October 2013

Antigua Preparing to Move Forward with WTO Authorized Rejection of US Copyrights

Patent

By Dennis Crouch

Over the past several decades, the US has been at the forefront of pushing through low international trade barriers and strong intellectual property rights. The current scheme is organized through the World Trade Organization and the vast majority of nations have signed-on as members. The WTO has a dispute resolution mechanism that allows one country to bring another country to task for failing to abide by their trade-related promises. Most of these cases involve either import restrictions placed on certain goods or the “dumping” of goods.

Since around 2003, the US has taken fairly effective measures to destabilize the market for cross-border gambling and betting services. In response to those measures, the country of Antigua and Barbuda filed a WTO dispute complaining that the US action was a trade violation and, the WTO panel agreed with Antigua. The particular findings are that “three US federal laws (the Wire Act, the Travel Act and the Illegal Gambling Business Act) and the provisions of four US state laws (those of Louisiana, Massachusetts, South Dakota and Utah) on their face, prohibit … cross-border supply … contrary to the United States’ specific market access commitments for gambling and betting services.” [Link]

The penalty for a WTO violation typically involves the WTO allowing counter-measures by the injured party – typically their own import quota or restriction. In countries with a strong domestic industry, the import quota can provide a strong, be it temporary, boost. However, those quotas also injure local consumers who typically pay more for lower quality goods or services. Antigua’s particular situation is also unique because the country does not have much of any domestic industry beyond tourism (including Gambling). As such, a typical quota does not make sense as a penalty against the US.

At the end of the day, the WTO authorized Antigua to suspend its TRIPs obligations with respect to U.S. intellectual property at a cost to the US.

Antigua is now rapidly moving forward with a monetization scheme that would essentially create a local market for copyrighted work owned by U.S. entities, but where no royalties are paid to the U.S. copyright holders. Antiguan legislation is expected in the upcoming weeks followed by bids from private contractors to build-out the online marketplace.

Warning: do not use political hearing video for a political purpose

Patent

Guest Post By Andrew Dhuey

Like most Americans, I watched the House Judiciary Committee hearing on H.R. 3309, the Innovation Act, this past Tuesday. While Members of Congress and witnesses lamented abusive assertions of patent rights, an ominous warning lurked below their talking heads:

Yes, that’s right – I am not allowed to use this Congressional hearing video for a political purpose. I am apparently free to use this for entertainment or religious purposes, but I would have to turn away lucrative commercial sponsorships. Fox News and MSNBC should think twice before using this video – only bona fide news programs allowed.

But seriously, Judiciary, this is embarrassing. On what basis could you possibly restrict the use of this video? Why would you even want to do that?

Let’s start with copyright law (psst…that’s within your jurisdiction, Judiciary!). The video is a production of the Library of Congress. That means no copyright. 17 U.S.C. § 105 (“Copyright protection under this title is not available for any work of the United States Government”). Even if the video were copyrighted, imagine the First Amendment implications of restricting the political use of a public, political hearing video.

Perhaps Judiciary has in mind a contractual theory for this restriction. By watching the video, I am agreeing to this use restriction. That would be quite a stretch, though. If you sue me on that theory, Judiciary, I’m going to call you a “Video Troll” and lobby you to pass legislation that prevents abusive use restrictions on legislative hearing videos.

Maybe the most plausible explanation for this use restriction is that it is there by mistake. Please correct that mistake, Judiciary. It looks bad for the people who make intellectual property laws to impose a legally unenforceable use restriction on a public hearing video.

Andrew Dhuey is an appellate lawyer in Berkeley, California.

Section 337 Caseload and Win Rate Revert to Norms

Patent

Guest Post By Michael G. McManus< ?xml:namespace prefix ="" o />

Traditionally, section 337 complainants at the ITC have enjoyed a greater chance of success than district court plaintiffs.  The historical complainant win rate at the ITC has been calculated as 58%.[1]  This contrasts with a district court patentee success rate of 32% (considering both summary judgment and trial stages).[2]  In 2010 and 2011 however, there was an unprecedented spike in the number of cases filed with the ITC.  These complainants fared poorly with a win rate well below the historical norm.  For section 337 complaints filed in 2012, however, both the number of cases and the win rate have reverted to recent historical norms.

In calendar year 2008, there were 36 section 337 complaints filed.  Of these, 20 were resolved by settlement[3] prior to the issue of an initial determination and 16 were resolved by administrative law judge (ALJ) decision[4] (either summary determination or final initial determination).  These 16 ALJ decisions were evenly split – 8 were resolved in favor of the complainant and 8 in favor of the respondent yielding a win rate of 50% at the ALJ stage.  The following year was generally similar.

In calendar year 2009, there were 34 section 337 complaints filed. Of these 34, 21 were resolved by settlement prior to the issue of an initial determination and 13 were resolved by ALJ decision.  Among those cases decided by ALJ decision, 6 were resolved in favor of the complainant and 7 in favor of the respondent yielding a win rate of 46%.

In calendar year 2010, the number of filings increased markedly to 58.  Of these, 36 were resolved by settlement prior to the issue of an initial determination and 22 were resolved by ALJ decision.  Of these 22 ALJ decisions, 10 were in favor of the complainant and 12 in favor of the respondent yielding a win rate of 45%.

In calendar year 2011, the number of section 337 filings increased further to an all-time high of 68.[5] Of these 68 cases, 49 were resolved by settlement prior to the issue of an initial determination and 19 were resolved by ALJ decision.  Of these 19 ALJ decisions, 5 were in favor of the complainant and 14 in favor of the respondent yielding a rather low win rate of 26%.

In calendar year 2012, by contrast, the number of section 337 filings fell to 40.  We cannot calculate the win rate for all cases filed in 2012 as those filed in the latter part of the year may still be awaiting ID’s.  All of those cases filed in the first half of 2012, however, have either settled or been subject to an initial determination.  Thus, we can use those cases from the first half of 2012 as a proxy.

There were 25 section 337 complaints filed in the first half of calendar year 2012.  Ten of these 25 resulted in ALJ adjudications. Of these 10, 6 were in favor of the complainant and 4 were in favor of the respondent yielding a win rate of 60%.

Put in graphical format, the win rate over time is seen as follows:

McManus1:

Overlaying the section 337 caseload over win rate yields the following:

McManus2

The graph suggests an inverse relationship between caseload and complainant success rate but there is no obvious explanation for that relationship.  One possibility is that the ITC’s increasing popularity attracted weaker cases. Also, it is possible that the strain of a greatly increased caseload caused the ITC to react in ways that were less hospitable to complainants. In any case, the “great disruption” of 2011 seems to have passed and the Commission’s caseload and win rate have reverted to their historical norms.


Michael McManus is a partner at Duane Morris.
 

[1] Colleen V. Chien, Patently Protectionist? An Empirical Analysis Of Patent Cases At The International Trade Commission, 50 Wm. & Mary L. Rev. 63 (2008), at 97 n. 174 (overall win rate for the period from January 1995 to June 2007).

[2] PWC 2012 Patent Litigation Study at 17 (overall win rate for the period from 1995 to 2011).

[3] Here “settlement” encompasses all cases resolved by means other than contested adjudication (e.g., withdrawal of complaint, default).

[4] This article will evaluate win rate at the initial determination stage rather than the final determination stage to increase the sample size and to permit an “apples to apples” comparison with cases filed in 2012 (most of which have not yet proceeded to final determination).

[5] As this is the number of cases filed in the calendar year rather than the ITC’s fiscal year, it differs slightly from statistics on the ITC’s web page.

AIA Patents

Patent

The first-to-invent rules of the America Invents Act came into force on March 16, 2013. Patents with an effective-filing-date of March 16 or later are judged under the new rules of prior art and priority found in 35 U.S.C. § 102. Because the patent-prosecution process is slow, it appears that only two such utility patents have issued thus far: U.S. Patent Nos. 8,557,916 and 8,534,240. Both patents through an accelerated examination program and both issued without substantive rejection from the patent examiners. We expect to see only a trickle of these cases coming through over the next year with a larger bolus following.

LinkedIn and Ethics – Florida opinion

Ethics

There's a lot of flux and uncertainty about a lot of ethics and social media/technology.  For Florida lawyers, a staff ethics opinion had severely hampered lawyers' ability to use LinkedIn.  Apparently, that has been reversed, according to an article here.

I've been asked to present a 3 hour (yes, 3 hour) presentation in the spring of 2014 on e-ethics issues to a big group of Georgia judges, and will be looking at that stuff as I go along, and will post anything of interest here.

Federal Circuit: Patent Claims Broadened During Prosecution Fail Written Description Requirement

Patent, , ,

By Dennis Crouch

Synthes USA v. Spinal Kinetics (Fed. Cir. 2013)

In a split opinion, the Federal Circuit has affirmed the jury verdict that Synthes’ asserted patent claims are invalid for lack of written description and has also affirmed the district court’s denial of SK’s request for exceptional-case attorney fees under 35 U.S.C. § 285. Judge O’Malley penned the majority opinion that was joined by Judge Prost. Judge Taranto dissented – arguing that the evidence presented at trial was – as a matter of law – insufficient to prove that the claims lacked adequate written description.

Synthes’ U.S. Patent No. 7,429,270 is directed to an intervertebral implant invented by a team of Swiss researchers. The original application was placed on file as an international application (PCT) in 2003. The U.S. national stage application was then filed in 2006. Five-years into prosecution, the patentee substantially amended the claims and added a new set of claims that were then asserted against SK. Claims 29-31. As part of these new claims, Synthes included the new terms “opening” and “plurality of openings” that had not been used previously in the patent application document. The original disclosure was directed more particularly toward grooves rather than the seemingly broader term openings. According to SK, Synthes added these limitations to the claims only after the accused SK product was on the market in a calculated attempt to shift the scope of the patent to cover SK’s improved technology. Under US patent law, that sort of intentional shifting of patent claim scope is permissible so long as the amended claim is sufficiently supported by the original disclosure. See See Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 909 n.2 (Fed. Cir. 2004).

It is not surprising that the infringement litigation turned on the proper construction of the “plurality of openings.” As is usual for patent litigation, the patentee was working to find a “right-sized” patent that was broad enough to cover the accused product but narrow enough to still be valid. Here, the approach was to create a term “opening” in an implant-plate that was generic enough to both (1) be described by the disclosed radial plate grooves and (2) capture the elongated circle slots of the accused device. However, the jury sided with the accused infringer and found the claims invalid under the written description doctrine.

On appeal, the Federal Circuit affirmed – finding that the substantial evidence supported the jury verdict.

Sufficiency of written description requires that the original disclosure reasonably convey to PHOSITA that the inventor had possession of the claimed subject matter at the time of filing. The exact level of detail required depends upon “the nature and scope of the claims and on the complexity and predictability of the relevant technology.” See Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc).

In affirming the jury verdict, the basically followed the precedent of Leibel-Flarsheim to find that increased breadth-of-claim was not supported by the more narrow original specification. In particular, the court noted that the original disclosure only included “groove” examples, not slots or openings on the plate. (“The written description, however, never discloses anything broader than using grooves to anchor the fiber system to the cover plates.”) That intrinsic evidence was then bolstered by expert testimony regarding the important differences between grooves, slots and other openings. Based upon this evidence, the court found substantial evidence for the jury verdict of invalidity.

[T]he jury was asked to determine whether the written description disclosure of “grooves” “reasonably convey[ed] to those skilled in the art that the inventor had possession of [an intervertebral implant that could utilize any sort of opening located anywhere on the cover plates to anchor the fiber system] as of the filing date.” Ariad, 598 F.3d at 1351. The jury did not believe so and, when all reasonable inferences are drawn in favor of the jury verdict, we must affirm that decision.

One tricky issue here is the various burdens. On review, the appellate court looks for substantial evidence (more than a mere scintilla) but the jury had to find clear and convincing evidence of invalidity.

Writing in dissent, Judge Taranto framed this case is one where the “structural claim language … is broader than the specific embodiments disclosed in the written description.” Of course, Federal Circuit precedent allows claims to be broader than the specific embodiments. See In re Rasmussen, 650 F.2d 1212, 1215 (CCPA 1981). According to Taranto, in this type of situation (alleged over-breadth), the challenger must show that the “particular difference” between the claim and the disclosure “has a material effect on whether the product or process would achieve the aims of the claims at issue, with materiality of the effect not the same as non-obviousness but related to predictability.” In other words, broader conceptions of the invention that would be predictable by PHOSITAs mind after reading the specification should be deemed to fit within the written description.

= = = = =

On the concept of attorney fees under 35 U.S.C. § 285 – the court reiterated its rule sanctions against a losing patentee can only be imposed after a showing of clear and convincing evidence of either (1) litigation misconduct; (2) bringing the litigation in subjective bad faith; or (3) bringing objectively baseless litigation. Here, the appellate court agreed with the district court that SK had failed to demonstrate clear-and-convincing evidence of any one of those three justifications for fees.

Innovation Protection Act of 2013

Patent

by Dennis Crouch

We have been discussing pending legislation in Congress. On October 29, House Judiciary Committee Ranking Member Conyers (D-Mich.), IP Subcommittee Ranking Member Watt (D-N.C.), and Congressman Doug Collins (R-Ga.) introduced H.R. 3349 the “Innovation Protection Act.”

The Bill is designed to protect the PTO from fee diversion by creating a wholly separate PTO revolving fund that the PTO could spend, regardless of any government shutdown, sequestration, or failure of appropriations.  “Any amounts in the Fund shall be available for use by the Director without fiscal year limitation.”  Of course, the fund would be maintained by USPTO fees and no taxpayer monies would go toward building the fund. 

File Attachment: H.R. 3499.pdf (249 KB)

Patent Reform 2013: Pending Bills

Patent, , ,

By Dennis Crouch

I wrote earlier about the pending Innovation Act (H.R. 3309) as proposed by a bipartisan set of Congressional leaders led by Rep. Bob Goodlatte. A host of other patent related bills are also pending in the House and Senate. The following is a rundown of some:

Manufacturing Innovation in America Act of 2013 (H.R. 2605)

Tax deduction carryover for patent development expenditures where profit is made years later.

Patent Abuse Reduction Act of 2013 (S. 1013) (Senators Cornyn and Grassley)

Smaller version of Goodlatte's Innovation Act that would focus on (1) raising pleading requirements (2) limiting discovery costs (especially pre-claim-construction); and (3) awarding attorney fees for the prevailing party.

End Anonymous Patents Act (H.R. 2024)

Requirement that the patent owner regularly update ownership information in the public record, including the "ultimate parent entity."

Patent Litigation and Innovation Act of 2013 (H.R. 2639)

Includes many provisions in parallel to the Goodlatte Innovation Act, but also includes a "sanction for abusive litigation" with mandatory review of each case by the court to ensure that no Rule 11(b) violations occurred.

MODDERN Cures Act of 2013 (H.R. 3091)

Extension of patent term for four to seven years for diagnostic medical tests. The program would be run through the FDA.

PATENT Jobs Act (H.R. 2582)

Proposed elimination of the PTO from the sequestration rules.

STOP Act (H.R. 2766)

Expanding the covered-business-method post-grant-review to also cover non-financial business methods and removal of the sunset provision. This is roughly parallel to the Patent Quality Improvement Act of 2013 (S. 866)

PACES Act (S. 1478) (Senator Cardin)

The Bill would remove certain patent infringement actions from Federal District Courts to the Court of Federal Claims. In particular, the bill focuses on causes of action against the unlicensed use patented inventions in the provision of 9-1-1, enhanced 9-1-1, or other emergency services. The CFC tends to favor the accused infringer both in terms of procedure and remedies available.

PARTS Act (S.780)

Act would prevent design patent owners from using those patents to prevent the use unauthorized spare-parts in the auto industry.

Medical Innovation Prize Fund Act (S. 627) (S. Sanders)

The bill would seemingly end drug patents with the text "no person shall have the right to exclusively manufacture, distribute, sell, or use a drug, a biological product, or a manufacturing process for a drug or biological product in interstate commerce."

Judge Denies Motion for Continuance to Party Who Needs New Firm Because Party Anticipates Litigation with Counsel of Record

Ethics,

Two weeks before a patent trial, the patentee says it expects litigation between it and its counsel.  So, it moves for continuance so it can get new lawyers.  Motion denied.  The case is Alexsam, Inc. v. J.C. Penney Company, Inc., et al., Case No. 2:13-cv-5 (E.D. Tex. Oct. 11, 2013), and an article about it is here.

This is awkward, to say the least.  On the one hand, the defendants surely have an interest in getting the case tried, and the court has an interest in managing its docket, but a lawyer who expects to be sued by his client (seemingly the case here) can't represent that client unless he reasonably believes he can do so and he gets the client's informed consent after full disclosure.  The odds of that being done right are slim.  So, where this ends up is the client seemingly not being able to prosecute its case, and so the firm incurring any damages caused by the withdrawal (assuming the client had a reasonable basis, etc.).

Wild.

Intellect Wireless v. HTC

Patent

By Jason Rantanen

Intellect Wireless, Inc. v. HTC Corp. (Fed. Cir. 2013) Download 12-1658.Opinion.10-7-2013.1
Panel: Prost, Moore (author), O'Malley

This opinion is notable because it involves one of the rare instances post-Therasense in which the Federal Circuit concludes that inequitable conduct occurred.

This appeal involves two related patents, Patent Nos. 7,266,186 and 7,310,416, which relate to wireless transmission of caller ID information.  During the prosecution of the '186/'416 patent family, Daniel Henderson, the inventor named on the patents, submitted a Rule 131 declaration to overcome a prior art reference.  A Rule 131 declaration is a document in which the inventor asserts that he or she invented the claimed invention prior to the date of a prior art reference cited by the examiner, a process colloquially referred to as "swearing behind."  (The mechanism does not allow applicants to bypass a statutory bar and was eliminated by the AIA.)  Mr. Henderson averred in the declaration that “the claimed invention was actually reduced to practice and was demonstrated at a meeting . . . in July of 1993.”  

When Mr. Henderson's company, Intellect Wireless, sued HTC for patent infringement, it came out that he had not actually reduced the invention to practice as of the date stated in the declaration.  The district court found that the false declaration constituted inequitable conduct under the Therasense framework.  Intellect appealed.

On appeal, the Federal Circuit affirmed, agreeing that both the requirements of materiality and intent were met. 

Materiality: One question left somewhat open after Therasense was the issue of what constituted egregious affirmative conduct.  Here, the court agreed that Mr. Henderson's conduct rose to that level. 

In one of its earliest opinions, the Federal Circuit held that when an applicant files a false declaration, the applicant must "expressly advise the PTO of [the misrepresentation’s] existence, stating specifically wherein it resides." Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1572 (Fed. Cir. 1983). In addition, "if the misrepresentation is of one or more facts, the PTO [must] be advised what the actual facts are." Id. 

Therasense, the Intellect Wireless panel held, did not modify this law.  "[T]he materiality prong of inequitable conduct is met when an applicant files a false affidavit and fails to cure the misconduct." Slip Op. at 7. 

Here, the original declaration was indisputably false; the only question was whether the subsequent actions by Mr. Henderson's attorney were sufficient to cure the falsity.  The court held that they were not.  While the attorney quickly submitted a revised declaration, that revised declaration failed to correct the falsehoods in the original declaration.  It did not expressly negate the false references to actual reduction in the original declaration, which included statements such as a reference to a "prototype now in the Smithsonian" that suggested a device embodying the claimed invention was actually built at the relevant time.  The panel agreed that "[n]owhere did the declaration openly advise the PTO of Mr. Henderson’s misrepresentations, as our precedent clearly requires," Slip Op. at 6., and "at best, the revised declaration obfuscated the truth."  Id.

Intent: The Federal Circuit also affirmed the district court's finding of intent to deceive.  In addition to the false statements made during prosecution of the '186 and '416 patents, Mr. Henderson also made false statements about actual reduction to practice during the prosecution of other patents in the family.  This pattern of false and misleading statements combined with the submission of a declaration containing fabricated examples of actual reduction to practice in order to overcome a prior art reference was sufficient to establish intent to deceive. 

Challenging the PTO’s NonAppealable Decisions to Grant or Deny Petitions for Inter Partes Review

Patent, , , ,

By Dennis Crouch

In re MCM Portfolios LLC (Fed. Cir. 2013) (pending on petition for writ of mandamus)

In a recent post, I wrote briefly about statutory bar against appealing PTO decisions to grant or deny a request for inter partes review. In particular, 35 U.S.C. § 314(d) reads as follows: No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable. MCM has now filed a somewhat direct challenge to the substance of that provision with a writ of mandamus to the Federal Circuit. Of course, a petition for writ of mandamus is not an appeal but instead a request for a particular order. By filing a writ (rather than an "appeal"), MCM avoids the statutory bar against appeals and also avoids the parallel problem arising from the lack of statutory support for a direct appeal. As I explain below, MCM would also argue that the statutory bar on appeals would not apply in its context because its petition challenges a PTO decision under § 315(b), not § 314.

MCM's Patent No. 7,162,549 covers a mechanism for controlling Flash storage devices that uses firmware error correction. According to the patentee, many Digital Picture Frames make use of the invention in their mode-of-operation. On September 21, 2011, MCM served PanDigital with a complaint for infringing the patent. Later, on March 28, 2012, MCM also sued HP for infringement. Now, the two lawsuits are largely the same because HP picture frames are actually made by PanDigital. MCM has provided expert testimony that HP DPFs are actually the PanDigital frames that have simply been re-branded with HPs name (with PanDigital's permission). Furthering the connection, HP publicly identifies PanDigital as its supplier; directs its customers to PanDigital for customer support; and sells its HP products on Amazon with an indication that they are also PanDigital products. Later, on March 28, 2013 HP filed its request for inter partes review. The date is important because it is just shy of one year after the March 28, 2012 date when HP was sued for infringement. It is, however, well over a year after PanDigital was sued.

35 U.S.C. § 315(b) creates a one-year statute of limitations for filing a request for inter partes review. The deadline is triggered when "the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." Here, HP is the petitioners and filed within one-year of being served a complaint. However, as foreshadowed above, MCM argues that, for this action, PanDigital should also be considered a "privy of the petitioner."

In its decision, the PTAB sided with HP – writing that "[MCM] provides no persuasive evidence that HP could have exercised control over Pandigital's participation in the Texas Action. Thus, § 315(b) does not bar institution of inter partes review based on HP's Petition."

In the mandamus action, MCM argues that statute-of-limitations here is essentially a time-delayed res judicata action and, as such, it makes sense to interpret "privy" in the same manner as is done by the Supreme Court in those preclusion cases. In particular, MCM relies heavily on Taylor v. Sturgell, 553 U.S. 890 (2008) to argue that the grounds for binding related parties is much broader than the "control" grounds suggested by the USPTO. The PTO's approach consequently "systematically misconstrue[es] Taylor to allow late IPRs." Of note here, the PTO seemingly agrees that Taylor controls, but reads Taylor differently than MCM.

Because Mandamus is an extraordinary writ, the petitioner must do more than simply indicate that the Board was wrong in its decision. Rather, the petitioner must also convince that this is a case that needs to be heard immediately. MCM offers three key reasons:

  • The Board's interpretation of §315(b) privity is incorrect as a matter of law.
  • The systematic denial of Taylor's second ground for establishing privity justifies this Court's exercising its supervisory role to resolve important issues of first impression that involve alleged usurpation of power. Schlagenhauf v. Holder, 379 U.S. 104 (1964).
  • The order of institution of an IPR cannot be remedied by a reversal on appeal.

Edward P. Heller is representing MCM in this appeal.

Download InreMCMPortfolioLLCWrit

Upcoming Fee Changes

Patent

A new set of US Patent Office fees will become effective on January 1, 2014.

Issue Fee Decrease:

  • Issue fee: from $1,780 to $960
  • Reissue Fee: from $1,780 to $960
  • Design Issue Fee: from $1,020 to $560
  • Publication Fee: From $300 to $0
  • Note: Small and Micro Entity reductions are available for all issue fees. I suspect that a substantial number of applicants will delay payment of issue fee until after the new year in order to take advantage of this significant savings-per-patent.

Small and Micro Entity Reductions for PCT / International Stage Applications

  • Small and Micro entity fee reductions will be available for a variety of new PCT fees. This change significantly changes the cost-structure for small companies considering PCT filings.

Assignment Recordation Fee Elimination:

  • When submitting an assignment electronically, the fee drops from $40 to $0 for recording the assignment.

http://www.uspto.gov/web/offices/ac/qs/ope/fee031913.htm

Bits & Bytes from Jonathan Hummel

Patent,

RECENTLY

#1. Twitter’s Puny Patent Portfolio May Prove A Positive

Leading up Twitter’s IPO, market analysts are pointing to the relatively small number of patents held by the company as weakness. Jeff John Roberts, writing for GigaOM explains why Twitter’s slim patent portfolio might not be a weakness, but instead a sign of strength.

            -read Bloomberg’s countervailing story here.

 #2. Apple Touchscreen Patent Upheld in Reexamination

Steven Musil, writing for C|Net, reports that “after invalidating US Patent No. 7,479,949 last December, the USPTO issued a re-examination certificate (see article & examination certificate here) reaffirming all 20 claims included in the patent, according to a filing last month spotted by Foss Patents.”

#3. Jorge Contreras on Patent Pledges Outside Standards-Setting Organizations

Dan O'Connor, writing at Patent Progress, interviewed Jorge Contreras to discuss his new paper, “Patent Pledges,” covering FRAND commitments and a call for a new paradigm in standards-setting. Mr. Contreras is a professor at the Washington College of Law at American University and a contributor at Patent Progress. His research focuses primarily on the effects of intellectual property structures on the dissemination and production of technological innovation, with a focus on basic scientific research and technical standards development.

#4. Goodlatte’s Innovation Act

Both Dennis Crouch here at Patently-O, and our friend Andrew Williams  at PatentDocs, wrote about legislation proposed by Rep. Bob Goodlatte (R-Va), namely the “Innovation Act.” The bill is squarely aimed at Patent Trolls and allows for parties to discover who the ultimate owner of the patent or exclusive right actually is, rather than a shell corporation.

            -Read Dennis’ article here.

            -Read Andrew’s article here.

PENDING

#1. Samsung Files Patent on Competitor to Google Glass

Alex Colon, writing at GigaOM, reports that Samsung has filed a design patent in Korea that looks suspiciously similar to Google Glass. Apparently, the Samsung patent focuses more on the “sportiness” of the spectacles. “The patent shows that the glasses could come with built-in earphones, which would allow you to listen to music and answer calls while you’re wearing it.”

 

COOL TECH

#1. Unbreakable Chemical Locks

Lisa Zyga’s story at Phys.org explains how research performed by Professor Abraham Shanzer and his group at the Weizmann Institute of Science in Rehovot, Israel could lead to the first chemical lock that responds to multiple “passwords.”

            -read the article here.

 

UPCOMING

Whittier Law School IP Symposium

  • The Global Medicine Challenge: The Fine Line Between Incentivizing Innovation and Protecting Human Rights
    • The Keynote Speaker will be James Love, director of Knowledge Ecology International, and NGO dealing with issues involving Intellectual Property.
    • This event has been approved for 5.5 hours of CLE
    • View the Program Flyer here.

 

WIPO Events

 

JOBS

#1. Patent Associate – Law Firm – Rockford, Ill.

            –Reinhart Boerner Van Deuren s.c., is a full-service business-oriented law firm with offices in Chicago, Rockford, Denver, Phoenix, Milwaukee, Madison, and Waukesha with a national and international client base.

 

#2. Patent Attorney – Law Firm – Washington, D.C.

            –Morris & Kamlay LLP, an IP specialty firm in DC with a relaxed and flexible work environment, is looking for an experienced patent prosecutor.

 

#3. Patent Attorney – Law Firm – Melbourne, Australia

            –Phillips Ormonde Fitzpatrick is seeking a Patent Attorney to work in its Melbourne, Australia, offices.

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The Baby Boom of Patent Practitioners
AIA Shifts USPTO Focus from Inventors to Patent Owners
New Patent Legislation: Innovation Act of 2013
Samsung Proposes a Patent Pledge to Settle EC FRAND Investigation
Anti-'Patent Troll' Bill Introduced In Congress
Bits & Bytes from Jonathan Hummel
Patent Practitioners

New Patent Legislation: Innovation Act of 2013

Patent, , , , ,

By Dennis Crouch

Representative Bob Goodlatte (R-VA) with the bipartisan support of ten other members of the House has introduced a new set of proposed patent reforms currently tiled the “Innovation Act.” (H.R. 3309) The proposed bill includes a number of provisions disparate provisions that would have a substantial impact on patent enforcement, procurement, and ownership. Some of the changes include severe increases in the requirements associated with filing a patent infringement complaint; Major statutory limitations on discovery; Elimination of the patent applicant option of filing a civil action to obtain a patent under Section 145; Forcing the USPTO to use standard claim construction (rather than BRI) in post-grant proceedings; Introduction of a new Double-Patenting rule; etc. the 50+ page bill is somewhat complex and, as Hal Wegner wrote, “[e]very organization impacted by patents must carefully study the Goodlatte bill for hidden features or suffer the consequences.” [Text][Sectional-Analysis]

Major Proposed Changes include the Following:

  1. A heightened pleading requirement for filing patent infringement claims, including a particularized statement “with detailed specificity” as to “how the terms in each [asserted] claim … correspond to the functionality of [each] accused instrumentality.” A brand-generic infringement action under § 271(e)(2) need not comply with the heightened pleading requirements. In addition, the Judicial Conference would be ordered to modify the form complaint for patent infringement to reflect the heightened pleading.
  2. An assumption that attorney-fees will be awarded to a prevailing party. The new provision would require an award of fees “unless the court finds that the position of the nonprevailing party . . . was substantially justified or that special circumstances make an award unjust.” On its face the provision is largely party-neutral with two caveats. First, the provision allows prevailing-accused-infringers to collect fees from non-plaintiffs who have a substantial interest in the patent-at-issue in the case. Second, the provision indicates that a patentee who extends a covenant-not-to-sue to the other party will be deemed a non-prevailing party and thus subject to attorney fees.
  3. Discovery will be limited until after a ruling on claim construction. In addition, the US Judicial Conference would be ordered to develop rules “to address the asymmetries in discovery burdens and costs in any civil action [relating to patents].”
  4. Transparency of Ownership. As a new required disclosure, the patentee in an infringement litigation must disclose anyone with a financial interest in either the patents at issue or the patentee and must additionally disclose the “ultimate parent entity” of the patentee. In the appropriate Federal Regulations, an ultimate parent entity is ethereally defined as “entity which is not controlled by any other entity.”
  5. Stay for Customer Suits. When both a manufacturer and its customer are sued for infringing the same patent, customer suit would be stayed so long as the customer agrees to be bound by the results of that case.
  6. IP in Bankruptcy. Under the new law, when a foreign company goes bankrupt, its trustee would no longer have the power to cancel licenses associated with US patent rights.
  7. No Civil Action to Challenge PTO. The new law would eliminated the civil action option found in 35 U.S.C. § 145. Patent applicants refused by the patentee would rather only have the option of appealing directly to the Federal Circuit.
  8. Shrinking Post-Grant-Review Estoppel. Under the current law, a post-grant review proceeding creates an estoppel against the petitioner later arguing in other forums “any ground that the petitioner raised or reasonably could have raised during that post-grant review.” 35 U.S.C. § 325(e). The new law would narrow that estoppel only to grounds actually raised.
  9. Patent Office Claim Construction. During Post-Grant Reviews and Inter Partes Reviews, the new law would require the patent office to use the ordinary “district court claim construction” law, that is, “construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”
  10. Double Patenting. There is some potential that the judicially created obviousness-type double patenting doctrine was eliminated by the recently implemented first-to-file regime. The new law would codify that doctrine.
  11. Covered Business Method Patent Review. The AIA creates an option for third parties to attack patents covering non-technological “covered business method” innovations through the use of a new post-grant review proceeding. The new law would somewhat restrict the scope of CBM review to only cover first-to-invent patents (rather than pre-AIA patents) as defined in Section 3(n)(1) of the AIA. The new law would also, inter alia, codify the USPTO’s somewhat broad definition of “financial product or service” described in the Versata case.
  12. Patent Term Adjustment. The new law would eliminate any patent term adjustment for “B delay” occurring after an applicant files a request for continued examination. This change would have a significant impact on the patent term of a large number of issued patents. The amendment proposes to be effective with regards to any “patent application or patent” pending on the Act’s date of enactment. (Note – it is unclear what it means for a “patent” to be “pending” in this context.)
  13. Federal Jurisdiction over Patent Cases. Although not a statutory change, the new law would make the “clarifying” statement that: “The Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole.”

Another Means-Plus-Function Patent: Invalid as Indefinite

Indefinite, Patent,

By Dennis Crouch

Ibormeith IP v. Mercedes-Benz (Fed. Cir. 2013)

Ibormeith’s patent covers a “sleepiness monitor” intended to sense when a vehicle driver is getting sleepy. This is obviously an important topic that results in thousands of annual traffic accidents. Ibormeith’s solution is to monitor both the time-of-day (circadian rhythm inputs) and unusual steering movement (vehicle inputs) and then use an algorithm to determine the likelihood of sleepy driving. The result then could be to warn the driver by beeping or perhaps taking more automated control of the vehicle. The patent (No 6,313,749) was issued back in 2001 around the time when attorneys were coming-round to the notion that means-plus-function claims lead to trouble – either comedy or tragedy depending upon your point-of-view.

The patent statute allows for patent claims to be written as a “means for” accomplishing a particular function. 35 U.S.C. § 112(f). When written in claim form, a “means for” claim appears extremely broad because it suggests coverage of all possible means or mechanisms for accomplishing the stated goal. However, the statute says otherwise. Rather than covering all possible mechanisms, Section 112(f) requires that the limitation be construed to only cover the “corresponding structure … described in the specification and equivalents thereof.” Since 1994, the Federal Circuit has supported this narrow construction. See In re Donaldson, 29 USPQ2d 1845 (Fed. Cir.1994). As Judge Taranto writes in this case “The price of using this form of claim … is that the claim be tied to a structure defined with sufficient particularity in the specification.”

Taking all of this a step further, the courts have also repeatedly held that a patent is invalid as indefinite under Section 112(b) if a claimed “means” if no particular corresponding structure is disclosed in the specification. See, e.g., Function Media, LLC v. Google, Inc., 708 F.3d 1310, 1319 (Fed. Cir. 2013); Blackboard, Inc. v. Desire2Learn Inc., 574 F.3d 1371, 1382-83 (Fed. Cir. 2009).

Here, the patent claims at issue all include a “computational means” that figure out whether or not someone is sleepy. And, on summary judgment, the district court found the claims indefinite because the claimed computational means were not supported by structure in the specification. That decision has been affirmed in a unanimous opinion written by Judge Taranto. Oddly, adequate disclosure under § 112(b) is a question of law reviewed de novo on appeal. That lower standard still did not carry the day for the patentee.

As in so many cases, the claimed “means” is really an algorithm being run on a computer to accomplish some particular goal. The court has ruled that the algorithm needs to be one that is “sufficiently defined to render the bounds of the claim . . . understandable to the implementer.” Here, the specification defines a set of input variables and a “sleep propensity algorithm” that is the sum of those variables. The specification also indicates the potential for various warning thresholds associated with the sleep propensity algorithm. However, the specification does not include any real examples for how the algorithm would work.

For Judge Taranto, the decision is largely about litigation strategy. The patentee argued that the algorithm is very broadly defined by the specification. The point of that argument was to ensure broad claim scope. However, the results is a finding that the algorithm is not particularly defined and therefore that the claim is invalid.

With means-plus-function claiming, the narrower the disclosed structure in the specification, the narrower the claim coverage. To succeed in ultimately proving that the “computational means” elements cover the accused Mercedes products … Ibormeith’s [argued that the algorithm of] Table 10 … is broad enough to reach the accused products. With consequences of such importance, Ibormeith’s position as to Table 10’s breadth is fairly treated as a binding admission. . . . That position, however, fails in the necessary attempt to steer a course that permits proof of infringement yet avoids invalidity.

Judge Taranto’s analysis here makes sense within the context of litigation strategy and holding parties to their litigation admissions. The major problem with this approach, however, is that allows patentees to hold-in and maintain ambiguity until the point of litigation.

= = = = =

The patent at issue here is based upon the invention by Dr. Louise Reyner and Dr. Jim Horne who are both sleep researchers at Loughborough University in the UK and who won the Queen’s prize in 2007 for their work on road death reduction through their work on driver sleepiness research. In March 2010, the UK company Astid Ltd. recorded its ownership of the patent and that same day Ibomeith was formed that is one of Michael Connelly‘s companies.

Interpreting the IPR Deadline; Conflicting PTAB Decisions; and Appealing Nonappealable Decisions

Patent, ,

By Dennis Crouch

St. Jude Medical v. Volcano Corp. (PTAB 2013)

This PTAB decision is important for a number of reasons. First, as a rule of substantive law, the decision announces a new interpretation of the statute-of-limitations for filing an IPR under 35 U.S.C. § 315(b). Second, the decision highlights (without directly addressing) the need for a better understanding of the role of precedent within PTAB decisions for cases such as this where a second PTAB panel rejects the legal analysis of a first PTAB panel. Finally, the case is important because it highlights problems with the statutory rule that the PTAB's determination "whether to institute an inter partes review [is] final and nonappealable." 35 U.S.C. § 314(d).

The Patent Trial and Appeal Board (PTAB) continues to see a growing docket of inter partes reviews (IPR) and post-grant reviews of covered-business-method patents (PGR-CBM). Of importance, the PTAB appears to be scrutinizing review requests and has denied several – finding that the requester had failed to meet the "reasonable likelihood" standard of 35 U.S.C. § 315 or the "more likely than not" standard of 35 U.S.C. § 324.

Here, however, an expanded panel of five administrative patent judges has denied St. Jude's IPR petition based upon the one-year statute of limitations triggered by service of "a complaint alleging infringement" under 35 U.S.C. § 315(b). That statute provides:

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

This is seemingly a pretty straightforward and easy to adjudicate rule. However, St. Jude raised an interesting question of law because it was never served with a complaint per se.  Rather, St. Jude sued Volcano for infringement and Volcano served an answer and counterclaim of infringement. The counterclaim was served more than one-year before the IPR request. Leaving the legal question of whether the filing of an answer with a counterclaim alleging infringement counts under the statute as a "complaint alleging infringement." There does not appear to be any direct legislative history from the AIA on point other than the general conception that the deadline is intended to prevent repeated "repeated litigation and administrative attacks." H.R. Rep. No. 112-98 at 48 (2011). As is often true of the Congressional record, that statement is general enough to be read in support of either side. And, certainly a counterclaim is often thought of as more of a defensive tact rather than being offensive harassment.

St. Jude's legal argument stems from Rule 7 of the Federal Rules of Civil Procedure that define pleadings in civil cases as follows:

Only these pleadings are allowed:

(1) a complaint;

(2) an answer to a complaint;

(3) an answer to a counterclaim designated as a counterclaim;

(4) an answer to a crossclaim;

(5) a third-party complaint;

(6) an answer to a third-party complaint; and

(7) if the court orders one, a reply to an answer.

You'll notice from the allowed pleadings that a counterclaim (No. 3) is separately defined from a complaint (No. 1). That listing coupled with the statement indicating that these are the "only" pleadings allowed suggests that the differentiation in the list is also important. Similarly, St. Jude points to FRCP R. 3 that states "A civil action is commenced by filing a complaint with the court." Finally, St. Jude highlights that the statute in question (§315) particularly mentions counterclaims in a different section of the provision and that linguistic distinction suggests that Congress thought that a counterclaim was different from a complaint.

The Board rejected St. Jude's argument – finding instead that a counterclaim is the functional and legal equivalent of a complaint and consequently that the request for IPR was untimely. The Board writes:

The Federal Rules of Civil Procedure neither define the term "complaint" in Rule 3 nor use it to refer only to the filing that commences a civil action. Rule 3 states, as amended in 2007: "A civil action is commenced by filing a complaint with the court." The rule specifies merely which filing commences a civil action—a complaint—but does not limit a "complaint" to be that filing and nothing else. Moreover, the term is used elsewhere in the Rules to refer to a pleading that does not commence a civil action. For example, Rule 14(a)(1) states, in pertinent part: "A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." A complaint against a third party does not commence a civil action; rather, it joins the third party to an existing civil action. The Rules, therefore, do not define or use the term "complaint" in the exclusive manner St. Jude argues.

We disagree also with St. Jude's contention that Rule 7 distinguishes a counterclaim from a complaint in a way that is meaningful for our determination. Rule 7 lists pleadings allowed in a civil action. The mere listing of items separately, however, does not, by itself, draw distinctions among the items in the list insofar as their legal equivalence. We discern in Rule 7 no such comparison or distinction between a complaint and a counterclaim.

A complaint and a counterclaim instead bear marked similarities. A counterclaim imposes the same burdens on the parties as does a complaint. A counterclaim alleges a cause of action, just like a complaint; confirming that equivalence, Wright and Miller explains that a counterclaim "basically is a defendant's complaint." 5 FED. PRAC. & PROC. CIV. § 1184 (3d ed.). …

St. Jude argues next that a counterclaim should be distinguished from a complaint in § 315(b) because that distinction is made in § 315(a). Pet. 3. St. Jude observes that 35 U.S.C. § 315(a)(3) excludes a counterclaim challenging validity from constituting a complaint challenging validity in § 315(a)(1). This argument is unpersuasive. Section 315(a)(3) states specifically that the exclusion applies to, and is made for purposes of, subsection § 315(a) only. The inapplicability of such an exclusion to § 315(b) indicates, to the contrary of St. Jude's position, that no similar exclusion exists, or was intended, with regard to a complaint and a counterclaim for infringement in respect of § 315(b). . . .

One interesting element of the decision here is that it differs with a prior decision made by the PTAB in Macauto USA v. Bos GmbH, IPR2012-00004. There, a three-member PTAB board found that the statute-of-limitations was tolled in cases where the complainant then voluntarily dismissed its case with prejudice. Citing Wright, Miller, Kane, and Marcus, 9 Federal Prac. & Proc. Civ. § 2367 (3d. ed.) ("[A]s numerous federal courts have made clear, a voluntary dismissal without prejudice under Rule 41(a) leaves the situation as if the action never had been filed.") It is not surprising that there are no overlapping judges between the St. Jude decision and Macauto.

The general standard operating procedure at the PTAB is that a Board decision is binding precedent "only if the opinion has been made Precedential" under the PTAB's operating procedure. See http://www.uspto.gov/ip/boards/bpai/procedures/sop2.pdf. Thus, at this point, neither opinion is precedential and so the next panel is also open to re-decide the case as it sees fit according to the law.

Certainly, the Federal Circuit would ordinarily be ready-willing-and-able to quickly resolve the split of opinion on the meaning of the law here. However, the statute indicates that this particular decision is both final and nonappealable. 35 U.S.C. § 314(d). Of course, the statute does not indicate that the decision cannot be attacked through a mandamus action or through a separate collateral attack on the final judgment, neither of which are ordinarily considered an appeal.

A short observation about Ultramercial v. Hulu

Ethics

An off-topic early morning rant.

I teach civil procedure (and ethics, and patent law), and I'm just boggled by some of the amici briefs (I haven't read the petition for cert itself) in Ultramercial v. Hulu.  The case involved the appeal of a 12(b)(6) dismissal.  That requires that, on the face of the patent itself there is clear and convincing evidence the patent was invalid.  (Why?  If 101 matters at all, then it is a basis for invalidity, and so an affirmative defense, and so under long-standing case law, the patentee has to "plead into" the affirmative defense.  Here, that means the patent alone must show clear and convincing evidence of "invalidity" under 101.)

The burden is actually even higher than that.  At the start of Ultramercial, the court wrote:  

Further, if Rule 12(b)(6) is used to assert an affirmative defense, dismissal is appropriate only if the well-pleaded factual allegations in the complaint, construed in the light most favorable to the plaintiff, suffice to establish the defense.See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Jones v. Bock, 549 U.S. 199, 215 (2007). Thus, the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility. For those reasons, Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule.

So… how can you ever grant a 12(b)(6) motion granted with that standard?  Imagine a court saying "as a matter of law there is clear and convincing evidence that there is no plausible way this patent is enabled" without considering anything but the patent. 

So, with that background , what is really, um, peculiar to me is lawyers putting in amicus briefs with "evidence" in the appendix about how the claim could be done in 16 lines of code.  One is here.  If one of my civ pro students in their first semester said this was proper, they'd get a zero on that answer.

So, whatever the merits of this patent, I'll bet a metaphorical dollar that the Supreme Court will take one look and say, "12(b)(6)?  cert denied."

But then again, it's early and I've only had one cup of coffee.  So tell me what I'm missing.

Update on Sony v. 1st Media

Ethics

The petition is here.  The question presented was:

Did the Court of Appeals for the Federal Circuit err in restricting district courts’ equitable discretion in evaluating patent unenforceability, contrary to this Court’s precedent in Keystone Driller, Hazel-Atlas, and Precision Instrument, by applying a rigid test that (a) forecloses district courts from considering the entire circumstantial record; and (b) precludes district courts from granting equitable remedies where a patent applicant has violated the PTO’s duty of candor. 

Update:  the rest of the briefs are here (response to petition), and the SG's brief is here.

I still don't think Therasense is a proper construction, and I also still think the issue of its retroactivity could still lurk out there for someone to raise…