Patent Law Blog (Patently-O)

Damages: Federal Circuit Again Demands More Substance from Damages Experts

ResQNet.com and Jeffrey Kaplan v. Lansa, Inc. (Fed. Cir. 2010)

The district court held that one of ResQNet’s patents was infringed and awarded $500k in past damages based on a 12.5% royalty rate. The court denied the patentee’s requested permanent injunction but instead ordered an ongoing license at the 12.5% royalty rate. The court also awarded sanctions against ResQNet’s counsel for failing to withdraw patents from suit that were clearly not infringed.

On appeal, the Federal Circuit took issue with the damages calculation — holding that the lower court had “relied on speculative and unreliable evidence divorced from proof of economic harm linked to the claimed invention.” 

This appellate decision should be seen as an extension of the Federal Circuit’s 2009 Lucent v. Gateway decision.  The issue of sufficiency of expert testimony on damages has been brewing for some time. I remember sitting near Judge Rader (one of the authors of this opinion) and both of us listening to Northern District of California Judge Ron Whyte refer to economic damages experts as the “most intellectually dishonest witnesses” that testify in his court.

Hypothesize Rather than Speculate: The statutory minimum damages for patent infringement is a “reasonable royalty.” That calculation typically involves a “hypothetical negotiation” in an attempt to calculate the rate at which the patentee would have licensed the patent to the infringer prior to the infringement.  Although the hypothetical negotiation is always involves guesswork, here the Federal Circuit reiterated the koan that the guesses must be based on evidence: “a reasonable royalty analysis requires a court to hypothesize, not to speculate.” Everyone understands that the arguments must have some evidentiary basis. Here, the real question was the type of evidence that can be applicable.  In particular, the appellate court held that the only relevant evidence is evidence related to “compensation for the economic harm caused by infringement of the claimed invention.”

Past Royalty Rate Must be Tied to Invention: The first problem with ResQNet’s evidence was that it presented past ResQNet license rates that were not bare patent licenses.  Addressing a similar issue, the CAFC wrote in its 2009 Lucent decision that a reasonable royalty damage award “cannot stand solely on evidence which amounts to little more than a recitation of royalty numbers, one of which is arguably in the ball-park of the jury’s award, particularly when it is doubtful that the technology of those license agreements is in any way similar to the technology being litigated here.”  Lucent.  According to the appellate panel, ResQNet’s expert witness Dr. Jesse David “used licenses with no relationship to the claimed invention to drive the royalty rate up to unjustified double-digit levels.”  The court indicated that experts need even more credible justification when the proposed royalty rate is much higher than might be expected.

Although the discredited prior licenses used by Dr. David were ResQNet licenses, those licenses were directed to the software code and re-branding rights but apparently did not specifically mention the patent number in suit and the evidence did not tie the licenses directly to the claimed invention. The appellate panel rejected these licenses as irrelevant to estimating royalty rate for the infringed patent: “In simple terms, the ’075 patent deals with a method of communicating between host computers and remote terminals—not training, marketing, and customer support services. The re-bundling licenses simply have no place in this case.”

The defendant Lansa did not offer any expert testimony on damages to counter Dr. David.  However, that failure does not remove the patentee’s burden to properly prove its damages. “As a matter of simple procedure, Lansa had no obligation to rebut until ResQNet met its burden with reliable and sufficient evidence.”

Judge Newman writing in dissent argued that the appellate panel over-stepped its bounds:

This is not a case of constructing, and applying, a royalty rate from totally unrelated content; it is simply a case of determining the evidentiary value of the infringed subject matter by looking at the various licenses involving that subject matter, and allocating their proportional value, with the assistance of undisputed expert testimony.

In the district court, ResQNet’s damages expert Dr. David, a qualified economist with experience in the field, followed the traditional application of the Georgia-Pacific factors, analyzing the impact of all of these factors in an extensive Expert Report and in testimony at trial. He was subject to examination and cross-examination in the district court, and the district court provided a full and reasoned analysis of the evidence. No flaw in this reasoning has been assigned by my colleagues, who, instead, create a new rule whereby no licenses involving the patented technology can be considered, in determining the value of the infringement, if the patents themselves are not directly licensed or if the licenses include subject matter in addition to that which was infringed by the defendant here. In this case, the added subject matter was usually the software code that implements the patented method, as the district court recognized, and whose contribution to the value of the license was evaluated by the damages expert and discussed by the court. My colleagues’ ruling today that none of that information is relevant to the assessment of damages is unprecedented, and incorrect.

Judge Newman was a member of the Lucent panel and argues that the majority decision here is “distorting the principles” of that case.

Ongoing damages: The appellate panel did not consider the issue of ongoing damages (compulsory license) because that question was not appealed.

Sanctions: The appellate panel did reverse the imposition of sanctions on Jeffrey Kaplan’s firm. In its decision, the court noted (i) the untimeliness of the motion for sanctions; (2) Kaplan’s prompt withdrawal of one of the three patents-in-suit; and (3) the actual “litigation substance” concerning the patent that was only withdrawn at the last minute.

Goods sold f.o.b. China considered sold "within the United States" for infringement purposes

SEB (T-Fal) v. Montgomery Ward & Co. (Fed. Cir. 2010)

The French company SEB sued Montgomery Ward, Pentalpha and others for infringement of its patent covering deep-fat-fryer. Patent No. 4,995,312. SEB won a jury verdict verdict of willful infringement and was awarded $4.6 million in damages, but the district court reduced the damage award to $2 million and refused to award enhanced damages for willfulness citing Seagate.

f.o.b. sales: Pentalphia shipped its products f.o.b. China and argued that it therefore could not be liable for sales in the US.  The Federal Circuit rejected that argument — holding instead that the US shipment destination and the intended US retail location were sufficient for a jury to find that the sales were within the US for the purposes of 35 U.S.C. 271. This decision follows the precedent of the 2008 Litecubes decision. In Litecubes, the court held that a foreign company’s “sale” may properly be considered within the US if the seller deals directly with US customers and then ships to the US — regardless of whether title to the goods was legally transferred in another country. 

Patent Attorney Expert: Noted patent attorney Charles Van Horn testified at the trial as expert witness explaining the infringement. Although he is not an expert on deep-fat-fryers, the Federal Circuit held that the lower court did not err in allowing his testimony:

District courts enjoy “wide latitude” to determine admissibility and “the mode and order” of evidentiary presentations. In this case, the district court was in the best place to judge that Mr. Van Horn had the “knowledge, skill, experience, training, [and] education” of a “specialized” nature that was likely to “assist the trier of fact to understand the evidence or to determine” infringement. Fed. R. Evid. 702.

In its decision, the appellate panel looked specifically at Van Horn’s 31 years at the patent office examining material-science related patents as well as his undergraduate chemistry degree.

The decision also discusses claim construction; infringement; prosecution history estoppel; and willfulness.

Patently-O Bits and Bytes

The following is a list of upcoming events that I will be attending. I look forward to seeing you there!:

• Texas Intellectual Property Law Journal's 11th Annual Intellectual Property Symposium at The University of Texas School of Law in Austin on February 19th, 2010.
• Stanford Technology Law Review Symposium at Stanford Law School focusing on “PTO Reform” on February 26, 2010.
• IP Law Summit for Corporate IP Counsel in Miami at the Doral Resort on March 25–27, 2010.
• Corporate IP Counsel Summit in New York City at the Helmsley Hotel on April 27–28, 2010.

If you are looking for me, I bear some resemblance to the photo on the right.

There are lots of recent patent law job postings. The following jobs were posed in the past two-weeks:

• Edwards Angell Palmer & Dodge is seeking two candidates, each with a focus on biotechnology and superior credentials. [Junior/Midlevel Associate][Junior Attorney/Agent]
• Oregon Health & Science University (OHSU) in beautiful Portland Oregon is seeking an in-house patent counsel.
• Qualcomm is seeking a patent counsel for its portfolio management team in San Diego; an open source software attorney in San Diego; and patent attorneys with 3–5 years patent prosecution experience in multiple locations.
• Life Technologies is seeking a patent agent to handle patent prosecution and portfolio management in the company’s DNA Sequencing Business Unit.
• Intellectual Ventures (IV) is seeking a patent attorney who “loves fast-paced business action, is detail-oriented, independently motivated, and has the confidence and ability to interact with clients and co-workers in a professional, approachable, and positive manner.” (Bellevue Washington).
• Edell Shapiro & Finnan is seeking a patent attorney (2–years patent prosecution experience) with a focus on mechanical engineering. (Rockville, Maryland).
• ION Torrent Systems is seeking a patent attorney (at least 2–5 years experience) with semiconductor expertise to work in its San Francisco, California offices.
• Fiala & Weaver is seeking part-time and full-time patent agents and patent attorneys for patent preparation and prosecution.  The firm is located in Washington DC, but qualified remote candidates may be considered.
  

Patent Examiner Experience Levels, Part II

The graph below shows examiner experience as grouped by technology center as of the end of FY2009.  The blue-bars represent the percent of examiners and SPEs that have fewer than three years experience at the PTO. The red-bars represent the percent of examiners and SPEs that have ten or more years experience at the PTO.  This is a continuation of an earlier discussion.

USPTO Budget Shortfall Causes: Maintenance Fees

A major reason for the current USPTO budget shortfall is the dropping rate of renewal. According to the USPTO annual reports, the "maintenance fees have traditionally been the largest category of patent fees." Renewal rates are charged in three-stages. The first-stage payment of $980 is due 3.5 years after issuance. The second-stage payment of $2,480 is due 7.5 years after issuance. And, the third-stage payment of $4,110 is due 11.5 years after issuance.

In FY2009 renewal rates dropped for each stage. Most troubling for future PTO revenue, the first-stage renewal rate for FY2009 was the lowest in a decade. The graph below is based on historic USPTO Annual Reports.

Patently-O Bits and Bytes

PTO Director Kappos has two interesting recent posts on his blog:

1. Reengineering the MPEP (Asking for suggestions on improving the MPEP and questioning whether it should be developed as a WIKI).
2. Thanks Patent Team (Anecdotes from practitioners that patent examiners are doing a better job of suggesting amendments that lead to allowance).

Patent Examiner Experience Levels

The US Patent Office has announced a “targeted effort to recruit patent examiners.” In particular, the Office is hoping to lure former examiners back to the office with the hope that experienced examiners can hit the job running with only a minimal amount of training.  However, time-saving and efficiency are only part of the story.

As indicated in the graph above the percentage of patent examiners with fewer than three years of examining experience is at its highest level in recent memory.  Almost 80% of patent examiners have fewer than three years examining experience.  Less than 10% of the examiners have been working at the office for more than 10 years.  In addition to efficiency, the overwhelming number of neophites threatens the professionalism and tradition of the Office. My hope is that the new hires will be leaders in the Office in addition to their role as more efficient examiners.

The drop in the percentage of experienced examiners (10+ years) from 20% to 7% over fiscal years 2004–2009 has two components. First, the absolute number of these experienced examiners dropped from 750+ to just over 400 based on attrition. At the same time, the total number of examiner rose from 3900 to 6500.  The PTO is hopeful that some of these 350 examiners who left the office during the Dudas regime will now return.

Most Popular Patently-O Posts for January 2010

1. Wyeth v. Kappos: Appellate Panel Confirms that PTO Is Miscalculating (Undercalculating) Delays in Prosecution and the Corresponding Patent Term Adjustment
2. USPTO To Begin Re Calculating Patent Term
3. Reconsidering Divided Infringement
4. Dropping: Average Number of Claims Per Patent
5. Inequitable Conduct Based on Contradictory Statements to the EPO (in a non-family member application)
6. What Does a Patent Examiner Do with 900+ References?
7. Interim Procedure for Requesting a (Free) Patent Term Adjustment (PTA) Recalculation from the PTO
8. Subscribe: Daily E-Mail from Patently-O
9. Means-Plus-Function Claims
10. No Surprise: Broadly Written Means-Plus-Function Terms Limited to Structure Described in Specification

Attorney Ethics: Disqualifying a Law Firm

Outside the Box Innovations, LLC v. Travel Caddy, Inc., (Fed. Cir. 2010)(order)

In a non-precedential order, the Federal Circuit has disqualified the law firm of King & Spalding from representing Travel Caddy on appeal. At the district court level, Outside-the-Box was successful in proving that Travel Caddy's patent should be held unenforceable due to inequitable conduct. In post-verdict motions, a King & Spalding partner (Tony Askew) filed an expert witness declaration on behalf of a Outside-the-Box indicating that the requested attorney-fees were reasonable. For the appeal, however, three other King & Spalding attorneys began representing Travel Caddy on the other side.

Writing for a unanimous appellate panel, Judge Dyk indicated that King & Spalding's actions are improper regardless of whether Askew's expert work created an attorney-client relationship with Outside-the-Box. In particular, the court noted the likelihood that King & Spalding's new client Travel Caddy will need to challenge the sufficiency of the expert opinion that it provided earlier.

The question whether King & Spalding should challenge the expert opinion of one of King & Spalding's partners in our view would materially and adversely affect the firm's representation of Travel Caddy on appeal. We determine that Rule 1.7(a) is applicable. There has been no showing that Travel Caddy waived the conflict pursuant to GRPC 1.7(b), even assuming that the conflict is one that can be waived. For example, there is no written waiver included in the submissions; there has been no showing that Travel Caddy "received in writing reasonable and adequate information about the material risks of the representation"; or that Travel Caddy was "given the opportunity to consult with independent counsel."

The case was litigated in Georgia and the Federal Circuit based its decision upon the Georgia Rules of Attorney Ethics. It did not seem to matter that the King & Spalding appellate counsel were all Texas attorneys.

Avoiding Declaratory Judgment Jurisdiction

Patentees now proceed with caution when approaching a potential licensee. The Supreme Court's 2007 MedImmune v. Genentech decision broadened the availability of declaratory judgment actions even when the potential licensee has no apprehension of suit. In a recent IP Today [$$$] article, Kristen Doyle provides five tips to help patentees avoid declaratory judgment jurisdiction:

1. File suit prior to sending a demand letter. (The suit typically need not be pursued for 3-4 months).
2. Send bland demand letters that avoid infringement allegations, threats of litigation, or even for licensing fees and that are signed by non-lawyers. Doyle could find not post-MedImmune decision that finds DJ jurisdiction based only on a letter that merely identified a patent and stated that the patent was available for licensing.
3. Establish a definite negotiation period.
4. Ask for a confidentiality agreement when negotiating.
5. File the litigation in the "most logical venue."

Third-Party Oppositions to PTA Calculations?

Section 154(b) of the Patent Act includes an odd provision indicating that a "third party" may not appeal or challenge the USPTO's patent term adjustment determination prior to the patent issues:

35 U.S.C. 154(b)(4)(B): The determination of a patent term adjustment [PTA] under this subsection shall not be subject to appeal or challenge by a third party prior to the grant of the patent.

Although not a necessary conclusion, this provision prompts a negative implication that a the PTA may be subject to challenge by a third party after the grant of patent.  Of course, the statute does not explicitly create that right. 

As it stands, third party challenges to patent rights come in three forms: (1) interference proceedings; (2) inter partes and ex parte reexaminations; and (3) patent infringement litigation (including declaratory judgment actions). However, allegations of an improper PTA calculation do not create grounds for starting either an interference or reexamination. As discussed, improper PTA calculation could be the proper subject of a declaratory judgment challenge. However, by statute, it appears that that challenge is limited to instances when potentially infringing actions are occurring during the extension portion of the term.

All this leaves me confused as to why the provision is law.  

USPTO Fees 2011: Justifying the Fee Increase

It is clear that the USPTO needs funding to address its backlog of yet-to-be-examined patent applications and to revitalize its information technology infrastructure. An increase in funding is largely in the interest of the patent community. The primary downside is that most of the proposed increase will be paid by the patent community as well. Three forms of increased funding are currently on the table:

1. Increase substantially all fees by 15%.
2. Allow the USPTO to set its own fees.
3. Allow the USPTO to retain and spend its collected fees even if they are over-budget

Fifteen Percent of What: Although a 15% increase in fees is significant. The current prosecution fees for a large entity total to $2,900. This includes Filing, Search, Examination, Publication, and Issue Fees. Many applicants pay additional fees for late responses, appeals, petitions and RCEs. The median fees paid for a large entity is probably closer to $4,000 and a 15% increase would be $600. For small-entities, the fees are reduced by 50%. Of course, the majority of the cost of patent prosecution is not found in USPTO fees, but rather in the cost of hiring patent attorneys & agents as well as the time spent by inventors and managers. For a large entity, the total cost of preparing an application and prosecuting the application through to issuance easily runs over $25,000. In that scenario, the $600 increase may be better seen as a 2.4% increase.

Trusting the USPTO: Some applicants may be worried that USPTO would rapidly increase fees if it were given the right to set its own fees. Perhaps the office would buy-into Tim Wilson's $50,000 application fee proposal. I do not believe that fear is grounded in reality. Here, I point to three practical limits on the PTO's power. First, as proposed, the fee increase would be limited to increases that allow the office to recoup its costs. Second, if the PTO raises a large excess amount in fees the extra revenue will almost certainly be taken by Congress. Knowing that, the PTO is unlikely to greatly increase fees. Finally, the current director David Kappos appears sympathetic to patent applicants and is unlikely to take actions that are truly adverse to that community as a whole.

Why not Cuts: The difficult case for the PTO is to explain why two-billion-dollars is not enough? (See tables below). I.e., should the needed money come from redirecting unhelpful spending rather than increasing revenue?

Redirection – An Office Full of Examiners: A particular thought that comes-to-mind is the potential that everyone on the patent-side who is qualified to be examining patent applications should be examining patent applications. This means that supervisors, technology center directors, quality-assurance specialists, legal advisors, international liaisons, patent attorneys, judges, petitions officers, and commissioners could all have examination dockets. Even if small, these folks are – for the most part – have a history of being productive examiners and would contribute to reducing the backlog. In addition, a refocus and reconnection on the core role of examination may also help the office both improve quality and its spirit.

The following two charts are taken from the USPTO FY2009 Annual Report:

Note: A note on my $25,000 prosecution budget above. That is my own anecdotal estimate. This includes (1) the time spent by in-house inventors and managers in writing-up the invention and selecting which inventions to patent along with patenting bonuses paid to the inventors; (2) attorney time in drafting and prosecuting the patent application; and (3) fees paid to the USPTO. Is this accurate?

USPTO FY2011 Budget: Part II

• Note: This is a discussion of President Obama's proposed budget for FY2011. It is unlikely that the proposal will be pass through Congress unchanged.
• Read Part I: [Link]
• USPTO Press Release: [LINK]

  Goals:

  • A significant reduction in patent pendency periods and the existing patent inventory backlog; improvement in patent quality; enhanced intellectual property (IP) protection and enforcement; global IP policy leadership; and investment in information technology (IT) infrastructure and tools to achieve a 21st Century system that permits end-to-end electronic processing in patents and trademark IT systems.
  • Achieve 3 percent annual efficiency gains in patents processing through the re-engineering of management and workflow processes.
  • Initiate a targeted hiring surge and hire 1,000 patent examiners annually during FY 2011 and FY 2012. This effort will target former patent examiners and IP professionals who will require minimal training and can be productive virtually from the start of their employment.
  • Further details on the USPTO's five-year strategic plan will be released in the second quarter of 2010 as they become available.

    Fees:

  • The administration is proposing an interim fee increase on certain patent fees which is estimated to generate $224 million.
  • The administration continues to support granting the USPTO fee-setting authority as a significant part of a sustainable funding model that would allow the director to propose and set fees in a manner that better reflects the actual cost of USPTO services.
• Just-an-Examiner: [LINK]
  • "[I]t will be interesting to see how the Office goes about finding 1,000 former examiners and IP professionals to hire. Like the Office's targets for pendency and backlog reduction, it seems pretty ambitious. Still, there's certainly nothing wrong with aiming high."
• Salary Rate for Examiners (Plus Overtime and Federal Government Benefits): Depending upon qualifications and prior experience, new patent examiners are typically hired at in the range of grades 7-11. [updated with 2010 salary information below]

Obama FY2011 Proposed Budget for the USPTO (Including at Least a 15% Increase in Fees)

• USPTO estimates $2.322 billion in revenue for FY2011. FY2009 USPTO revenue was $1.901 billion and FY2010 revenue is projected at $2.003 billion. 
• The jump in expected revenue is largely based on a proposed 15% increase in user fees. According to the budget statements, the increase is “intended to be an interim measure.”  However, I would not expect fees to drop again any time soon.
• Justifying this increase, the administration indicates that it has set a “high priority goal” of reducing “patent pendency for first action and for final actions from the end of 2009 levels of 25.8 and 34.6 months respectively by the end of 2011, as well as the patent backlog.”
• USPTO would also be given full access to its fee collections up-to $100 million over-budget.
• USPTO would also be given authority for FY2011 to increase fees beyond the 15% at its discretion.
• A Wall Street Journal article cites Commerce Department officials as indicating that the increased funding will allow the PTO to “reinstate overtime and hire 1,000 new examiners.”  Director Kappos has also indicated that updates of the USPTO IT system is necessary. [Link]
• The budget also estimates $36 million for the Court of Appeals for the Federal Circuit.
• Read the Budget here.

 

Patently-O Bits and Bytes No. 317

• Learning International IP: A relatively new patent-attorney asks the following question: "I find myself very unfamiliar with foreign patent practice. Could you recommend a book/other resource that discusses the intricacies of patent prosecution in foreign countries from the point-of-view of a US patent practitioner?" Suggestions?
• Learning by Watching: Professor Beckerman-Rodau is spearheading an IP Podcast series available for free from Suffolk Law. [LINK]
• Learning IP Theory: Three fairly new books recently arrived in the mail. All would be considered left leaning.
• Property Outlaws: How Squatters, Pirates, and Protesters Improve the Law of Ownership by Peñalver and Katyal. The book explains benefits of occasional disregard of private property. 
• The Soul of Creativity: Forging a Moral Rights Law for the United States by Kwall. The book argues that “moral rights” should be part of US copyright law. Although Kwall focuses on the personal experience of authorship, her arguments are difficult (for me) to distinguish from those regarding the personal experience of invention.
• The Future of the Internet--And How to Stop It by Zittrain. The book is about battle over control of the internet or how the internet is increasingly controlled.

Invalidity of the Extension of a Patent Term

Thousands of requests will be filed in the next couple of weeks asking the USPTO to recalculate the patent term adjustment (PTA) owed to recently issued US patents. [LINK] In a prior post, I suggested that the PTO's approach of offering a second-window for recalculation could be seen as improperly extending the agency's authority. [LINK] The PTO's improper extension of authority to adjust PTA is unlikely to leave a patent invalid. However, it is possible that the extended term could be rendered invalid under 35 U.S.C. § 282.

Section 282 describes defense available to an accused patent infringer. The final portion of the statute creates a defense of "invalidity of the extension of a patent term" based on improper calculation under either Section 154(b) (PTA) or Section 156 (PTE) of the Patent Act.

[The following shall be a defense:] Invalidity of the extension of a patent term or any portion thereof . . . because of the material failure (1) by the applicant for the extension, or (2) by the Director, to comply with the requirements of such section.

The statute goes on to explain that failure to comply with the statutory requirements create a defense against actions involving infringement "during the period of the extension."

Under this statute, the term extension can be left invalid based on the USPTO's failure to follow the law outlined in 35 U.S.C. § 154(b). The 1999 statute has not been interpreted yet, but appears to require (i) material failure to comply with the requirements of Section 154(b) and (ii) that the accused infringement occur "during the period of the extension," and that the result will be that the improperly calculated portion of the extension will be invalidated.

* * * * *

Extension of USPTO Authority?: Section 154(b) of the Patent Act details the steps for calculating a patent term adjustment and for challenging the USPTO's determination. Section 154(b)(3)(B)(ii) requires that the PTO "provide the applicant one opportunity to request reconsideration." (Emphasis added). A still dissatisfied patentee then has a right to file a civil action in the US District Court located in Washington DC within 180 days of the grant of the patent. Patent applicants with patents that issued in the past 6-months were all already given one opportunity to request reconsideration of the USPTO's PTA decision. In its interim recalculation offer, the USPTO is providing applicants with a second opportunity to request reconsideration. The administrative law question is whether the USPTO has authority or offer the second opportunity. Regarding invalidation of the extension under Section 282, an accused infringer hoping to challenge the term extension would also need to prove that the PTO action is "material."

* * * * *

The image above comes from James Scurlock's Patent No. 7,397,731.

Filing a Patent on Behalf of a Non-Cooperating Inventor

Yale Preston v. Marathon Oil (D.Wyoming)

The trial date is approaching in the case of Preston v. Marathon Oil. Preston was a former employee of Marathon and the two are disputing ownership of patent rights.  Preston and Marathon each obtained a patent naming Preston as the inventor.  Marathon’s file-history is interesting because it includes a petition to accept an unsigned oath based on the inventor’s refusal to sign.

37 CFR 1.47(b) reads as follows:

Whenever all of the inventors refuse to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom an inventor has assigned or agreed in writing to assign the invention, or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for all the inventors. The oath or declaration in such an application must be accompanied by a petition including proof of the pertinent facts, a showing that such action is necessary to preserve the rights of the parties or to prevent irreparable damage, the fee set forth in § 1.17(g), and the last known address of all of the inventors. An inventor may subsequently join in the application by filing an oath or declaration complying with § 1.63.

The petition filed by Marathon includes: (1) a statement from Marathon’s attorneys that contacted Preston by Mail and by Telephone and that he indicated his refusal to sign; (2) a copy of the employment agreement that includes a promise to disclose and an assignment of IP rights. The petition was granted. [Petition.pdf (2643 KB)]

Two interesting tidbits: (1) Preston’s patent issued first, and the examiner of the Marathon Oil application issued a double-patenting rejection. Interestingly, it does not appear (from the file history) that Marathon ever filed a terminal disclaimer or otherwise discussed Preston’s patent. [The Preston patent was not disclosed by the Marathon, rather it was located by the Examiner in his search.]  (2) the employment agreement is important for the case. As he signed his agreement, Preston indicated that he held prior rights in a “CH4 Resonating Manifold” that would not belong to Marathon.  The agreement expressly states that Marathon agrees that those rights are “NOT the property of MARATHON.”  The question up for grabs is whether the invention at issue in this case is the same as the CH4 manifold disclosed in the agreement.

 

Patently-O Bits and Bytes No. 316

• Searching: The Patent Librarian (Michael White) reports that esp@cenet now has new search functionality.
• Searching: I am enjoying a new blog by the patent searchers at Landon IP: The Intellogist.
• Job: The non-profit PIIPA (Public Interest Intellectual Property Advisors) is looking to hire a new executive director.
• Job: The USPTO appears to be hiring examiners again to fill “many vacancies.” [Link]  However, the jobs are not yet listed here.
• Jobs:
• Patent Counsel - Large Corporation - San Diego, Calif.
• Patent Attorney - Large Corporation - San Diego, Calif.
• Patent Counsel - Large Corporation - Multiple Locations
• Sr. Patent Agent - Large Corporation - San Diego or Foster City, Calif.
• Patent Attorney - Small Corporation - Bellevue, Wash.
• Patent Attorney/Agent - Law Firm - Rockville, Md.
• Section 292 (False marking): PATracer reports on a district court decision in favor of Target — holding that the retailer is not liable for false marking even if it knowinly sold products that were falsely marked. [LINK]
• Divided Infringement: PATracer also reports on an interesting non-infringement decision in favor of DirecTV based on the company’s outsourcing of customer support operations. “DirecTV can not be liable for direct infringement of an asserted claim if the evidence demonstrates that DirecTV neither performs by itself nor directs nor controls a third party's performance of any one element of the claim.” [LINK]

PTA Recalculation Submissions

Although I have some problems with the USPTO's claim of authority to act, prudent patentees will submit a PTA reconsideration form for patents issued since August 1, 2009 that might be owed additional patent term due to the Wyeth decision.

The recently distributed form (Titled a Request for Recalculation of Patent Term Adjustment in view of Wyeth) is exceedingly simple and requires only basic information regarding the patent and a signature. The applicant is not even required to indicate a belief that additional patent term is due. Forms are due on a rolling basis – always within 180-days of patent issuance. Thus, form should be immediately submitted for patents issued in early August, 2009.

Although PTA calculation is somewhat complex, the Wyeth change only impacts patents that meet the following criteria: (1) application actually filed on or after May 29, 2000 and (2) prosecution pendency of greater than three years. The vast majority of impacted cases will also include (3) a file history showing that the PTO delayed in examining the application during the first three years of pendency. The most likely PTO delay is that the Office waited more than 14-months before providing an initial examination response such as an office action rejection; restriction; or notice of allowance. Although only an educated guess, I suspect that the median additional term will be a bit under 1-year.

File Attachment: PTO Form SB-131 (Jan 2010).pdf (139 KB)

Interim Procedure for Requesting a (Free) Patent Term Adjustment (PTA) Recalculation from the PTO

In Wyeth v. Kappos, the Federal Circuit held that the USPTO has been miscalculating the Patent Term Adjustment (PTA) owed to patentees due to delays in patent prosecution. The USPTO has now announced an interim procedure for requesting recalculation of patent term.  According to the plan, the PTO will recalculate the patent term for free for any patent issued prior to March 2, 2010 so long as the request for reconsideration is submitted within 180 days of issue. (Patents Issued on August 4, 2009 will reach the 180 day mark on Sunday, January 31, 2010.)  The requested recalculation may only be for the purpose of correcting the overlap-calculation discussed in Wyeth. 

[T]he USPTO will be processing recalculation requests under an interim procedure that is available to a patentee whose patent issues prior to March 2, 2010, and who requests it no later than 180 days after the issue date. This procedure is available only for alleged errors in calculation that are specifically identified in Wyeth. A copy of the notice submitted to the Federal Register for publication and the form for patentees to use in requesting a recalculation of patent term is on the USPTO Web site at http://www.uspto.gov/patents/announce/pta_wyeth.pdf.

The USPTO created March 2, 2010 as a deadline because it expects to be correctly calculating PTA by that point. “The agency expects to complete by March 2, 2010, the software modification necessary to comply with the U.S. Court of Appeals for the Federal Circuit's recent decision in Wyeth v. Kappos regarding the overlapping delay provision of 35 USC 154(b)(2)(A).”  If my undertanding is correct, the PTO intends to continue to issue patents with the incorrect PTA calculation up until that point.

Although it would be wise to double-check the PTO’s calculations, the applicant is not required to make the calculation prior to requesting reconsideration. Rather, according to the PTO, “the request for reconsideration need only state that reconsideration is being requested in view of the Federal Circuit’s decision in Wyeth.”

Potential Statutory Violation: Although I applaud the USPTO’s patentee friendly approach I am not convinced that the PTO has the power to take this action. Notably, 35 USC 154(b)(3)(B)(ii) requires that the PTO “provide the applicant one opportunity to request reconsideration.”  The subsequent procedure identified by statute is a civil action that must be filed in court within 180 days of the grant of the patent.  For patents that have already issued, the PTO has already offered the one opportunity to request reconsideration (see 37 CFR 1.705) and this waiver of the rules is providing a second opportunity for reconsideration.  The court that limited the PTO’s power in Tafas v. Dudas could also limit the agency’s power in this situation.  Even if the PTO is acting unlawfully, a patent receiving additional patent term due to the unlawful behavior will still likely be valid and enforceable under Aristocrat.

Potential Loss of Right to a Civil Action: Applicants should also beware that the 180–day-from-issuance deadline for filing a civil action to correct the PTA has not been waived. This means that the applicant may have no recourse if the PTO’s recalculation decision arrives after that 180–day window.

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Inequitable Conduct Based on Contradictory Statements to the EPO (in a non-family member application)

Therasense, Inc. (Abbott) v. Becton, Dickinson and Co. (Fed. Cir. 2010) (Case No. 2009-1511)

This detailed 67–page opinion includes several important issues. This post focuses on inequtiable conduct. The Federal Circuit recently released a parallel decision involving the same parties (but different patent) here. 

After a bench trial, Northern District of California Judge Alsup held Abbott’s patent unenforceable due to inequitable conduct during prosecution. (Patent No. 5,820,551). On appeal, the Federal Circuit has affirmed that decision — holding that the prosecuting attorneys had violated their duty of disclosure by failing to dislcose statements made by Abbott to the European Patent Office during a proceeding involving the European counterpart of another patent family (the ‘382 patent’ family) also owned by Abbott.  Although the court affirmed the finding of inequitable conduct, it offered the fig leaf that such a finding should be “rare.”  (Note: Therasense originally filed both patent applications and also made the statements to the EPO. That company was subsequently purchased by Abbott.)

Patent applicants (and their attorneys/agents) are required to disclose to the US Patent Office any information that a reasonable examiner would likely consider important in deciding whether to issue a patent.  Failing to submit the required information can lead to a finding of inequitable conduct if the information was both (1) material to patentability and (2) witheld because of an intent to deceive the Patent Office.  Inequitable conduct usually results in a patent being rendered totally unenforceable. “The penalty for inequitable conduct is severe, as an entire patent is rendered unenforceable.”

During prosecution, the examiner rejected the application based on Abbott’s own ‘382 patent.  In response, Abbott’s Director of Research submitted an affidavit attesting that the one skilled in the art would not consider the ‘382 patent to teach the invention as claimed in the ‘551 patent. [The claimed invention was a glucose-memter electrode strip without an intervening membrane layer — with the absense of the membrane being the distinguishing feature.]  Based on that representation, the Examiner allowed the patent to issue. Meanwhile, in Europe, Abbott made the statement that the stated distinction was only a “safety measure” and was “preferred” but not necessary. [“It is submitted that this disclosure is unequivocally clear. The protective membrane is optional, however, it is preferred when used on live blood.”]

Based on these facts, the Federal Circuit found the statements material:

To deprive an examiner of the EPO statements—statements directly contrary to Abbott’s representations to the PTO—on the grounds that they were not material would be to eviscerate the duty of disclosure. Moreover, if this could be regarded as a close case, which it is not, we have repeatedly emphasized that the duty of disclosure requires that the material in question be submitted to the examiner rather than withheld by the applicant.

Lawyer Argument Regarding Prior Art: In several cases, the Federal Circuit has held that contradictory representations made during the prosecution of other patent applications should not be considered material to patentability if made in the form of lawyer-argument. See Innogenetics. Here, the appellate panel distinguished those cases because they all involved US applications rather than statements made to different institutions.

However, all of the cases Abbott cites involve patentees who simply made representations to the PTO about prior art in order to secure the allowance of their patents.  None of these cases involved a situation in which contradictory arguments made in another forum were withheld from the PTO. They do not speak to the applicant’s obligation to advise the PTO of contrary representations made in another forum. Before the EPO, Abbott made statements that contradicted the representations Abbott made to the PTO regarding the ’382 patent. An applicant’s earlier statements about prior art, especially one’s own prior art, are material to the PTO when those statements directly contradict the applicant’s position regarding that prior art in the PTO. See 37 C.F.R. § 1.56(b)(2). In any event, the representations to the PTO were not merely lawyer argument; they were factual assertions as to the views of those skilled in the art, provided in affidavit form.

Intent: The Federal Circuit agreed that the lower court’s finding of subjective intent was “amply supported.”

Holding:

Because the district court’s findings that the EPO submissions were highly material to the prosecution of the ’551 patent and that Pope and Dr. Sanghera intended to deceive the PTO by withholding those submissions were not clearly erroneous, the district court did not abuse its discretion in holding the ’551 patent unenforceable due to inequitable conduct.

Judge Linn filed a dissenting opinion: Judge Linn argues (1) that there is an explanation for the statements that does not lead to them being directly contradictory and (2) that the individuals involved “produced a good faith explanation as to why they withheld the EPO submissions.”  Such a good faith explanation should defeat charges of inequitable conduct if it is plausible.

The question, thus, is not whether it is plausible that the information is immaterial—a question asked under the objective materiality prong—but rather, whether it is plausible that the individuals subjectively believed that the reference was immaterial at the time they withheld it—a question presented under the subjective intent prong.

 

 

What Does a Patent Examiner Do with 900+ References?

Recently issued patent number 7,651,688 is not too remarkable. Its three claims cover an "antibody composition" with a particular arrangement of "sugar chains." The oddity is that the first 10-pages of the patent document are filled with a listing of over 900 references submitted by the applicant in a series of six information disclosure statements. (The examiner included an additional nine references based on her search of the art).

The most common type of reference submitted in this case were documents from the file-histories of other US patent applications owned by the same entity (Kyowa Hakko Kirin Pharma, Inc.). Many of the submitted references are actually from the file-histories of related-cases being examined by the same examiner. See table below:

881.    Non-Final OA issued Oct. 17, 2007 in U.S. Appl. No. 10/581,413. 882.    1.111 Amendment filed Apr. 17, 2008 in U.S. Appl. No. 10/581,413. 883.    Restriction Requirement issued Jul. 28, 2008 in U.S. Appl. No. 10/581,413. 884.    Final OA issued Dec. 11, 2008 in U.S. Appl. No. 10/581,413.

The result here is that the file history includes 13,689 pages of non-patent or foreign prior art. Most of those documents were submitted after the applicant had already received a notice of allowance.

Based on my cursory reading of the file history, I do not see that the prosecuting firm (Sughrue) did anything improper or wrong in this case. To the contrary, based on recent inequitable conduct cases, the patentee is clearly hoping to avoid charges of inequitable conduct based on 'hiding' references. Of course, the applicant did not indicate which (or which parts) of the 900+ references are most relevant and everyone is clear that the examiner is not going to read all of the references. As one practitioner wrote to me: "The balance is way off between useful information in an IDS and covering-our-asses in regards to inequitable conduct. Something needs to give."

I contacted Ken Burchfiel of Sughrue. He provided the following on-point commentary:

Burchfiel: I can't comment on U.S. Patent 7,651,688, except to commend its excellence, and instead offer more general observations on the infectious doctrine of inequitable conduct in a time of "absolute plague" 22 years after Kingsdown. In view of the Federal Circuit's decisions in Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358 (Fed. Cir. 2003) and McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897 (Fed. Cir. 2007), it is prudent to provide an examiner with citations to office actions in copending applications. Until the court or Congress acts to limit the ever-expanding scope of the meandering duty of disclosure, which now encompasses information that may be of marginal significance, reasonable practitioners have little choice but to follow the mandate of the Federal Circuit and identify Office Actions in other applications that could later be found to be material.  It may also be prudent to identify relevant foreign applications and office actions in an IDS, in view of Therasense, Inc. v. Becton, Dickinson & Co., No. 2008-1511 (Fed. Cir., Jan. 25, 2010). Although the prosecution history of a foreign application cannot be used to construe patent claims, it may now render them unenforceable. The extent of disclosure required in a given case is, of course, a judgment call that depends on many factors, including the indeterminate "reasonable examiner" standard applied by the Federal Circuit. The question is not whether information cited in an IDS is helpful to the actual examiner, but rather whether it may later be deemed material to a "reasonable" examiner by a court.  While an actual examiner is required to follow the rules of practice, including the 1992 amendments to Rule 56 limiting the scope of "material" information, a "reasonable" examiner is not similarly bound under Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309 (Fed. Cir. 2006).  It is not possible, as a practical matter, to determine the scope of information that may be later be deemed material to an unreasonable "reasonable" examiner (i.e., one who, unlike actual examiners, is not fettered by the rules of practice). As the Federal Circuit again emphasized in Therasense, "if this could be regarded as a close case, which it is not, we have repeatedly emphasized that the duty of disclosure requires that the material in question be submitted to the examiner rather than withheld by the applicant. See LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001) ("[W]hen a question of materiality is close, a patent applicant should err on the side of disclosure."); LaBounty Mfg., Inc. v. U.S. Int'l Trade Comm'n, 958 F.2d 1066, 1076 (Fed. Cir. 1992) ("[A close case] makes it all the more necessary that the [reference] should [be] disclosed to the examiner. Close cases should be resolved by disclosure, not unilaterally by the applicant.")." Whether or not this be divinest sense, it is nonetheless Therasense. A patent solicitor's life has never been an easy one.

Notes:

• Claim 1 reads as follows: An antibody composition comprising antibody molecules, wherein 100% of the antibody molecules comprising a Fc region comprising complex N-glycoside-linked sugar chains bound to the Fc region through N-acetylglucosamines of the reducing terminal of the sugar chains do not contain sugar chains with a fucose bound to the N-acetylglucosamines, wherein said antibody molecules bind to CD52.

Jury Wrong on Anticipation; But Claims are Obvious as a Matter of Law

[Updated to correct an error]

Therasense, Inc. (Abbott) v. Becton, Dickinson and Co. (Fed. Cir. 2010) (Case No. 2009-1008)

The Abbott patent covers a glucose meter designed with an additional sensor that ensures that a sufficient blood sample is obtained prior to the measurement. (Patent No. 5,628,890). Abbott sued BD and Nova Biomed for infringement. At the close of trial, the jury returned a verdict that the patent was infringed but invalid. The jury indicated that the patent was invalid for “anticipation or obviousness” and also invalid for failing the written description requirement of Section 112.

Law of Anticipation: On appeal, the Federal Circuit first determined that the jury instructions on the law of anticipation were incorrect. Notably, the district court judge had told the jury that “for anticipation, it is sufficient if the single reference would have informed those skilled in the art that all of the claimed elements could have been arranged as in the claimed invention.”  (emphasis added). Of course, anticipation requires that the reference disclose the same elements in the same arrangement. 

The requirement that the prior art elements themselves be “arranged as in the claim” means that claims cannot be “treated . . . as mere catalogs of separate parts, in disregard of the part-to-part relationships set forth in the claims and that give the claims their meaning.” Quoting Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co., 730 F.2d 1452, 1459 (Fed. Cir. 1984).

Harmless Error: Under Federal Circuit law, erroneous jury instructions will lead to vacatur unless the error “could not have changed the result.”  Here, the jury decided obviousness and anticipation together and the Federal Circuit found that the overwelming evidence of obviousness renders the error on anticipation “harmless.”

“[A]n erroneous instruction on the law of anticipation could not have changed the result in this case if claims 11 and 12 would have been obvious as a matter of law, such that no reasonable jury could have returned a verdict that the claims are not obvious.”

Obvious as a Matter of Law: The appellate panel held here that the asserted claims “would have been obvious over [the Nankai reference] as a matter of law.”  The court’s approach to his holding of obviousness will be important for future summary judgment motions.  In particular, Abbott’s downfall was its own broad claim language that encompassed the prior art.  One clear difference between the claims and the prior art was admitted by the patentee to be “insubstantial.”

Written Description: Because the claims were obvious, the court did not consider the written description appeal.

Cross Appeal: BD filed a cross-appeal in the case asking the court to overturn the holding of infringement. The Federal Circuit rejected that cross-appeal — holding that it lacked jurisdiction. Notably, a cross-appeal is only appropriate when “a party seeks to enlarge its won rights under the judgment or to lessen the rights of its adversary under the judgment.” Here, the cross-appeal was improper because a holding of non-infringement would not change the ultimate outcome of the case.

Note: The Federal Circuit has also decided the related case No. 2008-1511 (Therasense, Inc. v. Becton, Dickinson and Co.). That opinion focuses on obviousness and inequitable conduct.

Patently-O Bits and Bytes No. 315: Reexaminations

• Appealing Reexaminations: Rob Sterne has published a 25–page report on “Appeals from the Central Reexamination Unit.” For the 15 BPAI decisions in inter-partes reexaminations, Stern reports that only 15 inter partes reexaminations have reached a BPAI decision. Of those, the median case took 26.5 months to brief and an additional 6.2 months for the case to be decided. Sterne’s reexamination center provides regular updates on reexamination issues.
• Reexamination Gridlock: Hal Wegner reports: “Gridlock at all levels” of the inter partes reexamination process is “choking inter partes reexamination.”
• Stays of Litigation: David Donoghue reports on the N.D. Ill case of of Card Activation Techs. V. Bebe Stores, Inc., No. 09 C 406, Slip Op. (N.D. Ill. Nov. 20, 2009) (Gottschall, J.) (case stayed pending reexamination even though the asserted claims were not those being reexamined)
• Reexamining Design Patents: Scott Daniels writes on his reexamination blog about reexamination of design patents. [Link]  Of the 12 design patent reexaminations requests, two requests were denied based on no SNQ, two patents have been confirmed as properly issued, the other eight are still pending.  Eleven of the twelve requests were submitted by third parties.
• Webinar on Reexaminations: Managing IP is offering a free webinar on “Patent Reexamination as a Litigation Strategy” on Feb 24 at 1pm. The talk is led by Novak-Druce attorneys.
• Reexamination and Litigations: Joe Mullin reports on his Prior Art blog that 60+ photo-sharing defendants may be off-the-hook based on the cancelling of FotoMedia’s patent claims in reexamination. [Link] I looked up the reexamination (No. 90/010,143) and found that the PTO has issued a final rejection about half of the patented claims.
• Crouch on Reexaminations: I’ll be speaking on reexaminations at the IP Law Summit hosted by the marcus evans company at the Doral resort in Miami Florida March 25–27. See you there.

 

Obama: "There's nothing wrong with other people using our technologies. We just want to make sure that it's licensed and you're getting paid."

The following excerpt comes from President Obama’s recent townhall meeting in Ohio on Friday, January 22, 2010:

* * * * *

Q    I'm an inventor, and I hold U.S. patent number 7,397,731.

THE PRESIDENT:  Okay.

Q    And before I ask my question I'd like to make a sales pitch.  (Laughter.)  If you can use my patent in your next election, I think you can raise a ton of money worldwide.  You should take a look at it.

THE PRESIDENT:  All right, we'll take a look.  All right.

Q    If you can't use it, the government could use it, and I could build a multibillion-dollar business here in Ohio.  (Laughter.)

THE PRESIDENT:  All right, we'll take a look at your patent.  Go ahead, what's your question?

Q    Yes, okay, it has to do with international patent rights.  With all this free trade and trade barriers falling, it's really hard for an individual like me with a global-scope patent to file all over the world and get patent protection everywhere, and having to go overseas to fight infringement.  So if you're going to drop trade barriers, maybe you can extend my patent rights to the foreign countries.

THE PRESIDENT:  Well, this is a great question, and this is a huge problem.  (Applause.)  Look, our competitive advantage in the world is going to be people like this who are using their minds to create new products, new services.  But that only helps us and helps you build a multibillion-dollar company if somebody can't just steal that idea and suddenly start making it in Indonesia or Malaysia or Bangladesh with very cheap workers. 

And one of the problems that we have had is insufficient protection for intellectual property rights.  That's true in China; it's true for everything from bootleg DVDs to very sophisticated software.  And there's nothing wrong with other people using our technologies.  We just want to make sure that it's licensed and you're getting paid.

So I've given instructions to my trade offices -- and we actually highlight this at the highest levels of foreign policy  -- that these are issues that have to be addressed because that's part of the reciprocity of making our markets open.  And so when I met with President Hu of China, this is a topic that, at dinner, I directly brought up with him.  And -- but as you point out, it's got to be sustained, because a lot of times they'll say, yes, yes, yes, but then there's no enforcement on their end.

And one of the things that we're also doing is using our export arm of the U.S. government to help work with medium-sized businesses and small businesses, not just the big multinationals to protect their rights in some of these areas, because we need to boost exports. 

Can I just say, we just went through a decade where we were told that it didn't matter, we'll just -- you just keep on importing, buying stuff from other countries, you just take out a home equity loan and max out your credit card, and everything is going to be okay.  And it looked, for a lot of people, like, well, the economy seems to be growing -- but it was all built on a house of cards.  That's what we now know.  And that's why if we're going to have a successful manufacturing sector, we've got to have successful exports.

When I went and took this trip to China, and took this trip to Asia, a lot of people said, "Well, why is he going to Asia?  He's traveling overseas too much.  He needs to be coming back home and talking about jobs."  I'm there because that's where we're going to find those jobs, is by increasing our exports to those countries, the same way they've been doing in our country. If we increased our exports -- our share of exports by just 1 percent, that would mean hundreds of thousands of jobs here in the United States.  Five percent -- maybe a million jobs, well-paying jobs.  So we're going to have to pry those markets open.  Intellectual property is part of that process.

* * * * *

 The invention claimed by the 7,397,731 patent is pretty cool. It is a “perpetual day reminder calendar.” 

The patent was prosecuted by the inventors and it is not surprising that the claims are written in some sort of modified Jepson language. Claim 1 reads as follows:

1. A perpetual day reminder calendar for illustrating day, date and month information, including:

a) a set of day indicating plates with day indica; b) a set of month indicating plates with month indica; c) a set of date indicating cubes with date indica; d) a display stand with locating guides in one of three possible configurations, top holding, center holding or bottom holding;

the improvement wherein said day indicating plates and said month indicating plates identically shaped to fit around said date indicating cubes in a manner providing an interlocking of, said plates and cubes and the shielding of unneeded indica allowing only the needed day, date and month indica to be viewed and the interlocking pieces forming a calendar stack having a unique locating interaction feature with said display stand whereby the perpetual day reminder calendar can be easily manipulated for the sequential displaying of day, date and month indica.

Restriction Requirements and Double Patenting

Boehringer Ingelheim Int’l v. Barr Labs and Mylan Pharma (Fed. Cir. 2010)

This decision holds a terminal disclaimer cannot be effective if filed after the expiration date of the earlier patent. The decision expands scope of the safe-harbor created by 35 USC 121 against double patenting allegations. Here, the court held that a divisional-of-a-divisional still qualifies for the safe harbor so long as the later-filed applications do not violate the Examiner's original grouping suggestions.

(Opinion by Judge Linn and Joined by Judge Prost) Boehringer owns several patents listed in the FDA’s Orange Book as covering the drug Mirapex (pramipexole) used to treat symptoms of Parkinson’s disease. Boehringer filed this lawsuit after the defendant generic-drug manufacturers submitted abbreviated new drug applications (ANDAs) to the FDA as part of their efforts to begin making generic versions of the Mirapex.

The Mirapex patent family began with a 1985 patent application. That family has branched-out into more than fifty world-wide patents, including three US patents. Interestingly, the patent that issued from the original application (the “earlier patent”) is not listed in the Orange Book while a later issued patent is listed. By the time of this lawsuit, the Mirapex patents had passed their ordinary 17–year term of enforceability. However, the term of the later issued patent had been extended by over 4–years based on FDA delay under 35 USC 156.

Late-Filed Terminal Disclaimer : Despite their similarity, Boehringer had not filed a terminal disclaimer in the latest-filed US application. On the last day of trial, Boehringer decided to go ahead and file a terminal disclaimer. In spite of that action, the district court still held Boehringer’s asserted patent invalid under the judicially created doctrine of obviousness-type double patenting. In its opinion, the district court rejected the terminal disclaimer as inoperative because it was filed after the original patent had expired.

On appeal, the Federal Circuit agreed that a terminal disclaimer is not effective if filed after the expiration of the earlier patent.

By failing to terminally disclaim a later patent prior to the expiration of an earlier related patent, a patentee enjoys an unjustified advantage—a purported time extension of the right to exclude from the date of the expiration of the earlier patent. The patentee cannot undo this unjustified timewise extension by retroactively disclaiming the term of the later patent because it has already enjoyed rights that it seeks to disclaim.

Safe harbor of Section 121: Section 121 of the Patent Act provides a safe-harbor for family–member patents that issue after a restriction requirement:

A patent issuing on an application with respect to which a requirement for restriction … has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them…

On appeal, the Federal Circuit first held that Section 121 can apply to protect “a divisional of a divisional” as in this case. Here, the court agreed that the later application was filed “as a result of” a restriction requirement because the restriction requirement in the original application was the original cause of the multiple US patent filings. The court did indicate that this safe-harbor would have been lost if the later-filed application violated the claim groupings of the restriction requirement.

In a prior decision, the court held that Section 121 applies to protect patents against double patenting rejections. See Geneva Pharms, 349 F.3d 1373, 1378 (Fed. Cir. 2003) (“Section 121 intervenes to prevent a nonstatutory double patenting rejection”).

Thus, because of the protection of Section 121, Boehringer did not need to file a terminal disclaimer.

In dissent, Judge Dyk argued that Section 121 should not apply here because the applicant had not strictly following the groupings in the original restriction requirement. Notably, the original restriction requirement divided the claims into ten groups — each group representing a separate invention while the later application was filed with claims from four of the groups.

Calculating PTA: PTO to offer "guidance for expediting requests."

The USPTO has announced it will not seek further review of the Wyeth v. Kappos decision. In that case, the Federal Circuit held that the USPTO has been under-calculating the Patent Term Adjustment (PTA) owed to patentees based on USPTO prosecution delays. In its announcement, the USPTO indicated that is “preparing guidance for expediting requests for recalculation of patent term adjustments by the USPTO in light of the Wyeth decision.”

Although I have not completed the calculations, the patents perhaps most-likely to have some additional patent-term due to the Wyeth decision are those whose prosecution history include both (1) a pendency of more than three years from filing until either the patent issues or the applicant files an RCE and (2) a delay of more than 14–months from the application filing to the mailing of the first examination notification.* Prior to Wyeth, the PTO treated the beyond-three-year-issuance delay as overlapping with the the beyond-14–month-notification delay.

In a sample of 674 patents issued in the past year and filed after May 2000, I found that 479 (71%) both (1) had a pendency (smaller of filing-to-RCE and filing-to-Issuance) of greater than three years and also (2) had not received a qualifying notification with 14–months. Although I cannot say this with certainty yet, I believe that most of these newly issued patents deserve additional patent term under the Wyeth decision.

Note :*Notifications that qualify as first examination notifications include a Notice of Allowance, Final or Non-Final Rejection, Restriction Requirement, and an Ex Parte Quayle Action. Pre-examination notices such as a notice of omitted items or notice of incomplete application typically do not satisfy the PTO’s duty of meeting the 14–month deadline.

Patently-O Bits and Bytes No. 314: Defective Appeal Briefs

• PTO’s Guidance to Reduce Non-Compliant Briefs [LINK]
• PTO's Top Eight Reasons Appeal Briefs are Non-Compliant [PDF]
• PTO’s Checklist for Notice of Appeal Filed Under 37 CFR 41.31 [PDF]
• PTO’s Checklist for Appeal Brief Filed Under 37 CFR 41.37 [PDF]
• Patently-O’s list of Defective Appeal Briefs

InventHelp Sues Gene Quinn (IPWatchDog)

Invention Submission Corporation v. Gene Quinn & IP Watchdog (N.D.N.Y.)

Plaintiff, “InventHelp” is the most recent DBA name of the Invention Submission Corporation.  Defendant, Gene Quinn runs the IPWatchdog.com website and works with the same type of individual-inventor clients as InventHelp. The following two statements are taken directly from the InventHelp website:

From 2003 to 2005, we signed submission agreements with 6,592 clients. As a result of our services, 119 clients have received license agreements for their products, and 15 clients have received more money than they paid us for these services.

From 2006-2008, we signed Submission Agreements with 5,692 clients. As a result of our services, 94 clients have received license agreements for their products, and 21 clients have received more money than they paid us for these services.

During the 2003–2008 time period, fewer than 1 out of 300 InventHelp clients “received more money than they paid [to InventHelp] for these [invention promotion] services.”

For years, Gene Quinn has been writing about InventHelp and arguing that the company is “one of the most notorious of all invention scams.”  Now, the company has sued Quinn (and his wife) under the Lanham Act for providing a “misleading representation of fact … in commercial advertising or promotion…”; for defamation (apparently under NY Law?); for trade libel; and for interference with prospective clients.

• Complaint: File Attachment: isc_v_ipwatchdog_complaint.pdf (1277 KB)
• Quinn Writes about the Case
• Invention Submission Corporation versus Jon Dudas, USPTO Director

Defective Appeal Briefs

In an earlier post, I indicated that 40% of appeal briefs are initially rejected as "defective" for failing to comply with the rules of BPAI brief-drafting practice. I pulled-up the file histories for eleven applications whose appeal briefs were rejected in the calendar year 2009. [Table Below] The most common cause for defect in this group occurred when the applicant fails to list previously cancelled claims in the brief. Although that information is included in the appendix of claims, the briefing rules as interpreted by the appeal specialists require that withdrawn/cancelled claims also be identified in the proper section of the body of the brief.

Application Serial Number	Explanation of Defect
9/967,742	Brief did not contain a statement of the status of all claims (e.g., rejected allowed, withdrawn, objected to, cancelled) or does not identify the appealed claims. (The brief did state that "all of the claims have been finally rejected, and the rejections of claims 1-18 and 23-25 is appealed herein." However, the brief did not state that claims 18-22 were cancelled. Of course, that information was in the appendix of claims.)
10/159,079	Figures of prior art that were pasted into the brief were "unreadable." (The figures were identified and the prior art was already in the file).
9/983,493	The Brief did not present an argument under a separate heading for each ground of rejection on appeal. (It appears that the problem here is that the applicant underlined the heading for each argument, but did not put the argument in bold.)
10/223,904	The Brief did not contain a reference to a co-pending application also on appeal.
8/873,974	The Brief did not list the cancelled claims. (Of course, that information was in the appendix of claims.)
10/711,517	The Brief did not present an argument under a separate heading for each ground of rejection on appeal. (The argument section did not exactly parallel the grounds-for-rejection section.)
11/484,214	The Brief did not contain a concise statement of each ground of rejection presented for review. (The applicant was appealing one rejection and stated the ground of rejection being reviewed was "Whether the claims fail to comply with the written description requirement under U.S.C. § 112, first paragraph." The revised and accepted brief instead asked "Whether claims 1-13 fail to comply with the written description requirement under U.S.C. § 112, first paragraph." Of course, the original brief also stated that "Claims 1-13 are pending. Thus, claims 1-13 are being appealed.")
10/660,659	The Brief mis-cited the prior art at one point using the wrong patent number.
10/277,646	The Brief indicated that claim 23 was "cancelled," but the applicant had not actually filed an amendment to cancel the claim.
10/914,894	The Brief did not list all claims and their status, including those withdrawn. (The amended brief added the information that claims 24-42 had been previously cancelled. Of course, that information was also available in the claim appendix.)
10/804,237	The Brief did not list the cancelled claims although that information was available in the claim appendix.

BPAI: No New Arguments (or Nuances) in BPAI Reply Brief Without Good Cause

Ex parte Nakashima (BPAI 2010); Ex parte Borden (BPAI 2010)

Two recent expanded-panel BPAI decisions both consider the situation where a patent applicant presents arguments in a reply brief even though the arguments could have been raised by in the principal brief.  Interpreting the regulations of 37 CFR 41, both decisions hold that the Board is not required “to consider such belated arguments” unless the applicant presents “good cause” for the delay in presentation.

“[W]e take this opportunity to explain that the regulations governing Appeals to the Board require that any argument not timely presented in the principal Brief, will not be considered when filed in a Reply Brief, absent a showing of good cause explaining why the argument could not have been presented in the Principal Brief.” Nakashima.

Rule 41 does not discuss the potential content of a reply brief other than to note that the reply brief “shall not include any new or non-admitted amendment, or any new or non-admitted affidavit or other evidence. 37 C.F.R. § 41.41(a)(2) (2007). Prior to 1998, Rule 41 required that reply brief content focus only on points newly raised in an examiner’s answer.  That limitation, however was eliminated in the 1998 rule modifications. Despite this change, the BPAI panels both held that the “scope of the reply brief was never expanded to include belated arguments or new arguments unaccompanied by a showing of good cause.”

No New Nuances: A no-new-arguments rule is a common rule in all types of court systems.  However, the rule as implemented in Nakashima appears that it could be better stated as no-new-nuances. Nakashima argued in its principal brief that the examiner’s obviousness rejection was incorrect. The “new” argument presented in the reply brief still focused on obviousness and the same two references, but provided a new justification for a non-obviousness conclusion. In particular, Nakashima’s opening brief argued (1) that the examiner’s suggested combination of prior art teachings would “destroy” the functionality of the claimed vacuum apparatus and (2) that the examiner was incorrect in his assertion that one of the references taught a “inner belt.”  The reply brief added the nuance that there is “no reason to combine” the two prior art references because the result would not have been desirable.  According to the Board, the “no reason to combine” argument was new and therefore, the Board refused to address that issue.

Writing in dissent in Nakashima, Administrative Patent Judge Terry Owens argued that the patent applicant had a right to include new arguments in its reply brief.  Owens quotes the PTO’s comments associated with the 1998 rule change found in 62 Fed. Reg. 53168: “The former practice of permitting reply briefs based solely on a finding of a new point of argument [in the examiner answer] is eliminated thereby preventing present controversies as to whether a new point of argument has been made by the primary examiner.”

Notes:

• On remand and after filing an RCE, Nakashima should be able to argue its new points to the examiner and perhaps reach the Board again in three-years.
• The Nakashima application is owned by Brother (Japan) and is being prosecuted by the Oliff & Berridge firm (DC).
• The Borden application is owned by Sharp (US) and is being prosecuted by the Chernoff firm (Oregon).

Editorial Article: The Role of Diversity in Selecting the Next Nominee for the Federal Circuit

In the newest Patently-O Patent Law Journal article published today, Gregory Landis and Loria Yeadon discuss the role of ethnic diversity in the process of choosing upcoming nominees for the Court of Appeals for the Federal Circuit. The authors suggest that diversity should play a role in the judicial selection and that diversity likely will play such a role. 

Read Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) here: [Nominee Diversity]

The Patently-O Patent Law Journal publishes short, timely essays on patent law focused topics. The published essays are typically fewer than 2000 words.  Feel free to submit essays to me: dcrouch@patentlyo.com. 

Director Kappos on the USPTO's (lack of) Funding

In a recent e-mail to PTO employees, Director Kappos explained a real problem associated with PTO funding for the next year — that 1.9 billion dollars will not be enough for FY2010.  Although that seems like a lot of money, the PTO’s technology infrastructure is in dire need of an overhaul and the agency needs to hire additional examiners to reduce the current backlog of over one million pending applications.  It appears likely that the PTO will collect over two billion dollars in user fees for FY2010, but the current funding rules would force the agency remit any amount over $1.887 billion to the US Treasury. 

To recap, the PTO is (1) entirely funded by by user fees and (2) has significant financial needs to address shortfalls in serving its users. In this situation, the agency should at least be authorized to spend the fees that it collects.

== Kappos Letter ==

Dear Team:

I wanted to share my thoughts with you about a topic of great import to the USPTO and its mission. As you’ve read in the press, we have been engaged in ongoing discussions with members of Congress and their staff regarding our budget for the current fiscal year, which began on October 1, 2009. In addition, we have been providing technical assistance to Congress in connection with patent reform legislation, which is geared toward placing the USPTO on a sustainable funding model.

Innovation is the engine of our economy, and an efficient USPTO facilitates the timely delivery of innovative goods and services to market. What we do here at the USPTO is therefore of paramount importance to economic recovery and job creation.

As you know, the USPTO has been struggling in the last year to put itself on solid financial footing. Declines in fee revenue during the recession have adversely impacted our budget – and as a consequence forced us to make hard choices – including halting virtually all hiring, limiting overtime, and postponing critical repairs to our information technology infrastructure.

As part of the annual appropriations process, our financial team was asked to provide Congress with projected fee income for the 2010 fiscal year. This information was provided in September based on the data available at that time, when agency collections were at their low point. Congress used that projection of $1.887 billion in setting our budget for the 2010 fiscal year. That budget forces us to maintain operations on a bare-bones basis, but provides insufficient resources for us to replace employees who leave the agency, improve infrastructure or continue some of the improvements we have started to implement.

In addition, in the last two years, Congress had provided the USPTO a buffer of $100 million above our appropriation, which we were authorized to retain and spend to the extent fee income exceeded our appropriation (up to the $100 million buffer amount). That provision was removed from our fiscal year 2010 appropriation, due (we have been advised) to changes in Congressional Budget Office accounting which made it more difficult for our appropriators to provide the $100 million buffer this year.

The good news is that fee collections have begun to increase, and our current FY10 projections are more than $100 million above the $1.887 billion appropriations amount. We are actively working with Congress and the Administration to find ways to retain funds in excess of the $1.887 billion spending cap so that we can begin to backfill departing employees, improve our infrastructure, and continue to implement reforms.

But let me be clear about this: Hiring large numbers of people is not the silver-bullet solution to our problems, and we intend to hire conservatively and smartly. Most of you are aware that we have launched many reforms since I came on board last August, and we are now aggressively implementing them and looking for new ways to be more efficient on a constant basis. However, there is simply no way to get the backlog under control in a reasonable period of time without significant hiring given current attrition rates. You can run the numbers yourselves using the Patent Pendency Model and I would encourage you to do that.

Our infrastructure needs are also dire – so dire that President Obama referenced the USPTO’s antiquated IT systems in his remarks last week on modernizing government. We must improve those systems to become an efficient 21st century agency – and to be able to effectively serve the innovation community and the American economy.

It is therefore imperative that we work with Congress to develop long-term financial solutions that will establish a sustainable budget for USPTO over multiple years. Providing the USPTO with fee-setting authority as included in the pending patent reform legislation would be part of that plan. But, for the current year, we have immediate and urgent funding needs that require short-term assistance.

For your reference, I’ve attached a copy of the letter I sent to the relevant Congressional committee members on January 4, 2010.

Addressing our financial challenges so that the Agency can function effectively is my highest priority. I remain dedicated to working with our stakeholders, the Department of Commerce and members of Congress to ensure that we are able to perform our mission properly in the short-term – and to develop and adopt a sustainable funding model that will allow us to serve this country’s innovators in the future.

I want to thank you for your hard work and dedication during this challenging period for the agency. I very much look forward to hearing any thoughts you might have on this matter. Please share any comments via the Director’s Blog. I will be sure to keep you posted on any significant new developments with respect to our budget.

Regards,

David Kappos

Pendency of BPAI Appeals

The BPAI reports that their average pendency of ex parte appeals decided in the 1^st Quarter of FY2010 (Oct-Dec 2009) jumped to 9.9 months from 7.7 months for the prior three month period. [Link] BPAI Chief Judge Michael Fleming recently reported that the average pendency is likely to rise significantly in the coming year because of the large and growing backlog of cases on appeal.

The BPAI has done an increasingly good job of providing information directly to the public. However, this pendency data is highly misleading for a patent applicant considering the question of whether to appeal.  In particular, the BPAI figures are measured from the “appeal number assignment dates” which occur at some point after briefing is complete and therefore do not include time associated with briefing.

To provide a bit more details regarding pendency, I created a dataset of 2770 ex parte BPAI decisions decided in the past two-years (2008–2009) and their assocated file wrappers.  Using this dataset, I looked at appeal pendency as calculated from the filing of a notice appeal to the BPAI decision date. A summary of the results follow.

Results:

• Median appeal pendency: 23.9 months (Notice of Appeal to BPAI Decision Date).
• Median pendency of application at time of BPAI decision: 67 months (Application Filing Date to BPAI Decision Date).  I.e., the median case where an appeal has been decided had been pending for 5 1/2 years before the
• Median pendency of application family at time of BPAI decision: 79 months (Earliest Priority Date to BPAI Decision Date).
• Defective Briefs: 40% of the decided cases included at least one applicant brief that was rejected as defective.
• There are three charts below: The first shows the Cumulative Frequency of Ex Parte Appeal Pendency.  This first chart is useful in considering the odds that a particular appeal would take fewer than X-months. The second chart shows the median pendency grouped by technology center. The third chart shows the percent of decided appeals that include at least one notice of a defective appeal brief for each technology center. 
• Looking Forward: As implied by the first paragraph of this report, these figures likely understate the expected pendency for any recently filed appeal.

Notes:

• This report did not consider (1) remands without opinion; (2) decisions that were not published on the BPAI website; or (3) the fact that most notices of appeal filed by applicants do not actually result in a complete appeal process (because the examiner withdraws the rejection or the applicant decides to abandon the application or file an RCE).
• See also: http://www.patentlyo.com/patent/2007/09/how-long-does-a.html (2007).

 

Narrowing Claims in Reissue

In a prior post, I discussed the BPAI’s recent precedential decision of Ex parte Tanaka (BPAI 2009). In that case, Board held that a patentee’s failure to add an additional dependent claim (without cancelling the broader claims) was not the type of “error” that is correctable via reissue.  Tanaka had wanted to add the aditional claim as a hedge against the potential that the broader claims were found invalid.

Oblon’s Chico Gholz e-mailed me with a likely caveat to this decision based on his 2008 IP Today article. In that article he suggests that is should be proper in a reissue to merely add an additional narrower claim if the purpose is to provoke an interference. [Link] 

Patently-O Bits and Bytes

• BTLJ Student Writing Competition. The Berkeley Technology Law Journal is hosting its own writing competition for law student (JD) papers focused on some topic near the intersection of law & technology. $2,000 prize and likely publication in the journal.  Deadline is February 26, 2010. [Rules].
• Recent Jobs Posted to Patently-O Jobs:
• Baker & Hostetler LLP in Cincinnati Ohio is looking for Experienced Associates for Patent Prosecution and Patent Litigation.
• Pittsburgh Pennsylvania start-up is looking for a patent prosecution specialist for an in-house position.
• Gen-Probe in San Diego California seeks an experienced patent prosecutor.
• Morrison Foerster’s LA Office seeks an experienced patent litigator (3–4 years experience) with a preferred technical expertise in computer science or electrical engineering.
• Marsh Fischmann & Breyfogle LLP in Denver seeks a patent attorney/agent with an electrical engineering background and 2–5 years experience prosecuting patents.
• A Middletown Connecticut Firm is looking to hire a patent attorney with an engineering background and at least three years experience.
• Ryan Swarts runs the job board. Please feel free to contact him with questions. (ryan.swarts@patentlyo.com).
• Patent Damages Handbook: A committee of patent professionals and judges formed at the behest of Chief Judge Michel recently released their “Patent Damages Handbook.” The 34 page handbook is intended as a “resource for judges and lawyers” in understanding the damages phase of patent litigation “under current law.”  Download it for free.

Reissue Cannot Merely Add New Dependent Claims (Without Cancelling the Broader Claims)

Ex parte Tanaka (BPAI 2009) (Precedential)

The number of patents undergoing reissue is at an all-time high. [LINK] Often, patentees prefer the reissue route over reexamination. In a reissue, for instance, an applicant may file RCEs and divisional applications. Those common elements of patent prosecution are prohibited during reexaminations. Likewise, claims can be broadened in a reissue, but not during reexamination. Finally, the time-pressure of reissue prosecution on the patentee is small comparable to that of reexamination.

Under 35 U.S.C. § 251, the reissue process is to correct an “error” in a patent that would tend to make the patent “wholly or partly inoperative or invalid.” The statute lists specific types of errors, including “a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent.”

In this case, the patent applicant (Seiko) started a reissue process claiming that its mistake was in failing to include an additional narrower dependent claim to “hedge against possible invalidity of the original claims.” The patentee did not cancel the broader claims because they were still potentially valid.

Issuing a precedential decision, the BPAI has interpreted Section 251 to bar reissue in this case.

[T]he Examiner found that because the reissue application contains all of the original patent claims and adds by reissue application only a single dependent claim 16, the reissue declaration cannot satisfy the error required under 35 U.S.C. § 251 because it cannot properly allege that the patent is wholly or partly inoperative or invalid by reason of the patentee claiming more or less than he had a right to claim in the patent.

We affirm.

This interpretation of Section 251 falls in-line with MPEP § 1402 and with the dicta of Hewlett-Packard Co. v. Bausch & Lomb, Inc., 882 F.2d 1556, 1565 (Fed. Cir. 1989).

Notes: Interestingly, Tanaka originally filed the reissue application and submitted a preliminary amendment that would broaden independent claim 1. (App No 10/201,948). After receiving a final rejection for the broadened claim, Tanaka changed its tactics; reinstated the original claim 1 and added a narrowed claim 16 that includes limitations not found in any other claim. At that time, Tanaka also submitted a substitute reissue declaration

Southern California Wins Trademark Battle with South Carolina

SC v. SC (Fed. Cir. 2009)

The University of South Carolina (Carolina) was founded in 1801 and is the flagship public university of the state. The University of Southern California (Southern Cal) was founded in 1880 and is a large private university located in Los Angeles. This case involves a trademark dispute between the two universities.

The case arose when Carolina attempted to register its SC-logo and Southern Cal opposed the trademark registration based on its own interlocking SC-logo. [See hats below] Carolina retaliated by moving to cancel Southern Cal's trademark registration of the initials "SC" based on the mark's suggestion of a false association between Southern Cal and the State of South Carolina.

The Trademark Appeal Board (TTAB) sided with Southern Cal in (1) refusing to register Carolina's SC-logo because it was confusingly similar to Southern Cal's logo; (2) holding that Carolina lacked standing to bring the cancellation counterclaim; and (3) finding that the initials "SC" are not unmistakably associated with the State of South Carolina. On appeal, the Federal Circuit affirmed.

Confusingly Similar: The appellate panel first agreed that the TTAB had appropriately held that the SC-logos were confusingly similar despite the lack of any actual evidence of customer confusion. (South Carolina did not appeal the Board’s findings that the marks were legally identical.)

Regarding Southern Cal's registration of the initials "SC," the appellate panel rejected the TTAB's finding that Carolina lacked standing, but affirmed the summary judgment because Carolina had not shown a genuine issue of material fact for trial.

Standing in a Cancellation Proceeding: A party damaged by a registered mark's "suggestion of a false association" has a right to file for cancellation of that mark. To have standing, the party must also show a "real interest" in the proceeding and a "reasonable basis" for the belief that the mark has (or will) cause false-association damage. The Federal Circuit found that Carolina had met this test of standing because it sold goods bearing the same mark.

Standard for Cancellation based on False Association: "To prevail on a Section 2(a) Lanham Act claim for cancellation based on false association, a party must show that the challenged mark is 'unmistakably associated' with another person or institution." Here, Carolina provided evidence that the public does associate the initials "SC" with South Carolina. However, that evidence is insufficient for a false association claim because "SC" also refers to "many entities aside from the state."

Indeed, South Carolina, in the context of another issue, submitted evidence showing that at least sixteen other universities and colleges represent themselves as "SC." In light of this evidence, South Carolina did not satisfy its burden on summary judgment. Even drawing all reasonable inferences in favor of South Carolina, evidence showing that the initials "SC" could refer to the State of South Carolina does not create a genuine issue on whether the initials uniquely point to the State.

Affirmed. 

As a native of South Carolina, I am regularly confused by uses of “SC” that refer to non-South-Carolina entities.

Patently-O Bits and Bytes No. 312

• Bruce Pokras recently made available his "Family-izer 2.4.1" web version. The free web-based software uses the EPO's INPADOC patent family database to group a list of patents into "families." This becomes quite helpful when looking at a portfolio of patents. Although the program runs on a web-browser, you will still need to download a small program to make it work. It took me about 3 minutes to get going.
• The USPTO FY2009 Annual Report provides the following numbers as of September 30, 2009:
• • Total Number of Pending Non-Provisional Utility Patent Applications: 1,139,344.
  • Percent that have Not Received a First Action from an Examiner: 53.4%

GRAPH UPDATED

Design Patent Rejections

Most utility patent applications are rejected at least once on either anticipation or obviousness.  Design patents are different.

As part of a larger project, I combed through 1049 file histories of design patents that issued in the past 12 months. Of those, 5 were rejected on novelty grounds and 8 on obviousness. This leads to a prior-art-based rejection rate of 1.2% (95% CI range of 0.7% – 2.1%).  The vast majority of the patents (81.6%) were never rejected during prosecution.  The most common rejections are under 35 USC 112 paragraphs 1 and 2.  Typically both paragraphs are asserted simultaneously.

According to the most recent USPTO annual report, design patents had an allowance rate of about 90% during the period FY2005–FY2009 as measured by the percentage of disposals that were allowances.  About half of design patents issued in 2009 were pending for less than one year.

These numbers suggest that the US design patent system is operating as a registration system rather than as one based on a true examination.  Along this vein, it is typically easier and cheaper to prosecute a design patent to issuance than to register a product design as trade dress.  To be clear, I support the idea of a design patent registration system. More on that in another post.

Patently-O Bits and Bytes No. 311

Quoted: President Obama to the Forum on Moderninzing Government:

“Believe it or not, in our patent office -- now, this is embarrassing -- this is an institution responsible for protecting and promoting innovation -- our patent office receives more than 80 percent of patent applications electronically, then manually prints them out, scans them, and enters them into an outdated case management system. This is one of the reasons why the average processing time for a patent is roughly three years.”

The Milwaukee Journal Sentinal asks “is it time to privatize the Patent Office?”  If not the whole PTO, the editorial asks why not “privatize most of the Patent Office functions?”

GWU’s IP Speaker Series Continues at 12:00 Noon this Spring:

• January 20, Laura Heymann of William & Mary (Naming, Identity, and Trademark Law)
• February 3, Michael Ryan of GWU, (Patent Incentives in Brazil)
• February 10, Abraham Drassinower of Toronto Law (What’s Wrong with Copying)
• February 24, Jonathan Zittrain of Harvard Law (Minds for Sale)
• March 24, Mark Janis of Indiana Law (Daniel Webster's Patent Cases)
• RSVP to iplaw@law.gwu.edu

Writing Competition: Virginia State Bar Section on Intellectual Property Law Law Student Writing Competition.  $4,000 cash will be given to a current US Law Student (including December 2009 graduates) who either attends school in Virginia or is a resident of Virginia. The prize will be awarded to author of the best IP focused law-review-style article. [Link]

 

Law School Summer Programs in Intellectual Property for 2010

When law students ask, I generally recommend pursuing practical experience rather than summer school. This year, however, summer jobs for law students are scarce -- making school a more likely alternative. Summer programs that focus on intellectual property (IP) law are especially interesting because they draw-together a critical mass of students and professors who are interested in patent and copyright issues.  In those settings, the intellectual property law discussions tend to spill-out from the class into lunch, dinner, and late-night pub conversations or debates.  In my experience, summer classes are often less rigorous than the ordinary law school classes. For that reason, I might avoid taking core-classes such as US Patent Law.

I created a simple spreadsheet guide [Download IPSummer2010] to help students locate intellectual property focused summer programs. To create the guide, I contacted all of the US patent law professors that I know and also sent an e-mail to the Deans of Academic Affairs of US Law School. There may be other programs out there -- notably, many law schools offer summer classes in IP law (although I wouldn't call those IP Programs).

Study Abroad: The list includes two programs in Munich, Germany (George Washington and Santa Clara); two programs in China (Franklin Pierce and John Marshall); and two programs on the isles (Loyola of LA in London and Franklin Pierce in Cork). Although not strictly an intellectual property program, UW/Marquette program in Giessen Germany will include an IP component.

In the US, Franklin Pierce's Intellectual Property Summer Institute (IPSI) has been a mainstay in Concord, NH. This year, they expect to offer 15 different courses focused on intellectual property (students are only allowed to earn up to 6 credits). I taught in Concord in the summer of '07 and had a fabulous time. Although the information is not yet fully available, American University is also planning a summer program in Washington DC as part of its Program on Information Justice and Intellectual Property (PIJIP). On the west coast, Santa Clara is again offering several IP classes through its Hi-Tech Summer School in Santa Clara (Silicon Valley). Folks at SUNY Buffalo (Buffalo, NY) and TM Cooley (Auburn Hills, MI) also wrote in to note that they will be offering IP classes within their summer offerings. I suspect that other schools will do the same.

All of the IP summer programs have limited enrollment.

Files: Download IPSummer2010.

Book Review: Patent Ethics: Volume I Prosecution

[This post is an old-one, I’ve moved it to the front because Amazon now has the books in stock.]

Patent Ethics: Prosecution

by David Hricik & Mercedes Meyer

ISBN: 0195338359

$225 from Amazon

Professor David Hricik is the country's leading expert on patent law ethics. Oxford University Press recently published his (and co-author Mercedes Meyer's) volume on patent prosecution ethics. This is a book that includes specific guidance for both patent attorneys and patent agents. It should be within the reach of every patent prosecutor. Topics include: guidance on client engagement and dis-engagement; the duty of loyalty to the client (perhaps as opposed to the inventor); avoiding conflicts of interest; specific areas of competency in patent prosecution; avoiding pitfalls created by the duty of candor; and issues arising from attorneys who practice both prosecution with litigation. The book also includes two very helpful appendices. The first appendix is an annotated version of the PTO ethics rules where the authors discuss nuances of each rule. The second is a set of sample forms; checklists; and client-memos -- a version of which should be used by every patent practitioner in handling client relations.

I suspect that this book will quickly become the leading authority on patent prosecution ethics. Although not at all foolproof, attorneys and agents who rely on the book for guidance will have some cover from charges of malpractice or inequitable conduct.

My only problem with the book is its price: $255! Once you add tax and shipping, the cost approaches $1 per page. Of course, that price would get you only about a 1/2 hour of Professor Hricik's time. This book is the first volume in a two-part series. The second volume will be published in 2010 and will focus on patent litigation ethics.

Patently-O Bits and Bytes No. 310: On TV

• New on NBC: “Kindreds,” created by Emmy Award winner David E. Kelley (“Boston Legal,” “The Practice,” “L.A. Law”), follows a curmudgeonly ex-patent lawyer and his group of misfit associates as their lives come together to form an unconventional kind of law practice. The series is from Warner Bros. Television and David E. Kelley Productions. Kelley is the writer and executive producer.
• New on Fox: Although it has nothing to do with patent law, Sons of Tucson was written by my college roommate.
• Last night on PBS: Copyright Criminals. I have the DVD version and will write a review once I watch it. [LINK]
• The Shark Tank: For those who have not seen it, the Shark Tank is pretty funny. The investors clearly see the importance of intellectually property rights but the nuances are almost always lost (perhaps in the editing process). [Link]
• Patent Juries: Joe Mullin has a great article at IPL&B on the jury verdict in the i4i v. Microsoft case. [Link]
• Dr. Noonan on Gene Patents and the L.A.Times: [I]n an editorial entitled "Genes and patents," the L.A. Times joined its East Coast cousin in taking an inaccurate and irrational position on an important question: patents on diagnostic methods involving genetic information. [Link]

PTA Errors: How Hard to Fight

Many recently issued patents should receive a further extension of their patent terms based on the USPTO’s miscalculations of PTA and the Federal Circuit’s decision in Wyeth v. Kappos. To receive that those additional months of protection, however, the patent holder may have to file a civil action against the PTO. The question for patentees will be whether the expected value of those additional months at the end of the patent term (years from now) are worth the up-front expense of filing suit.

I am confident that most applicants will find it not worthwhile to go about the effort of seeking the additional PTA extension. As I wrote in 2009, most patents expire before the end of their alloted patent term because applicants fail to pay the maintenance fees. [Link] That said, more than 45% of patents are maintained in-force through the patent term.

In the next few days, we may see a few firms ramping-up as PTA specialists in a way that could reduce the cost of suing.

Links:

• PTA Statistics
• Patent Maintenance Fee Payments
• USPTO Re-Calculating PTA
• Wyeth v. Kappos
• PTA for Fun and Profit (Kamholz)

As a side-note, Irving Kayton's company offers PTA Calculation for $200 per patent. (PatentTerm.Com).

Patent Term Adjustment Statistics

The Patent Term Adjustment (PTA) procedure operates to lengthen the patent term of a utility patent based on delays during patent prosecution. The current backlog of applications at the PTO suggests that most newly issued patents will have some positive adjustment.

I looked at the patent term adjustment (PTA) calculations for the 3187 utility patent issued on January 12, 2010. Eighty percent (80%) of these newly issued patents included some adjustment of the patent term based on the length of prosecution. For those with some adjustment, the average PTA is 14.5 months. The longest PTA adjustment in this group was for 74.5 months (six+ years). That patent (No. 7,647,402) took almost nine-years to issue. Under the Wyeth v. Kappos decision, I calculate that the PTA for the '402 patent would be extended by almost two additional years to 98 months (8+ years).

The chart below shows the cumulative frequency of PTA calculations for the January 12, 2010 patents using the pre-Wyeth calculations. It will be interesting to see if the PTO recalculates the PTA for these newly issued patents based on the Wyeth decision.

Appeals versus RCEs: The Wyeth PTA boost puts an additional thumb on the scale of appealing final rejections because filing of an RCE prevents any further accumulation of Part-B PTA. 35 U.S.C. 154(b)(1)(B)(i).

USPTO To Begin Re Calculating Patent Term

The USPTO has posted a notice acknowledging the Federal Circuit’s decision in Wyeth v. Kappos and indicating that the Justice Department will now determine whether to seek an en banc rehearing or petition for certiorari. In the meantime, the PTO will change its PTA calculations to “conform with the Federal Circuit’s decision.”

On January 7, 2010, the Federal Circuit issued a decision in Wyeth v. Kappos, No. 2009-1120, regarding the calculation of patent term adjustments under 35 U.S.C. 154(b). The Federal Circuit’s decision rejects the USPTO’s interpretation of the “overlap” limitation in Section 154(b)(2)(A). The Solicitor General will determine whether to seek further review of this decision. Pending that determination, the USPTO is in the process of changing the manner it will calculate patent term adjustments under Section 154(b) to conform with the Federal Circuit’s decision.

Applicants and Patent Owners dissatisfied with a patent term adjustment determination by the agency are reminded of the requirement to seek review of that determination within 180 days of patent issuance and the time periods set in the implementing regulations. See 35 USC 154(b)(4) and 37 CFR 1.705.

Although not 100% clear, the statute appears to put the duty of calculating the the patent term adjustment exclusively in the hands of the USPTO. Thus, anyone claiming additional patent term under 154(b) may only do so based on a PTA “determination made by the Director.” That theory is bolstered by the statutory limitation of 180–days for filing a civil action based on dissatisfaction with the PTA determination.

Action Item: Anyone whose patent is about to issue or whose patent has issued in the last 180–days should quickly determine whether additional patent term is due. It is unlikely that the PTO will go-back and recalculate PTA for those cases. The PTO may also be willing to re-calculate the PTA for patents issued more than 180 days ago. There is also the potential that a court would disregard the 180–day limitation in this instance based on a doctrine such as equitable tollling.

Statistics: In a prior study, I found that over 75% of recently issued patents were awarded some patent term adjustment due to delays during the patent prosecution process. The Wyeth decision should not change the number of PTA eligible patents, but instead will tend to increase the PTA calculation value. For the period June-2008 to June-2009, I found that the average PTA calculation ranged from 9 to 12 months depending on whether the patent was examined by a primary examiner or assistant examiner respectively. [Link]

See also: PTA Strategies Presentation by Polk, Brinkerhoff, & Wegner; Don Zuhn at Patent Docs; Eric Guttag’s post on IPWatchdog; Sheri Qualters at NLJ;

Reconsidering Divided Infringement

Centillion Data Systems, LLC v. Quest Corp., Appeal No. 2010-1110 (Fed. Cir. 2010)(now on appeal).

Centillon's patent No. 5,287,270 covers a system used to present user-specified pre-processed summary reports of billing information. In 2004, Centillon sued Qwest for infringement – arguing that the communications company offered this type of functionality to its customers. (LOGIC, eBill Companion, and Insite). The major problem with Centillon's claims is that they require activity on both a system computer and a customer's personal computer. This is a situation often termed divided-infringement.

Section 271 of the Patent Act creates a cause of action for unauthorized "use" of a patented invention. Centillon argued that Qwest used its invention by offering the service to its customers. However, in a 2009 ruling, the district court held that Qwest could not be liable because the company did not use each and every element of the asserted claims. Rather, some of the elements of the system were used only by Qwest customers.

In NTP v. RIM, 418 F.3d 1282 (Fed. Cir. 2005), the Federal Circuit broadly defined "use" of a patented system to focus on control and beneficial use of the system as a whole. Although that case defined use within the context of determining whether a system was used "within the United States" the district court found that a similar definition applies when determining whether a single entity used the invention. However, instead of looking at use of the system as a whole, the district court felt bound to consider "use" on an element-by-element basis. Thus:

[A] party is liable for direct infringement for the "use" of a system claim under § 271(a) if it, by itself or in combination with a third party directed by it, put each and every element of the system claim into service, i.e. exercised control over, and benefited from, the application of each and every element of the system claim.

A real trick in divided-infringement situations is that an accused infringer's actions of intentionally inducing another party to use some of the elements will not create a cause of action for infringement unless the accused infringer is shown to have control over the use of each element.

Centillion submits that the accused systems satisfy the '270 patent's limitation "said personal computer data processing means being adapted to perform additional processing" because the e-Bill client application, for example, is designed to adapt the customers' personal computers, the customers download the application following Qwest's instructions and user guide, and the customers "further manipulate" the billing data they receive from Qwest. However, as the Court noted earlier, as a general rule, to hold Qwest liable for direct infringement Centillion must demonstrate that Qwest, by itself, practiced each and every limitation of the system claim. Here, however, Qwest relies on its customers to satisfy this limitation. Although the eBill client application may have been designed to adapt the customer's personal computer, the designated evidence demonstrates that it does not actually adapt the customers computer until the customer executes the application. Moreover, Qwest does not control whether its customers load the Logic or eBill Companion client applications on their personal computers. . . . Centillion admits Qwest's customers are not obligated or contractually bound to perform additional processing on individual transaction records provided by Qwest. Rather, Qwest's customers independently determine whether or not to perform additional processing on individual transaction records by Qwest. Moreover, Qwest does not control whether its customers load the Logic or eBill Companion client applications on their personal computers. Therefore, the Court concludes that Centillion has failed to raise genuine issues of material fact regarding whether Qwest directly infringed independent claims 1 and 8, and dependent claims 10 and 46.

From a practical standpoint, the baseline solution to this problem is to properly draft patent claims to ensure that the claims focus on the operations of a single entity. Here, however, the crux of the invention was way that data from the server was communicated to the PC. The most natural way to describe the invention is to include both of those elements in the claim.

The appeal is now pending although no briefs have been filed yet. On appeal, the Federal Circuit should hold that the district court too narrowly focused its agency doctrine analysis. The courts have never held that strict control over a third-party's actions is necessary. This case is similar to ones where the actions of doctors & patients have been conflated and the court then determined whether the combined actions constituted infringement. See, for example, Eli Lilly and Co. v. Actavis Elizabeth LLC, --- F.Supp.2d ----, 2009 WL 5159650 (D.N.J. 2009)("The actions of the doctors and patients will be treated together, and will be considered a directly infringing act."); AstraZeneca LP v. Apotex, Inc., 623 F.Supp.2d 579, 598-600 (D.N.J.2009); Alza Corp. v. Andrx Pharms., LLC, 607 F.Supp.2d 614, 623 (D.Del.2009)

Notes:

• Read more about this case at PaTracer (where I originally learned of the case).
• File Attachment: CentillionSJOrder.pdf (117 KB)
• File Attachment: 5287270_Billing_system.pdf (1189 KB)
• A reexamination of the asserted patent was requested by Quest and granted by the PTO. However, after a full reexamination, the PTO confirmed the patentability of all 85 claims in the patent. (Ex. Parte Reexamination Certificate No. 7267).

Trade Dress Registration Rejected Out of Habit

The Foundation for a Christian Civilization, Inc. v. Mary Queen of the Third Millennium, Inc. (Fed. Cir. 2010)

If nothing else, the caption of this case is interesting. In 2009, the Trademark Trial and Appeal Board (TTAB) agreed with Mary Queen of the Third Millennium that the Foundation for a Christian Civilization’s “habit” could not be registered as a trademark because (1) the habit was not inherently distinctive and (2) the habit had not acquired distinctiveness. On appeal the Federal Circuit affirmed without opinion.

According to my source (Wikipedia), the Foundation is an alternate name for the American Society for the Defense of Tradition, Family and Property — “an organization of Roman Catholic Inspiration” that “opposes liberal and egalitarian ideas, policies, and trends.” The Foundation traditionally funded a Catholic counterrevolution against communism. Mary Queen of the Third Millennium is part of the a Vatical recognized “private association of Christ’s faithful.”

Members of both organizations wear the habit with its identifying markings. 

TTABVUE