All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law

Calling Patent Attorneys to Pro Bono

The complexity of patent law and the restrictions on who is permitted to practice have served patent attorneys well — with the resulting generous incomes. The problem though is that these same complexities raise a barrier to entry for many small companies and individual inventors. Over the past few years, the USPTO has improved and formalized its pro bono programs. Get involved. (

Recent Patent Transfers

  1. Sandisk transferred a handful of patents and applications to newly formed company known as Sudek Technologies. The patents stem from the work of MusicGremlin – which was bought by Sandisk several years ago. How much would you pay for the following claim with a 2003 priority date?

1. An electronic device comprising:

an interface through which to communicate with a network; a memory; and processor in communication with the interface and the memory,

wherein the processor is operative to:

receive subscription information from a user, wherein the subscription information includes (i) a user-selection of one of a plurality of available subscription lists and (ii) a user-selected frequency at which an updated listing of digital media file titles from the selected subscription list is to be delivered from a server in the network to the electronic device, wherein the server stores a listing of one or more digital media file titles for the selected subscription list, which is updated periodically, wherein the delivery of the updated listing occurs repeatedly over time as the server updates the listing;

provide the subscription information to the server;

after an available connection to the network is detected:

automatically establish a connection to the server, wherein the connection to the server is established invisibly to the user; and

automatically receive an updated listing of digital media file titles from the server if it is time for the updated listing to be delivered, per the user-selected frequency in the subscription information, wherein the user manually selects the subscription list but particular digital media file titles from the subscription list are automatically selected and sent to the user.

  1. Japanese Konica-Minolta has transferred a set of 20+ patents to the Korean company Moneual (maker of a roomba competitor). The patents are all older (latest issued date is 2002) and relate to control systems for a mobile robot.
  2. The patent holding company known as “HOME RUN PATENTS LLC” has transferred all 16 of its patents to Palo Alto Networks. Earlier this year, Palo Alto Networks agreed to pay $175 million to settle a patent case with Juniper.
  3. RPX added a few more patents to its portfolio with a transfer from Hyperchip. The patents relate to fundamental aspects of network operations (such as congestion avoidance).
  4. Codexis just transferred a set of six patents to Pioneer Hi-Bred (DuPont) related to genetically modified plants with “pest resistance.” The patents were originally held by Maxygen and it is possible this transfer is simply a clean-up of a prior sale to DuPont.

What to do About All These Invalid Patents?

By Dennis Crouch

The recorder-of-deeds here in Boone County Missouri is pretty good at her job. Although there is an occasional error in the records, those errors are quickly remedied once found.  The property records are regularly relied upon and their correctness is important to ensure smooth operation of the real property marketplace.

Over the past few years, the Supreme Court has uncovered a few glaring errors in the patent records.  Namely – hundreds of thousands of patent claims have issued that are – in fact – not patentable.  These problematic claims either lack eligible subject matter under the patent common law and 35 U.S.C. § 101; are indefinite under 35 U.S.C. § 112; or are obvious under 35 U.S.C. § 103.  This results is prompted by the recent decisions in Supreme Court cases such as Alice Corp. v.. CLS Bank International, 134 S.Ct. 2347 (2014); Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014); Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012); and KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Prior to these decisions, the USPTO had been issuing patents under more lenient standards. See, e.g. State Street Bank (Fed. Cir. 1998). For its part, the USPTO has quickly modified its approach effectuate the new precedent that offers more stringent tests of patent eligibility and patentability. The result is not necessarily fewer issued patents or a lower grant rate, but instead perhaps a modification (narrowing) of claim scope.

These decisions are all naturally retroactive in that they apply fully to the aforementioned problematic claims found in already issued patents.  However, the general approach thus far has been to leave those patents and their problematic claims on the patent rolls as if nothing had happened unless and until a third-party challenges their validity or the patentee abandons the protection.  Q: Is this a problem? A: Yes.

Next time: A few ideas for moving forward.

Alice Corp. and Patent Claiming: A Simple Example

By Howard Skaist[1]

In the wake of Alice Corp (“Alice”), many practitioners, including myself, are thinking about its implications, in particular, with respect to drafting patent claims. Of note, especially, is the Court’s statement, recited more than once in Alice, that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  See 573 U.S. ____ (2014); slip opinion at 16. I would like to test that notion and, potentially, its general boundaries with a simple example.

Let’s consider, as an example, the early days of computers and the creation of VisiCalc.  If today’s law applied then, e.g., Alice, would a patent claim covering VisiCalc have been statutory? I would be inclined to say, even today, that it depends a lot on the particular claim, but we also have the Supreme Court’s position on the matter, mentioned above. So, to what extent does the answer depend on the particular claim?

Here is one possible claim to VisiCalc:

  1.  A method comprising:  implementing a spreadsheet on a computer.

One issue worthy of mention here is that cases getting to the Court are ones in which the claims do not appear on their face to appropriately flush out the subject matter considered innovative, at least if we can rely on the opinions without taking the trouble to look at other claims of the particular patents.   However, most skilled practitioners tend to make sure that a spectrum of claims are included, at least for considerations related to section 103.  As shall be seen, this may also be the best practice for addressing 101 issues.

The claim above, thus, is in line with claims previously adjudicated before the Court.  That is, the claim on its face does not appear to communicate details about the innovation itself. Rather, this claim would likely be held non-statutory under the approach in Alice.  Applying the analysis, spreadsheets constitute a way to organize human activity that is of longstanding use.  Thus, it would seem that, following Bilski and Alice, a spreadsheet may potentially be deemed an abstract idea or a fundamental concept.  Thus, it is, if anything, a building block for human ingenuity and, on policy grounds, section 101 exceptions to statutory subject matter are potentially implicated.

Again, then, following the approach in Alice, the aspect of the claim calling out implementation on a computer likewise does not constitute a sufficiently meaningful addition, whether analyzed element by element or as a whole.  It might be argued that computer implementation is faster than performing spreadsheet calculations on paper, but merely being faster is not sufficient, generally, to pass muster here.

It is important to realize, however, that when technology is implemented, rarely does it just result in being faster and nothing more.  Usually, the implementation provides other advantages.  Here, referring to this simple example as an illustration, VisiCalc made a type of functionality possible that had not existed before.  Therefore, if that aspect were particularly claimed, perhaps such a claim would be deemed statutory under the analysis in Alice.

For example, consider the following two claims, recognizing that this example is not intended to illustrate the best claims possible, but is just a simple example to test the Court’s recent pronouncement.

  1.  A method comprising:

generating and displaying a matrix of cells comprising an electronic spreadsheet on a computer, said electronic spreadsheet to implement on said computer one or more user-specified mathematical operations in which one or more operands for said one or more user-specified mathematical operations are to be entered in particular cells of said matrix and results of performing said one or more user-specified mathematical operations on said one or more operands are to be displayed in other particular cells of said matrix; and

displaying on said computer, in said particular cells and in said particular other cells, after said one or more operands are entered, said one or more operands and said results of performing said one or more user-specified mathematical operations on said one or more operands, respectively.

  1. The method of claim 1, wherein said results of performing said one or more user-specified mathematical operations on said one or more operands comprise one or more operands of one or more other user-specified mathematical operations either with or without displaying said one or more operands of said one or more other user-specified mathematical operations in cells of said matrix.

Several arguments are available that one, if not both, of these claims is statutory.  To turn the issue around, we should, perhaps, ask the following:  If we ignore the conventional hardware elements of the claim, is the implementation, as claimed, more than merely conventional?

This question, of course, as framed, clearly is not the same question presented under section 103. Thus, while the Court may be criticized for making considerations under 101 more similar to considerations under 103 than had previously been the case, the analysis is still different.

To be even more explicit, we may ask:  is an innovation being claimed (even if it may in light of prior art later be determined to be an obvious one)? 

Here, the answer is quite arguably, yes!

Most everyone is familiar with the functioning of VisiCalc and Excel.  Certainly, at the time Apple introduced VisiCalc, it was an innovation over what had been done previously with conventional spreadsheets of the time.

Perhaps I am overly optimistic and not everyone will agree that claim 2 at least is statutory.  However, these claims call out an improvement over existing processes involving spreadsheets. See 573 U.S. ____ (2014); slip opinion at 13 (discussing that the claims in Diehr improved on an existing process).  A user is able to link together in a spreadsheet format, complex calculations and display the results in a manner so that any change in “operands” is able to be rippled across the spreadsheet and displayed immediately.  This is an improvement over use of a paper spreadsheet and provides a new functionality that previously did not exist.  I am not arguing that this is necessarily patentable, since that is judged relative to particular prior art, only that it is at least statutory because it is not merely conventional.

If it were generally agreed that the first example is likely non-statutory under the Court’s recent pronouncement and the second example is likely statutory[2], then what does that tell us in terms of claim drafting? One thing it demonstrates is that including limitations directed to innovative aspects of particular implementations may provide a claim drafting safe harbor, so to speak, for this area. Where this is done correctly, it would seem that claims of value to a client should ultimately stand up as statutory.  As was mentioned, most practitioners tend to make sure that a spectrum of claims are included.  This is good practice, now, to address, not just 102 and 103, but also 101.

If we compare the two example claims above, what is the difference?  Why, from a policy perspective should one be statutory and the other not, since they are both directed to what is meant to be the same core subject matter?  It appears that section 101 imposes a statutory requirement of proper form.  That is, from a formal perspective, it is necessary that innovative aspects of the invention, as implemented or intended to be implemented, be on the face of the claim for the claim to be statutory.[3]

Recall that we started with the notion that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  The ironic twist here seems to be that, if section 101 imposes a statutory requirement of proper form, then the prevailing situation would seem quite the opposite of the Court’s stated view.  That is, that patent eligibility indeed depends on the draftsman’s art and our example appears to confirm as much.

Several points are therefore addressed with this example.

  1. Take care when evaluating inventions for meeting statutory subject matter – rarely are things as simple as they look.
  2. Great care is needed in drafting claims in general but particularly in this area because otherwise there may have been a statutory invention inadvertently left unclaimed.
  3. The policy view that patent-eligibility should not turn on the draftsman’s art is not the full story.

[1] Howard Skaist founded Berkeley Law & Technology Group (BLTG) in 2003 after having been employed as the Director of Patents for Intel Corp.  BLTG has a total of twelve patent lawyers and handles all aspects of intellectual property law practice, including patent law.  Mr. Skaist has also been an adjunct professor at Boalt Hall Law School in Berkeley, CA, at Willamette School of Law in Salem, OR, at Lewis and Clark Law School in Portland, OR, and at Albany Law School.

[2] A separate twist is raised by Sotomayor’s concurrence (also expressly by Judge Mayer recently in I/P Engine v. AOL). Would the second example get over those hurdles?  I would say probably not.  It appears difficult here to argue that the problem solved is technical in nature rather than being directed to organizing human activity.  Thus, three justices would probably say that the second example is also non-statutory.

[3] Of course, one would expect that this would also be true to meet section 103.  However, perhaps a difference is that, for purposes of section 103, dissection is not permitted, at least not yet.  While Alice looks at the claim as a whole as well as the claim elements, it was clear as far back as Flook, that some amount of dissection was permissible.  Alice has made that even clearer, following Mayo, by permitting an element by element analysis.

Federal Circuit: Bingo Gaming Software Improperly Encompasses the “Basic Tools of Scientific and Technological Work”

by Dennis Crouch

Planet Bingo v. VKGS (Fed. Cir. 2014)

In a non-precedential decision earlier this week, the Federal Circuit found Planet Bingo’s patents invalid as lacking eligible subject matter under 35 U.S.C. 101.  The court’s opinion self-identifies as a “straightforward application of the Supreme Court’s recent holding in Alice Corp. v. CLS Bank International.”

The patent claims a computerized method for managing a game of Bingo – yes, the multi-billion dollar industry of Bingo. The basic idea of the invention is that some folks want to play ‘their numbers’ each week.  The computerized system lets individuals pre-select their numbers and also helps the Bingo-hall to track sales, verify winners, and avoid tampering.  VKGS and Planet Bingo compete in the marketplace for bingo equipment.

Claim 1 of U.S. Patent No. 6,398,646 recites typical computer hardware including a computer with a CPU, memory device, a printer, input and output terminal, and also a computer program with particular features.  As is typical with software related inventions, the only novel features of the invention stem from software-related functionality. Here, the program is configured to allow input and storage of the pre-selected Bingo numbers in files associated with the players. A player with stored numbers can then retrieve them to play Bingo. At that point, a control number is also associated with the numbers that can later be used to verify winnings.  The patents also include method claims that basically step through the program steps outlined above.

Although I am no Bingo expert, nothing here appears amazingly inventive. Of course, the challenge to the patent is not on grounds of obviousness or anticipation. Rather, the challenge is on subject matter eligiblity grounds – that the patent unduly encompasses an “abstract idea” and therefore unduly limits “the basic tools of scientific and technological work.”

The Patent Act is broadly written so as to allow the patenting of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. 101.  In addition to the text of the statute, the Supreme Court has further restricted the patenting of “laws of nature, natural phenomena, and abstract ideas.”  According to the court, these exceptions to patentability are necessary to protect “the basic tools of scientific and technological work.”  In Alice Corp, the Supreme Court explained:

“[M]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it,” thereby thwarting the primary object of the patent laws. Mayo. We have “repeatedly emphasized this . . . concern that patent law not inhibit further discovery by improperly tying up the future use of ” these building blocks of human ingenuity. Mayo (citing Morse).

Here, the Federal Court found that – yes – those building blocks of scientific inquiry are being inhibited by Planet Bingo’s bingo software patent.  To reach this result, the court began by recognizing that the method and system claims are basically the same and thus should rise-and-fall with the same analysis.  The court then analyzed the case through the lens of the method claims as ineligiblity tends to be easier to show for method claims.

Following the process outlined in Alice Corp., the Federal Circuit first identified the abstract idea as the steps of selecting, storing, and retrieving the bingo numbers, assigning the control number, and checking to see whether the set of numbers is a winner. These steps are collectively an abstract because they are “mental steps which can be carried out by a human using pen and paper.”  Particularly, none of these steps require new technology but rather may be “carried out in existing computers long in use.” (quoting Benson).  Further, the Federal Circuit was unable to find an “inventive concept” in the rest of the claimed subject matter sufficient to transform these abstract ideas into a patent eligible invention. The court writes:

Apart from managing a game of bingo, the claims at issue also require “a computer with a central processing unit,” “a memory,” “an input and output terminal,” “a printer,” in some cases “a video screen,” and “a program
. . . enabling” the steps of managing a game of bingo. These elements, in turn, select, store, and retrieve two sets of numbers, assign a player identifier and a control number, and then
compare a winning set of bingo numbers with a selected set of bingo numbers.

Here, however, the claims recite merely a generic computer and instructions that simply implement the abstract idea discussed above.

Patent Invalid.

Ready to Nationalize Trade Secret Law?

By Dennis Crouch

On the Congressional tees this fall sit a pair of trade secret reform bills with the joint purpose of creating a private cause of action at the federal level for trade secret misappropriation.

  • The Defend Trade Secrets Act of 2014 and
  • The Trade Secrets Protection Act of 2014

Unlike other major branches of intellectual property law, US trade secret rights are predominantly state-based. Thus, my trade secret rights here in Columbia, Missouri depend upon the trade secret law enacted by the Missouri legislature.  Thus, a cause of action for trade secret misappropriation within the state of Missouri would also be brought in a Missouri state court. To be clear, there is substantial uniformity amongst the states based upon the popularity of the Uniform Trade Secret Act (the law in Missouri) as well as cross-pollination of common law principles.

At the national level, we currently have the Economic Espionage Act of 1996 (EEA) that criminalized trade secret misappropriation (as well as conspiracy) that was either (1) done with knowledge or intent to benefit a foreign power (18 U.S.C. § 1831) or (2) related to interstate or international commerce and done with knowledge or intent to harm the trade secret owner. (18 U.S.C. § 1832).

To be clear, the current federal law is a criminal law and, as such, action may only be taken by the federal government (acting through the department of justice).

The proposed modification would largely reboot trade secret enforcement practice with the following addition to the EEA:

An owner of a trade secret may bring a civil action under this subsection if the person is aggrieved by a misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce.

The result of this addition is that essentially every trade secret misappropriation action will be enforceable by the injured party under federal trade secret law.

The proposals do not appear to create any preemption – thus, the federal causes of action would parallel the state-rights in much the same way as trademark and unfair competition laws.

In his testimony before Congress on the issue, Doug Norman explained that the variety of state laws overly confusing for multi-national powers such as his employer Eli Lilly.  David Kappos has also called for the nationalized trade secret enforcement – noting that “the lack of [federal] protection has led to a host of problems that threaten U.S. companies’ competitiveness at home and abroad.

A group of 31 law professors (who teach trade secret law) led by Professors Sharon Sandeen (Hamline) and David Levine (Elon) have countered with a letter explaining that adding this additional layer of potential civil action would be harmful to the balance inherent in the current state-based system. They write:

This deep body of state law creates its own benefits; as the general principles of US trade secret law are well-established and substantially uniform, there is a high level of predictability by and for US businesses and their attorneys. But because the Acts cannot entirely preempt state trade secret law … they will result in confusion, as well as less uniformity and predictability. As a result, the business community will suffer from decreased predictability in the law with … no corresponding benefits.

To be clear, the professors are not against trade secret protection, but instead recognize that the proposal will unsettle the law and may lead to overzealous protection in federal courts.

Further, the professors do not appear to be strongly against nationalized trade secret protection. And, that solution may well be a positive approach. In his essay on the topic earlier this year, David Almeling saw this progression as following a natural order:

Trade secrets are the only major type of intellectual property (i.e., copyrights, patents, trademarks, and trade secrets) not governed primarily by a federal statute. Copyrights and patents got theirs in the 1700s. Trademark got its in the 1800s. Now that we’re firmly in the information age, it’s time for trade secrets to join their peers.

So, the particular major issues here with the proposed law is that it is entirely lacking in details – what is meant in the Bill by the key terms “trade secret” and “misappropriation.”   The lack of details are problematic when coupled with the Supremacy Clause of the US Constitution.  Most trade-secret cases are linked to other state-law issues such as employment and contract law.  The new nationalized trade secret law would reign supreme over these other areas that have up-to-now been given equal weight.

Giving Effect to the Order of Steps in a Method Claim

Mformation Tech v. Research-in-Motion (Fed. Cir. 2014)

Although several important patent litigation procedure issues are embedded here, the most important legal outcome of this case is the Court’s construction of the method claim to require a particular stepwise order – even though the order is not express in the claim itself.

Mformation’s Patent No. 6,970,917 claims a client-server method for managing a wireless device’s mailbox. The steps include:

transmitting registration information relating to the wireless device from the wireless device to the server;

verifying the registration information at the server; and

without a request from the wireless device, performing the steps of:

establishing a mailbox for the wireless device at the server,

placing a command for the wireless device in the mailbox at the server,

delivering the command from the mailbox at the server to the wireless device by establishing a connection between the wireless device and the server, transmitting the contents of the mailbox from the server to the wireless device, and accepting the contents of the mailbox at the wireless device, and

executing the command at the wireless device;

wherein the connection is established based on a threshold condition.

After for years of litigation, the jury found that BlackBerry infringes ($200 million verdict), but the federal district court rejected the people’s verdict on motion for JMOL.

The basic question at issue is claim construction – and whether the step of “establishing a connection between the wireless device and the server” must occur prior to the step of “transmitting the contents of the mailbox from the server to the wireless device.”  Apparently, in the blackberry device, a connection to the mobile device is established contemporaneously with the transmission of contents.

In finding a required order of operations, the Federal Circuit writes:

We agree … that claim 1 requires that a connection be established before transmission. We are persuaded … that the separate sub-step for establishing a connection would become “superfluous” if we concluded that a connection did not have to be established (completed) before transmission. That is because, under such construction of the claim, establishing a connection is necessarily encompassed in transmitting a command.

Further, we note that other sub-steps in claim 1 inherently require an order-of-steps. . . . And while it is true that “we have expressly rejected the contention that if a patent describes only a single embodiment, the claims of the patent must be construed as being limited to that embodiment,” Phillips v. AWH, we do note that our conclusion is consistent with the sole embodiment in the specification.

Thus, the basic idea here is not that the listing of steps in a particular order necessarily means that the claims require that particular order.  What is implicit here, however, is that the listing order is important and will be given limiting effect when additional factors corroborate that result.

= = = = =

An odd element of the case is that the district court’s JMOL determination (rejecting the jury verdict) was based upon its post-verdict “clarification” of the claim construction. There is some prior precedent barring district courts from altering claim construction post-verdict. Thus, here it was important that the Federal Circuit found that the claim meaning had only been “clarified” rather than substantively modified.

During the trial, the patentee’s infringement testimony and evidence relied upon the original claim construction that did not expressly require the stepwise ordering. Thus, it is not surprising that evidence presented fails to prove infringement under the new construction.  What is surprising, however, is that the Federal Circuit did not order a new trial based upon the modification.

Accelerating ex parte PTAB Appeals: For a Fee

By Dennis Crouch

The Patent Trial and Appeal Board (PTAB) is burdened with a statutory mandate to quickly reach final determination in its post-issuance review trials. To meet that requirement, the PTAB has put tremendous resources into its trial teams to ensure sufficient bandwidth to handle the hundreds of inter partes trials. At the same time, a 25,000 case backlog of pending ex parte appeals persists at the Patent Trial and Appeal Board.  Those cases do not have as clear of a statutory-mandate for rapid processing and, as a result, have clearly languished as the Board developed its post-issuance review trial program with most cases now waiting more than three years for a decision from the Board. (Notice-of-Appeal to Board Decision).  Rather than dealing with its poor statistics, the PTAB appears to have simply stopped publishing them.

For many patent applicants (though certainly not all), the appeal delay is costly because it extends a period of ambiguity and it delays issuance of the patent rights.  Certainly, the vast majority of long-pendency patent applications (those that issue more than 7 years after filing) spent considerable time in the appeal queue awaiting a reversal of an examiner rejection. Those late-issued patents have the potentially of being disruptive to marketplaces that have developed and grown in the absence of an issued patent.

A few months ago, I conducted what I called a “10-second”survey on Patently-O regarding the potential market for accelerated PTAB decisions in ex parte cases.  I asked:

Would you pay an extra $5,000 for accelerated PTAB decisions in ex parte cases that issue[] within nine months rather than waiting the standard 2 1/2 years?

I should note that the 2 ½ year figure had increased. The results are instructive and somewhat fit the model seen with the $4,000 fee for prioritized “track one” examination, although the market for accelerated appeals seems somewhat greater.  The vast majority of the 614 responses indicated that they would use the fast track in at least some cases – with most indicating that the fast track would be used in >5% of cases.


Although not any final word on the market for accelerated appeals, the chart is indicative of a demand for accelerated appeals.  And, although not a solution to the docket problem, acceleration of a subset of appeals offers the potential of alieviating the most some of the more pointed needs.

I should note here that a subset of accelerated examination cases (“made special”) are also accelerated when pending before the PTAB. However, those do not include prioritized examination cases under the pay-for-speed program.  I do not have any statistics on how that acceleration impacts the timing of appeals.

Court Finds Patent Invalid; Then Orders Defendant to Stop Infringing

By Dennis Crouch

Following the Supreme Court’s equitable relief decision in eBay, many patentees have found it difficult to obtain injunctive relief to stop ongoing infringement – even after final judgment that the patent is both valid and infringed.

In a recent decision, the District Court Judge Blake (D.Md.) seemingly flipped eBay on its head by enjoining TWi Pharma from making or selling a generic version of Par’s patented Megace ES formulary. The upside-down element of the decision is that the order granting the injunction issued only after the court found the patent claims invalid as obvious. Par Pharma v. TWi Pharma, 1-11-cv-02466 (MDD August 12, 2014, Order). To be clear, the order here is not for permanent relief, but only relates to injunction pending appeal.

The doctrine involving the grant of equitable relief pending appeal is a bit squirrelly – especially at the district court level because the general setup involves the court deciding that its decisions are likely wrong. Recognizing that, the law does not require the moving party to show that its case is a likely winner but only a substantial likelihood that the requested equitable relief will be entered as a result of the appeal. Applying this standard, the district court writes:

Par claims that it will succeed on the merits because this court erred in its application of the law with respect to motivations to combine the prior art and inherency. Although the court stands by its judgment, it recognizes that the case presents a close call. Further, the Federal Circuit will conduct a de novo review of whether the ’576 patent is obvious, including whether this court properly interpreted the law regarding motivation and inherency. . . . The court is not persuaded Par has demonstrated a “strong” likelihood of success on appeal—especially given that most of its dispute with this court’s earlier decision is only rehashing the legal arguments it has already made. Par has, however, made a showing of a substantial case.

The district court joined this “substantial case” on appeal with strong evidence of irreparable harm absent relief in its decision to grant the injunction pendente lite.

Regarding the ‘public interest’ element of equitable relief, the court found that element neutral.

The court recognizes that the public is served by the availability of low-cost generic medications, especially where an invalid patent has previously barred their entry into the market. On the other hand, the public also has an interest in the protection of valid patents because it promotes innovation. This factor, therefore, is neutral.

An interesting and problematic element of the court’s decision here is that the doctrinal approach makes it easier for a patentee to obtain temporary relief following an adverse final judgment (of invalidity) than prior to such a judgment. The doctrinal difference highlighted by the court between preliminary injunctive relief pending final judgment and post-decision relief pending appeal is simply that the proof of likelihood-of-success is reduced for relief pending appeal. This is obviously problematic because in the second case, the court will have already reached a final judgment that the patentee loses.

In making its decision, the district court applied Federal Circuit precedent regarding relief pending appeal. However, those cases relate generally to the asymmetrical situation of staying-injunctive relief pending appeal rather than, as here, granting injunctive relief pending appeal.

There is a better approach that still recognizes the potential need for injunctive relief pending appeal and that is simply requiring a greater showing of need for relief (irreparable harm; balance of hardships; public interest) when the likelihood-of-success element is reduced.

Myriad Patents Now Challenged at the PTO

Myriad v. Gene Dx, Inc.

In 2013, the US Supreme Court invalidated Myriad’s patent claims covering isolated DNA coding for the cancer causing BRCA1/BRCA2 by ruling that those isolated genes were unpatentable products of nature. However, the Supreme Court also ruled that the ‘created’ cDNA versions of the genes were patent eligible – or at least not excluded by the product-of-nature exception to subject matter eligibility.

Following that decision, a number of companies indicated that they would enter the market and begin BRCA1/BRCA2 diagnostic genetic testing in violation of the patents. Myriad responded aggressively by filing lawsuits against several companies, including Gene Dx for patent infringement. The case against Gene DX alleges infringement of sixteen different Myriad patents and is still pending in Federal Court in Utah where the parties have jointly agreed that settlement prospects are “low.” The case has been centralized before a multidistrict panel that is handling parallel cases against Gene DX, Quest Diagnostics, Ambry, and Counsyl.

In a bold move, Gene DX has now filed a set of inter partes review (IPR) requests – challenging 11 of the Myriad (or Myriad Licensed) patents. I should note, these challenged patents are different from the ones ruled-upon by the Supreme Court. In the IPR regime, patents can only be challenged on prior art grounds. Here, each of these patents have been challenged on either 103 (obviousness) or 102 (novelty) grounds.

USPTO RCE Backlog Coming Down

In its most recent annual report, the USPTO indicated that 560,000 non-provisional utility patent applications were filed during the fiscal year. (FY2013). The report fails to mention that 30% of those “new” filings were not actually new, but rather were merely Requests for Continued Examination (RCEs) filed by applicants in already pending cases. For many patent applicants, RCEs have become an expected element of the prosecution process in order to provide for a third-round of communication with the examiner.

Over the years, the USPTO has vacillated on its view of applicant Requests for Continued Examination (RCEs). In 2009, the office began a program to delay further consideration of RCE’d applications. That action resulted the rapid growth of a backlog of RCE filings awaiting examination. The USPTO is now addressing that backlog and appears to have it largely under control.

As part of its program to reduce RCE filing, the USPTO is pushing several of its initiatives including Quick Path Information Disclosure Statement (QPIDS) and After Final Consideration Pilot (AFCP 2.0).

Upcoming Events

By Dennis Crouch

I’m looking forward to a few upcoming events for patent law professionals:

  • September 7-9, 2014, the Intellectual Property Owners Association (IPO) will hold its annual meeting in beautiful Vancouver BC. I’ll be there joining a panel discussing the impact of recent US Supreme Court patent cases. [LINK]. The IPO event again has a great line-up, including Professor Hricik, Nathan Myhrvold, and many more.
  • On the evening of November 5, 2014, I will be delivering the University of Houston’s IP IL Annual Fall Lecture at the Four Seasons Hotel in Houston (Sponsored by the Katz Foundation). My talk will be on incentives (current and future) for patent clarity. [LINK]. Thank you to the University of Houston Law Center for hosting this event.
  • November 6-7, 2014, I will be down in Austin Texas participating in the annual Advanced Patent Law Institute with a talk titled Evidence Based Patent Law: Trends and Statistics, and What they Mean for Your Practice and your Patent Portfolio. [LINK]. Other speakers include Professors Golden (UT Austin), Lemley (Stanford), Wegner (formerly with GWU), and Hricik (Mercer); the Hon. Terry Rea and Randy Rader; Rob Sterne, et al.
  • January 7-11, 2015, I will be in Vail, Colorado talking about patent law as part of the 32nd National CLE Confrence where they also happen to have “amazing skiing.” Conference co-chairs are Scott Alter (Baker Daniels) and David Bernstein (Debevoise & Plimpton ). [LINK]
  • February 7-10, 2015: Hal Wegner’s annual Patent Experts Conference in Naples (FL) at the Naples Beach Hotel.

I look forward to seeing you in person.

Non-Patent Friday

By Dennis Crouch

UChicago Law Professors Adam Chilton and Eric Posner have a new article out that looks at political bias in legal scholarship. The basic finding is a correlation between a professor’s donation to a political party (Republican or Democratic) and that professor’s “scholarship ideology” (conservative or liberal).

We find that, at a statistically significant level, law professors at elite law schools who make donations to Democratic political candidates write liberal scholarship, and law professors who make donations to Republican political candidates write conservative scholarship. These findings raise questions about standards of objectivity in legal scholarship.

Areas of Disuniformity in US Inventorship

By Dennis Crouch

The chart below uses the breakdown of patent documents into their various workgroups. As shown here, the workgroups are basically an intermediary classification that falls between the micro-art-units and the macro technology centers. Dividing into workgroups is especially useful for looking at Technology Center 3600 because that center examines perhaps the widest variety of technologies. For the chart below, I collected inventor information on all U.S. patents issued from January 2010 – August 2014 and simply displayed the percent of patents whose first-listed inventor claimed a U.S. residence in the application documents.

Today, just about half of newly issued patents are non-US originated. That datum is dramatically different from historical figures where U.S. inventors dominated the U.S. patent rolls. I have written before that this change likely signals a future shift in U.S. policy as the population is less likely to support foreign-owned patent rights blocking access or raising prices for goods and services. To the extent policymakers are relying upon this concern, the chart provides some additional insight because it points to areas of technology where U.S. inventors continue to dominate in the U.S. Patent market.

Intel Successfully Defends its Patent Case but Owes its Own Attorneys $9 Million for the Defense.

By Dennis Crouch

Stragent, LLC v. Intel Corp., 11-cv-0421 (E.D. Texas). JudgeDykOpinion

Federal Circuit Appellate Judge Timothy Dyk has been sitting by designation as the trial judge in this patent infringement lawsuit over video compression technology. (U.S. Patent No. 7,302,102). A jury found Stragent’s two asserted patent claims both invalid and not infringed. And, apparently, Strategent chose not to appeal that determination.

The final issue left for Judge Dyk to decide then was attorney fees and the court has now denied Intel’s motion for fees.

The ordinary rule in American law is that each side pays its own attorney fees. For a successful defendant such as Intel here, the outcome of the lawsuit is likely still a seven-figure payout to its defense team (paid by the winning defendant). As an exception to the usual rule, the Patent Act provides that a district court judge may award attorney fees to the prevailing party in “exceptional cases.” Recently in Octane Fitness, the Supreme Court rejected the Federal Circuit’s prior strict standard and high-bar for exceptional case awards and instead put the determination within the discretion of district court judges.

Under Octane Fitness,

[An exceptional case] is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated . . . considering the totality of the circumstances . . . [and excising the court's] equitable discretion.

Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014). Despite the seeming wide decision making discretion, the Supreme Court also recognized that exceptional case awards should be “rare” and “uncommon.”

Although having a losing party is a prerequisite to an exceptional case finding, Judge Dyk here found that “the mere fact that the losing party made a losing argument is not [otherwise] a relevant consideration.” Rather, according to the opinion here focus should be on whether the arguments were “frivolous or made in bad faith.” That said, Octane does not expressly require bad faith or frivolous arguments, and that decision makes clear that exceptional case awards may be available at times when the losing parties actions are not sufficiently bad to warrant Rule 11 sanctions. A second point with regard to Rule 11 sanctions is that those sanctions tend to be focused on individualized frivolous or bad faith arguments made by parties while §285 fees are awarded with reference to the case “as a whole” and in considering “a totality of the circumstances . . . includ[ing] the conduct of the winning party.”

In considering the case at hand, Judge Dyk noted that Intel’s motion for fees “is primarily based on the fact that Stragent made losing arguments.” Although Judge Dyk agreed that Stragent’s case was “certainly a weak one,” he also noted that Intel failed to even move for summary judgment:

Stragent’s argument was certainly a weak one, but despite the alleged implausibility of Stragent’s position, Intel never sought summary judgment of non-infringement on the basis of the limitation at issue. This suggests that Intel did not always view Stragent’s infringement position as frivolous. There is little injustice in forcing Intel to bear its own attorney’s fees for defending a claim it did not challenge on summary judgment. Disposing of a frivolous claim on summary judgment would avoid a trial and have the effect of saving both parties a substantial portion of their litigation costs.

Motion for fees denied. Intel is unlikely to overturn this on appeal.

= = = = =

An interesting tidbit from the Intel’s briefs: “Intel spent approximately $9 million in legal costs.” Wow! How on earth do you spend $9 million defending a three-patent case asking only for a reasonable royalty. (By trial, the case had been narrowed to only be challenging two claims found in one of the patents.) I would really love to see the accounting for that $9 million. Of course the docket does list 17 attorneys on Intel’s side. . .


State of Vermont’s Demand Letter Case against MPHJ Continues

State of Vermont v. MPHJ Technology (Fed. Cir. 2014)

MPHJ has become the poster-child for bad patent trolling behavior and has been the subject of unfair-trade-practice action in several states. The basic idea is that MPHJ has mailed out more than 15,000 demand letters to small businesses who use scan-to-email technology. The set of five patents have a 1997 priority date. See patent, No. 8,488,173.

Vermont’s attorney general Bill Sorrell has been active in pushing against patent trolls and MPHJ in particular. In May 2013, Vermont sued MPHJ in State Court alleging that the company was engaging in unfair and deceptive trade practices under Vermont law and that the letters “contained threatening, false, and misleading statements.”

Up to now, the case has been in civil-procedure limbo. A major issue to be decided in the state-enforcement actions is the extent that state powers are preempted by the federal patent laws. MPHJ believes that preemption is more likely to be found if the case is decided by a federal court rather than a state court. As such, the patentee removed the case from state court to federal court on grounds of diversity and federal question. However, the federal district court remanded the case back to state court. In its recent decision, the Federal Circuit has tacitly affirmed the remand – finding that it lacks appellate jurisdiction over any appeal. In particular, the Supreme Court has held that there may be no appeal of a Federal District Court’s decision to remand under 28 U.S.C. § 1447(d).

The Vermont State Court will now handle the case and determine the extent that MPHJ’s actions violate the law.

IP Journalist Joe Mullin has written on MPHJ in several posts at ArsTechnica.

Update on Patent Grant Rates

I have updated my grant-rate chart from a prior post. For these figures, I obtained a set of 15,900 published patent applications and categorized each application according to its area of technology and also as either patented, abandoned, or still pending. The chart below shows both the grant rate (percentage of applications that have been patented) and also the still in-process rate (percentage of applications that are still in-process).

My sample of applications are a random set of published applications with filing years of 2004 through 2010. About 94% of these cases have been concluded (either patented or abandoned) and my original chart did not include the in-process numbers which, for most areas-of-technology are fairly minimal. However, on reflection, I went back and looked at these figures and found that they are important.

Notably, the eCommerce arts appear to have a low grant rate. However, a substantial percentage of applications in that area are still pending. It is almost certain that some of those still-pending applications will issue as patents and the final grant rate for the area will be higher than originally predicted.


Senators to Pritzker: Patent System Needs More Clarity and Transparency

In a letter last week to Secretary Pritzker (DOC), a group of five Democratic Senators have urged for administrative patent reforms to “prevent[] low-quality, vague patents from entering the market.” The group include Senators Jeff Merkley, Tom Udall, Martin Heinrich, Mark Begich and Mark Warner.

Although the letter does not provide direct policy plans, it does provide a set of guidance that should be well taken by the Patent Office:

(1) Take steps to incentivize examination quality over quantity.

(2) Direct Examiners to ensure that the patent file history is complete and resolves any ambiguities with clarified patent terms prior to issuance.

(3) Assess whether the PTO’s steps to “address functional claiming concerns . . . are sufficient to address concerns that functional claiming provides a loophole from definite, precise claims.”

(4) Expand crowdsourcing and public data analysis as a mechanism to identify problematic patents and categories of patents — then target those areas for more thorough examination.

(5) Ensure public access to information about patents and the file histories.

Read the Letter

The suggestions by the Senators are all helpful and are directed to an area of patent law ripe for reform. Lets hope that the USPTO can take these suggestions and create sensible policy.

Patent Grant Rate by Technology Area

By Dennis Crouch

The chart below shows the grant rate of US patent applications grouped by technology center sub-groups (technology area). The numbers come from a random set of 10,000 published patent applications that were filed between 2003 and 2010. Later-filed applications cannot be readily used for this exercise because most of them are still pending. The grant rate is calculated simply by counting the percentage of applications that have as patents. The areas of technology are shown with a representative technology-center (or art unit). Overall the grant rate in this population was 60%. I have also added error-bars showing the 95% CI for each group.



Telework: How much did you work? Nobody Knows!

By Dennis Crouch

In another seeming bombshell for the Patent Office, the Washington Post has published a 2012 internal USPTO memorandum on telework fraud. Lisa Rein from the post writes:

Some of the 8,300 patent examiners, about half of whom work from home full time, repeatedly lied about the hours they were putting in, and many were receiving bonuses for work they didn’t do. And when supervisors had evidence of fraud and asked to have the employee’s computer records pulled, they were rebuffed by top agency officials, ensuring that few cheaters were disciplined, investigators found.

Oversight of the telework program — and of examiners based at the Alexandria headquarters — was “completely ineffective,” investigators concluded.

Further, the report indicates that “USPTO management demonstrates reluctance to take decisive action when the misconduct is egregious and the evidence is compelling.” At the time, the USPTO was led by Director Kappos.

The original report was then substantially tamed-down (with the most damning elements removed) before it was provided to the DOC Office of the Inspector General. Based on the evidence found in the secret original document, the OIG has indicated that it will now launch a probe of the USPTO’s workforce quality control.

Production versus Hours: The facts here are disturbing. However, one underlying assumption of the report is that we should be looking to the hours-worked by examiners rather than focusing on whether the work is completed (i.e., production).  Examiner production is closely monitored and measured on a bi-weekly basis and there is no sense in the industry that examiners can avoid those production quotas without major repercussions.