Sports (Fed. Cir. 2004).

Iron Grip is the assignee to U.S. Patent No. 6,436,015, which covers a weight plate with a triad of dispersed grip locations.  USA makes allegedly infringing plates.  The district court granted USA's motion for summary judgment that the patent was obvious, finding that "it would have been obvious to a layman to combine the prior art."  On appeal, the Federal Circuit affirmed:

Because the claimed invention falls within a range disclosed in the prior art, and the patentee has not shown that the prior art taught away from the invention or new and unexpected results from a three elongated grip weight plate as compared to those in the prior art, we conclude that the claims are obvious absent substantial evidence of pertinent secondary factors supporting patentability.

Finding of obviousness affirmed

Barbell companies have been getting rejected at the trademark side of the PTO as well.  John Welch filled me in on the recent case of in re Ivanko Barbell Company (not precedent).

In Ivanko, the TTAB refused to register the weight plate design (shown above) for two reasons: (i) functionality and, in the alternative, (ii) failure to establish distinctiveness.  The applicant had essentially admitted functionality -- that is a bad move at the TTAB or when applying for a design patent.

As required by the statute, we must consider whether applicant’s design as a whole is functional. 15 U.S.C. § 1052(2)(5). Here, the evidence supports the examining attorney’s position that the design is de jure functional. Applicant touts the utilitarian advantages of safety and ease of handling of its design.

The Board noted that, because the designs are functional, any evidence of distinctiveness is moot.  However, for the sake of completeness, the board discussed the applicant's contention that its designs had acquired secondary meaning.  The applicant had presented survey information in an attempt to show secondary meaning associated with the 7-hole weight plate:

Applicant has the burden of proving that its mark has acquired distinctiveness. . . . Of the survey respondents who were familiar with the Ivanko barbell weigh weight [sic] plate in question with all indicia removed (Picture A-1), 58.65% associated the appearance of the barbell weight plate shown with Ivanko and an additional 8.65% associate it [with] one company.”

However, the majority of survey participants were upper level employees in the barbell business, and thus, the court could not tell whether potential consumers have assigned any secondary meaning to the designs.

BlackBerry Maker RIM wins Partial Victory in Patent Appeal

NTP v. Research in Motion (Fed. Cir. 2004).

In this highly anticipated patent case, the Federal Circuit has vacated the district court's judgment and injunction.

Accordingly, the judgment and the injunction are vacated, and the case is remanded to the district court for further proceedings consistent with this opinion. We affirm the district court’s judgment in all other respects. We thus affirm-in-part, vacate-in-part, and remand.

HOWEVER, RIM's win is marginal at best -- NTP remains in a strong position as the case returns to the district court.  The decision is remanded for the district court to determine what portion, if any, of the jury verdict should be set aside, based on the prejudicial effect of the court's misconstruction of a single claim term.

Specifically, the Appeals Court only questioned the infringement decision on five of NTP's patent claims.  Presumably, the verdict of infringement on the other eleven claims is upheld.

Background:

NTP's patents are directed toward an "electronic mail system with RF communications to mobile processors." (e.g., U.S. Patent No. 5,436,960). NTP sued RIM, maker of the BlackBerry for patent infringement.

The district court “construed the disputed terms according to their plain and ordinary meaning, as supported by the specification and prosecution history.”  Based on the claim construction, the district court granted summary judgment to NTP on several patent claims -- finding that the BlackBerry infringed some of the claims.  The remaining claims were decided by the jury.

On every issue presented, the jury found in favor of the plaintiff, NTP. The jury found direct, induced, and contributory infringement by RIM on all asserted claims of the patents-in-suit. The jury also found that the infringement was willful. It rejected every defense proposed by RIM. Adopting a reasonable royalty rate of 5.7%, the jury awarded damages to NTP in the amount of approximately $23 million.

The court awarded monetary damages totalling more than $53 million, with the following approximate division: (1) compensatory damages of $33 million; (2) attorneys’ fees of $4 million; (3) pre-judgment interest of $2 million; and (4) enhanced damages of $14 million. The court also entered a permanent injunction against RIM, enjoining it from further manufacture, use, importation, and/or sale of all accused BlackBerry systems, software, and handhelds.

Claim Construction:

The Court of Appeals for the Federal Circuit reviewed the claims construction de novo, taking an ordinary meaning approach: "In the absence of an express intent to impart a novel meaning to the claim terms, the words take on the full breadth of the ordinary and customary meanings attributed to them by those of ordinary skill in the art," using the written description as examined through the viewing glass of a person skilled in the art to give context to the claim language.

The CAFC agreed with the RIM on only one point:

that the district court misconstrued the term "originating processor."  The Appeals Court found that the originating processor as claimed by NTP refers to only one processor - and not three separate processors.

On all other points, the CAFC affirmed the district court ruling, these include (i) construction of all other terms; (ii) a decision that RIM's Canadian server location does not prevent application of U.S. Patent Laws to the e-mail system; (iii) Denial of RIM's motion for JMOL; and (iv) exclusion of RIM's expert and demonstrative testimony.

Conclusion:

RIMM won the appeal on a sliver of an argument, but is still in a position to lose the case.

AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED

by Dennis Crouch

Links:

• Federal Circuit's Decision [pdf];
• cNet Article;
• How Appealing;
• RIM Trading Halted.

Notes:

• The decision was a rare unanimous claim construction decision written by Judge LINN and signed by MICHEL & SCHALL.
• The opinion is 60 pages in length [pdf].
• Comment from a Reader

The CAFC reversal of the claim construction of the District Court does not affect all of the asserted and infringed claims. According to the opinion 'some' of the claims are definitely infringed on. However, it was remanded because the jury did not outline how much royalties apply to each infringed claim. The CAFC only reversed the claim construction of "originating processor" found in some claims and not of the comparable "originating device" found in the other claims. The District Court had construed these terms them separately and RIM only appealed "originating processor" and not "originating device". So I guess it can be said the NTP won a "Judgement-in-Part."

• You should also note that the re-examination of NTP's patents continues at the USPTO.
• If the BlackBerry's infringe, why did the the Appeals Court reinstate the injunction against RIM?

A Tom Kirby, a Patently-O Reader, answers my question:

Vacating an judgment often does not imply disapproval, but merely clears the deck for further action by a lower court.  The U.S. Supreme Court has an established practice known as GVR.  When it decides a case there may be several other arguably similar cases in the pipeline from the Court of Appeals.  The Supreme Court will (i) Grant review of the case, (ii) Vacate the decision below, and (iii) Remand for reconsideration in light of the recent decision.  Very often the Courts of Appeals conclude that little or nothing needs to be changed and simply reinstate their previous ruling.

Foreign Infringement:

Today, this case is important because of the millions of BlackBerry users in the U.S.  However, the doctrinal significance of this case will be the Federal Circuit's stance on the inclusion of foreign components in the infringement analysis. 

Under the Patent Act [35 U.S.C. 271(a)], patent rights are limited by the territory of the United States.  However, in this case, the court found that plain language of section 271(a) does not preclude infringement where a system such as RIM’s, alleged to infringe a system or method claim, is used within the United States even though a component of that system is physically located outside the United States."

According to the Court, the test is not whether the infringement took place within the United States, but whether "control and beneficial use" of the infringing system was within the United States.

This liberal interpretation of the territoriality restrictions of the Patent Act bodes well for Eolas in the recently heard Microsoft v. Eolas appeal.

Federal Circuit Court of Appeals Gives Broad Construction to Means Claim

Versa v. Ag-Bag (Fed. Cir. 2004).

Versa owns a patent on an apparatus for creating air channels in bagged compost materials. The air channels allow for decomposition of the material.

Versa filed suit against Ag-Bag for patent infringement.  However, in the wake of an adverse Markman hearing, Versa admitted that it could not prove infringement based on the district court's claim construction. After filing the appeals, the parties entered into a settlement agreement that resolved all issues on appeal other than the proper construction of the “means . . . for creating air channels” limitation. The parties have also agreed that, if we conclude the flutes are required, Ag-Bag will pay Versa an agreed royalty. Thus, the sole question before us is whether under a proper claim construction the claimed bagging machines must include flutes.

The Federal Circuit found that the means-plus-function claim language did not require flutes.

Accordingly, since we hold that flutes are not required structure, the judgment of non-infringement based on the district court’s incorrect claim construction is REVERSED.

In Dissent, Newman:

This case does not present a new question, and it should not have a new answer. The question is, can a patent claim clause written in means-plus-function form be construed, as a matter of law, literally to cover a device that is not the invention described in the specification, that is not shown in any of the drawings, that was not examined for patentability, that was excluded by prosecution arguments, and that is not an asserted equivalent. Statute and precedent require that the question be answered in the negative. Until today.

Eolas v. Microsoft: On the briefs

Eolas v. Microsoft (04-1234)(On appeal at the Federal Circuit)

The parties in this case include Eolas and the University of California as plaintiffs and Microsoft as the defendant. In addition to the parties, a number of amicus briefs were filed at the Federal Circuit by interested parties.  These parties include: AOL; Association for Competitive Technology; Autodesk; Bentley Systems; Intel; Macromedia; Netscape; Oracle; Professor Joe Miller; Sun Microsystems; and Wacom Technology.

Amicus Briefs:

All of the Amicus briefs support Microsoft's position -- looks like nobody supports the little guy anymore.

• Association for Competitive Technology amicus brief [PDF]. ACT argues that the District Court made a major mistake by failing to undertake "reasonable efforts to find out" what was known or obvious to those skilled in the art at the time of the patent application.
• Autodesk, Bentley, Macromedia, WACOM, Professor Miller amicus brief [PDF].  This group argues that section 271(f) was incorrectly expanded by the district court.
• Netscape, AOL, Intel, Sun Microsystems amicus brief [PDF].  Netscape & friends argue that the Court should find "that section 271(f) does not apply to components manufactured outside of the U.S., even if they are manufactured using code, prototypes, molds, or templates designed and developed domestically."

Party Briefs:

• Microsoft opening brief [PDF].
• EOLAS answer [PDF].
• Microsoft reply [PDF].

Thanks to Gerry Stegmaier (ACT's attorney of record) and John Vandenberg (attorney of record for Autodesk, et al.) for providing copies of the briefs.

Robins Kaplan represents Eolas -- they have a unique trial preparation technique: Hung Jury.

In Search of The Next Acacia?

Voice Capture v. Intel (S.D. Iowa 2004) [PDF]

Intel was just denied summary judgment in its defense against upstart Voice Capture.

An examination of the relevant case law and the Patent Office procedures leads to the conclusion that the recapture rule applies only to reissue claims that are broader than claims in the original patent that were cancelled to define the claims over prior art. Because the reissue claims at issue in the present case do not pertain to original claims that were cancelled or rejected based on prior art, the recapture rule is inapplicable.

Crouch's December report on new academic research

Here is a limited set of recent papers that I have found interesting.

Bronwyn Hall & Manuel Trajtenberg, Uncovering General Purpose Technologies with Patent Data, NBER Working Paper.

The authors discuss their technique for finding "general purpose technologies" using patent data.  It is thought that there are a few technologies that are extremely pervasive in various sectors of the economy and are thus important building blocks for further technological development.  In addition to giving us their formula for finding these important technologies using patent data, Hall & Trajtenberg also provide a listing of GPTs in their appendix.

Douglas Lichtman, How the Law Responds to Self Help, UChicago Working Paper.

Chapter IV deals with patents: Lichtman focuses on what measures the proverbial "bad man" who owns a patent should be allowed to do.  "Courts would need to be able to distinguish instances where a patent holder is attempting to profit from the patented invention, which presumably should be allowed, from instances where a patent holder is instead attempting to protect profits that derive from some underlying illegal act, which probably should not be [allowed]."

Gary Becker and Richard Posner, Pharma Patents (Not really "academic").

I was lucky enough to take part in a weekly seminar with Richard Posner, Gary Becker, and Doug Lichtman (above) while a law school student.  These three are great thinkers -- Posner and Becker have now started their own blog.  Although Lichtman may not follow with his own blog, he has certainly been a contributor to several on-line formats including Patently-O, Crescat Sententia, and Lessig Blog. 

Today, Becker & Posner discuss pharmaceutical patents:

POSNER: Patents are a source of great social costs, and only occasionally of commensurate benefits.

BECKER: I do not like the hype and some other salesmanship of big pharma and bio-tech companies, but this industry has made enormous contributions to raising world health. It is likely to become even more important in the future as drugs are developed to match individual genetic differences. One does not want to kill this goose that is laying golden eggs by ill-thought out and counterproductive "reforms".

Please e-mail me with new research.

Supreme Court Closer to Reviewing Hatch-Waxman Safe Harbor Patent Case

Merck v. Integra LifeSciences (On petition for writ of cert. at the Supreme Court).

The Drug Price Competition and Patent Term Extension Act (Hatch-Waxman) created a safe harbor that permits drug manufacturers to perform the experiments needed to obtain FDA approval of their drugs without incurring liability for patent infringement, even if their activities infringe others patent rights.

However, the statute, codified at 35 USC § 271(e)(1), was limited by a 2003 decision by the Court of Appeals for the Federal Circuit.  The Federal Circuit affirmed a lower court's finding that the safe harbor against patent infringement does not apply to pre-clinical activities to identify and develop new drugs that will eventually be subject to FDA approval -- and thus, that Merck was liable to Integra for patent infringement.

The Case: Integra alleged that Merck and Scripps infringed patents owned by Integra relating to peptides involved in interactions between cell surfaces and the extracellular matrix.  Under contract from Merck, Scripps identified several potential anti-tumor peptide candidates and selected the most promising peptide by conducting in vivo and in vitro experiments to evaluate the specificity, efficacy, and toxicity of the peptide candidates for various diseases. Scripps also performed tests to assess the histopathology, toxicology, circulation, diffusion, plasma half-life, and proper mode of administering of the peptides candidates.

The Appeals Court held that these activities did not fall under the safe harbor (§ 271(e)(1)) because they were not done "solely for purposes reasonably related to the development and submission of information" to the FDA.

"the focus of the entire exemption is the provision of information to the FDA . . . [a]ctivities that do not directly produce information for the FDA are already straining the relationship to the central purpose of the safe harbor." (CAFC Opinion).

"Expansion of § 271(e)(1) to include the Scripps-Merck activities would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents."

Supreme Court:

Merck has now appealed the case to the Supreme Court of the United States, petitioning the High Court to hear the question:

Under 35 U.S.C. 271(e)(1), it is generally not an act of infringement to use a patented invention “solely for uses reasonably related to the development and submission of information under a Federal law” regulating the manufacture, use, or sale of drugs. The question presented is whether the court of appeals erred in limiting that exemption to clinical studies designed to provide information for Food and Drug Administration approval of a new drug.

Only a small percentage of cases appealed to the Supreme Court are accepted for hearing.  However, the Merck case took a major step closer to being heard last week.  On request from the Court, the Solicitor General of the U.S. submitted the Government's view that the case should be heard.  The Government brief makes two major points, one legal and the other social:

Gov't Brief: The decision of the court of appeals reflects an incorrect view of the law, and is likely to restrict significantly the development of new drugs. Fairly read, the decision below holds that “pre-clinical” research regarding a potential new drug is not protected by the FDA exemption because that exemption is limited to “clinical” research necessary to obtain ultimate FDA approval of a new drug. That holding is inconsistent with the text of the FDA exemption, reflects a mistaken and unduly narrow view of the types of information relevant to the FDA’s two-step process for evaluating potential new drugs, and is in tension with this Court’s decision in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990). Moreover, the court of appeals’ decision poses a direct and substantial threat to new drug research by dramatically narrowing the scope of protections enacted by Congress in Section 271(e)(1). Although this case is not an ideal vehicle for considering the issue, see p. 18, infra, the potential impact of the court of appeals’ legal conclusion is sufficiently important that the petition for a writ of certiorari should be granted.

The Court is expected to decide whether to hear the case within the next two months. Wyeth, the AARP, and Eli Lilly are each expected to file Amicus Briefs in support of the petition to rehear the case.

Judge Richard Posner (In Lessig Blog) has advocated the creation of a fair-use exception for patents on research tools:

Link: For example, a generic drug manufacturer is permitted to use the patented drug to demonstrate that its generic equivalent is indeed therapeutically equivalent (the "testing" exception created by the Hatch-Waxman Act). More broadly, an inventor can use the information in the patent to try to invent around the patent. And Landes and I advocate an expansion of the patent fair-use principle to allow scientists to use patented research tools (such as the oncomouse) without license--provided the scientists aren't allowed to use the tools to produce their own patented products!

In response, Lichtman has noted that Judge Posner's proposal "is problematic for the simple reason that, often, the key market for research tools is to sell those tools to other researchers. If a researcher's use of patented research tool is fair use, that would significantly degrade the incentive to create those research tools inthe first place. Moreover, even if your approach works, it is in sharp conflict with the Bayh-Dole instinct that society might very well be better off in a world where academic researchers patent their work. As you know, that legislation was passed in response to evidence that university breakthroughts were sitting on the shelves both because (a) they could not be owned exclusively under old NIH rules; and (b) universities had too little incentive to bring their work to the attention of industry."

Owners of Duragesic (R) win patent appeal

Alza v. Mylan Labs., (Fed. Cir. 2004) (04-1344).

Alza sued Mylan for infringement of its patents relating to administration of fentanyl through the skin.  Because fentanyl, a narcotic, is prone to abuse, the inventors developed a patch that minimized the amount of drug that would be used in the system.  The patch is sold by Janssen as Duragesic (R).

Alza won at the district court level.  On appeal, Mylan argued that (i) the claims were not correctly construed and (ii) one of the patents was unenforceable due to inequitable conduct.

Claim construction: The appeals court looked only to the specification and prosecution history to determine that "fentanyl citrate" was not a "skin permeable form" of fentanyl -- thus avoiding prior art.

In determining the meaning of a disputed claim term, a court looks first to the intrinsic evidence of record, examining, in order, the claim language itself, the specification, and the prosecution history.

Inequitable Conduct: The district court found that a statement made by the applicants during prosecution was literally true, but "had the potential to mislead the examiner."  However, on the question of intent, the district court could not find the requisite deceitful intent associated with inequitable conduct. 

The Federal Circuit affirmed: "We discern no clear error or abuse of discretion."

Dissent (in part) by Dyk: Judge Dyk would have found inequitable conduct.

Here, the patentee made an untrue assertion and simultaneously submitted accurate facts not in accord with that assertion.  Such a submission of accurate facts does not cure a false statement.

NOTE: The patent expires January 23, 2005 -- Mylan must wait until then to begin selling a generic version of the patch.

Federal Circuit Rejects Professor's Attempt to Patent Cold Fusion Technique

In re Dash and Keefe (Fed. Cir. 2004) (Unpublished).

In 1990 professor John Dash filed a patent application for producing heat energy using nuclear fusion at a low temperature.  Experimental results suggesting that nuclear fusion occurred in their apparatus were submitted to the Patent Office in support of Dash's attempts to overcome utility rejections mounted by the PTO. 

Dash appealed the Board's rejection of his application for lack of enablement and utility.

On appeal, the CAFC relied on the "scientific community's considerable doubt" regarding the utility of "cold fusion" in sustaining a prima facie case for lack of utility and enablement -- even though the articles relied upon by the PTO were anectodal and not peer-reviewed.

We are aware of no rule that forbids the examiner from relying on related technology, anecdotal information or sources that are not peer-reviewed to establish a case of inoperability. . . .

The Examiner must only establish that a person of ordinary skill in the art would reasonably doubt the asserted utility.

The court then rejected Dash's Rebuttal Evidence:

For each type of evidence Dash produced, the examiner found at least one sound reason to disbelieve the evidence.

Rejection Affirmed.

Comment: (i) All this comes in the wake of the DOE's report that they are accepting quality research proposals on cold fusion. (ii) If this were a published opinion, it would be quite a precedent -- giving some real teeth to the utility requirement. 

Here is the conflict: Applicants use statements from experts saying "a certain result cannot be accomplished" to prove that the result is nonobvious.  Now, the court brings a double-edged sword -- finding that those statements can now be used to show a lack of utility.

35 U.S.C. Section 103 Amended to Encourage Cooperative Research

The 'Cooperative Research and Technology Enhancement Act (CREATE Act) of 2004' easily passed both the House and Senate and has been signed into law by President Bush today, December 10, 2004. (see Thomas).  The purpose of the Act is to promote cooporative research -- such as between a university and start-up company.  The main thrust of the new law is to exclude some prior art from obviousness (103) consideration if the invention arose from a joint research agreement.

What You Need to Know:

If you are involved in cooperative research, you need to have a joint research agreement to ensure that your work will not invalidate patents that you apply for sometime in the future.  If you already have a joint agreement, you may need to make amendments to the agreement to ensure that it qualifies under the new law.

In order to qualify under the law, currently pending applications should be amended to disclose the names of the parties to the joint areement.  You may also consider a broadening reissue if your claims were restricted by now excluded prior art.

Text of the Act:

Section 103(c) of title 35, United States Code, is amended to read as follows:

(c)(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.

(2) For purposes of this subsection, subject matter developed by another person and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person if--

(A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;

(B) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

(C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(3) For purposes of paragraph (2), the term `joint research agreement' means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

EFFECTIVE DATE

(a) IN GENERAL- The amendments made by this Act shall apply to any patent granted on or after the date of the enactment of this Act. (Exception: The legislation does not not affect the right of any party in any action pending before the United States Patent and Trademark Office or a court on the date of the enactment of this Act to have that party's rights determined on the basis of the provisions of title 35, United States Code, in effect on the day before the date of the enactment of this Act.

MESSAGE TO RESEARCHERS:

If you work collaborate on work with individuals from other legal entities, you need to have an agreement up front as to how that collaboration is going to be handled. Contact your patent attorney to ensure that the agreement is properly created to fall within the scope of the new law.

BACKGROUND ON THE LAW:

Texas Republican Lamar Smith introduced the legislation in 2003 to promote research between universities and the private sector.

According to co-sponsor Senator Leahy, this Bill will circumvent the ruling in OddzOn Products, Inc. v. Just Toys, Inc. (Fed. Cir. 1997) (holding that non-public information may be used as prior art under certain circumstances), thus allowing more collaboration. Philip McGarrigle published an article in IDEA discussing the OddzOn Products. Brian Murphy disagreed with OddzOn Products in the Fordham IP Law Journal. Additionally, James Gambrell discusses the use of section 102(f)/103 prior art in the Federal Circuit Bar Journal.

Analysis and discussion of the Act from the House Committee Report:

In particular, Sec. 103(c) is amended to add a new paragraph that permits reliance on the provisions of 103(c) by parties that have not commonly assigned their rights to subject matter and the invention at the time a claimed invention was made. It does so by construing the phrase `owned by the same person or subject to an obligation of assignment' in newly redesignated 103(c)(1), to include circumstances in which the parties have entered into a qualifying joint research agreement before to making the invention. The amendments made in this Act do not alter existing law governing inventions under 103(c) where the invention and the subject matter at issue are commonly owned or subject to an obligation of common assignment.

A party who seeks to gain the benefit of the amended Sec. 103(c) must comply with certain conditions. First, the invention and the subject matter (i.e., prior art or information qualifying solely under 35 U.S.C. 102(f)) that is being excluded must be owned by, or otherwise subject to the control of, one or more of the parties to the joint research agreement. While the subject matter being excluded may pre-date the joint research agreement, the claimed invention must be made after the date of such agreement. Second, the invention must arise from work performed by or on behalf of the natural or legal persons that are party to the eligible joint research agreement. Third, the identities of the parties to the joint research agreement must be disclosed in the patent. This information may be included in the original application, through an amendment to the application, or added by an amendment to the patent (e.g., by a certificate of correction) pursuant to the amended law. The omission of the names of parties to the agreement is not an error that would justify commencement of a reissue or reexamination proceeding.

Thus, by entering into a joint research agreement before making the claimed invention, disclosing the names of the parties in the patent application or amendment, and ensuring that the claimed invention resulted from activities under the agreement, subject matter developed by another person and the claimed invention will be deemed to be commonly owned.

Section 2 also defines the term `joint research agreement' as a `written contract, grant, or cooperative agreement.' By doing so, Congress does not intend to prescribe the specific form of the agreement parties must use to benefit from this Act nor to require the writing be contained in a single instrument. Congress does intend the writing to demonstrate that a qualifying collaboration existed prior to the time the claimed invention was made and that the claimed invention was derived from activities performed by or on behalf of parties that acted within the scope of the agreement.

The term `joint research agreement,' used in section 2 of the Act, is not limited to joint research agreements under the Bayh-Dole Act (Sec. 200 et seq. of the Patent Code), but also includes other governmental or private sector cooperative research agreements, development agreements, and other transaction agreements, including Government Cooperative Research and Development Agreements (15 U.S.C. 3701a), and Department of Defense or National Aeronautics and Space Administration (NASA) `other transaction' agreements (10 U.S.C. 2371, 42 U.S.C. 2473).

USPTO Budget

Congress has set the USPTO's budget at $1.3 billion for fy 2005.  According to the recently enacted Consolidated Appropriations Act of 2005, all of the funding will be derived from fees paid to the Office.  If fees collected are less than the budgeted amount, then the budget "shall be reduced accordingly."  Although not explicitly stated -- if fees collected are greater than those spent, then excess funds will be returned to Congress.

Interestingly, of that money, $20 million is to be allocated to "protect United States intellectual property overseas."  This will likely includes Mark Cohen's foray into China.

 

Eolas v. Microsoft On Appeal

Eolas v. Microsoft (04-1234)(On appeal at the Federal Circuit)

At the district court level, Eolas won a $500 million+ verdict for Microsoft's alleged patent infringement.  The technology at issue involves a method of using a web browser to open third-party applications using plug-ins.  Now, the case is on appeal at the Federal Circuit, with oral arguments being held today, December 9, 2004. Microsoft is expected to argue both improper claim construction and error in including Microsoft's foreign sales in damage calculations.

The foreign sales portion of the case falls under 35 U.S.C. 271(f).  271(f)(1) provides for liability for causing components of a patented invention to be supplied for assembly abroad.  In Eolas, however, no physical component of the patented invention had shipped from the U.S.  However, the District Court ruled that Microsoft's shipment of information on a "golden master" disk created a sufficient nexus with the U.S. 

The foreign damages are expected to be overturned by the Federal Circuit appeals court based on its holding in the recent case of Pellegrini v. Analog.  In Pellegrini, the Federal Circuit essentially held that there is no liability for patent infringement unless components of a patented invention are physically shipped from the United States.  Two weeks ago, the Supreme Court denied Pellegrini's petition for writ of certiorari.

The asserted patents are also undergoing a reexamination at the United States Patent Office.

Parties Involved:

The asserted patents are owned by the University of California but exclusively licensed to Eolas.  The two reportedly have an agreement that Eolas will pay the University 25% off the top of any award.  Microsoft is the defendant.  In addition to the parties, a number of amicus briefs were filed by interested parties.  These parties include: AOL; Association for Competitive Technology; Autodesk; Bentley Systems; Intel; Macromedia; Netscape; Oracle; Professor Joe Miller; Sun Microsystems; and Wacom Technology. 

Comment:

Although I have not reviewed these amicus briefs, I expect that they generally support Microsoft's contention that the Eolas patents are invalid and that the reach of the patents should not extend beyond the borders of the U.S.  Paul Festa at cNet has written a brief article on the appeal.

New Patent Fees In Effect: Consolidated Appropriations Act, 2005 enacted on December 8, 2004

Consolidated Appropriations Act was signed by the President and enacted into law on December 8, 2004. The Consolidated Appropriations Act revises certain patent application and maintenance fees; provides separate fees for a basic filing fee, a search fee, and an examination fee; and requires an additional fee for any patent application whose specification and drawings exceed 100 sheets of paper (application size fee). The new patent fees are now effective and will remain in effect during the remainder of fiscal year 2005 and during fiscal year 2006. The patent maintenance fee changes apply to any maintenance fee payment made on or after December 8, 2004, regardless of the filing or issue date of the patent for which the fee is submitted. The revised maintenance fees took effect on December 8, 2004. Thus, any maintenance fee paid at any time on (or after) December 8, 2004 is subject to the revised maintenance fee amounts set forth in the Consolidated Appropriations Act.

NOTES:

• The fee chart is a little confusing. For a new utility application pay this: filing fee ($300) + search fee ($500) + examination fee ($200).
• The AIPLA has a nice chart of most fees.
• Download the new Fee Transmittal.

Supreme Court Upholds Fair Use Defense in Trademark Case: Finds that some consumer confusion is compatible with fair use

KP Permanent Make-Up v. Lasting Impressions I, 543 U.S. ___ (2004).

FACTS: Both KP Permanent Make-Up and Lasting use the term “micro color” in marketing permanent cosmetic makeup.  KP has used a single-word version of the term since 1990 or 1991.  In 1992, Lasting registered a trademark that included the words “Micro Colors” under 15 U. S. C. §1051, and, in 1999, the registration became incontestable, §1065. When Lasting demanded that KP stop using the word “microcolor,” KP sued for declaratory relief, asserting the statutory affirmative defense of fair use, §1115(b)(4). The Ninth Circuit ruled consumer confusion is an element of fair use and appeared to place the burden of proof (to show an absence of confusion) on KP.

ISSUE: Does a party raising the defense of fair use to a claim of trademark infringement have a burden to negate any likelihood that the practice complained of will confuse customers about the origin of goods or services affected?

HOLDING: (Souter) A party raising the statutory affirmative defense of fair use to a claim of trademark infringement does not have a burden to negate any likelihood that the practice complained of will confuse consumers about the origin of the goods or services affected.

(a) Even if a mark is incontestable (under §1115(b)), a trademark holder has the burden of showing that the defendant’s actual practice is “likely to cause confusion, or to cause mistake, or to deceive” consumers about the origin of the goods or services in question, see, e.g., Two Pesos, Inc. v. Taco Cabana, Inc., 505 U. S. 763, 780.  While cases such as Baglin v. Cusenier Co., 221 U. S. 580, are consistent with taking account of the likelihood of consumer confusion as one consideration in deciding whether a use is fair, they cannot be read to make an assessment of confusion alone dispositive or provide that the defense has a burden to negate it entirely.

(b) Since the burden of proving likelihood of confusion rests with the plaintiff, and the fair use defendant has no free-standing need to show confusion unlikely, the Court recognizes (contrary to the Ninth Circuit’s view) that some possibility of consumer confusion is compatible with fair use. . . . The Court does not rule out the pertinence of the degree of consumer confusion under the fair use defense.

(c) VACATED and REMANDED.

Supreme Court Opinion
9th Circuit Opinion

 

New Blog Covers Decisions of the Trademark Trial and Appeal Board

New York attorney Martin Schwimmer has been covering trademark issues for the past few years at his quality Trademark Blog.

One area of trademark law where Marty has only rarely taken his readers is into the arcane decisions of the Trademark Trial and Appeal Board (TTAB).  The TTAB is an administrative body of the Patent & Trademark Office that decides various trademark issues such as ex-parte appeals, oppositions, cancellations and concurrent use proceedings.  These decisions are extremely important, but only rarely written about . . . until now.

At Marty's encouragement, Boston attorney John Welch has created the TTABlog: Occasional Observations re the Trademark Trial and Appeal Board.  Welch has a wealth of knowledge concerning operation of the TTAB and, perhaps more importantly, is a great writer.  In his posts, John certainly gives you the facts, but he also imparts some of his own insight into the inner workings of the administrative trademark appeal process.

Recent headlines on the TTABlog:

• Dallas Mavericks Lose Board Battle For "DEEP 3"
• Beauty and the Board: TTAB Says "MISS T-GIRL USA" Likely To Confuse
• TTAB Gives Thumbs Up To WW2 Pin-Up Nose Art
• TTAB Nixes Baby Carrier Shape As Functional
• "THE BEEF JERKY OUTLET" Not Generic For Beef Jerky Outlets

Welcome to the blogosphere John Welch.

Related Links:

• Trademark Blog
• TTABlog
• USPTO TTAB homepage
• USPTO Trademark Search Page
• An Overview of Trademark Law

Free Telephone Roundtable Today on Patent Damages

Date: December 8, 2004
Time: 12:30 PM Eastern Duration: 1 Hour
Phone in #: RSVP to [email protected] in order to obtain 1-800 dial-in number
Fee: Participation is FREE

Topic: Patent Damages--Beyond the Basics: Lost Profit Consideration

This discussion will center on patent infringement damages. The presentation will address damage issues beyond the basics of Panduit and Georgia Pacific including recent court decisions on lost profits, reasonable royalty and price erosion. Joseph Egan and Michael Chase, expert witnesses on economic damages with Navigant Consulting, Inc., will also provide case examples from some of their recent engagements and expert testimony. Curt Whitenack, a litigator from McDonnell Boehnen Hulbert & Berghoff LLP, will moderate.

I had forgotten to post this notice until I saw it on I/P Updates.

Commerce Department Inspector General Releases Report Critical of Patent Office Examiner Goal and Appraisal System

The Inspector General's Report highlighted several problems with the current system of Examiner Goals and Evaluation:

• Patent Examiner Goals Have Not Changed Since 1976
• Patent Examiner Performance Appraisal Plans Are Not Linked to Supervisor and PTO Goals
• Patent Examiner Award System Is Not Well Structured
• No “gain-sharing” award is offered between 110-120 percent of the production goal to encourage production at that level
• Special achievement award does not require higher performance than the gain-sharing award
• Criteria for pendency reduction award are not tied to pendency reduction

The Office of the Inspector General of the Commerce Department recently released its report on the Patent Office titled:

USPTO should reassess how examiner goals, performance appraisal plans, and the award system stimulate and reward examiner production. [Download PDF]

In addition, the Report made three fairly mild recommendations:

• Reevaluate current patent examiner goals and assess the merits of revising them to reflect efficiencies in and changes to work processes resulting from automation and other enhancements.
• Examine the benefits of revising patent examiner performance plans to (a) better reflect agency production, first action and overall pendency goals, and (b) better measure examiner success at processing applications within specified time periods.
• Evaluate the current patent examiner award system to determine if there is a more effective and efficient way to stimulate higher examiner production.

Who is the Inspector General of the Department of Commerce?

In 1999, Johnnie Frazier is the was sworn in as the Inspector General of the U.S. Department of Commerce, and thus assumed responsibility for monitoring the operations of one of the most diverse federal agencies. As Inspector General, Mr. Frazier is charged with (1) promoting economy and efficiency, and (2) detecting and preventing fraud, waste, and abuse in Departmental programs and operations. The Office of Inspector General is created to provide an independent and objective evaluation of Departmental programs and operations.

Conclusory Statements by Patent Examiner are Inadequate to Support Motivation to Combine References

In re Bruce Beasley (Fed. Cir. December 7, 2004) (04-1225 Unpublished Opinion).

In 1991, Beasley filed a patent application directed to the generation of images on a video screen using a light pen that operates by mapping the screen into a memory on a point-by-point basis. 

The patent appeals board (BPAI) found that the invention was obvious based on prior art patents cited by the patent examiner during prosecution.  Beasley then appealed to the Court of Appeals for the Federal Circuit (CAFC).

On appeal, Beasley argued that the examiner never established a prima facie case of obviousness.  Specifically, Beasley urged reversal because there was no motivation or suggestion to combine the references cited by the Examiner and BPAI.

The Court agreed with Beasley and reversed the BPAI's rejection -- finding that:

The record reflects that the examiner and the Board have managed to find motivation for substituting one type of memory for another without providing a citation of any relevant, identifiable source of information justifying such substitution. The statements made by the Examiner, upon which the Board relied, amount to no more than conclusory statements of generalized advantages and convenient assumptions about skilled artisans. At least under the MPEP then in effect, such [conclusory] statements and assumptions are inadequate to support a finding of motivation, which is a factual question that cannot be resolved on subjective belief and unknown authority.

Vacated and Remanded.

In Dissent, Judge Dyk would have affirmed the obviousness rejection.

I see no error in the Board’s reliance on the PTO’s own specialized knowledge [for a motivation to combine]. The effect is merely to create a prima facie case, and to shift the burden to the patent applicant. Here the applicant did not refute the factual findings of the Board and the patent examiner, but merely offered lawyer argument to contradict the Board’s findings. Under these circumstances the application was properly rejected.

With this said, I agree that the MPEP provision in effect at the time is not a model of clarity and can be read as recognizing only a very limited scope for the use of the PTO’s expertise. MPEP § 2144.03 (7th ed. 1998). However, the current version appears to allow greater latitude. MPEP § 2144.03 (8th ed., rev. 2, 2004). In future cases, where the PTO has provided us with an interpretation of the new MPEP provisions, we will need to address the extent to which the new version of the MPEP gives the PTO greater scope to rely on its own expert knowledge.

 

Commerce One Auctions Patents: Public Interest Groups Complain

It is right there in the Patent Act.  Patents are a form of personal property and are freely assignable.  35 U.S.C. §261.  They may be bought & sold, licensed exclusively and otherwise. 

Now, some patent groups (EFF) are up in arms because a bankrupt company, Commerce One has auctioned its patent portfolio that reportedly covers computerized methods of paying bills and obtaining supplies.  Their objection: "the buyer is to require a substantial rate of return." 

Give me a break -- what kind of objection is that? The underpinning of the American economy is based on the exchange of property and obtaining a return on investment. 

 

Snippets

Snippets^TM provides a review of timely developments in intellectual property law. Here is a table of contents of the most recent issue (November 2004):

1. Thomas Fairhall and Paul Churilla, The Intersection of Trade Secrets and Patent Law: The Prior User Rights Statute, 35 U.S.C. 273, Part 2.
2. Eric Moran and Dennis Crouch, Drafting the Technology Game Plan Part 5: Domain Name Protection.
3. Marcus Thymian and Sherri Oslick, On Your Mark! . . . Get Set! . . . Know: Marking Fundamentals.
4. Alison Baldwin, Patent Validity Assessments: Your Guide to Avoiding the On-Sale Bar, Part 2.

You can e-mail the editor ([email protected]) to receive your FREE copy of the newsletter.

In the e-mail, you can indicate your technology and legal interest: (Biotech, Electrical, Software, Chemical, Mechanical, Litigation, and/or Prosecution).

European Patent Organization Continues to Spread

Link: The European Patent Organization has announced that Lithuania has now joined the European Patent Convention -- pushing the number of member states to 30. European patents are now valid in 36 European states, covering a market of more than 560 million inhabitants.

Link: There are (as of 1 December 2004) 30 member states: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Liechtenstein, Lithuania, Luxemburg, Monaco, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom (see European Patent Convention article for the dates of entry in force in each country).  In addition there are six so-called "extension states" which recognise European Patents but are not member of the EPO. These are Albania, Croatia, Latvia, Macedonia, Serbia and Montenegro and Bosnia and Herzegovina.  Further countries are expected to join the EPO in due course (probably Latvia, Malta and Norway soon).

In addition, the U.S., Europe, and Japan have agreed to take real steps to coordinate work sharing, electronic business developments to support work sharing, and harmonization or standardization of search strategies, tools and substantive patent law.

Amazon wins patent suit . . . for now: Pinpoint's case dismissed without prejudice

Pinpoint v. Amazon (N.D. Ill. December 6, 2004) (No. 03 C 4954, Richard A. Posner, sitting by designation).

After an evidentiary hearing on the eve of trial, Judge Posner has determined that Pinpoint was not the owner of the asserted patents at the time the complaint was filed -- and thus, that Pinpoint does not have standing to sue.

The case was dismissed without prejudice.  After ensuring that the patents are properly assigned, Pinpoint may re-file the suit.

Read the opinion here: Download Pinpoint.pdf.
Read more about the lawsuit here, here, and here. 

Blog: Word of the Year

In patent law, Merriam-Webster is the cream of the crop.  The Federal Circuit cites Webster's 3rd International Dictionary more than any other source in claim interpretation.  The CAFC likes dictionaries because they are descriptive of the language - unlike other documents, such as RFC's, that are seen as prescriptive.

As the English language changes, so does Webster's.  Recently, Merriam-Webster named the term "blog" as their number one word of the year -- finding that "blog" was the most searched word on its Web sites in 2004.

In 1999, "blog" was added to Webster's Collegiate Dictionary.

Blog: noun; short for weblog; a Web site that contains an online personal journal with reflections, comments, and often hyperlinks provided by the writer.  Blogger; Blogging.

Now, there is a rumor that Bloggers may be TIME's people of the year.

I hope that you enjoy this patent law blog and find it useful for your practice.  Please feel free e-mail feedback: [email protected].

McDonnell Boehnen Hulbert & Berghoff LLP Dennis Crouch Patent Attorney 300 S. Wacker Dr. Chicago, IL 60606  [email protected] patentlaw.typepad.com  tel: fax: 312 913 3316 312 913 0002

Add me to your address book... Want a signature like this?

CAFC: Expert Testimony Essential for Finding of Infringement

Centricut v. ESAB (Fed. Cir. 2004) (03-1574).

At the district court, Esab Group won a multi-million dollar judgment against Centricut for infringement of Esab's patent relating to plasma welding products.  Centricut appealed the judgment and the measurement of damages.  Esab cross-appealed, asking for a modification of the judgment on damages.

On appeal, Centricut argued that ESAB had not satisfied its burden of proof on infringement because it failed to present expert testimony comparing the claims as construed with the accused device.  The Appeals Court agreed that expert testimony was essential in this case:

[E]ach of Esab’s three theories [of infringement] suffers from the same deficiency: none is supported by expert testimony. The first theory, adopted by the district court, rests on the district court’s own interpretation of the evidence. The latter two theories rest on the testimony of witnesses who were admittedly not experts on [the specific technology].

... This case stands as an apt example of what may befall a patent law plaintiff who presents complex subject matter without inputs from experts qualified on the relevant points in issue when the accused infringer has negated infringement with its own expert.

Infringement Reversed

The Court went on to say that experts are not necessary for cases where the technology is "easily understandable." And, that there is no "per se rule that expert testimony is required to prove infringement when the art is complex."  However, "where the accused infringer offers expert testimony negating infringement, the patentee cannot satisfy its burden of proof by relying only on testimony from those who are admittedly not expert in the field." 

Willful Patent Infringement: An Empirical Look

Professor Kimberly Moore is one of the leading empirical researchers in the area of patent law.  In her latest article, Professor Moore looks into the issue of willful patent infringement.  Some of her findings:

• Willfulness is alleged all of the time (more correctly in +90% of cases);
• Willfulness is never decided on summary judgment;
• About one third of willfulness issues are bifurcated at trial;
• At trial, willfulness is found about half of the time;
• The CAFC affirmed over 90% of jury verdicts on willfulness;
• In bench trials, a noninfringement/invalidity opinion was critical in avoiding a willfulness finding;
• In jury trials, an opinion did not create a significant impact.

The study analyzed all patent cases infringement cases that terminated during litigation from 1999-2000.

Kimberly A. Moore, Empirical Statistics on Willful Patent Infringement, 14 Fed. Cir. Bar J. 227 (2004).

Means-Plus-Function Claims Lose at the Federal Circuit

35 U.S.C. Section 112 paragraph 6 provides a statutory basis for drafting patent claims in what is known as means-plus-function language.  The language allows a patentee to write a claim based on the function of a device rather than its actual structure.  This language is, in the words of Gene Quinn, "dangerously seductive."  Means claims are easy to write, and there is a belief that the means language adds some "fuzzy math" to the court's calculation of infringement.

Over the past several years, the Federal Circuit has continually limited the scope of means limitations.  Such a limitation is construed by the court to cover the corresponding structure as described in the specification and equivalents thereof.  Thus, if you use means claim limitations, you should make absolutely sure that the structure is completely (and broadly?) described in the specification.

In an admittedly unscientific survey of case law, attorney Hal Wegner searched through the last fifteen CAFC opinions that dealt with the interpretation of means-plus-function language. Results:

Patentee's construction of "means" term accepted: 0%
Patentee's argument that term was not a "means" term accepted: 14
Summary judgment of non-infringement reversed: 7%
Losses for Patentee: 80%.

Thus, the means language was a loser for the patent holder in 80% of cases. (12 of 15 cases). (Hal, thanks for conducting the study).

Bottom Line: MPF claims are risky.  They are fine to add as insurance after you have drafted more descriptive claims, but they should not be trusted. 

If you are still writing MPF claims, you are not alone -- thousands of patents using such language are issued annually.

35 U.S.C. 103(a): Disclosure of alternative embodiments does not constitute teaching away.

In a case involving the design of shoe tred, the Federal Circuit provided further insight into the motivation to combine references under 103(a).

In re Fulton (Fed. Cir. 2004) (04-1267).

After receiving an obviousness rejection at the Board of Patent Appeals and Interferences (BPAI), inventors Fulton and Huang appealed to the Federal Circuit.  Their utility patent application is directed to a shoe sole with increased traction.  The BPAI found that the prior art as a whole suggested a combination of the orientation of hexagonal surfaces found in the application. 

Motivation to Combine Need Not Come from Preferred Alternatives: On appeal, the inventors argued that there was no motivation to combine because the characteristics disclosed in the references were not the preferred alternative.  The CAFC rejected this argument -- finding that "our case law does not require that a particular combination must be the preferred or the most desirable, combination described in the prior art in order to provide motivation for the current invention."  The appeals court went on to clarify that the "prior art's mere disclosure of more than one alternative does not constitute a teaching away from any of these alternatives" unless the disclosure criticizes, discredits, or otherwise discourages the solution.

Rejection for obviousness affirmed.

Federal Circuit Begins Announcing Panel Composition One Week Early

Some patent law experts have noticed an internal rift in the Federal Circuit Court of Appeals in the area of claim construction.  Some of the CAFC judges generally decide claim construct based on an "ordinary meaning" approach while others generally rely on patent documents such as the specification and prosecution history to determine the meaning of claims. UPenn Professor Polk Wagner has even created a Federal Circuit Predictor to predict the outcome of a claim construction apeal based on the appellate panel.

Thus far, Professor Wagner's predictor has been seen as a cute but ineffective tool because the appellate panel is not given with any advance notice.  The Predictor Tool adds certainty, but the lack of advance notice does not allow for any real settlement negotiations.

Now, in a public experiment, the Federal Circuit has begun to post the composition of panels the Thursday prior to the week of oral argument. 

Thus, for instance, we now now that next Thursday  (December 9) that the Panel of Rader, Friedman, & Plager will hear the Eolas v. Microsoft panel.

The court requests public comment on the experimental change.

Carlos Gutierrez nominated as Secretary of Commerce

Kellogg Executive Carlos Gutierrez has been nominated by President Bush to replace Don Evans as Secretary of Commerce.  The Commerce Department manages the Patent & Trademark Office as well as other utilitarian functions of the government such as the census, weather forecasting, and standard setting.

Gutierrez fled Castro's Cuba in the 1960's and worked his way up the corporate ladder -- eventually taking the helm at Kellogg in 1999.  He is credited with revitalising the company that had been knocked from its perch at the top of the cereals business.

Bush called Gutierrez a "great American success story" and a visionary executive, who understands the world of business from the "first rung on the ladder to the very top."

Kellogg is no stranger to the PTO, more than sixty years ago Kellogg brought a case to the Supreme Court over whether the pillow shape of Nabisco's shredded wheat was trademarked.  In Kellogg v. National Biscuit, the Court ruled that a "product shape that is the subject of a [utility] patent goes into the 'public domain' when the patent expires." 306 U.S. 111 (1938).

Marking Estoppel: CAFC Vacates but Leaves Possibility

Slip Track Systems v. Metal Lite (Fed. Cir. December 1, 2004) (unpublished) ("Slip Track III").

In a long-running dispute involving patents directed to earthquake resistant wallboard structures that permit a wallboard to slide vertically with respect to the supporting wall studs, the Federal Circuit vacated the district court's infringement holding.

The district court barred Defendant Metal Lite from contesting infringement for three reasons. 1) Because of a prior partnership with Slip Track, Metal Lite had marked its product with the asserted patent number -- thus creating a marking estoppel. 2) In an earlier decision, ("Slip Track II"), the CAFC had found the asserted patent to cover identical subject matter as another product that Metal Lite admittedly infringed -- thus, Metal Lite must also infringe the asserted patent. And 3) Metal Lite's tardy presentation of non-infringement arguments were contrary to Fed. R. Civ. Pro. R. 26 of "fully airing each parties' theories of the case well in advance of trial."

On appeal, the CAFC vacated-in-part:

Marking Estoppel: While deliberate mismarking of a product may provide grounds for applying estoppel, there is no evidence in this case that Metal Lite believed its product to fall outside the scope of the patent's claims when it made the decision to mark its product.  Thus, marking estoppel does not apply in this case. 

NOTE: The Court explicitly refused to endorse the doctrine of marking estoppel -- "We find it unnecessary to address this issue because, even assuming the doctrine remains viable, it does not apply to the facts of this case."

Identical Scope of Second Patent: Patent infringement analysis requires the court to compare construed claims to the accused product. In bypassing this step, the district court failed to consider that Metal Lite's products do not necessarily infringe the patent.

Metal Lite's Litigation Conduct: In its answer, Metal Lite denied infringement -- and thus, was not tardy.

Accordingly, we hold that the district court abused its discretion in granting Slip Track's motion in limine barring Metal Lite from contesting infringement.

In Dissent: Judge Newman could "not discern reversible error."

Mobile Phone Manufacturers Win Design Patent Suits

Earlier this month, the Federal Circuit ruled that Tony Colida's patented cell phone design was not infringed by Matsushita's GU87 phone.  (link).  Now, Colida's parallel suit against Kyocera Wireless and Sanyo have been struck down. 

Colida v. Sanyo (Fed. Cir. December 2, 2004) (unpublished)

A design patent is for the visual appearance of a useful article. Durling v. Spectrum Furniture Co., 101 F.3d 100, 104-05 (Fed. Cir. 1996). To infringe a design patent, the accused device must have substantially the same appearance as the patented device, and contain the points of novelty as compared with the prior art, such that the ordinary observer would believe that they are the same product.

We agree with the district court that there is no view of the facts whereby a reasonable trier of fact could find infringement, and that summary judgment of non-infringement was properly entered.

Judgment of non-infringement affirmed.

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Kyocera v. President Electronics and Tony Colida (Fed. Cir. November 30, 2004) (unpublished).

Mr. Colida [] argues that the Kyocera 2200 phones are substantially similar to the design in the '184 patent. The district court pointed to significant differences in the Kyocera 2200 phones, in that they do not have as pronounced a curvature, have additional buttons taller screens, and different arrays of holes in the earpiece.

[T]he district court's summary judgment of non-infringement has not been shown to be incorrect. Error has not been shown as to the district court's analysis. The district court's identification of the many differences in the features of the designs has not been disputed.

The judgment of non-infringement is affirmed.

============================================

Colida v. Matsushita (Fed. Cir. 2004) (unpublished opinion).

Facts: Tony Colida owns design patents covering the design of mobile phones designated A.  Matsushita owns a patent on the design for mobile phone B.  In addition Matsushita makes a GU87 phone that matches up with its patented design.  After comparing the phone with the figures from Colida's patents, the district court dismissed Colida's infringement suit - finding that there was no infringement as a matter of law.

Appeal: Reviewing the summary judgment de novo, the appellate panel affirmed, finding no error in the district court's conclusion that "no reasonable trier of fact could find infringement of the [patents] by the GU87 phone in this case."

Summary Judgment of Noninfringement Affirmed.