Patent Law Blog (Patently-O)

Supreme Court Likely to Hear Transnational Patent Law Dispute

Microsoft v. AT&T (on petition for certiorari).

The DOJ and PTO have given their solid support to Microsoft’s petition for certiorari in its battle over transnational patent infringement. This support makes grant of the petition highly likely.

This case, like Eolas and Pellegrini before, questions the scope of Section 271(f) of the Patent Act.  That statute allows a U.S. patentee to collect damages for foreign sales of a patented invention based on the export of one or more of its components from the U.S.  Recently, the CAFC has expanded the common interpretation of the statute to include the export of software code (AT&T, Eolas) as well as to the export of elements used in a patented method (Union Carbide).  In a case that is difficult to square with AT&T or Eolas, the court held that the “component” does not apply to plans or instructions.

In this case, Microsoft’s software code was generated in the U.S. and then shipped abroad where copies were then generated and distributed.  AT&T claims (and courts have thus far agreed) that sales of those foreign copies infringe the U.S. patent and create liability.  The chart below gives my loose graphical interpretation of the events.

If it stands, this case could have far-reaching effects in the fields of biotechnology (DNA/cell replication) as well as foreign piracy (shipping product from the U.S. to reverse engineer and copy in a foreign country).

From a business perspective, this interpretation of the statute gives business executives another reason to send software jobs overseas.  If the component was not exported from the U.S., there will be no damages under 271(f).

In their brief supporting the petition, Daryl Joseffer and the DOJ crew agree that software can be a component of a patented invention.  They argue, however, that the foreign replicas do not create liability under the act because the replicas themselves were not supplied from the United States (as is required by the statute). According to the brief, the lower court’s interpretation “improperly extends United States patent law to foreign markets and puts United States software companies at a competitive disadvantage vis-a-vis their foreign competitors in foreign markets.”

The Government argues that the extraterritorial nature of U.S. patents should be narrowly construed and that if someone wants rights to stop foreign infringement, then they should get foreign patents.

Respondent’s remedy lies in obtaining and enforcing foreign patents, not in attempting to extend United States patent law to overseas activities.

Important recent 271(f) cases:

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

Documents:

• On Petition for Certiorari
• Petitioner: Microsoft Petition
• Petitioner: Microsoft Petition Appendix
• Respondent: AT&T Opposition
• Petitioner: Microsoft Reply in Support
• Respondent: AT&T Supplemental Brief
• Petitioner: Microsoft Supplemental Brief
• Amicus: Software and Information Industry Association in Support of Microsoft
• Amicus: Government in Support of Microsoft

Notes:

• SCOTUS blog has more here.

Rader and Bryson spar over anticipation of method of use claims

Perricone v. Medicis Pharmaceutical (Fed. Cir. 2005)

This case involved two patents (the '693 and the '063) on treating skin damage or disorders--particularly sunburn--by the application of ascorbyl fatty acid ester (vitamin C in a fat soluble form). On summary judgment, the district court determined that the asserted claims of both patents were invalid due to anticipation and double-patenting. On appeal, the CAFC affirmed the district court's decisions in all respects but one: according to the majority, the district court erred when it determined that four claims to methods of treating "skin sunburn" by the application of ascorbyl fatty acid ester were anticipated by a prior art patent ("Pereira") disclosing ascorbyl fatty acid ester as "suitable for topical application to the skin or hair." Judge Rader wrote the opinion for the court, which Judge Linn joined, while Judge Bryson dissented.

Claim 1 of the '693 patent is representative of the "skin sunburn" claims at issue:

A method for treating skin sunburn comprising topically applying to the skin sunburn a fatty acid ester of ascorbic acid effective to solubilize in the lipid-rich layers of the skin an amount effective to scavenge therefrom free radicals present as a result of transfer of energy to the skin from the ultraviolet radiation which produced said sunburn.

Pereira disclosed cosmetic compositions for topical application, including the recited ascorbic acid composition, and identified the compositions as "suitable for topical application to the skin or hair." The district court determined that Pereira anticipated Perricone because "Pereira will inherently function in [the claimed beneficial manner] when topically applied to the skin."

According to Judge Rader, however, "The issue is not, as the dissent and the district court imply, whether Pereira's lotion if applied to skin sunburn would inherently treat that damage, but whether Pereira discloses the application of its composition to skin sunburn. It does not." Judge Rader continued: "Claim 1 of the '693 patent recites a new use of the composition disclosed by Pereira, i.e., the treatment of skin sunburn. The district court's inherent anticipation analysis for this claim contains a flaw. The disclosed use of Pereira's lotion, i.e., topical application, does not suggest application of Pereira's lotion to skin sunburn. In other words, the district court's inherency analysis goes astray because it assumes what Pereira neither disclosed nor rendered inherent."

Judge Rader's majority opinion distinguished claim 8 of the '693 patent, directed to a method for "preventing sunburn damage," from claim 1, finding it anticipated by Pereira. According to Judge Rader, claim 8 "merely requires application of the composition to exposed skin surfaces. Because all skin surfaces are susceptible to sunburn damage, and because one can only realistically apply a composition to a skin surface when that surface is exposed, Pereira's 'topical application' encompasses the application step of claim 8."

Judge Bryson dissented, writing, "In my view, the differences between the claims that the court invalidates and those that it holds not to be invalid do not justify a difference in outcome." Judge Bryson explained: "The majority seems to attach significance to the notion that topical application of Pereira's emulsion always prevents sunburn, because all skin is subject to sunburn, but that it does not always treat sunburn, because not all skin is sunburned and in need of treatment. That distinction, however, does not stand up: the fact that the sunburn treatment function is pertinent to only a subset of users of the Pereira method (i.e., those already suffering from sunburn) does not mean that Pereira does not anticipate the treatment claims."

The key point, according to Judge Bryson, was that the mechanism underlying both the prevention and treatment of sunburn by ascorbyl fatty acid ester is the same. According to Judge Bryson, "topical application of the Pereira composition to normal skin inherently produces the same chemical processes that underlie the sunburn prevention claims, including scavenging free-oxygen-containing radicals and neutralizing other reactive oxidants. Topical application of the Pereira composition to sunburned skin inherently produces the same processes, which also underlie the sunburn treatment claims." Accordingly, in Judge Bryson's view, "[t]o hold that the treatment claims of the sunburn patent are not anticipated by Pereira is to permit an inventor to secure patent rights to an existing invention merely upon identifying an inherent benefit of the prior art that had not previously been specifically identified, but that falls within a broader class of benefits already identified in the prior art."

NOTE: This case review was written by a patent attorney (not me) who wishes to remain anonymous.

Links:

Read the Opinion
Patent Baristas Review Case
Patent Hawk Reviews Case
Heinze Reviews Case

Supreme Court: LabCorp Briefing Round I [UPDATED]

LabCorp v. Metabolite (on writ of certiorari).

This case involves a patented method of correlating a body protein level with a vitamin B deficiency.  (U.S. Patent No. 4,940658).  The claim in question (Claim 13) includes two steps: (1) assaying a body fluid for an elevated level of total homocysteine and (2) correlating an elevated level of total homocysteine with a folate deficiency. (paraphrased).

The patent holder won at trial and at the CAFC.  The defendant, Metabolite, then brought its case to the Supreme Court arguing that the patent is invalid because it “claim[s] a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.”

Interestingly, the question presented is not firmly grounded in any particular rule of patent law.  Rather, it implicitly raises issues of indefiniteness, enablement, written description, and patentable subject matter. (to name a few).  However, the Supreme Court has given some indication that it is most interested in this case because of the issue it raises regarding the patenting of natural phenomena under Diehr.

LabCorp has filed its brief on the merits as have a number of third parties:

Petitioner’s Brief  PDF (211 KB)

In Part I, Petitioner LabCorp’s stance is essentially that the law is correct, but that it has been misapplied in this case.

Claim 13 violates this Court’s longstanding rule barring patents on “laws of nature, natural phenomena, and abstract ideas.”

According to LabCorp, the claim involves “no actual invention beyond the scientific discovery it recites.”  The claimed correlation is a scientific principle or law of nature, and its discovery alone cannot be patentable.  The “trivial pre-solution” activity of assaying “cannot transform claim 13 into a patentable invention.”  Here, Petitioner never strays far from the precedential pillars of Diehr, Chakrabarty, Funk Bros., and Flook.

In Part II, LabCorp goes on to argue that the claim is neither definite, enabled, nor adequately described.  The Brief appears to ask the court to invalidate any claim that includes a “correlating” step unless the process of how to calculate a correlation is spelled out in the specification. 

The Federal Circuit relied on the accepted dictionary definition of “correlate” as meaning “to establish a mutual or reciprocal relationship between.” But nothing recited in the claim or disclosed in the specification tells a practitioner how to actively “establish” a “relationship” between a particular test result and a vitamin deficiency. At most, the Patent discloses that such a scientific relationship exists.

More is required for a valid claim. . . .

In the remaining sections of the Brief, Petitioner argues that, on policy grounds, a very broad claim hinders scientific and technological progress and that the lower court judgment should be reversed.

Solicitor General’s Amicus Brief for the U.S. Government  PDF (165 KB)

The Solicitor General with assistance from the PTO’s counsel has filed its brief that falls closely in line with its prior unsuccessful brief in opposition to the petition for certiorari. 

In line with Petitioner, the Government agreed that the patent “appears to [impermissibly] claim all substantial practical applications of the natural relationship.” However, the Brief specifically states that this case should not be decided on an issue of whether a law of nature has been improperly claimed because the lower court record has not been developed on this issue. Directly addressing Petitioner’s part II, the Government argues that the specification does satisfy the requirements of 35 USC 112 “by describing, enabling, and claiming the method.”

Intellectual Property Owner’s Association (IPO) Brief  PDF (97 KB)

IPO realized that the question presented for review in this case does not directly challenge the current standards for patentable subject matter. However, the Supreme Court has indicated an interest in considering whether the patent-in-suit claimed patentable subject matter. 

IPO believes that the current standards for patentable subject matter, as set forth by the Court in Diehr, correctly delineate between those innovations that should be eligible for patent protection and those that should not. Accordingly, IPO believes that this case should not serve as a vehicle for overturning or altering those standards. Rather, this case should reinforce the standards of Diehr and thus, support the expectation that innovations in yet unknown areas of technology will be eligible for patent protection.

Specifically, IPO argues that a broad scope of subject matter eligibility properly places research and development decision-making into the hands of individuals and private entities rather than in the judiciary. This “free market” approach “beset allocates research and development resources without judicial entanglement.”  The requirements of novelty, nonobviousness, and description protect against over-reaching patents and warrant against further restricting patentability based on subject matter.

* NOTE: I was a coauthor of the IPO brief along with Paul Berghoff and Joshua Rich from MBHB as counsel for IPO.  The IPO Board of Directors approved the Brief.

Affymetrix Brief PDF (104 KB)

Affymetrix is a supplier of commercial DNA microarrays and “has an interest in ensuring that patents not issue on basic laws of nature so as to impede scientific progress in analyzing DNA and gene expression.”  Affymetrix argues that the fact that “elevated levels of an amino acid in the blood correlated to a vitamin deficiency” is a natural phenomenon that leaves claim 13 unpatentable under current precedent.

Interestingly, Affymetrix argues that ambiguity of whether a claim impermissibly covers a natural phenomena should be resolved in favor of invalidity to avoid serious constitutional questions. (citing Feist).

Public Patent Foundation PDF (375 KB)

PubPat argues that the CAFC has gone astray by over-reaching the permissible bounds of patentable subject matter. (Citing Alappat and State Street). Rather, PubPat would have the Court return directly to Flook.

Reviews Coming:

Download Bear Stearns & Lehman Brothers Amicus Brief.PDF (3617 KB)

Download American Heart Association.PDF (3800 KB)

Download AARP.PDF (4033.7K)

Download AMA.pdf (2553.5K)

Download AMEX.pdf (527.0K)

Download AmerClin.pdf (3007.8K)

Download CCIA.PDF (2590.7K)

Download IBM.pdf (2283.3K)

Download NYCBLA.pdf (691.6K)

Download PatNotProf.pdf (999.6K)

Download PeoplMedSoc.pdf (3316.8K)

RIM Appeals to the Supreme Court

Research-In-Motion v. NTP (Supreme Court). [Updated 12/19/05]

The BlackBerry patent battle continues.  In a well written petition, RIM has requested that the Supreme Court hear its appeal from the Federal Circuit’s decision that that was decided in NTP’s favor in August, 2005.

The appeal involves the question of territoriality of the patent laws.  Specifically, RIM poses the following question to the Court:

Under § 271(a) of the Patent Act, "use" infringement is expressly limited to use of a patented invention "within the United States." The question presented is: Whether an Internet-based global telecommunications system, such as the BlackBerry wireless email system, is used "within the United States," where components crucial to the system’s operation are located outside the United States.

RIM, a Canadian company, maintains its routers in Canada and has argued that because a portion of its allegedly infringing system was outside of the US that it could not infringe a US patent.  NTP argued the other side — that the mere fact that some servers were located abroad (while many others were within the US) cannot let RIM escape judgment.  For its part, the Court of Appeals for the Federal Circuit split-the-baby and differentiated between system claims and method claims. 

• For infringement of method claims, each and every step must be performed in the US.


• For infringement of system claims, the US must be the place where control of the system is exercised adn beneficial use of the system obtained..

In the past two years, the Court has turned down at least two cases involving extraterritorial application of the patent laws.*  Perhaps setting the stage for certiorari here. (odds are still low).

More Info:

• Download RIM's Petition for Cert (PDF).


• According to news reports, all five of NTP’s patents have received office action rejections at least once in the reexamination proceedings, and three of them have received two non-final rejections. [Link]


• Crouch, BlackBerry Settlement Found Unenforceable, Patently-O: Patent Law Blog (November 30, 2005).


• Crouch & Kafadar, Pushing The Boundaries, 176 Patent World 10 (October 2005) [Link]


• * Pellegrini v. Analog Devices and Microsoft v. Eolas.

Patent Reform

Of course, Patent reform will continue in 2006.  In a recent four-page magazine style article, Professors Lemley (Stanford), Lichtman (Chicago), and Sampat (Columbia) present their proposal for patent reform.  The professors argue that we should not waste money worrying about the patent office doing poor examinations on unimportant patents.  Rather, they argue, we should focus on the inventions that are economically important.  Their proposals allow market participants to identify the important issues:

• For standard examination, courts should have weakened or no presumption of validity;
• Applicant can pay for “gold plated” examination which would then be given presumption of validity; and
• Allow post-grant opposition for newly issued patents — opposer would fund a new examination.

Read the proposal here: What To Do About Bad Patents?

Patent Compulsory Licensing System II

eBay v. MercExchange

The upcoming MercExchange case is important, but it will not lead directory to a compulsory patent licenses on any large scale.  In this case, patentee MercExchange won its infringement suit against eBay, but was denied a permanent injunction. The district court gave four reasons for denying the injunction.

1. General concern over the viability of business method patents;
2. A strong likelihood of continuing disputes based on eBay workarounds;
3. MercExchange’s willingness to license; and
4. MercExchange’s failure to request a preliminary injunction.

Reviewing them in turn, the Federal Circuit panel dismissed each of these reasons — finding each unpersuasive.  Ultimately, finding that the defendant had shown “no reason to depart from the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”

Now, this case has arrived at the Supreme Court to question this “general rule.” In the backdrop, the statute in question — 35 U.S.C § 283 — is written with the standard equitable language seemingly implying that injunctions are discretionary:

The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.

It is unclear at this point what a damages calculation would be in a case where a permanent injunction is denied — probably most importantly is whether a patentee will be allowed treble damages for the ongoing infringement.

• Dennis Crouch: Discussion of the briefs on petition
• Dennis Crouch: Discussion of eBay’s petition
• Dennis Crouch: CAFC Opinion in MercExchange v. eBay
• Peter Zura: Reexam of MercExchange’s Patents

Court Finds Standing for Consumers to Bring Antitrust Claim of Asserting an Invalid Patent.

Molecular Diagnostics Lab v Hoffman La Roche (D.D.C. 2005)

By S. Richard Carden

MDL, a purchaser of Thermus aquaticus DNA polymerase or "Taq" (a component used in performing polymerase chain reaction), brought suit against Roche, Applera and others for violations of the Sherman Act, allegedly arising from Roche's enforcement of U.S. Patent No. 4,889,818 ("the '818 patent") knowing that it had been procured through inequitable conduct.  The '818 patent claims a thermostable DNA polymerase isolated from the Thermus aquaticus bacteria.  Defendants moved to dismiss the complaint on several bases including (1) lack of standing, (2) tolling of the statute of limitations, (3) failure to sufficiently allege a conspiracy, and (4) failure to comply with the pleading requirements of Rule 9.  The D.C. District Court denied Defendants’ motion in its entirety, with a minor exception that precluded MDL from seeking damages for the period prior to the four year statute of limitations period prior to its filing of the suit.

Claim Construction: "A sodium phosphate" limited to one type of sodium phosphate.

Norian v. Stryker (Fed. Cir. 2005).

In the second claims construction appeal, the CAFC found that the term “a sodium phosphate” was limited to a single type of sodium phosphate.  In its decision, the Court found that if the patentee had intended to cover multiple types of sodium phosphate then it should have used “at least one” language.  This decision was supported by two factors: (1) the claim was amended to use the transition “consisting of” rather than the open ended “comprising” and (2) none of the listed examples in the specification used multiple types of sodium phosphate. 

Judgment of noninfringement affirmed.

Links:

• Read the Decision.
• Norian v. Stryker — First Decision (Fed. Cir. 2004).

EBay Arrives at Supreme Court: A Landmark Patent Case

eBay v. MercExchange (on petition for certiorari).

The Supreme Court has agreed to review the question of “when it is appropriate to grant an injunction against a patent infringer” and will question the century-old precedent of Continental Paper Bag (1908).

The issues before the Court include:

1. Whether the Federal Circuit erred in setting forth a general rule in patent cases that a district court must, absent exceptional circumstances, issue a permanent injunction after a finding of infringement. (Question proposed by eBay).
2. Whether this Court should reconsider its precedents, including Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908), on when it is appropriate to grant an injunction against a patent infringer. (Question proposed by Supreme Court).

 In its petition for certiorari, eBay spells out the traditional four-factor test for injunctive relief and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the CAFC.  The four-factor test includes consideration of:

1. Irreparable harm from not issuing an injunction;
2. Whether an adequate remedy exists in law (damages);
3. Whether the injunction would be in the public interest; and
4. Whether a balance of hardships would tip in the plaintiff’s favor. 

According to regarded patent law professor Joseph Miller, this certiorari decision is breathtaking. “If the Court writes narrowly, it will be the most important patent case since Chakrabarty or Diehr. If the Court writes broadly, it will be the most important patent case (perhaps even the most important patent or copyright case) in a century.”

An injunction in this case would not threaten eBay’s core business, but is directed to the “buy-it-now” feature of the online auctioneer.

Links:

• Discussion of the petition and reply
• Discussion of eBay’s petition
• CAFC Opinion in MercExchange v. eBay
• Reexam of MercExchange’s Patents 
• Wegner's Patent Cases
• Supreme Court’s Decision on Cert

 

BPAI: Mixing Subject Matter => Rejection

Ex parte Moore (BPAI 2005) (NOT PRECEDENTIAL)

In the wake of the CAFC’s recent IPXL v. Amazon opinion, the PTO’s Board of Patent Appeals has decided its own Section 101 case — rejecting a patent application based on its use of mixed use of method limitations and apparatus limitations in a single claim.

The statutory categories under 35 U.S.C. § 101 are expressed in the alternative, i.e., process, machine, manufacture or composition of matter. Thus, the appellants’ claim 24, which encompasses two statutory categories, i.e., apparatus and method, violates 35 U.S.C. § 101. See Ex parte Lyell, 17 USPQ2d 1548, 1551 (BPAI 1990).

Here, claim 24 was directed to a “backlash reduction apparatus” that comprised a number of components, and, in addition, required “the backlash reduction apparatus executing a method comprising: advancing a substrate . . .”

Interestingly, the Examiner did not raise this issue – rather, it was raised, apparently sua sponte, by the Board after the Examiner’s reasons for rejection were themselves rejected.

Opinion

 

System Claim that Includes a Method Step is Invalid as Indefinite.

IPXL Holdings v. Amazon.com (Fed. Cir. 2005).

IPXL sued Amazon, arguing that its one-click purchasing system infringed on IPXL’s patent. Amazon won at trial and on appeal.

A portion of the opinion focuses on indefiniteness.  Specifically, the district court found that claim 25 was indefinite under 35 USC 112 because it attempts to claim both a system and a method for using that system.  Claim 25 reads as follows:

The system of claim 2 [including an input means] wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, and the user uses the input means to either change the predicted transaction information or accept the displayed transaction type and transaction parameters.

On appeal, the panel set out the rule — that a “claim is considered indefinite if it does not reasonably apprise those skilled in the art of its scope.”  Regarding claims directed to both systems and methods, the panel agreed with prior BPAI decisions that “made it clear that reciting both an apparatus and a method of using that apparatus renders a claim indefinite.”

Here, the CAFC found that the claim was unclear whether it required only a system that allows the user to use the input means or instead required that the user actually use the input means. “Because claim 25 recites both a system and the method for using that system, it does not apprise a person of ordinary skill in the art of its scope, and it is invalid under section 112, paragraph 2.”

Notes:

• This is a very big decision and may lead to invalidation of many claims. A few potential examples:
• A system for performing the method of claim 1.
• A system comprising X and Y, wherein X operates at a high rate of speed.
• The case does not mention product-by-process claims.
• The analysis of indefiniteness here is quite different than the Court used in recently in Fisher-Price v. Graco.  There, indefiniteness required “severe” defects in the claims.
• The court also denied Amazon’s claims for attorney fees because they were not filed in compliance with FRCP Rule 54(d)(2)(B). “[W]e hold that any claim to attorney fees must be processed in compliance with Rule 54(d)(2)(B). No provision in section 285 exempts requests for attorney fees thereunder from compliance with Rule 54(d)(2)(B).”
• Rule 54(d)(2)(B): Unless otherwise provided by statute or order of the court, the motion [for costs and attorney fees] must be filed and served no later than 14 days after entry of judgment;  must specify the judgment and the statute, rule, or other grounds entitling the moving party to the award;  and must state the amount or provide a fair estimate of the amount sought.  If directed by the court, the motion shall also disclose the terms of any agreement with respect to fees to be paid for the services for which claim is made.
• Opinion.

 

Under 102(g), Conception of Prior Art Requires Appreciation of Invention

Invitrogen Corp. v. Clontech Laboratories (Fed. Cir. 2005).

By Donald Zuhn, Ph.D. (Patently-O Guest Author).

In an appeal from a District Court judgment invalidating more than two hundred claims in three Invitrogen patents as being anticipated under § 102(g)(2), the Federal Circuit vacated and remanded, holding that the District Court misapplied the law of appreciation when determining the date of conception for researchers at Columbia University. The Federal Circuit, however, affirmed the District Court's rulings on enablement, written description, and infringement.

The patents at issue relate to a genetically modified version of the enzyme reverse transcriptase, that has use in the field of molecular biology. Naturally-occurring (or unmodified) reverse transcriptase possesses both DNA polymerase and RNase H activities, the former permitting the enzyme to synthesize a DNA copy (cDNA) of a messenger RNA (mRNA) template, and the latter permitting the enzyme to degrade the mRNA template following cDNA synthesis. In contrast, the genetically modified enzyme lacks RNase H activity, and therefore, is unable to degrade the mRNA template following cDNA synthesis, allowing researchers to reuse the mRNA template to create additional cDNA copies..

While neither party disputed the District Court's determination that Invitrogen had reduced a modified reverse transcriptase lacking RNase H activity to practice in January of 1987, Invitrogen did find fault with the lower court's ruling that Drs. Stephen Goff and Naoko Tanese, two researchers at Columbia University, had conceived of such an enzyme before Invitrogen had reduced the enzyme to practice. Drs. Goff and Tanese had begun their work in 1984 by preparing a panel of bacterial mutants having modified reverse transcriptase genes. The panel included two mutants that the Columbia University researchers would later show possess modified reverse transcriptase lacking RNase H activity. However, due to limitations in the assays that Drs. Goff and Tanese were using to measure RNase H activity, they were unable to conclusively establish that any of the mutants possessed modified reverse transcriptase lacking RNase H activity at the time the mutant panel was prepared. In March of 1987, Drs. Goff and Tanese used a new assay that they had developed to finally establish that two of the mutants from their panel possessed the modified enzyme. They were also able to correlate the results obtained with their new assay with their late 1986 sequencing analysis of the mutants.

Following a series of pre-trial motions regarding the issues of conception, enablement, written description, and infringement, the District Court determined, inter alia, that Drs. Goff and Tanese (a) had conceived of a genetically modified reverse transcriptase lacking RNase H activity either in December of 1984 when they had isolated mutants possessing modified reverse transcriptase, or in January of 1986 when they had sequenced the reverse transcriptase genes in these mutants; (b) had actually reduced their invention to practice in March of 1987 when they established that two mutants from their panel possessed modified reverse transcriptase; and (c) were diligent in reducing their invention to practice, and did not abandon, conceal, or suppress it. However, despite these rulings, the District Court refused to find that the work of Drs. Goff and Tanese anticipated Invitrogen's patents under § 102(g)(2), arguing that anticipation posed factual questions requiring resolution on a claim by claim basis.

Stating that conception "require[s] more than unrecognized accidental creation," and instead "requires that the inventor appreciate that which he has invented," the Federal Circuit found that the District Court erred by establishing Drs. Goff and Tanese's conception before January of 1987 and granting partial summary judgment for Clontech. Relying on decisions of its predecessor Court, which "require some connection between the physical result (the invention) and the belief (by the inventor)," the Federal Circuit determined that the record was inconsistent with the District Court's notion that Drs. Goff and Tanese set out to create a modified reverse transcriptase or appreciated in 1984 that their mutant panel contained two mutants possessing modified reverse transcriptase. Rather, the Federal Circuit believed that this case "fit[] squarely within the unrecognized, accidental duplication cases."

However, while the Federal Circuit determined that the evidence excluded both dates of conception proposed by the District Court, the Federal Circuit also found that Dr. Goff's deposition testimony precluded it from finding that the District Court abused its discretion in refusing to grant partial summary judgment for Invitrogen on the issue of conception. In particular, Dr. Goff had testified that he had formed a suspicion in late 1986, based on his difficulties analyzing the mutants, that two of the mutants possessed modified reverse transcriptase lacking RNase H activity. Because a reasonable fact-finder presented with Dr. Goff's testimony could conclude that the evidence preceding the researchers' March 1987 testing might suffice, under the applicable standard, to corroborate Dr. Goff's suspicions about the two mutants, the Federal Circuit vacated the District Court's invalidity judgment and remanded the case for further proceedings.

NOTE: This post was written by patent attorney Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both litigation and prosecution at MBHB LLP in Chicago. ([email protected]).

Phillips v. AWH: Case Petitioned to Supreme Court

Phillips v. AWH (on petition for certiorari)

AWH has petitioned the Supreme Court to take-up this landmark case with the broad question of whether patent claims should be reviewed de novo on appeal.

Question Presented: Whether the Federal Circuit is correct in holding that all aspects of a district court’s patent claim construction may be reviewed de novo on appeal.

This petition picks up where Judge Mayer and Newman’s dissent left off in the en banc Phillips decision. In their dissent, the judges focused their attention on the “futility [and] absurdity” of the de novo rule.  

Now more than ever I am convinced of the futility, indeed the absurdity, of this court’s persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component. Because any attempt to fashion a coherent standard under this regime is pointless, as illustrated by our many failed attempts to do so, I dissent.

Indeed, many believe that the high reversal rate of claim construction is primarily due to the de novo standard.  To that effect, AWH’s petition does not mince words:

Left to its own devices, the Federal Circuit will continue to improperly devote the chief measure of its energy to rejudging the facts of patent claim constructions, rather than to fulfilling its purpose of bringing uniformity to patent law.

A Phillips reply brief will be due shortly.

Notes:

• File Attachment: Petition for Cert.pdf (161 KB)
• Notably, the Brief cites a recent article by Peter Zura, author of the 271 Blog. 
• Phillips v. AWH en banc decision.

CAFC: Claim implied at least two styles.

Microstrategy v. Business Objects (Fed. Cir. 2005)

These companies make business intelligence software.  Microstrategy filed suit against Business Objects alleging both patent infringement and several business tort claims.  The patent at issue involved automatic broadcasting of information to multiple types of subscriber devices and then formatting the output.

Patent Claims: After a Markman hearing, the defendant, Business Objects, was granted summary judgment of non-infringement. On appeal, Microstrategy did not fight the claim construction, but rather the interpretation and application of the claim construction.  The question was whether the claim language of “each user output device . . . be associated with a device-specific style” required at least two different styles.

MicroStrategy argues that this Markman construction and the context of the invention do not require support for more than one type of output device. In particular, MicroStrategy notes that the specification contemplates a system with "one or more" output devices. Thus, MicroStrategy reads the claim and the district court’s Markman construction to permit a system with support for just one type of user device.

The CAFC, disagreed. Because the claim required that “each user output device . . . be associated with a device-specific style,” the Court determined that the claim implicitly required at least two different styles.  Because the defendant only supported one style, the non-infringement decision was affirmed.

The Appellate panel did, however, reverse the lower court’s findings regarding one of the business tort claims under Virginia law.

Court invalidates more Lemelson claims

Symbol Tech. v. Lemelson (Fed. Cir. 2005) (order).

In a recent decision, the Federal Circuit affirmed a finding that Lemelson’s patents were unenforceable due to prosecution laches. Lemelson filed a petition for rehearing.  In an order based on that petition, the CAFC declined the opportunity to rehear the case except by further punishing the long-time patent holder.

Although the district court did not make its resolution of the laches issue applicable to the remaining claims, holding that the question would be decided only if it later became necessary to do so, in our view, the more appropriate course of action is to apply the laches holding to all of the claims in the 14 asserted patents. Lemelson does not provide any persuasive reason why that should not be so.

Link.

Bush Administration Intercedes in BlackBerry Patent Case

NTP v. Research-in-Motion (Fed.Cir. 2005)

In this ongoing patent infringement case involving the Canadian RIM’s BlackBerry system, the U.S. Government has submitted a brief to District Court Judge Spencer.  The brief notes that under Trojan v. Shat-R-Shield, the Federal Government cannot be enjoined against using a patented invention and thus, asks the court to fashion any injunction in such a way to continue to allow the U.S. Government workers to continue to use the BlackBerry.

According to the Government brief, at this point, RIM has no way to distinguish between U.S. Government users and private users. Thus, the Government proposes the following options:

1. Require RIM to create a whitelist of U.S. Government devices and users
2. The Government is in the process of determining how long it would take to provide user names and information to RIM, and thus asked for a 90 day stay in the proceedings to determine whether they believe an injunction would implicate other public interests.

Chief Judge James R. Spencer is a Reagan appointee and Harvard Law graduate.

Other tidbits:

• RIM Decides to Squash the Berries

2nd Circuit Approves Patentee-Generic Reverse Payments

In re: Tamoxifen Citrate Antitrust Litigation (2nd Cir. 2005).

Just in time for the Supreme Court’s decision on certiorari in FTC v. Schering-Plough, the Second Circuit court of appeals has released its decision in the Tamoxifen Citrate case — finding that reverse payments to a generic manufacturer were not sufficient to show a per se violations of the antitrust laws.  In addition, the Court went on to hold that even “excessive reverse payments” might not be unlawful.  The Court did recognize the suspicious nature of reverse payments.

There is something on the face of it that does seem "suspicious" about a patent holder settling patent litigation against a potential generic manufacturer by paying that manufacturer more than either party anticipates the manufacturer would earn by winning the lawsuit and entering the newly competitive market in competition with the patent holder. Why, after all -- viewing the settlement through an antitrust lens -- should the potential competitor be permitted to receive such a windfall at the ultimate expense of drug purchasers? We think, however, that the suspicion abates upon reflection. In such a case, so long as the patent litigation is neither a sham nor otherwise baseless, the patent holder is seeking to arrive at a settlement in order to protect that to which it is presumably entitled: a lawful monopoly over the manufacture and distribution of the patented product.

Dismissal affirmed.

In dissent, Judge Pooler argued the antitrust analysis can be applied to settlements concerning patented products.

The requirement that—unless an antitrust plaintiff demonstrates that a settlement agreement exceeds the scope of the patent—it must show that the settled litigation was a sham, i.e., objectively baseless, before the settlement can be considered an antitrust violation is not soundly grounded in Supreme Court precedent and is insufficiently protective of the consumer interests safeguarded by the Hatch-Waxman Act and the antitrust laws.

Links:

• File Attachment: Opinion (273 KB)
• Patent Barista’s Discussion of Reverse Payments
• Patently-O on Schering-Plough
• Heinze has more 

CAFC: Court's Summary Judgment of Noninfringement "Invaded the Province of the Fact Finder"

Dorel v. Graco (Fed. Cir. 2005).

Dorel sued Graco for infringement of its patents on child car seats with retractable cup holders. Graco won its motion for summary judgment of non-infringement based on the argument that its seats did not include a seat “removably secured to the base.”  The court reasoned that the seat could not be removably secured to the base because there was no separate base.

On appeal, the CAFC reversed, finding that the district court had “invaded the province of the finder of fact . . . in deciding the infringement question.”  Here, the CAFC determined that a question of fact existed because as to whether there was a separate base because the seat portion of Graco’s product could easily be separated (with a screwdriver) into a top and bottom portion that could be termed a seat and a base respectively.

In dissent, Judge Newman took issue the majority’s factual analysis — arguing that no reasonable jurist could find that the base was “removable.”

The Graco carseat is a permanent assembly whose molded parts are permanently screwed together with six "one-way" screws. Upon unscrewing and disassembly, the Graco seat becomes a collection of loose parts, the cup holder incapable of its function of supporting a cup. . . . Removal of the top part of the Graco carseat (for example, to carry the infant into grandma's house), would require removing the upholstery, upending the carseat (requiring removal of the entire assembly from its crash-proof installation), and removing the six unremovable screws with the special tool needed for removing unremovable screws -- and then repeating the operation in reverse upon returning to the car with the top part and its infant cargo. The panel majority's redefinition of the patented invention to cover such a carseat is devoid of support.

 

 

CAFC: Indefiniteness Requires “Severe” Defects in the Claims

Fisher-Price v. Graco (Fed. Cir. 2005) (NOT PRECEDENT).

Fisher-Price holds a patent on a collapsible infant swing and sued Graco for infringement. The primary asserted claim reads as follows:

6. An infant swing comprising:
   an upward extending frame support post;
   a swing arm pivotally coupled to an upper end of said frame support post and extending in a downward direction from said upper end of said frame support post;
   a seat coupled to said swing arm and having an upper seating surface;
   said swing arm and said frame support post defining a reconfigurable swing area there between;
   a shield coupled to said seat and extending upwardly from said seat and disposed between said reconfigurable swing area and said seating area.

After a Markman hearing, the district court found several limitations of the claim indefinite (italicized) and thus invalid.

On appeal, the CAFC explained that a defect in a claim must be “severe” before it will be invalidated as indefinite. Here, the CAFC reversed because the “patent is not complex; it is readily understood by both the expert and layperson [and] the words used in the limitation are simple, with well-known ordinary meanings [that] can be construed without great difficulty, even if, as Graco points out, it is not mentioned in the specification.”

Finally, regarding “said seating area,” Graco argued that the term was indefinite because it had no antecedent basis in the claim.  Although not rejecting the legal basis of this argument, the CAFC found an implied antecedent basis in the term “upper seating surface.” 

CAFC reverses jury finding of invalidity and noninfringement.

Callicrate v. Wadsworth (Fed. Cir. 2005).

Callicrate sued Wadsworth for infringement of its patented bull castration tools. After a trial, a jury found all of the claims anticipated, obvious, and not infringed.  On appeal, the CAFC disregarded the jury verdict and reversed.

Infringement:  The defendant admitted that its devices include all of the claim elements. Based on that admission, the CAFC determined that the jury had “no basis” for finding no infringement and that there is “no reason for a new trial.”  (Although each element was included, the defendant argued that the components were “not connected in the particular manner recited in the claims.  The CAFC does not seem to have addressed that point specifically since the jury instructions asked simply whether “each and every element” of the claim was included).

Enabling Disclosure: Callicarate’s patent claim priority to an earlier patent, but could be invalidated if they were shown to be not fully enabled by the earlier patent.  The district court found that the earlier patent did not contain adequate disclosure to support the claimed mechanism because (1) the only disclosure of the claimed mechanism is in the background section of the earlier patent; (2) the background section contains disparaging remarks about this mechanism; and (3) the patentee distinguished his assembly mechanism from the claimed mechanism during prosecution.

However, the CAFC held that these reasons were insufficient for a finding of a lack of enablement.  First, the background section can be used to enable a claim. Second, disparaging remarks do not make it any less likely that one of ordinary skill in the art would, after reading the background, know how to make and use the invention.

Defendant Challenging Claim Construction: In a cross-appeal, the defendant challenged certain claim construction terms.  However, the CAFC refused to hear that appeal because the defendant had not objected to the district court’s construction and had conceded infringement of the newly challenged element. (note: the CAFC has finally drawn a line for when it will not review claim construction).

Conclusion: Reversed and remanded because jury verdict was against the weight of the evidence.

Supreme Court Shows More Interest In Pharmaceutical-Patent Antitrust Case

FTC v. Schering-Plough (on Petition for Certiorari).

Odds are good that the Supreme Court will hear this high profile case involving antitrust issues surrounding the settlement of generic-pioneer patent cases.  On October 31, the Court asked the USDOJ to provide its stance on the case — a request that is often followed with a grant of certiorari.

It is a bit odd that the High Court asked for the Government’s amicus view on a case where the Government is a party.  Although the FTC is not directly under the control of the Administration, this has the appearance of giving antitrust regulators two bites at the apple. On the other hand, this may expose an interesting split between the FTC and DOJ.

In its petition for certiorari, the FTC presents two questions to the Court:

1. Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.

2. Whether the court of appeals grossly misapplied the pertinent “substantial evidence” standard of review, by summarily rejecting the extensive factual findings of an expert federal agency regarding matters within its purview.

In its supporting brief, the FTC argues that agreements between competitors should not be per se lawful simply because they are within the “potential” reach of a patent claim.

Links:

• Patently-O Article I
• Patently-O Article II
• Patently-O Article III
• File Attachment: FTC Petition for Cert (182 KB)
• FTC petition for Rehearing at the 11th Circuit
• Schering 11th Circuit Decision.pdf
• Patent at issue, No. 4,863,743
• PubPat Amicus Brief to the 11th Circuit [pdf]

ITC Claim Construction Vacated -- Court Unnecessariliy Limited Claim Scope

Sorensen v. ITC (Fed. Cir. 2005)

Sorensen alleged that Mercedes-Benz imports violated its patented injection molded tail lights. and requested that the ITC institute an investigation under 19 USC 1337.  However, after the investigation, the ITC found no infringement based on its interpretation of the claims.

The patent is directed to a multi-layer injection molding with at least two materials having “different characteristics.”  The only difference between the accused layers was that they were different colors, and the ITC found that “different characteristics” must refer to different molecular properties and not to color.  Under this claim construction, it was easy for the ITC to find no infringement.

On appeal, the CAFC reversed because the claim did not exclude color as a basis for differing characteristics, the specification did not so limit the term, and there was no disavowal of scope in the prosecution history.

Summary judgment vacated.

LabCorp v. Metabolite: Supreme Court To Hear Patent Case Questioning Patentability Of Medical Method

Laboratory Corp. of America (LabCorp) v. Metabolite Laboratories (Supreme Court 2005).

The Supreme Court has announced that it will hear LabCorp’s appeal that will again question the scope of patentability in the U.S.  Specifically, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.

The question on review is as follows:

Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

Patent in suit: This case revolves around claim 13 of Metabolite’s U.S. Patent No. 4,940,658

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Thus, the method comprises two steps, (i) assaying a body fluid and (ii) correlating the measure with a mineral deficiency.

LabCorp’s argument: LabCorp argues that claim 13 is invalid for a number of reasons.  Most pointedly, although the claim requires a step of “correlating,” there is no description of how the correlation would take place. According to the petitioner, “[s]uch a vague claim cannot be valid; for if it could be, parties could claim patent monopolies over basic scientific facts rather than any novel inventions.” In addition, the claim arguably fails the written description requirement because “the specification does not describe what a practitioner must do to perform the active ‘correlating’ step.”

Comment: The Supreme Court appears bent on making this case a question of subject matter patentability.  If it takes that course, it will likely answer many of the questions left open by Lundgren and Fisher.  Of course, as a general rule the decisions from the Court raise more questions than they answer.

Declaratory Judgment Jurisdiction: Fourteen Month Time Lag Destroys Apprehension of Imminent Suit

Citizen Electronics v. Osram (D.D.C. 2005)

Osram owns several patents related to multi-color LEDs.  In 2003, Osram and Citizen discussed potential licensing, but the two companies never reached a deal. Osram sued several LED importers in the ITC and in Europe and announced that it “would not tolerate any infringement of its patent rights and would take legal action against unauthorized use.”  However, after 2003, the two companies did not have any direct discussions regarding the patents.

Fourteen months later, Citizen filed suit against Osram asking for a declaratory judgment of invalidity and noninfringement.  Osram challenged the basis for jurisdiction.

The court agreed that Osram’s actions in the other lawsuits did not give rise to any “reasonable apprehension of suit.”

[W]hether OSRAM broadly interpreted its patent rights in a suit against a third party (as opposed to filing the suit) does not provide plaintiff with a reasonable apprehension of suit, since it is mere conjecture to argue that OSRAM would have acted on its interpretation by instituting suit against Citizen.

In addition, the court found that the “nervous state of mind” created by the 2003 communications between the companies “not enough to demonstrate a reasonable apprehension of suit” in January 2005. Specifically, the court noted that there must be a reasonable apprehension of imminent suit, and a fourteen month time lag belies any such apprehension.

Case dismissed with prejudice for lack of subject matter jurisdiction.

Reissue Patent Invalid Because Reissue Was Filed To Correct Procedural Error

Medrad v. Tyco (W.D. Pa 2005).

Medrad sued Tyco for infringement of its patented injection system for use with an MRI.  The patent, RE 37,602, underwent two reissue procedures before being asserted by Medrad. 

Tyco asserts, however, that the reissue patent is invalid because the reissue process was not initiated to correct one of the four statutorily identified errors:

1. Defect in the specification;
2. Defect in the drawing;
3. Error in claiming too much; or
4. Error in claiming too little.

Rather, in this case, the patentee filed the second reissue to correct a mistake made during the prosecution of the original reissue. (The patentee failed to file a supplemental reissue declaration in compliance with PTO Rule 1.175).

The district court agreed with the defendant that Section 251 (Reissue) can only be used to correct an error in the specification, drawings or claims and cannot be used to correct a procedural error that is not reflected in the patent grant itself.

“While we recognize that this holding produces a harsh result — ultimately, plaintiff’s patent is invalidated because it failed to file a supplemental declaration with the PTO — we cannot reconcile plaintiff’s legal argument with the language of section 251, and the controlling case law interpreting it.

Thus, the court found Medrad’s reissue patent invalid because the reissue was filed for a purpose other than that enumerated in the statute.

Comment: This case should serve as a reminder to patent practitioners that the PTO can occasionally be convinced to give you more than what the law allows. If that happens, it is the patentee who pays the ultimate price.

Licensee Lacks Standing; Dismissed With Prejudice

Sicom Systems v. Agilent (Fed. Cir. 2005).

Sicom’s lawsuit was dismissed by the Delaware district court after finding that the plaintiff was not an “effective patentee” and thus lacked standing to sue.

The patent in question uses “eye patterns” for automatic monitoring of signal transmissions.  (Patent).  The patent was originally assigned to the Canadian Government and then licensed to Sicom, a company owned by the inventors. Under the license agreement Sicom had rights to bring “commercial infringement actions.”  However, the district court found that such rights were insufficient to allow a licensee to bring suit because “Canada may still be able to pursue non-commercial customers of Defendants like governmental entities, the military and universities, thereby creating multiple risk of litigation over the same patent, a result which is inconsistent with a genuine exclusive right to sue.”

Generally, a patentee and successors in title have rights to sue for patent infringement as do licensees who receive “all substantial rights under the patent.” Thus, a nonexclusive license confers “no constitutional standing on the licensee to bring suit.”

On appeal, the CAFC agreed that Sicom did not possess all substantial rights under the patent — focusing on Canada’s ability to sue other infringers and Canada’s retention of a right to practice the invention.

Dismissal With Prejudice: Sicom also argued that the lower court’s dismissal with prejudice should be set aside to give Sicom a third chance to establish standing.  However, because the company already had one chance to correct the standing defect, the CAFC affirmed, finding that the district court was within its discretion to dismiss the case with prejudice.

 

CAFC Jurisdiction Set At Filing of Complaint

MedImmune v. Genentech (Fed. Cir. 2005)

MedImmune, a licensee in good standing, filed a declaratory judgment action to challenge the patents validity and enforceability. The district court dismissed the action, without prejudice, finding no “case of actual controversy.” On appeal, the CAFC affirmed holding that a licensee in good standing is not under threat of being sued for patent infringement and thus cannot bring a DJ action. (Citing MedImmune v. Centocor).

MedImmune also had pending antitrust claims and asked that once the Federal Circuit had disposed of all the patent claims, the case be transferred to the Ninth Circuit Court of Appeals.  The CAFC panel disagreed, finding that “the jurisdiction of the Federal Circuit is established by the well-pleaded complaint in the district court, whereupon the Federal Circuit must exercise jurisdiction of all of the issues in the case.”  According to the panel, jurisdiction is determined “at the outset of litigation” and does not change — except when sham charges of patent infringement are brought to manipulate the appeals process.

In dissent, Judge Clevenger argued that the district court’s dismissal without prejudice was “equivalent for jurisdictional purposes to an amendment removing the declaratory judgment claims from the complaint.”  Because no other claims in MedImmune's complaint "arise under" patent law, Clevenger argued that the regional circuit should now have jurisdiction over the case.

Real Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

Because of the “technological arts” requirement, I have always thought the term “business method” to be a misnomer when applied to patents.  Famous business method patents such as Bezos one-click patent and the State Street patent are really directed at software for e-commerce and data processing.

However, when a skilled business person thinks of a method of doing business, their proposal is generally not limited to software or tied to a computer.  I can’t count the number of times that I have explained to a confused business inventor that the PTO would not allow their broad claim because of a form-over-function limitation that a “computer” must be recited in the claim.

Regardless of your stance on patenting of business methods, the “technological arts” rule — requiring simply that a computer be recited somewhere in the claim — was indefensible.  I’m just happy that I will now be able to explain business method patents in terms that business leaders understand.

Links:

• Ex parte Lundgren.(from Patently-O)
• Tim Wall’s APLF article on the old rule.
• Official BPAI Opinion.

Patent Board Eliminates "Technological Arts" Requirement For Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

In a landmark decision, the Board of Patent Appeals and Interferences has issued a precedential opinion eliminating the Patent Office procedure of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”

Our determination is that there is currently no judicially recognized separate "technological arts" test to determine patent eligible subject matter under § 101.  We decline to create one. Therefore, it is apparent that the examiner's rejection can not be sustained. 

This decision will once again expand the role of business method patents by freeing them from being tied to a computer or other electronic device.  At the same time, this decision widens the gap between the US and many other countries who are still debating patentability of software.

It is unclear at this point whether the PTO solicitor will ask the Federal Circuit to review this case.

The Majority Opinion:

Lundgren had claimed a “method of compensating a manager” that involved several steps of calculating a proper compensation based on performance criteria and then transferring payment to the manager. The examiner rejected the claims arguing that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.”

A five member panel reviewed this action, and three signed on to the per curiam majority opinion that found the claim to “produce a useful, concrete, tangible result” without being a “law of nature, physical phenomenon or abstract idea.”  Regarding the PTO “technological arts” test, the majority found that such a test does not exist under the law.

Rejection reversed, there is no judicially recognized "technological arts" test for patentability.

Dissent by Judge Smith:

Judge Smith dissented, arguing that the “technological arts” standard is simply the modern lexical equivalent to the phrase “useful arts” found in the US Constitution. He then argued that Congress does not have power to pass patent laws that expand beyond those “useful arts.”

While I do not question the power of Congress to pass laws to carry out this mandate, whatever law passed by the Congress cannot be applied in such a manner as to enlarge the constitutional mandate.  Thus, any laws passed by the Congress to grant patents should be applied in a manner that is consistent with the constitutional mandate. 

The dissent then implicitly calls for the Federal Circuit to review the case and explicitly calls fro Congress to “step in and clarify the limits of 35 U.S.C. § 101.”

Dissent by Judge Barrett:

In a 78 page dissent, Judge Barrett suggests a new test under section 101 that would require some transformation of physical matter.

Notes:

• The BPAI holds its appeals in secret — and the Ex parte Lundgren opinion is yet to be officially released by the Board.  I published this article on the case after receiving copies of the opinion from reliable sources. Opinion.v1; Opinion.v2.
• Link. Read more about Dr. Lundgren.

CAFC Denies RIM Rehearing (UPDATE)

The big patent news on Friday was that RIM’s petition for a rehearing en banc at the Court of Appeals for the Federal Circuit was denied.  This news was so hot that trading of RIMM on Wall Street was halted for three hours.  (Someone on the Street does not understand odds because the denial was entirely expected.)

RIM has ninety days to file a petition for writ of certiorari with the Supreme Court and line-up any Amicus curiae.  NTP will then have thirty days to respond in opposition.  This time-line easily pushes the Court’s decision on whether to even hear the the case into 2006.  In all likelihood, the Court will decline — thus allowing the case to return to the district court to determine: (1) whether a the “term sheet” was an actual settlement; (2) whether an injunction should issue immediately; and/or (3) how new hearings/trial should proceed on the issues vacated by the August 2005 opinion [pdf]. (see UPDATE below).

In a parallel process, the patents in suit are all undergoing reexamination at the PTO.  Each patent has been initially rejected in a first office action.  However, those initial rejections have yet to be made final.

 UPDATE: I received several comments on my implied conclusion that the district court would not take-on the case until after the Supreme Court came to a conclusion on the petition for cert:

Love your blog. . . . The district court gets jurisdiction back as soon as the Fed Cir mandate issues. . . . The district court can thus act even while RIM is drafting a cert petition and the Supremes are reviewing it.  In most cases, a district court will move forward because the odds of cert are so low.  The district court can, however, stay the case pending Supreme Court review.  If I were NTP, I'd be in Judge Spencer's face right now pushing for action on this case and telling him that the revised Fed Cir opinion makes Supreme Court review highly unlikely.  If I were RIM, I'd be asking for a stay based on the progress of the re-exams, and I'd be citing the Fed Cir's stay of the MercExchange case.

 

Single Embodiment Of Claim Element Fails To Describe Element Generically

LizardTech v. Earth Resource Mapping (Fed. Cir. 2005).

On summary judgment, the district court deemed LizardTech’s patent invalid for failing to meet the written description requirement of 35 USC 112 para 1.  The asserted patents were related to the use of discrete wavelet transform (DWT) to compress digital images.

The specification provides an example method for creating a seamless DWT including the step of “maintain[ing] updated sums” — that procedure is the focus of claim 1.  Claim 21, however, is a broader claim that lacks the “maintains updated sums” limitation.  The specification did not explicitly describe a method that did not include that limitation. (Although claim 21 was included in the original disclosure)

On appeal, the CAFC paid lip service to the rule that a claim will not be invalidated under Section 112 for only disclosing a single embodiment.  However, the court went on to determine that claim 21 was directed at “all seamless DWT’s” — a coverage not adequately supported by the single embodiment.

After reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by "maintaining updating sums of DWT coefficients."

[A] patentee cannot always satisfy the requirements of section 112, in supporting expansive claim language, merely by clearly describing one embodiment of the thing claimed.

As noted by David Long, this case is a “must read for those addressing written description (or enablement) issues.

Comments:

• I see this as a quite odd decision.  First, although claim 21 arguably covers either “seamless DWT” or  “non-seamless DWT,” such a result is explicitly claimed.  The CAFC did not point to any element of claim 21 that was not sufficiently described.  Rather, the court found the claim invalid because an an embodiment arguably covered by the claim (seamless DWT) was not sufficiently described. 
• A fellow patent attorney and Patently-O reader e-mailed this morning with a different take:

Section 112 requires that the patentee have both possession of the invention and an enabling disclosure. In this case, the Court found that because the patentee had only described (and apart from claim 21) claimed the one embodiment that required "maintaining updating sums of DWT coefficients" this shows that the method including this element was really the scope of what the patentee considered their invention. That is, the patentee didn't think they had invented a more generic way of creating a seamless DWT that did not include that element.

The Court went on to say that any such generic method is also not enabled -- first because it is not described in the specification and second because it is not within the ability of one of ordinary skill to practice without undue experimentation. As the Court noted, both these requirements usually rise or fall together. The last paragraph of the opinion makes clear, however, that even assuming that patentee had possession of this invention (by virtue of claim 21 being part of the original application) the claim is still not enabled. That is, even if one of ordinary skill in the art read claim 21 and recognized that it covered a generic method of creating a seamless DWT, that person still would not have been able to come up with the generic method (i.e., one not using the updating sums element) without undue experimentation. Therefore, the claim doesn't satisfy the requirements of 112.

Thus, after this case (and as was the case, no pun intended, before LizardTech) one is free to describe one or more embodiments in the application and draft claims that cover other broader embodiments that are not described in the application. Those broader claims will be valid provided that the patentee had possession of those broader embodiments and the broader embodiments are enabled. Presumably they would be enabled because, even though not described in the application, they would still be within the ability of one of ordinary skill in the art to practice without undue experimentation.

• The lesson for prosecutors is that broad claims will generally require multiple embodiments of each element. Specifically, if you claim A+B+C+D, do not expect that you can claim A+B+C without adequately disclosing that D is not necessary or that D can take alternative forms.
• Philip Mann of IP Litigation Law Blog was counsel for LizardTech.

Documents:

• Read the case.
• Read the patent.
• Link: LizardTech Opening Brief.
• Link: Earth Resource Response.
• Link: LizardTech Reply.

Solicitor General to Opine on Landmark Obviousness Case

KSR International v. Teleflex (On Petition for Certiorari).

KSR is challenging the Federal Circuit’s “teaching-suggestion-motivation test” for determining whether two references can be combined in an obviousness rejection.  This test has been a stalwart of Federal Circuit jurisprudence for twenty years.  During that time, however, the Supreme Court has not heard a single obviousness case. 

The case is now on petition for certiorari at the Supreme Court — awaiting the High Court’s decision on whether to hear the case.  Signaling at least a tepid interest in the case, on October 3, 2005, the Court has asked the Solicitor General to file a brief expressing the views of the US Government.  The new Chief Justice (Roberts) took no part in the decision.

At this point, it is likely that the Court will follow the Solicitor General’s recommendations — although it is still unclear what those recommendations will be.

Support for the petition: Respected law professor John Duffy is an attorney of record on the KSR brief, which argues that the CAFC’s obviousness test goes against Supreme Court precedent, against precedent of other circuits, and is bad policy. Professor Duffy is a former clerk of Justice Scalia.

A consortium of five major corporations, including Microsoft, Cisco, and Hallmark have filed as amicus supporting the petition.  Their brief argues that the current structured test for obviousness is too easy a hurdle for patentees and that the formalities of the test undermines courts ability to truly determine whether an invention is obvious to one skilled in the art.

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
• Amicus Briefs
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Prior Discussion of the CAFC decision;
• Patently-O Prior Discussion of Law Professors Brief.

CAFC Finds Liability For Export of Catalyst Used in Patented Process Abroad

Union Carbide v. Shell Oil (Fed. Cir. 2005).

A jury found that Shell infringed Union Carbide’s patented process for producing Ethylene Oxide.  However, the court did not allow Union Carbide to collect damages for Shell’s foreign sales under 35 U.S.C. 271(f) because the statute is “not directed to process claims.”

On appeal, the CAFC reversed the district court and reaffirmed the recent Eolas decision that 271(f) is directed to “every component of every form of invention” and that the statute is “not limited to physical machines.”

Thus, the court found that Shell’s exportation of a catalyst used abroad to facilitate the patented process constituted infringement under the law. Remanded for a new determination of damages.

Links:

• Union Carbide v. Shell.pdf (119 KB)
• 271(f) Under Eolas v. Microsoft
• 271(f) Under RIM v. NTP
• 271(f) Under AT&T v. Microsoft
• 271(f) Under Pellegrini v. Analog Devices
• Shell’s Amicus Brief in Eolas

Means-Plus-Function: Identification of Function and Corresponding Structure Reviewed De Novo

JVW Enterprises v. Interact Accessories (Fed. Cir. 2005).

In a case involving a video game controller, the appeals court reversed-in-part, finding that the lower court had misconstrued the means-plus-function limitation.

De Novo: Like other claim construction, the interpretation of means-plus-function language is reviewed de novo.  More particularly, identification of the function and corresponding structure is reviewed de novo.

In this case, the CAFC found that the district court’s opinion “confuses function with structure.”  According to the appellate panel, “function must be determined before corresponding structure can be identified.” 

Function as claimed: The function of a means-plus-function claim is found in the claim language.  In this case, the district court erred in interpreting unclaimed functions into the claims. 

Structure as described: The corresponding structure of a claimed function must be found in the specification — and must be clearly associated with performance of the function.

The CAFC reversed and remanded based on consequences of the err in claim construction.

Means Plus Function Disavowal of Equivalents?

Cross Medical v. Medtronic (Fed. Cir. 2005).

After an award of summary judgment of infringement, the Central District of California District Court issued a permanent injunction against Medtronic’s use of Cross’s patented spinal implants.  After determining that it had jurisdiction, the CAFC reversed the claim construction and remanded for a new determination of infringement based on the corrected construction.

Jurisdiction: Cross argued that, the injunction had no coercive effect because had Medtronic pulled its products from the market prior to the injunction, and thus, that there was no jurisdiction for an appeal.  The CAFC disagreed, highlighting their clear rule that: “if the district court’s order expressly grants an injunction, the order is appealable under § 1292(a)(1), without regard to whether the appellant is able to demonstrate serious or irreparable consequences.”

Claim Construction: The appellate panel began its claim construction analysis by referring to Webster’s definition of an “interface.” This was permissible under Phillips because the dictionary definition did not “contradict any definition found in or ascertained by a reading of the patent documents. Using the new definition, the CAFC modified the district court’s construction.

Means Plus Function: In an office action, the applicant referred to the claimed “securing means” as “i.e., the nut.”  Despite this reference to the a specific securing structure, the CAFC found that there had been no disavowal of scope in the means plus function element.  In dicta, the court noted that it had not decided whether there could ever be “a disavowal of § 112, ¶ 6 equivalents.”

The court then conducted a thorough analysis of infringement and validity, eventually vacating the summary judgment and remanding for further proceedings.

Download the case.

On Sale Bar Invalidates DNA Probe Patent

Enzo Biochem v. Gen-Probe (Fed. Cir. 2005).

At the district court, Enzo’s patent, covering DNA probes for hybrodizing N. gonorrhoeae, was held invalid under the on sale bar. Specifically, the district court found that the claimed invention had been offered for sale before the critical date — more than one year before the patent application was filed.

In June 1982/83, Enzo and Ortho Diagnostics entered into a joint research that specifically focused on the gonorrhea probe. In 1984 Enzo supplied Ortho a probe like that claimed.  However, it was not until 1986 that Enzo filed its patent application.  The district court found the transfer to be an invalidating sale and awarded summary judgment of invalidity.

On appeal, the CAFC reviewed the two prong Pfaff test for application of the on sale bar:

1. Subject to a commercial offer for sale; and
2. Invention ready for patenting.

Offer for sale: Taking the two elements in turn, the appellate panel first found that the research agreement “created the necessary contractual obligations” to be considered a commercial offer for sale. Specifically, the court pointed to the following language in the agreement:

ENZO shall supply to ORTHO and ORTHO shall purchase from ENZO for use in Licensed Products no less than ninety percent (90%) of ORTHO’s United States requirements or seventy-five percent (75%) of ORTHO’s worldwide requirements of Active Ingredients. . . .

Ready for Patenting: Because the invention had been reduced to practice and its utility as a gonorrhea probe had been recognized, the court also determined that the invention was “ready for patenting.”

Method Claim: The CAFC found that the method claims were put “on sale” by including instructions for use with the probe.

Summary judgment of invalidity affirmed.

Eolas v. Microsoft: Eolas Patent Set to Reissue

Eolas v. Microsoft (Reexamination at the PTO).

Microsoft’s appeal of this case is currently pending before the Supreme Court. In a parallel action, however the Eolas patent has been undergoing reexamination at the USPTO. 

As occurs in almost all inter partes and director-ordered reexaminations, the patent office issued a non-final rejection to Eolas.  Although this first rejection was a good sign for Microsoft, on September 27, 2005, the patent office indicated that it was filing a “Notice of Intent to Issue a Reexam Certificate” for patent number 5,838,906. 

This means that the PTO has decided, for a second time, that the ‘906 patent is valid. 

Links:

• USPTO’s Docket Report (Live)
• Preview of reexamination
• File Attachment: Eolas Reasons for Patentability.pdf (2845 KB)
• IP Law Bulletin Article (subscription req’d)

U.S. Philips CD Patent Pool Given Green Light by Court of Appeals

U.S. Philips v. International Trade Commission (Fed. Cir. 2005)

Philips owns patents on recordable compact discs including CD-R and CD-RW technology and offers licenses to various manufacturers in pools of “essential” and “nonessential. Several foreign manufacturers refused to pay and, upon Philips request, the ITC initiated an investigation.

During the investigation, the ITC administrative law judge found that the manufacturers infringed the claims of the asserted Philips patents but rules the patents unenforceable for patent misuse.  Specifically, the judge ruled that the pooling arrangement constituted misuse because some of the “essential” patents were actually not essential. 

Among the grounds invoked by the administrative law judge for finding patent misuse was his conclusion that the package licensing arrangements constituted tying arrangements that were illegal under analogous antitrust law principles and thus rendered the subject patents unenforceable.

In Philips first appeal, the Commission affirmed the judge’s ruling, concluding that nonessential patents were impermissibly tied to essential patents because "none of the so-called essential patents could be licensed individually for the manufacture of CD-RWs and CD-Rs apart from the [essential] package."

Court of Appeals for the Federal Circuit, however, reversed, finding that the license pool was not patent misuse even if some of the pooled patents were nonessential.

[T]he Commission erred when it characterized the package license agreements as a way of forcing the intervenors to license technology that they did not want in order to obtain patent rights that they did.

The CAFC’s decision relied on the theory that it would be “entirely rational” for a patentee who has an “essential” patent to “charge what the market will bear for the essential patent and to offer the others for free.”

Thus, the CAFC held that that the Commission's application of both  per se and rule-of-reason analyses to the package license agreement to be legally flawed.

REVERSED AND REMANDED

• File Attachment: Philips v. ITC.pdf (150 KB)
• Commentary by Professor Shubha Ghosh

Jury must be presented with a structural analysis of means+function elements

CytoLogix v. Ventana (Fed. Cir. 2005).

CytoLogix sued Ventana for infringement of its patents covering an automated microscopic slide stainer.  The case went to trial and the jury found that the patent was not invalid and that Ventana infringed.

The district court entered a permanent injunction but did not yet reach the issue of damages.

Final Judgment: As a preliminary matter, the CAFC determined that it had jurisdiction to hear an appeal even though the court had not entered a final judgment with respect to liability damages.  Specifically, the court held that it had jurisdiction over the interlocutory appeal because Ventana was appealing a permanent injunction order.

Means+Function: The CAFC overruled the jury’s verdict on claim 13 — a means plus function claim.  The appellate court ruled that CytoLogix had failed to present “substantial evidence” of infringement of the means plus function claim because it did not construct a specific structural analysis of that claim.

To establish infringement under § 112, ¶ 6, it is insufficient for the patent holder to present testimony “based only on a functional, not a structural, analysis.”  Here, CytoLogix failed to identify the structure in the specification that is the “temperature controller means” and compare it to the structure of the accused device. Accordingly, because CytoLogix failed to present substantial evidence of infringement of claim 13 of the ’693 patent, the jury verdict of infringement of claim 13 must be reversed.

 

Assignor Estoppel: Inventor barred from testifying for defense

Pandrol v. Airboss Railway (Fed. Cir. 2005).

Pandrol sued Airboss for infringement of its RR track fastening system that resists erosion.  On summary judgment, the district court found that the patent description was “adequate to satisfy the written description requirement.”  In addition, the lower court barred one of the inventors from testifying for the defense.

Written Description: Section 112 of the patent act requires “sufficient information in the specification to show that the inventor possessed the invention at the time of that original disclosure.”  On appeal, the CAFC affirmed, finding that the claims (as construed) were sufficiently supported.

Assignor Estoppel: In addition, the CAFC reviewed the district court’s exclusion of one of the inventor’s testimony under the doctrine of assignor estoppel.  The judicial doctrine of assignor estoppel prevents the assignor of a patent from later contending that the patent is invalid.

In this case, the defendant wanted to have one of the inventors testify that the patent was invalid — a request denied by the district court. 

On appeal, the CAFC agreed that the court had correctly excluded the inventor’s testimony because it would be “unfair” to allow the inventor to testify against the patent.

File Attachment: 04-1069.pdf (83 KB)

 

Nystrom v. Trex: Take Two

Nystrom v. Trex Co. (Fed. Cir. 2005). This summer's Phillips v. AWH decision shifted the focus of claim construction from extrinsic evidence (e.g. dictionaries) to the patent specification. After agreeing to rehear the Nystrom v. Trex appeal to address the effects of Phillips, a Federal Circuit panel (Mayer, Gajarsa, and Linn) has withdrawn its June 28, 2004 opinion (in which Gajarsa had dissented) and has substituted a new unanimous opinion that reaches a different claim construction, resulting in a different case outcome.

Nystrom’s patent related to a design for deck boards that are shaped to shed water. The main claim construction issue related to whether the claim term “board” was limited to boards made of “wood cut from a log” or whether a broader dictionary definition (e.g. “a flat piece of wood or similarly rigid material adapted for special use”) would apply.  In its pre-Phillips opinion, the panel relied on the dictionary definition and claim differentiation (a dependent claim specifically called for “wood cut from a log,” while broader claims did not) to determine that “board” was to be construed broadly.

In its post-Phillips opinion, the same panel noted that Nystrom’s specification and the prosecution history consistently described boards made of wood cut from a log.  The panel dismissed claim differentiation as a basis for its previous broad construction: "[d]ifferent terms or phrases in separate claims may be construed to cover the same subject matter where the written description and prosecution history indicate that such a reading of the terms or phrases is proper.” Regarding the broad dictionary definition previously relied on, the panel noted:

What Phillips now counsels is that in the absence of something in the written description and/or prosecution history to provide explicit or implicit notice to the public – i.e., those of ordinary skill in the art – that the inventor intended a disputed term to cover more than the ordinary and customary meaning revealed by the context of the intrinsic record, it is improper to read the term to encompass a broader definition simply because it may be found in a dictionary, treatise, or other extrinsic source.

Importantly, there was no clear disavowal of claim scope in this case – Phillips doesn’t require as much – but nothing in the intrinsic record supported a construction broader than “wood cut from a log.”

Marcus Thymian is still a Minnesota Vikings fan and has been involved with several recent litigations in which claim construction turned on intrinsic extrinsic.  He is a partner at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago.  [Marcus Thymian's Bio]

Microsoft Asks Supreme Court to Hear $500 Million Eolas Appeal

Microsoft v. Eolas (on petition for certiorari).

At trial, Eolas won a half-billion dollar judgment against Microsoft after the jury found that Microsoft’s Internet Explorer violated an Eolas patent.  On appeal at the Federal Circuit, Microsoft won a new trial on several issues, but lost a major legal contention that allows Eolas to obtain extraterritorial damages under Section 271(f) of the Patent Act. 

Now, Microsoft has asked the Supreme Court to determine whether the Federal Circuit erred in determining that software code can qualify as a “component” of a patented invention under 271(f).

Question Presented: Whether 35 U.S.C. 271(f) — which imposes infringement liability on one who “supplies” “components” of a patented invention from the United States for “combination” abroad — is satisfied if no physical parts are suppled from the U.S. and all that is supplied is software code that foreign computer manufacturers use to program computers that are made and sold outside the U.S.?

Microsoft’s brief in support of the petition outlines jumbled nature of CAFC precedent on this point — Specifically noting cases such as:

• Deepsouth (“these acts of Congress do not, and were not intended to, operate beyond the limits of the United States”);
• Pellegrini (shipment of design instructions do not qualify under 271(f));
• Bayer v. Housey (271(g) limited “component” to physical products);
• NTP v. RIM ("it is difficult to conceive of how one might supply or cause to be supplied all or a substantial portion of the steps of a patented method in the sense contemplated by the phrase 'components of a patented invention' in section 271(f)").

Documents:

• File Attachment: Microsoft Petition for Cert.pdf (856 KB)
• Expanding Reach of U.S. Patent Laws
• Eolas v. Microsoft CAFC Decision
• Pellegrini case

Biagro v. Grow More (Fed. Cir. 2005).

Biagro v. Grow More (Fed. Cir. 2005).

Claim Construction: In a step-back from recent claim construction holdings, the Court of Appeals for the Federal Circuit held that an “attorney’s statements” made during prosecution “do not alter the ordinary meaning of the claim language.”

Biagro’s patents relate to a phosphorus-based fertilizer for plants.  Representative claim 1 requires a “phosphorous-containing acid or salt . . . in an amount of about 30 to about 40 weight percent.”

Grow More’s product contains phosphorous, but the final product does not contain any phosphorous acid (although it is created using phosphorous acids).  Biagro argued that the claims should be interpreted as requiring the “chemical equivalent” rather than actually requiring an acid in the final product.  Biagro also pointed to the prosecution history where the attorney had pointed to the phosphorous acid in two examples — when in fact those examples only included chemical equivalent amounts of phosphorous acid. The CAFC found Biagro’s arguments unappealing and affirmed the district court’s construction and dismissal.

Doctrine of Equivalents: Biagro had amended the claims during prosecution to include the “phosphorous acid,” but contended that Festo should not apply.  The CAFC disagreed:

Burden: Even at summary judgment, the patentee has the burden of showing that it can overcome the Festo presumption associated with a narrowing amendment.

Reason for the Amendment Merely Tangential: A narrowing amendment made when were claims were rejected but done without any discernible reason is presumed to be made for a patentable reason, and not for a reason merely tangential to the equivalent.

The prosecution history revealed no reason for the amendment, and therefore Festo could not show that the rationale underlying the amendment was only tangential to the accused nonmagnetizable equivalent. Similarly, in this case, since the prosecution history shows no reason for adding an upper limit to the concentration range, Biagro cannot claim that the rationale for the amendment is merely tangential.

Other Reason: The court rejected the Biagro’s reasoning that the patentee had believed the claims meant “chemical equivalent” when, in fact, they did not.

Summary judgment of noninfringement affirmed.

 

 

Appeals Court Affirms Unenforceability of Lemelson's Patents Due to Prosecution Laches

Symbol v. Lemelson (Fed. Cir. 2005).

Lemelson’s patents have priority dates of 1954 and 1956, but through skillful use of the patent rules, several patents have still not expired. 

In an infringement suit against Symbol, the district court found that the patents were unenforceable under the doctrine of prosecution laches — holding that the “18 to 39 year delay in filing and prosecuting the asserted claims . . . was unreasonable and unjustified.”

On appeal, the Court of Appeals for the Federal Circuit affirmed, finding that the lower court did not abuse its discretion in holding the patents unenforceable.

The court listed several “legitimate grounds” for filing a continuation in a patent:

• Filing a divisional application in response to a restriction requirement (even if you defer filing the divisional until just before the parent issues);
• Refiling rejected claims in order to present newly found evidence of unexpected advantage;
• Filing a continuation to support broader claims; and
• Refiling for other reasons that are “not unduly successive or repetitive.”

However, the panel found that refiling an application solely containing previously-allowed claims for the business purpose of delaying their issuance can be considered an abuse of the patent system — and can constitute laches.

The court was careful to note that a single delay in one particular application would not merit the extraordinary relief of unenforceability. However, a history of a series of delay may trigger laches. “Patent applications should normally be permitted to issue when they have been allowed and the statutory requirements complied with.”

Comment:

• Important inventions generally involve at least one continuation application — when filing a continuation, the attorney should consider whether it is justified under one of the listed legitimate grounds.
• Because of the 1995 change in the law, this issue is becoming largely moot. Now patents have a 20–year term from the filing date rather than the old 17–years from issuance. 

 Links:

• File Attachment: Symbol Lemelson.pdf (55 KB)
• Transcript of the appeal hearing

Doctrine of Equivalents: Expert Testimony Must Include Limitation-by-Limitation Analysis

Network Commerce v. Microsoft (Fed. Cir. 2005).

Network Commerce sued Microsoft for infringement of its e-commerce patent relating to the purchase of downloadable electronic content.  The district court awarded summary judgment to Microsoft, finding that the company did not infringe either literally or under the doctrine of equivalents (DOE).

Specifically, the lower court found that Network Commerce’s extension of the patent to include Microsoft’s metafile downloads would vitiate the claim requirement that the download an executable file or program.

On appeal, the CAFC did not reach the vitiation requirement.  Rather, the appellate panel found that even the basic requirements of element-by-element equivalents had not been sufficiently shown by the plaintiff because the expert declaration did not provide sufficiently specific testimony to prove a limitation-by-limitation analysis.

The expert declaration and other evidence relied on by Network Commerce supporting infringement by equivalents are generalized and do not provide particularized testimony and linking argument on a limitation-by-limitation basis. For this reason the evidence did not raise a genuine issue of material fact. Summary judgment of non-infringement under the doctrine of equivalents regarding metafiles was therefore proper.

Summary Judgment Affirmed

Decision.

Government Secrecy Request Stalls IP Case.

Crater Corp v. Lucent (Fed. Cir. 2005).

Crater holds a patent on a coupling device that operates underwater.  In a suit involving trade secret violations, the district court determined that the Government’s assertion of “Military and State Secret privilege” made it impossible for Crater to engage in discovery or to make out a prima facie case.  The court therefore dismissed the claims.

On appeal, the CAFC found that the lower court correctly sustained the government’s assertion of the state secret privilege, but erred in dismissing the case.

For the state secret privilege to be properly asserted, “the head of the pertinent government department must formally invoke the privilege on behalf of the government. Then, after reviewing the declarations of government officials and the circumstances surrounding invocation of the privilege, the court must determine whether assertion of the privilege is appropriate.”

After reviewing confidential documents submitted by the Government, the CAFC concluded that the Government had claimed a legitimate state secret.  Although the appellate panel recognized that proper resolution of the issues would be difficult in light of the state secret restriction on discovery, the court ordered that the facts of Crater’s claims must be further developed before making a determination of whether those claims should be dismissed.

In dissent, Judge Newman argued Crater should be given access to the Government documents and that the case should proceed in camera.

This case does not raise the constitutional debate about public trials; this is a commercial dispute, of interest only to the parties. It seems clear that the court's requested remand cannot be implemented without risk of violating the secrecy order, with possible penalty. This is the third judicial cycle of this simple dispute. We should remand this case for in camera proceedings that would protect the information from public disclosure, and allow this dispute to come to closure. Trials in camera of issues subject to secrecy restraints are not new, and such trial would be the appropriate procedure in this case.

Decision.

IP Issues in the Supreme Court Calendar

Noted attorney and author Hal Wegner has released his first review of IP cases for the October 2005 term of the Supreme Court.  Of the seven cases reviewed, two are awaiting oral argument (Unitherm and Illinois Tool); four are awaiting a certiorari decision (Schering-Plough, KSR, Lab. Corp. and eBay); and one is still before the CAFC (RIM v. NTP).

1) Unitherm v. Swift Eckrich: Appellate procedure question of when a court of appeals may overturn a civil jury verdict. Argument scheduled for November 2, 2005.

2) Illinois Tool Works v. Independent Ink: Question of whether a patent creates a rebuttable presumption of market power in a Sherman Act tying case. Argument scheduled for November 29, 2005.

3) FTC v. Schering-Plough: Whether pioneer-generic settlement duopoly settlement agreements are permissible when agreement falls within the scope of the patent. On petition for cert. Odds of being heard are good.

4) KSR v. Teleflex: Whether teaching-suggestion-motivation test for obviousness should be changed.  On petition for cert.  Odds of being heard are OK.

5) Lab. Corp. v. Metabolite: Whether a medical diagnosis method patent is invalid as non-patentable subject matter under Diamond v. Diehr, 450 U.S. 175, 185 (1981). On petition for cert. Odds of being heard are low.

6) eBay v. MercExchange: Whether the current de facto rule of an injunction always resulting from a finding of infringement and validity should be changed.  On petition for cert. Odds of being heard are low — although this is a volatile issue.

7) NTP v. Research in Motion: Extraterritorial reach of U.S. patent law.  Last fall, the court denied Pellegrini’s petition for certiorari in a somewhat similar case.  These issues will be heard by the Court in some case within the next two years.

Document:

• Wegner, Seven IP Cases on the RADAR Screen for the October 2005 Term of the Court (44 KB).

Lexmark: Patentee May Include Conditions on Aftermarket Activities

Arizona Cartridge Remanufacturers Assn. v. Lexmark Int’l. (9th Cir. 2005).

ACRA sued Lexmark for unfair business practices based on Lexmark’s “prebate” program that allows customers to receive $30 off the price of a printer cartridge if they agree to return the empty cartridge to Lexmark — rather than allowing a third-party remanufacturer to refill the cartridge. ACRA argued that this practice was a restriction on alienability that should be barred.

The district court granted summary judgment in Lexmark’s favor, finding that the restriction on further use was a valid agreement and that Lexmark’s statements about the pricing were accurate.

On appeal, the 9th Circuit found that the post-sale restriction was allowable because the product was patented. (citing Monsanto v. McFarling).  Post sale conditions are generally allowed if the good is “reasonably within the patent grant.”  The EFF filed a brief in the case that was largely ignored. 

DDC Commentary:

1. For me, the interesting part of this opinion is that restrictions on alienation (resale/repair) of consumer goods are generally not enforceable unless the good in question is patented.
2. In the wake of this and other cases, pundits are predicting that we will be seeing more “shrink-wrap” licenses restricting repair and modification attached to products that might need repair or modification.
3. If you plan to take such an action, be sure that your product is patented. (Query — will a design patent be sufficient?)

Links to Further Commentary:

• Link: Fred von Lohmann at EFF
• Link: Donna Wentworth at Copyfight/EFF
• Link: Cathy Kirkman at Wilson Sonsini
• Link: Professor Michael Madison at Pitt
• Link: Professor Mark McKenna at St. Louis
• Link: Legal Blog Watch (Lauren Gelman) on Lisa Stone’s blog
• Link: Lexmark Press Release

Documents:

• Lexmark Decision

 

11th Circuit Allows Case Asserting Anticompetitive Pioneer/Generic Patent Settlement

Andrx Pharma v. Elan (11th Cir. 2005)

Andrx sued Elan for antitrust violations based on Elan’s enforcement of its patent and settlement agreement. The district court dismissed the case on the pleadings, finding that (i) Noerr-Pennington immunized Elan for its patent infringement litigation and (ii) Elan’s settlement agreements did not support an antitrust action.

On appeal, the Eleventh Circuit affirmed in part and reversed in part.

Noerr-Pennington: The appellate panel agreed that Noerr-Pennington “shields a defendant from antitrust liability for resorting to litigation to obtain from a court an anticompetitive outcome.” The primary exception to the doctrine arises when the litigation is a “sham.”  In this case, it was clear that the litigation was “objectively baseless” and thus did not fall within the exception. (Elan had won a CAFC appeal).

Settlement Agreements: Andrx asserted that settlement agreements signed by Elan to terminate patent litigation were anticompetitive.  Under the recent case of Schering-Plough v. FTC, the three elements are required to prevail on a Section 1 Sherman Act action: “(1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects” in the relevant market.

The appellate panel found that Andrx should at least pass the pleading stage because the complaint demonstrated that (1) the patent was necessary for the sale of controlled release naproxen; (2) the license agreement was structured to “effectively bar any generic competitors from entering the market;” and (3) if true, this dynamic would have an anticompetitive effect on the market.

Under Section 2 of the Sherman Act, the Panel found that Andrx had properly alleged specific intent to monopolize and preserve a monopoly in the controlled release naproxen market.  That pleading, according to the court, was sufficient to overcome a 12(b)(6) motion.

Link: The Supreme Court has been petitioned to hear the Schering-Plough case. If that hearing comes about, Andrx v. Elan may see a new appeal.

File Attachment: Andrx v. Elan.pdf (96 KB)

Interference only declared once examination is complete

Westbrook v. Gray, 75 U.S.P.Q.2d 1607 (BPAI) (UNPUBLISHED).

In a short decision, the Patent Board confirmed that “examination must be complete in an application before an interference involving that application is initiated.”

Applicant Gray filed a petition with the Board asking for guidance as to whether it should file a motion suggesting the declaration of an interference. Finding that examination of the application had not been completed, the Board held that an interference would be premature.

Under MPEP 2301.01, before a claim should be “considered as the basis for the count of an interference, the claim should be allowable and in good form.”