All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law

Director Michelle Lee

The White House has announced President Obama’s plans to nominate Michelle Lee for the position of Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.  Although Lee is already the de facto Director of the office, this move has important political implications because it will help to better ensure both USPTO autonomy and USPTO influence within the Beltway.  Congratulations to Michelle Lee and the Patent Office on this important move forward.

It was almost one year ago that Michelle Lee was appointed as deputy director and de facto director.  At the time, I praised the selection of Lee, but questioned both the legality and the wisdom of appointing a prominent deputy director while leaving the slot of director still vacant.   Because of legal limitations, Lee has not be identified as the “Acting Director” but only “acting as Director.”

Part of the willingness of the White House to now appoint Lee may have come from the country’s new Chief Technology Office Megan Smith who is a former Google executive. (Lee led Google’s patent strategy for a decade).

Up to now, Lee has largely followed the lead set by former Director Kappos and Acting Director Rea. The unanswered question is whether the new role will now embolden and empower Lee to shift USPTO policies in a new direction.


Teva v. Sandoz and Claim Construction Deference

By Dennis Crouch

In Teva v. Sandoz, the Supreme Court is focused-in on the appellate rules that should apply to claim construction decisions. Namely, if a district court makes factual conclusions that underpin a claim construction determination, should those factual conclusions be given deference on appeal or instead reviewed de novo on appeal. The Federal Circuit’s practice is to follow the latter approach while Federal Rule of Civil Procedure 52(a)(6) suggests the former.

The issue as presented to the Supreme Court:

Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Federal Rule of Civil Procedure 52(a) requires.

Here, the district court may several explicit factual findings, including resolution of conflicting expert testimony regarding how a figure should be interpreted and how one of ordinary skill in the art would understand the term “average molecular weight” in the context of size-exclusion chromatography.  These findings served as precursors to the lower court’s ultimate clam construction determination. On appeal, the Federal Circuit expressly reviewed and rejected those determination — but gave them no deference in the appeal. I should note here that there is disagreement about what should count as a factual finding — the PTO suggests that anything that relies at all upon patent or prosecution related documentation is legal textual analysis and not fact finding. Teva agrees that deference should be reserved to “classic fact­finding,” but that would include factfinding that also draws some inferences from patent documents in conjunction with other evidence.

The Supreme Court recently heard oral arguments, and the transcript is available online. In the case, Rising Star William Jay of Goodwin Procter argued for the patentee Teva who won at the district court but lost on appeal at the Federal Circuit. Carter Phillips of Sidley argued for Sandoz and Ginger Anders represented the Solicitor’s Office as Amicus.

Much of the of debate focused on the best analogy for patent claims — should they be interpreted as we interpret statutes (fully de novo review)? Or should they instead be interpreted as we do contracts (deference for underlying factual conclusions)? Jay attempted to argue that statutes are different because they are always designed to be read by the general public whereas patents are focused on those skilled in the art.

JUSTICE ALITO: If a patent is like public law, if it’s like a statute or like a rule, then factual findings regarding the meaning of that patent are not entitled to clear error review. . . Now, on the other hand, if a patent is private law, if it’s like a deed or if it’s like a contract, then Rule 52(a) comes into play. . . .

MR. JAY: Terms of art in statutes, Justice Alito…are nonetheless written to be read by the general public. And … when they have a legal meaning, the determination of that legal meaning is still a question of law. . . .

I think when you’re interpreting a statute that it s generally clear at least what the right frame of reference is Now in the in the patent case what the frame of reference is is itself a question of fact as this Court said in Graham v John Deere. Ascertaining the level of skill in the art who is the skilled artisan who is this patent written for that is itself a factual question and then figuring out what that what that person knows is also a factual question. . . .

MR. PHILLIPS: But actually, I think Markman
answered that, because I think Markman recognized that this is a public document that is going to be binding on third parties, and that therefore ought to be construed as a matter of law in order to ensure the stare decisis component of it.

Justice Breyer seemingly announced his position in favor of deference:

JUSTICE BREYER: And [the direct viewing of witness testimony], I think, is a very powerful reason for saying in a technical case, don’t overturn the judge’s factual findings whether they are ­­ particularly scientific matters, but no particularly here ­­ unless those three judges who will not even read the whole record normally and certainly won’t hear those witnesses, don’t let them do it unless they are convinced that it is clearly erroneous. Now, that’s the argument, and I would like to say that’s different from a statute.

Of course, in this particular case there was no live testimony for the district court Markman “hearing”, but rather only submissions in briefs and declarations.

A second analogy proffered is to the patent issue of obviousness that is also a question of law but is generally based upon underlying factual findings.  To that, Sandoz response is largely that claim construction should be considered unique.  On that point, a number of Justices seemed to question the fundamental Markman decision and its impact on Seventh Amendment rights.

Policy goals at stake: Uniformity and Consistency?

JUSTICE SOTOMAYOR: If you and the government can’t agree, why should we defer to a district court? Why don’t we defer, as has been done now forever, to the Federal Circuit and let them review these things de novo? . . .

CHIEF JUSTICE ROBERTS: [With deference,] two different district courts construing the same patent could come out to opposite results based on a subsidiary factual finding, and neither of those would be clearly erroneous, and yet on a public patent that is going to bind a lot of other people, people won’t know what to do.

. . . .

MR. PHILLIPS: It’s not ­­ it’s not worth the candle because all you’re going to do is create a cottage industry of trial lawyers fighting with the judge about which bucket some particular evidence fits into.

In my view, Mr. Phillips is right that the relative impact of deference for factual findings is relatively small.  The larger potential impacts will be seen if the court remarks more generally on what should count as a factual finding; whether claim construction methodology should be more aligned with statutory construction vs contract construction; and how the factual findings for claim construction might impact later parallel jury determinations.

Inventing Solutions to Global Disease & Poverty

Guest Post By David Kappos and Quentin Palfrey  

In April 2013, the Obama Administration announced the first wave of winners of the Patents for Humanity competition, an innovative program to provide recognition and incentives to companies that use their patented technologies to help the world’s poorest people. The winners and honorable mentions were diverse and impressive. For example, Gilead Science was recognized for making HIV/AIDS drugs available through innovative licensing mechanisms.The University of California at Berkeley developed lower cost ways to product anti-malarial compounds. DuPont developed an improved strain of sorghum that was fortified with more protein and vitamins for use among starving populations in sub-Saharan Africa. Procter & Gamble removed impurities from drinking water. Nokeros delivered solar light bulbs and phone chargers for off-grid villages through local entrepreneurs. In addition to well-deserved recognition for these and other laudable initiatives, companies recognized through the Patents for Humanity program received something else: a voucher to accelerate applications in one of several processes at the U.S. Patent & Trademark Office (USPTO).

This February, the White House reaffirmed its commitment to the Patents for Humanity program, removing it from pilot status and making it an annual program. The second wave of applications is due at the end of this month and we are sure to see another impressive group of innovators seeking recognition. But the program could be even more impactful in incentivizing humanitarian uses of patented technology if awardees were free to transfer their acceleration vouchers to other companies. This would increase the incentive effect of the program by making the vouchers more valuable. That is the idea behind the Patents for Humanity Program Improvement Act, introduced by Senator Patrick Leahy, the chair of the Senate Judiciary Committee, and Senator Chris Coons. The Obama Administration has supported this common sense, cost-neutral measure to strengthen an innovative program.

The challenges facing the world’s poor are daunting. One in eight people on the planet suffers from malnutrition. AIDS, tuberculosis, and malaria kill more than 6 million people a year. More than a billion lack access to safe drinking water. To overcome these challenges will require a sustained commitment, as well as many new ideas and inventions. The global fight against disease, hunger, poor sanitation, and other development challenges is urgent and bipartisan, and we hope Congress will act without delay to pass Senator Leahy’s and Senator Coons’ bill.

David Kappos is the former Under Secretary of Commerce and Director of the United States Patent & Trademark Office. Quentin Palfrey, a special counsel at the law firm WilmerHale, is a former Senior Advisor for Jobs & Competitiveness in the White House Office of Science & Technology Policy.

The Role of Patents in the Emerging Market for Venture Lending

by Dennis Crouch

A new article out from Yael Hochberg, Carlos Serrano, and Rosemarie Ham Ziedonis looks at how patents are increasingly being used as collateral for start-up ventures.  Generally, this area is being termed “venture lending.”  Article: Patent Collateral, Investor Commitment, and the Market for Venture Lending.

Conventional wisdom in the area has been that new ventures are typically too risky to allow for loans to finance research, development, and commercialization projects.  Bronwyn Hall and Josh Lerner (2010) and others have suggested that instead venture capital is the ‘more natural’ solution for financing entrepreneurship.  However, work by Alicia Robb & David Robinson and others have recently found that a substantial large percentage start-up companies also rely upon loans in order to finance their work.

Hochberg’s team looked to see the extent that patent rights are being used as collateral for these start-up companies.  A nice data feature here is that security interests in patents are normally recorded with the USPTO.  Using those records, the research team found that a substantial percentage (36%) of venture-backed startups in their study also relied upon loans for financing.  The sample here is fairly small (1,500 companies) and I suspect some potential selection bias, but still interesting results.

The authors also suggest that the market for patents is “thicker” and more liquid than many economists previously assumed.   That result is important because a more robust market for patents should mean that lenders are more willing to take patent rights as collateral.

If these intermediaries [such as Intellectual Ventures] increase the salability of patent assets, by increasing liquidity in the market, innovation-oriented companies could find it easier to borrow against their patents. This ex ante effect on innovation financing should be weighed, ideally with evidence from more companies and sectors, against the ex post distortions that may arise from patent trading and enforcement.

Although the article does not spell this out fully, one point that the authors are making here is that any study reporting on the cost/benefit of the patent system and transferability of patent rights should consider this financing benefit rather than simply the costs caused by enforcement.

The work here also builds upon Professor William Mann’s research that I previously highlighted here.


Nobel Prize in Patent Law

Professor Thomas Cotter (Minnesota) has two Nobel Prize related posts on his Comparative Patent Remedies blog.

First, Professor Cotter writes about physics Nobel prize winner Shuji Nakamura who was part of the Japanese team that first developed an efficient blue LED which turned out to be a major stepping stone for the now popular general use of LED lighting for a variety of applications.  Japanese law requires that inventors of high-value inventions be reasonably compensated and Professor Nakamura was able to receive about $8 million from his former employer Nichia Corp. (but only after suing).  Apparently, Japan is in the process of removing this law so that corporate owners can retain a higher profit.

Second, Professor Cotter writes about the economics Nobel prize going to Jean Tirole who has written a number of important patent related articles — focusing primarily on patents relating to technology standards and network impacts.  Most recently, Tirole and Josh Lerner have distributed their article titled “Standard-Essential Patents“.-

What is the Particular ‘Value’ of FaceTime?: Thoughts Provoked by Discussion of VirnetX v. Cisco and Apple

Guest Post by Jacob Jacoby, Merchants Council Professor of Consumer Behavior, New York University and President, JacobyIP Research (

When claiming patent infringement due to an individual component of a multi-component product, patent attorneys confront a fundamental problem, namely, determining with a reasonable degree of precision the extent to which the patented feature creates the basis for customer demand.  The purpose of this post is to apprise patent attorneys of a research-based approach capable of doing so with precision, while being able to pass Daubert requirements.

Jason Rantanen’s September 16, 2014 post described the kind of evidence considered (and rejected) by the Federal Circuit in arriving at its VirnetX, Inc. v. Cisco Systems, Inc. (Fed. Cir. 2014)  Virnetx v Cisco opinion.  As Jason pointed out:

A key issue in calculating the infringement damages for complex technological products is whether it is appropriate to use the value of the entire device in the damages calculation.  Generally speaking it is not appropriate to do so: “when claims are drawn to an individual component of a multi-component product, it is the exception, not the rule, that damages may be based upon the value of the multi-component product.”  Slip Op. at 27.  Rather, “‘[a] patentee may assess damages based on the entire market value of the accused product only where the patented feature creates the basis for customer demand or substantially creates the value of the component parts.’” Id., quoting Versata Software, Inc. v. SAP Am., Inc., 717 F.3d 1255, 1268 (Fed. Cir. 2013) (emphasis added by court).  This is due to the general requirement that damages must be actually attributable to the infringing features within a reasonable degree of precision.

The Federal Circuit rejected use of the Nash Bargaining Solution as a model for determining reasonable royalty damages.  This was not surprising, given that a key premise (namely, “where two person bargain over a matter, there is a ‘solution’…in which ‘each bargainer get[s] the same money profit”) could not possibly apply.  Customers purchasing smart phones, computers, TVs, etc. in the real-world marketplace typically are not “bargainers,” nor do they realize “the same money profit” from their purchases as do the sellers.

Subsequent discussion of Jason’s post yielded interesting perspective, especially the exchange between iwasthere and Curmudgeon.  When the former asked “So how would you propose breaking out the ‘value’ of FaceTime?…. What do you think [of] consumer survey data?”, the latter replied “Yes, I think customer surveys, akin to those used in trademark litigation, could make sense.”  As a proponent of surveys and author of the ABA’s 1000-plus page treatise, Trademark Surveys (2013), it might be surprising to see me assert: In my professional opinion, traditional survey research is not capable of providing a scientifically reliable and valid basis to be used when assessing damages. Consider some of the problems.

Suppose one asked past purchasers questions regarding the factors led them to make their purchase.  Considerable research shows that asking questions a point in time after the item has been purchased — especially for surveys conducted weeks, months or years after the purchase — is likely to generate answers subject to faulty memory.  Another problem is that the answers are likely to be colored by post-purchase experiences. Although a product feature may not have played a role in their pre-purchase deliberations and decision, positive post-purchase experiences can cause them to overestimate the value of the feature, to the point where they believe they must have considered it prior to purchase.  The reverse effect due to experiencing a disappointing feature is also possible.

Asking prospective purchasers to indicate the factors they think will influence their purchase decision can generate other problems.  Most importantly, prospective customers may not be aware of some product features until they begin seriously considering whether to purchase the product; hence, they could not possibly report on the materiality of these features to their purchase decision.

Consider iwasthere’s critical question “So how would you propose breaking out the ‘value’ of FaceTime?”  The answer is by using behavioral simulations such as those I developed and used for defendants in two matters, Polaroid Corporation v. Hewlett-Packard Company, U.S.D.C.  D. Delaware, C.A. No 06-738 (SLR) (2007) and John Taylor, et al. v. JVC Americas Corporation. U.S.D.C.  D. New Jersey, Civ. No. 2:07 Civ. 4059 (FSH/PS).  Such simulations measure actual information acquisition behavior not before or after the fact, but as it occurs, identifying the specific features potential purchasers of the goods at issue actually do consider and consider important (and those they ignore and obviously not consider important) while reaching a purchase decision.  In part based upon the research findings, both matters quickly settled out of court.  To illustrate, consider the following findings from one of the above mentioned cases which breaks out consumer demand for the contested feature, Feature P, as well as all the other features associated with this product. (Note: The names of the features have been redacted, which is why the features only have letters.)


Many contemporary products have numerous features and components.  The Federal Circuit has called for evidence quantifying the extent to which allegedly infringing components or features drive customer demand.  The output from such simulations are capable of doing so better than are any other extant procedures, thereby making it easier for damages to be attributable to the infringing feature(s) within a reasonable degree of precision.  Moreover, given their realistic nature and clear-cut findings, such simulations are likely to be more readily understood and accepted by triers of fact, especially juries, than are intricate damages theories, especially those involving questionable premises or arcane mathematical formulas.

Unfortunately, we cannot go back in time to determine to determine how the parties would react to each other under a hypothetical negotiation at the time of the infringement, a Georgia Pacific factor.  We can only test consumers who are in the process of reaching a purchase decision now.  That said, plaintiffs, defendants and triers of fact may find being able to identify the extent to which a feature or component drives current customer demand is preferable to relying on hypothetical negotiations that would have taken place at the time of the infringement.

Status of US Patent Applications


The chart above shows the current prosecution status of U.S. patent applications as either patented (blue), abandoned (red), or still pending (green). As you might expect, more recently filed applications have a greater percentage of applications still-pending, while fewer than 10% of those filed before 2009 are still pending.  You’ll note that the percentage of issued-patents appears relatively steady at about 60% over the filing-years 2005-2010. However, we can expect that figure to rise for the later-years in that group as the still pending cases are finally decided.

The applications here were considered through actions on October 1, 2014.  Thus, the 2012 applications have been pending between 1-year-9-months and 2-years-9-months.

The chart below looks at the same data, but limits it to only fully decided cases – those that are either patented or abandoned.




New Jobs

Law firms are hiring! We’ve had a rush of job postings this month – find yours!


Right Round: Comparing US and European Software Patent Eligiblity

Guest Post by Michael Williams. Williams is a UK and European Patent Attorney and Partner at the London based Cleveland-IP firm.

In the book “Through tAlicehe Looking-Glass”, Alice compares her drawing room to the one reflected in the mirror.  She notes that everything is the same “only the things go the other way”.

In the recent Alice Corp[1] decision, the US Supreme Court set out a framework for assessing whether claims are patent eligible under 35 U.S.C. § 101.  In this article I shall compare this framework with that used by the European Patent Office, and consider the similarities.

The US Alice Approach

In a memorandum dated June 24, 2014, the USTPO has set out its Preliminary Examination Instructions to the Patent Examining Corps in view of the Alice Corp decision[2].   In the Instructions, a three stage framework is set out which is summarized below:

  1. Determine whether the claim is directed to one of the four statutory categories of invention, i.e., process, machine, manufacture, or composition of matter. If the claim does not fall within one of the categories, reject the claim as being directed to non-statutory subject matter (§ 101).
  2. If the claim does fall within a statutory category, determine whether the claim is directed to an abstract idea. If not, proceed with examination of the claim for compliance with other statutory requirements.
  3. If an abstract idea is present in the claims, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. If there are no meaningful limitations in the claim, reject the claim as being directed to non-statutory subject matter.

The Examiner should then proceed to examine the claim for other patentability requirements, whether or not a rejection under § 101 has been raised.

I have illustrated the three-stage “Alice” approach in Figure 1.


The EPO approach

The approach of the EPO to claims with potentially excluded subject matter is summarised below.

  1. Examine the claim to establish whether it relates to excluded subject matter as such. This is done by assessing whether the claim has a technical character.  If there is no technical character at all, the claim is rejected under Article 52 EPC for relating to excluded subject matter as such[3] .
  2. If the claim has technical character, it is examined for novelty and inventive step. In the case of inventive step, it is determined whether the invention involves an inventive step in a technical field.  If the claim lacks an inventive step in a technical field it is rejected under Article 56 EPC.

In the case of a claim with a mix of technical and non-technical features, the following steps are followed when assessing inventive step[4]:

  1. Identify the non-technical aspects of the claim,
  2. Select the closest prior art on the basis of the technical aspects,
  3. Identify the technical differences from the closest prior art,
  4. Determine whether or not the technical differences are obvious.

If there are no technical differences, or if the technical differences are obvious, the claim is rejected for lack of inventive step.

I have illustrated the overall approach in Figure 2.  In order to facilitate comparison, I have separated the approach into stages which correspond roughly with those of the USPTO approach.  I have also assumed that there are differences between the claimed invention and the prior art (otherwise there would be lack of novelty).


Comparison of the two approaches

A comparison of the flow charts in Figures 1 and 2 shows a striking similarity between the first stages of each approach.  In each case, it is in effect determined whether the claim relates to no more than excluded, or ineligible, subject matter.  In both cases this acts as a filter to weed out claims which do not have any technical subject matter.

The second stages of each approach also bear comparison.  In the case of the EPO, it is determined whether or not the claim includes both technical and non-technical features.  In the case of the USPTO it is determined whether the claim is directed to a (non-technical) abstract idea.  However, since the claim must contain some technical subject matter (or it would have been weeded out at stage one), this is akin to determining whether there is a mix of technical and non-technical features. In both cases, the second stage flags up cases where there might still be a problem with excluded subject matter.

In the third stage of each approach we come to the nub of the matter.  It is here that borderline cases will stand or fall.  It is therefore worthwhile analysing this stage of each approach.

In the case of the EPO approach, the technical and non-technical features of the claim are first separated out.  The technical features which are not present in the prior art are then identified.  It is then determined whether or not those technical features are non-obvious.  In doing so, it is assumed that the non-technical features are already present in the prior art.  If the technical features which are not present in the prior art are obvious, the claim is rejected for lack of inventive step.

In the case of the USPTO approach, stage three involves determining whether there are any elements in the claim which amount to significantly more than the abstract idea itself.  This in effect requires two steps, as follows:

  1. Identify the elements which are not an abstract idea, and
  2. Determine whether those elements amount to significantly more than the abstract idea itself.

It is notable that step a is similar to the EPO approach of identifying the non-technical aspects of the claim.

With regard to step b, this begs the question: how much more is “significantly more”?  According to the Instructions there must be “meaningful limitations” in the claim, but how meaningful do they have to be?

We can assume that the elements which must be “significantly more” than the abstract idea are technical (since otherwise the claim would have been weeded out at stage one).  It is also the case that, in order to be “significantly more”, those technical elements must be meaningful.  If they must be meaningful, does this mean they must contain the inventive concept?

My guess is that, in practice, persuading the USPTO to allow claims of this type is probably going to involve arguing that the elements which are significantly more than the abstract idea are somehow tied in with the inventive concept.  Otherwise they would not be “meaningful”.  This then starts looking very much like arguing for non-obvious technical subject matter; in other words, an inventive step in a technical field.

There will of course be differences between the two approaches, not least due an imprecise alignment of the concepts of “abstract” and “non-technical”.  However it seems to me that both approaches are seeking to achieve something similar, namely, an assessment of whether the innovation itself lies in a non-excluded field.

Thus, to my mind, we are now in a situation where, in practice, the two approaches are considerably aligned, albeit “the other way round”.


As readers of the book will recall, when Alice actually goes through the looking glass, she finds it to be completely different from what she first saw.  I suspect that, as case law and practice develop, we will find that USPTO and EPO practice will differ.  However it is notable that, at least on the face of it, there are now considerable similarities.

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[1] Alice Corporation Pty. Ltd. V CLS Bank International, et al


[3] Guidelines for Examination in the European Patent Office G-II, 2.

[4] Guidelines G-VII, 5.4

Call for Papers

Akron IP Journal is hosting a symposium issue on Patentable Subject Matter and welcomes academic papers on the topic with a deadline of December 1, 2014.  Submit in Word format to attn: Jarrett Wyatt (Managing Editor).

The Patent Information Users Group (PIUG) is calling for papers for its 2015 Annual Conference held this year in the Chicago area. The conference focuses on patent search strategies & technology but the group is also looking to hear from attorneys on their application in support of patent drafting, prosecution, opposition or litigation matters. [LINK].


A Major Drop in Patent Infringement Litigation?

New patent litigation (original complaint filing) is down 40% from this time last year. The chart below comes from LexMachina whose founder, Mark Lemley, offers the speculation that the drop is largely due to the Supreme Court’s recent patent law activity — especially the fall-out from Alice Corp.  Along with Alice, we have a set of additional legal issues that favor accused infringers, including indefiniteness (Nautilus) and fee shifting (Octane Fitness).  Further, we are also well into the reign of post-issuance reviews (IPR, CBM, and now PGR) and the vast majority of repeatedly-asserted patents are involved in a parallel administrative review.  All these factors come together to provide plenty of reason for patent holders to slow-down on complaint filings. Of course, the change and the purported cause cannot be said to be ‘significant’ in the statistical sense.


We previously discussed the jump in April 2014 as a likely artifact caused by a threatened retroactive fee-shifting legislation.

In thinking about this issue, I was surprised to see HP’s most recent lawsuit as a plaintiff where it asserted three seemingly weak patents. U.S. Patent Nos. 6,089,687, 6,264,301, and 6,454,381.  These patents serve as HP’s attempt to control the market for replacement ink cartridges for its printers and have titles such as “providing ink container extraction characteristics to a printing system”; “identifying parameters in a replaceable printing component”; and “specifying ink volume in an ink container.”  The defendant in this case is Chinese ink-knockoff manufacture Ninestar.

The claims of these patents are clearly susceptible to Alice Corp in that the seeming points of novelty are basically very simply data structures.

The following is claim 1 of the ‘687 patent:

1. An ink-jet printing system comprising:

a printer portion for depositing ink on media in response to control signals, the printer portion configured for receiving a supply of ink;

a replaceable ink container for providing a supply of ink to the printer portion, the replaceable ink container including an electrical storage device for providing parameters to the printer portion, the electrical storage device containing:

an ink container scale parameter for selecting an ink container volume range from a plurality of ink container volume ranges,

a fill proportion parameter for specifying a fill proportion for the selected ink volume range;

wherein the printer portion determines an ink volume associated with the ink container based on the fill proportion parameter and the selected ink volume range.

Here, my understanding is that the hardware components were all known prior to the application here and the invention is simply to store two parameters on the cartridge (ink container scale parameter (specifying container volume) and fill proportion parameter (specifying how full it is)). The use of these parameters was also well known prior to the invention, but (apparently) they had never been put on an ink cartridge before.  Until recently, we would think this claim has an obviousness problem.  Now, it looks like it has patent eligibility problems as well. See HP v. Ninestar, 14 cv 4473 (N.D. Cal., complaint filed October 6, 2014).

The New Role for Post Grant Review Proceedings (PGR)

by Dennis Crouch

It has now been just over 18-months since we started filing patent applications under the new first-to-file patent system mandated by the America Invents Act (AIA) of 2011.  And, slowly but surely, FTF patents are now beginning to issue.  Those new patents also bring us into a new era of Post-Grant-Review-Proceedings (PGR).

My expectation is that PGR will quickly prove itself as an incredibly powerful tool for challenging patents. Importantly, PGR proceedings allow a third party to challenge the validity of a patent on any of the validity grounds that could be raised in court as a defense under 35 U.S.C. 282 – these include novelty, obviousness, written description, enablement, indefiniteness, utility, and subject matter eligibility. This list represents a major expansion of challenge-justifications over inter partes review (IPR) proceedings or reexaminations. These same doctrines have already been available for covered-business-method review (CBM) proceedings and have been used successfully if only on a narrow class of patents (those covering financial business methods).

Two recent PGR proceedings have been filed.  In one case, LaRose Indus. has challenged Patent No. 8,684,420 that covers the popular children’s “Rainbow Loom.”  Although the patent claims a 2010 priority date, the particular application was filed as a continuation in July 2013 and, at least according to the petitioner, added new mater to the claims at that point.  The second case PGR case involves Patent No. 8,598,291 that covers a liquid formulation of a particular nausea control drug used by chemotherapy patients. The petition argues that the claims fail the requirements of written description, enablement, and definiteness.

The most important limitation on the PGR process is the relatively short 9-month window for filing a PGR petition. Namely, the petition must be filed within 9-months of the patent issuance.  This puts some pressure on parties to monitor competitor patents and patent families.  It also provides patent owners at least some incentive to hold-off asserting their patent until after that window has closed (unless the patentee would welcome the review).  I suspect that the set-up in the LaRose Rainbow Loom market will be fairly common. The patentee (Choon) had previously sued LaRose on a previous patent and so LaRose has been closely monitoring the continuation applications.

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In thinking about how soon the AIA cases will come on-board, I created the chart below. The chart provides some information on the timing of patent issuance — showing the percentage of patents issued with 18-months of filing and 36-months of filing respectively.  A big caveat for this particular chart is that it looks at the actual application filing date and does not consider the priority date that will typically control whether a patent will be examined under the AIA. Thus, even at the three-year date (March 2015), I would expect that significantly less than half of the recently issued patents would be FTF patents.

You’ll note the trend beginning in FY2011 of issuing more patents more quickly.  I largely attribute the change to two initiatives pushed by David Kappos during his term as PTO Director that resulted in (1) more funding to hire more examiners; and (2) a greater allowance rate.  Those factors have continued through the succeeding interim leadership terms of Terry Rea, Peggy Focarino, and now  Michelle Lee.


Moving Toward A Way of Searching Through Cited References

The average number of references cited per patent has continued to grow over the past decade and now almost reaches 50 per patent with no sign of slowing-down.  When the reference-count was much lower, many examiners apparently assumed that applicant had already ensured that the cited references did not disclose the patented invention.  However, today neither patent applicants nor their patent attorneys have time to read through and fully consider such a large number of references.  Obviously, examiners also do not have time to read 50 references.  In my view, technology could offer a nice solution that would easily allow examiners to conduct an internal textual search that is limited particularly to references that have been submitted in this case and perhaps those previously cited in similar cases. So far, that search capability does not appear to be available for the examiners – especially for non-patent prior art.


Now, I should mention here that the ‘averages’ are a problematic figure for references cited because the distribution is quite skewed. Namely, there are a fairly small number of cases that cite a very large number of references, and those cases have a major impact on the results.  The chart below shows a more nuanced version of the distribution.





Integration vs Filtration: Federal Circuit Asked How to Determine Eligibility

University of Utah and Myriad Genetics are back at the Federal Circuit after losing a motion for preliminary injunction against the genetic testing company Ambry Genetics.  The case still focuses primarily on BRCA genetic testing, although the asserted claims are different from those in the Supreme Court decision.

For instance, Utah has asserted claim 7 of its Patent No. 5,753,441 listed below.

7. A method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises

comparing germline sequence of a BRCA1 gene … from a tissue sample from said subject … with germline sequences of wild-type BRCA1 gene…

wherein a difference in the sequence of the BRCA1 gene … of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject, [and]

wherein a germline nucleic acid sequence is compared by hybridizing a BRCA1 gene probe which specifically hybridizes to a BRCA1 allele to genomic DNA isolated from said sample and detecting the presence of a hybridization product wherein a presence of said product indicates the presence of said allele in the subject.

Because Claim 7 is a dependent claim, I have rewritten it to include the limitations of independent claim 1 and also eliminated some language written in the alternative.  I have also eliminated some redundancy.

The advance embodied by the University of Utah’s BRCA patents all center around the researchers’ discovery of the genetic sequence and location of the naturally occurring BRCA1 and BRCA2 genes and that the mutations correlate with a high risk of cancer.  That discovery itself is not patentable because it is a law of nature, or alternatively, an abstract idea or perhaps even a product of nature.  The question then is whether the claim includes the necessary “something more” – an “inventive concept” that transforms the invention into one that is patent eligible in a way that ensures that fundamental building blocks of science and technology are not monopolized through the patent.  A problem for Myriad on this front is that the tools of hybridized screening were already known and were not themselves inventive concepts at the time.  However, clearly the invention as a whole is practical, transformative, and inventive.

On October 6, 2014, the Federal Circuit heard oral arguments on the case with a panel consisting of Chief Judge Prost, Judge Dyk, and Judge Clevenger.  Oral arguments focused largely on the question of integration versus filtration.  Namely, when applying the second step of the Alice/Mayo analysis, is it proper to consider the invention as a whole integrated invention or must the court first filter-out the excluded subject matter and then ask whether an inventive concept can be found in the remains. It will be interesting to see how the court resolves this important and tricky question.

US Patents: Where are the Inventors Located?


Country of First Named Inventor FY2014 Patent Count
Japan 54975 18%
Germany 16730 5%
Korea 16280 5%
Taiwan 11303 4%
China 7694 3%
Canada 7218 2%
France 6812 2%
UK 6700 2%
Israel 3453 1%
India 3005 1%
Sweden 2754 1%


* The numbers above are based upon the inventor country as listed for the first-named inventor on the face of each U.S. utility patent.  Although there are an increasing number of cross-country patents (with inventors listing different countries), those numbers are negligible in a population analysis such as this. The results for assignee-country are virtually parallel with the exception that about 6% of U.S. patents are issued without a listed assignee.

Court Affirms Inequitable Conduct for Inventor’s Failure to Submit Prior Art

American Calcar v. American Honda (Fed. Cir. 2014)

Back-Link: Jason Rantanen previously discussed the court’s first decision in the case here: Calcar v. Honda: CAFC’s First Post-Therasense Inequitable Conduct Opinion (2011).

EvidentiaryStandardsIn a split opinion, the Federal Circuit has affirmed the district court’s determination that Calcar’s three asserted patents are unenforceable due to inequitable conduct during prosecution.  The case teaches about “but-for materiality” and holds that the withholding of information can be the but-for cause of a patent issuance even if that information is insufficient to render any of the patent claims invalid in court. See also Therasense. The court winds this tale by noting the evidentiary difference: PTO only requires a preponderance of evidence of nonpatentability while invalidation in court requires clear and convincing evidence.

Duty of Disclosure, Candor, and Good Faith Dealing: Although lawyers always bear certain good faith obligations, those practicing before the before the PTO bear a more significant duty of disclosure, candor, and good faith dealing.  Failure to meet this high standard has a number of potential repercussions — for patent owners, the greatest issue is the potential that resulting patents may be held undenforceable due to inequitable conduct in proceedings before the USPTO.  Importantly, for any particular patent case, the duty of disclosure extends to all “individuals associated with the filing or prosecution.” 37 C.F.R. 1.56. This certainly includes named inventors as well as “every other person who is substantively involved” with the application.  Id.

Therasense En Banc: In Therasense (Fed. Cir. 2011) (en banc), the court made it a bit more difficult to render a patent unenforceable by requiring (a) proof of a ‘bad’ act that is a but-for cause of the patent issuing as well as (2) particular intent that the act was intended to deceive the PTO.  Conventional wisdom is that Therasense (as well as Excergen) has dampened many claims of unenforceability — especially those where the allegation is merely a failure to fully disclose to the USPTO all information related to patentability of the case in question.

large-luxury-carFailure to Disclose Photos Taken of Prior Art: This case involves a family of three patents directed to a multimedia system used to access vehicle information and control vehicle functions.  The district court found that Calcar’s founder and named inventor Michael Obradovich had particular information about a prior Acura 96RL navigation system that he failed to submit to the PTO.  In particular, prior to starting work on his invention, Obradovich had driven the Acura, operated its navigation system, and taken photographs as well written a “QuickTips” guide.  Although the application identified the 96RL system as prior art, Obradovich did not write a summary of his experiences or submit the photographs or the owner’s manual.  The district court found this failure to be material to patentability and also that the “only reasonable inference from the evidence” was that Obradovich withheld the information with “specific intent to deceive the PTO.”  On appeal, the Federal Circuit affirms.

But For Materiality: An interesting aspect of this case comes from the fact that the jury considered the non-submitted prior art but found that it failed to render any of the patent claims invalid. Yet, the courts here hold that the non-submitted prior art can still be considered a but-for cause of the patent issuing in the first place.  The reasoning for this discrepancy is that that the PTO’s evidentiary standard for refusing to issue a patent is only a preponderance of evidence – a much lower standard that the clear and convincing evidence required to invalidate an issued patent.  Here, the finding is that the USPTO would have found at least one of the claims obvious if it had seen the non-submitted prior art.

But Obviousness is a Question of Law: Under Graham and KSR, obviousness is a question of law that relies upon an underpinning of factual determinations. Although the court ignores the Graham inquiry in its analysis here, it appears that the only disputed issue is the ultimate legal question of obviousness and not the factual underpinning.  The fact that we’re talking about a question of law is important because questions of law are not governed by evidentiary standards but rather both the PTO and Courts must approach that ultimate question with the same framework of simply correctly determining the law based upon the evidence presented.

The majority opinion was written by Chief Judge Prost and joined by Judge Wallach. Judge Newman wrote in dissent.

Judge Newman focuses on an interesting issue. She argues that, rather than speculating about what the PTO might do, lets look at what it actually did when it saw the references.  Namely, the ‘497 patent (invalidated by the jury and not at issue here) was reexamined by the PTO during the course of the litigation and the examiners reviewed the previously non-submitted prior art and then confirmed all of the claims as patentable.  However, Judge Newman’s arguments appear more appropriately addressed to the earlier court opinion in this case.

Nonetheless, my colleagues rule that the patents are unenforceable based on the initial failure to send the Owner’s Manual and photographs to the PTO. The inequitable conduct with which Mr. Obradovich is charged is that he “did not tell Mr. Yip [his patent attorney] about his experience with the 96RL, nor did he provide Mr. Yip with the Owner’s Manual or the photos of the navigation system display screens.” Dist. Ct. Op. at 11. However, the PTO established, on reexamination of the ’497 patent, that the purportedly withheld information was not material to patentability. In accordance with Therasense this ended the inequitable conduct inquiry, for the PTO sustained patentability in view of this information.

In addition, there was no evidence of intent to deceive the PTO. The panel majority impugns Mr. Obradovich’s credibility, although they do not say what is disbelieved. The jury heard and saw Mr. Obradovich, on examination and cross-examination, and did not find deceptive intent. My colleagues “infer” clear and convincing evidence of deceptive intent from Mr. Obradovich’s initial failure to send his patent attorney the Owner’s Manual and the photographs of the Acura display. They postulate that a savvy inventor and businessman such as Mr. Obradovich
would have known the information was material to patentability and would therefore withhold it in order to deceive the PTO. However, a more likely inference is that a savvy inventor and businessman would know that a patent obtained through concealment of a material reference is not a reliable commercial asset.


For Patents, It Still Comes Down to the Jury Verdict

Jury verdicts are fascinating with their simple power.  The jury is not asked to provide a long winded studied response to the case but rather to provide very simple responses to very difficult and complicated questions.  A lawyerly answer would be ‘its complicated,’ but that option is not allowed on the verdict form.

Masimo v. Philips involved a two week jury trial — two weeks of testimony where the two companies cross-asserted blood-oxygen monitor patents with competing experts at every front. Following that, the jury was given a simple form and it sided with Masimo to the tune of  $466 million dollars for past infringement.

MasimoDamages MasimoVerdict

Joe Re led the trial team for Masimo.

Double Patenting when you have a Common Assignee but No Common Inventors

This is a bit of an in-the-weeds question, even for Patently-O.

Because firms tend to operate within a certain market area and use a particular technological approach, it makes sense that a patentee may well create prior art that blocks future innovations. One solution offered by the law is the “common owner ship excption.”  In particular, the statutory definitions of prior art include the ‘common owner exception’ that excludes a right-owner’s prior-filed patent applications from the scope of prior art for later-filed applications so long as those prior applications were not published by the filing date of the later applications.

AIA Expansion of Exception: This is one area where the AIA reduced the scope of prior art. Namely, before the AIA the common owner exception excluded the prior applications only with regard to obviousness consideration (assuming different inventors). The AIA expands the exception to also exclude these prior-applications from anticipation consideration.  With this expansion, we might expect some increase in double patenting problems.

Double Patenting Common Assignee but No Common Inventors: My question relates to the statements in MPEP 804 that examiners should issue double-patenting rejections when two commonly-owned inventions claim the same subject matter even when there is no overlapping inventorship:

Claims in commonly owned applications of different inventive entities may be rejected on the ground of double patenting. This is in accordance with existing case law and prevents an organization from obtaining two or more patents with different expiration dates covering nearly identical subject matter. See In re Zickendraht, 319 F.2d 225, 138 USPQ 22 (CCPA 1963) (the doctrine is well established that claims in different applications need be more than merely different in form or content and that patentable distinction must exist to entitle applicants to a second patent) and In re Christensen, 330 F.2d 652 (CCPA 1964). . . .

[A rejection is proper even when] the reference … and the pending application are … by a different inventive entity and are commonly assigned even though there is no common inventor.


The problem with the MPEP here is that the cases cited are not on-point – i.e., they do not say anything about whether a double patenting rejection may persist when there are no inventors in common.  We know that statutory-double patenting is said to stem from 35 U.S.C. 101 and, likewise, we learned in AbbVie v. Kennedy Institute that obviousness-type-double-patenting also finds its roots in Section 101.  The problem with that approach is that Section 101 remains old-school and still focuses on “inventors” rather than applicants or owners.

My Question: What is the legal source of the MPEP’s declaration that a double patenting rejection is proper based upon common-ownership even when the two documents have no common inventor?  I suspect that there is a case on this, but I don’t know. 

Would you like 10,000 Cloems with that Patent?

Cloem Logo

by Dennis Crouch

Although you might be the first-to-file a patent application covering a particular new innovation, certain market areas are so competitive that you should expect follow-on patents from competitors that take the original idea and push it in other similar-but-different directions.  Those follow-on patents won’t block you from practicing your core invention, but they may well block you from implementing practical and important elements of a market-ready solution.

One potential partial solution to this problem is being offered by a new company out of Canes, France.  The company, known as Cloem, has an interesting business model of creating tens-of-thousands of what they call “cloems” based upon a client’s submitted claim set. A cloem is a computer-generated claim (or statement of an invention) that is created by the various permutations possible as well as by considering alternative definitions for terms as well as “synonyms, hyponyms, hyperonyms, meronyms, holonyms, and antonyms.”  The owner’s idea is that the cloems will be immediately published and then serve as prior art to prevent competitors from claiming rights to the whitespace surrounding the original patent.  Customers might also want to cloam a competitor’s patent application to prevent them expanding that subject matter.

Cloem admits that a substantial number of its results are nonsense, but a substantial number are also on-the-money and, with 50,000 cloems per patent, they can afford to waste a few.

Questions remain: (1) whether these smart-but-random computer-generated cloems should count as prior art; (2) when one of the cloems represents a seemingly patentable invention, who is the inventor and is it patentable?  Robert Plotkin wrote a book that considers some of this: The Genie in the Machine: How Computer-Automated Inventing is Revolutionizing Law and Business