April 2005

Hynix Fails to Beat Rambus on Collateral Estoppel Issue

Rambus Hynix Semiconductor v. Rambus (N.D. Cal. 2005).

In an earlier lawsuit against Infineon, a court dismissed Rambus’s patent claims in a bench statement that "I have concluded that [Infineon] has proved, by clear and convincing evidence, a spoilation that warrants dismissal of [the patent infringement case] as the only appropriate sanction after having considered the alternatives."  However, the case settled before the judge issued a written opinion.

Now, Hynix argues that Rambus should be collaterally estopped from re-asserting the spoilage issue.  The N.D. Cal. disagreed with Hynix, finding that the elements for a finding of collateral estoppel were not met.

In the 9th Circuit, a party asserting collateral estoppel must show four elements:

  1. Full and fair opportunity to litigate in the previous action;
  2. Issue was actually litigated in that action;
  3. Issue was lost in a final judgment; and
  4. The person against whom collateral estoppel is asserted in the present action is in privity with the party from the previous action.

Using these elements, the court found (i) that the issue of spoilage (unclean hands) is particular to each litigation and thus had not been litigated in the Infineon case; and (ii) that the Infineon court’s statements from the bench did not constitute a "final judgment" because they were not "sufficiently firm."

While there is no question that Judge Payne was sufficiently settled in his decision that he was willing to dismiss Rambus’s patent claims at the conclusion of the evidentiary hearing on spoliation, he never issued a reasoned opinion, either written or oral, explaining his ruling. Before Judge Payne could issue such a ruling, Infineon and Rambus settled the action between them, stipulating to a dismissal with prejudice.

Seemingly to protect against the CAFC’s veto power, the opinion noted that even if all the elements of collateral estoppel were met, the court would use its discretion to deny the motion because such offensive uses of collateral estoppel are disfavored.

Hynix’s motion to dismiss Rambus’s patent claims for unclean hands on the basis of collateral estoppel is denied.

Patent Appeals via Videoconference

The Board of Patent Appeals and Interferences (BPAI) has begun to allow oral arguments from attorneys in remote locations (such as Chicago) using a video/audio feed.  The PTO has created a new "Electronic Hearing Room" that will allow for oral hearings in both ex parte and inter partes proceedings.
While three administrative patent or trademark judges preside from the USPTO in Alexandria, Va., an attorney can present a client’s case from anywhere around the globe with equipment capable of dialing Standard - H.320 (ISDN) protocol.

As the attorneys make their case, the judges will be able to watch your every move through their 50 inch plasma screen.

France: Right To Privacy Includes DVD Copying For Personal Use

Monsieur Stephane P v. Universal Pictures Video France (Court d’Appeal de Paris 2005).

PatentlyOImage031In a move to protect privacy rights, a French Appellate Court has ordered DVD vendors to stop selling copies of the film “Mulholland Drive.”  The court found that copy prevention software on the DVD violated privacy rights of DVD purchasers because it precluded them from transferring the film onto a VHS tape for personal use.

Assistance — Does anyone have an English translation of the case? (crouch@mbhb.com).

Links:

 

PATENT REFORM: Preventing Inequitable Results Under Knorr-Bremse Willfulness

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the landmark decision of Knorr-Bremse v. Dana Corp., an en banc panel of Federal Circuit judges recently held that no adverse inference is to be drawn from the absence of an opinion of counsel in willfulness determinations.  This ruling overruled the Court’s earlier precedent in Quantum and was a dramatic change.  The proposed legislation attempts to balance this swing in jurisprudence by adding a section on willfulness that incorporates the Knorr-Bremse holding while carving out broad exceptions.  

The proposed changes repeat the Knorr-Bremse holding that “[t]he absence of an opinion of counsel shall not create an inference that the infringement was willful.”  Further, the legislation makes mere knowledge of a patent or its contents insufficient for a finding of willfulness against the defendant.

The legislation diverges from Knorr-Bremse by listing “other factors” that may be considered in increasing damages against an infringer.  Included as one such factor is intentional copying by a defendant who has specific knowledge he is infringing patented subject matter.  However, unlike Knorr-Bremse, the defendant must rebut proof of specific knowledge by proffering evidence of an “informed good faith belief” that the patent is invalid, not infringed, or unenforceable (i.e. an opinion).  Thus, while no adverse inference of willfulness will be drawn in the absence of an opinion under the proposed changes, the defendant will still have the onus to provide an opinion in cases in which the plaintiff proves the defendant’s specific knowledge of infringement.

Finally, the legislation also proposes adding to the statute for increased damages the “factor” of prior litigation between the parties for substantially similar infringement.  Thus, in a later action between parties for colorably similar infringing conduct, willfulness may be based on the knowledge the infringer has maintained since the earlier litigation.

Antitrust: FTC confronts decision that liberally allows patent settlements

PatentlyOImage030Schering-Plough v. FTC (11th Cir. 2005) (on petition for en banc review).

In a March 8 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers over the patented blood pressure drug K-Dur.  The FTC had concluded that the settlement was an “unreasonable restraint of trade.”  The 11th Circuit disagreed, finding that because the suit involved patented products, neither a per se nor a rule of reason analysis would be appropriate.

By their nature, patents create an environment of exclusion, and consequently, cripple competition. The anticompetitive effect is already present. “What is required here is an analysis of the extent to which antitrust liability might undermine the encouragement of innovation and disclosure, or the extent to which the patent laws prevent antitrust liability for such exclusionary effects.” Therefore, in line with Valley Drug, we think the proper analysis of antitrust liability requires an examination of: (1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects.

Applying their rule to the facts, the Court concluded that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law. Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.

Petition en banc: Now, the FTC has filed a petition for rehearing of the case en banc. In the petition, the Commission raises three primary contentions:

  • Not every patent infringement litigation settlement should be shielded from antitrust scrutiny, so long as entry of the allegedly infringing product is not precluded at any time subsequent to expiration of the patent;
  • That the decision subverts the goals of Hatch-Waxman; and
  • That the decision used an improper standard review of critical disputed facts.

If this petition for rehearing fails, the Government is expected to appeal to the Supreme Court.

Links:

2005 USPTO Partnership Meetings Scheduled for May 4, 2005

On Wednesday May 4, the Patent Office is holding a couple of “Customer Partnership Meetings.”  These meetings are designed to provide insight into how the patent office handles patent applications and tend to give some informal insight into peculiarities of particular technology areas. They are also free of charge.

1) Nanotechnology

The PTO has a newly formed Nanotechnology art unit class.  The Wednesday discussion will provide a look at how the new art unit is collecting and searching the prior art.  In addition, an industry panel will give feedback to the PTO and participants.  There will also be time for an open floor discussion.  Although the deadline for signing up for the conference has passed,

there is still some room for those interested.  Contact Jill.Warden@uspto.gov.

2) Business Methods

Because of a popular believe that business method patents are of lower quality, the PTO has instituted a number of initiatives to improve quality in the art unit.  The PTO is focusing on speeding up a process that currently involves long delays.  John Love, director of art unit handling business method patents as well as other members of the unit will be available to discuss these issues.  This conference may be full — however Joseph.Thomas@uspto.gov may be able to fit you in.

Note: I’m planning to be at the business methods conference.  I look forward to meeting you there.

How should a future patent attorney choose a law school?

AcademicEggHeadThe new USNews law school rankings have been released.  Everyone knows that the rankings are worthless, but we follow them anyway.  Engineers and scientists usually do pretty well on the LSAT and often end up with the following law school options:  

  • Attend a highly-ranked law school;
  • Attend a lower-ranked law school with a renowned intellectual property program; or
  • Attend a lower-ranked law school as a night student and continue making money during the day.

The name of the law school matters most when you are looking for your first job out of law school.  Many people advise students to attend the highest ranked school where they can gain admittance.  Others would advise you to go to the school that offers the best financial package.  Not many advocate part-time solution — because it is such a hard road to work full-time then attend school four nights a week.  However, some of the most skillful attorneys that I know went through school that way.

What is your advice for hopeful pre-law students? Please leave a comment:

PATENT REFORM: Quick highlights from the Senate hearings.

The Senate Intellectual Property subcommittee held hearings on Monday, April 25, 2005 to discuss patent reform.  Some highlights:

  • Jon Dudas, Director of the Patent Office believes in the goal of “educating the world on the importance of patents.”  I believe that a major part of this should be to restore the mystique of the American inventor/entrepreneur.
  • On behalf of the AIPLA, Michael Kirk shot down BSA proposals to limit the availability of injunctive relief and the size of damage awards.  Kirk also mentioned that Congress should consider repealing 35 U.S.C. 271(f).
  • David Simon from Intel promoted changes to the notion of when an injunction should be granted.  In his viewpoint, there should be “a return equitable principles to determine whether an injunction should be granted.”

Patent Claim Construction: Whereby Clause Limits Claim Scope

PatentlyOImage029Hoffer v. Microsoft Corp. (Fed. Cir. 2005) (per curiam).

By Eric Moran

In Hoffer, the patentee (appearing pro se) appealed a summary judgment holding that defendants Microsoft, IBM, and Ariba did not infringe claim 21 of U.S. Patent No. 5,799,151 (the ‘151 patent) and that claim 22 of the ‘151 patent was invalid for indefiniteness.  The Federal Circuit reversed the judgment on invalidity and affirmed the judgment of noninfringement.  In affirming the judgment of noninfringement, the Federal Circuit affirmed the construction of a “whereby” clause, which “generally states the result of a patented process” and generally does not limit claims.  Here, however, as discussed below, the Federal Circuit held that when a “whereby” clause “states a condition that is material to patentability, it cannot be ignored in order to change the substance of the invention.”

The ‘151 patent involves methods and systems that allow remote users of computer terminals to obtain economic data from an index, and interactively post and receive messages concerning economic topics.  Claim 21 of the ‘151 patent in Hoffer included the phrase:

whereby a trade network supports users at said plurality of [remote user terminals] who are each guided by said [integrated application program interface] to select an economic activity, to identify that index topic that corresponds to said activity, to enter that topic board dedicated to said topic, and who are collectively able to concurrently engage in interactive data messaging on said topic boards.

The accused method allows real-time posting of messages, but not interactive data messaging in which users can communicate with each other.

The patentee argued that under Minton v. Nat’l Ass’n of Securities Dealers, Inc., 336 F.3d 1373, 1381 (Fed. Cir. 2003), a “whereby” clause cannot limit method claims when the “whereby” clause simply states the intended result of a method step.  In particular, the patentee contended that the “whereby” clause in claim 21 did not state the mechanics of the claimed method, but only stated an overall objective, and, moreover, his invention does not require interactive messaging.

The Federal Circuit disagreed, finding that, based at least on the “Summary of the Invention” section of the patent and statements in the prosecution history, interactive messaging “is more than the intended result of a process step; it is part of the process itself. . . . [It is] an integral part of the invention.”  Thus, the Federal Circuit held that the “whereby” clause stated a condition that was material to patentability, and claim 21 was limited to interactive messaging and did not extend to real-time posting of messages.

Judge Newman, in a panel that also included Judges Bryson and Dyk, authored a concurrence in which she disagreed with the panel’s failure to decide each of the appealed claim construction issues. 

Eric Moran (moran@mbhb.com) is an attorney at the intellectual property law firm of McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. His practice runs the gamut of intellectual property issues and includes patent, trademark, and domain name disputes.

Notes:

 

PTO and patent examiner union should focus on goal of patent quality and timeliness

The Patent Office Professional Association (POPA) is the union representing patent examiners at the patent office.  The POPA newsletter is certainly a propaganda piece, but it always reflects some semblance of truth and provides a gauge of the PTO esprit de corps.  In the most recent issue (February-March 2005) POPA discusses its contract negotiations with the PTO:

While boosting fees to the patent-user community, the USPTO hopes to slash examiner award pay and workplace benefits. If it succeeds, the agency's next step likely could be upping the already-high examiner work goals. The USPTO proposals undervalue the examiners' job, reduce quality by increasing speed-at-all-costs, and impede the government's ability to attract top-notch recruits to the USPTO ranks.

My hope is that the PTO and the examiner’s union can come to an agreement that makes the examiners happy by reward them for high-quality and timely work.

Full Panel Denies Rehearing in Fosamax Patent Case

Merck & Co. v. Teva Pharmaceuticals (Fed. Cir. 2005) (on petition for rehearing).

Merck & Co. owns the patent on the best-selling drug Fosamax.  Teva, a generic manufacturer lost an infringement case at the district court after the court found the patent valid and infringed.  In January 2005, the Court of Appeals for the Federal Circuit reversed the district court — vacating the lower court’s finding of validity and infringement. 

Merck, with the amicus support of PhRMA, subsequently filed a petition for rehearing en banc.  The CAFC has denied that the request, thus maintaining the panel decision. 

DISSENT: In a two-page dissent, Judge Lourie, supported by Chief Judge Michel and Judge Newman, argued that the panel decision erroneously concluded that commercial success was not probative to obviousness in this case and by linking commercial success with the failure of others.

Commercial success is a fact question, and, once it is established, as found here by the trial court, the only other question is whether the success is attributable to the claimed invention (“nexus”), rather than to other factors such as market power, advertising, demand for all products of a given type, a rising economy that “lifts all boats,” etc. It is not negatived by any inability of others to test various formulations because of the existence of another patent. Success is success. The panel’s rule is especially unsound in the context of an improvement patent, as here, because it holds in effect that commercial success for an improvement is irrelevant when a prior patent dominates the basic invention.

Commercial success is also independent of any “failure of others,” as that is another, separate secondary consideration.

Respectfully, the full court should have reheard the appeal to eliminate the confusion in the law that the panel opinion creates.

Interestingly, Judge Rader dissented in the three-judge panel opinion, but now agrees with the majority that the case should not be reheard.

The case will be remanded to the district court on April 28, 2005.

A REUTERS article indicates that Merck & Co. plans to petition the Supreme Court to hear an appeal from the CAFC decision.

Links:

Microsoft ordered not to release patented TCP software

PatentlyOImage028Alacritech v. Microsoft (N.D. Cal. 2005) (04–C-03284)

In an April 12 decision, Judge Jeffrey White of the Northern District of California granted Plaintiff Alacritech’s motion for a preliminary injunction against Microsoft — thus preventing Microsoft from releasing its TCP Chimney or Longhorn software. Alacritech’s patent covers a software method of establishing a TCP connection with reduced processor load and accelerating digital communication. 

In the thirteen page decision, Judge White determined that the patent was likely to be found valid and infringed and that the balance of hardships weighed in favor of the plaintiff, Alacritech.  Factors considered include:

  • A finding of likelihood of success on the merits leads to a presumption of irreparable harm in patent cases;
  • Because Alacritech is a small start-up, it would not be able to withstand infringing competition from Microsoft; and
  • Microsoft has not yet released the TCP Chimney software

Links:

Patent Applicant’s Claim Takings Claim Barred by Res Judicata

PatentlyOImage027Hornback v. U.S. (Fed. Cir. 2005).

Back in 1986, Mr. Alton Hornback applied for a patent on a error slope sensor for a missile.  The invention was found to be patentable but was withheld from issuance because of a secrecy order under 35 USC 181. The secrecy order was renewed annually until 1999, and the patent finally issued in June of 2000.

Hornback requested compensation for the delay in issuance, arguing that it was a taking.  Because Hornback had argued the takings issue in a previous case, the CAFC found that his claim was now barred by res judicata.

Hornback argued that the present case raised new issues because the military had de-classified then reclassified the technology in the interim.  The CAFC rejected that argument, however, finding that the classification action internal to the military did not alter his rights — “because only the Commissioner of Patents may rescind a secrecy order.”

In addition, the Appellate Panel agreed that the Court of Federal Claims “does not have subject matter jurisdiction of an adverse ruling of the PTO director.” 

28 U.S.C. §1361 vests “original jurisdiction” for the issuance of mandamus orders in the district courts, authorizing the district court to hear any action “to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.”

Dismissal affirmed.

Aside: In 1996, Hornback made another precedent when the CFC held that a pro se patent applicant without legal training is not held to the same standard as trained counsel.

Link:

Merck v. Integra: Transcript of Oral Arguments

On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity).  A transcript of the oral arguments is attached.

Based on the briefs and the oral arguments, I expect that the CAFC decision narrowly interpreting 35 USC 271(e)(1) will be reversed.  Respondent Integra’s strongest argument is a technicality — that the question on appeal is not based on any case or controversy remaining between the parties.

In many eyes, the question is not whether Merck’s actions are protected by the statutory safe harbor.  Rather, the point of speculation is: How far will the Supreme Court extend the safe harbor?

Merck v. Integra: Supreme Court Hears Drug Development Patent Case

On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity).  However, the oral arguments do not appear to have raised any new issues that will impact the case. 

The High Court was critical of the Federal Circuit prose:

  • “not a crystal clear opinion by any means” (J. Ginsburg).
  • “pretty foggy” (J. Breyer).

These remarks did not extend to the substance of the opinion.  Book-makers expect that the CAFC’s decision will be at least partially reversed — the real question is the eventual breadth of the statute.

In January 2005, Tom Mauro of the Legal Times reported that Justices Sandra Day O’Connor and Stephen Breyer did not participate in the decision to grant cert.  Interestingly, both Justices took part in the oral arguments.

A decision is expected this summer.

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Written Description: Defendant’s Own Expert Deposition Testimony Used to Overturn Summary Judgment of Invalidity

PatentlyOImage026Space Systems/Loral  v. Lockheed Martin (Fed. Cir. 2005)

By John Smith

Loral, the owner of U.S. patent 4,537,375 (the ’375 patent), sued Lockheed for infringement of claim 1. The District Court ruled in favor of Lockheed, finding the claim invalid for violating the written description requirement of 35 U.S.C. § 112.

The ’375 patent is directed to an improved method for maintaining the orientation and attitude of a satellite in space by a process known as station-keeping.  After an initial thrust, the satellite re-checks its position, and often fires its thrusters again to better correct its position. Station-keeping thus uses the limited fuel supply on board a satellite and contributes to shortening the life of satellites. The ’375 patent discloses a method directed to improving the efficiency of the corrective procedure.

Claim 1 of the ’375 patent entails a multi-step procedure of thruster-firing, data storage, checking of position and correction of position, and minimization of error in correction of position. Essentially, the satellite fires its thrusters to correct its position, then checks its position and compares its current error in position to its previous error in position before firing its thrusters again. Lockheed argued that the patent was invalid, because the second step of claim 1 was not adequately described in the specification.

Defendant Lockheed’s expert, when asked at deposition where one would find the second step description, answered (over counsel objections) that the second step was depicted in Item 96 of Figure 2B.  The court found this, along with the testimony of plaintiffs’ expert, established that the specification sufficiently described the claim.

Lockheed also argued that the second step of claim 1 was not inherent in the written description because the specification did not state that the second step was necessarily used in the satellite position correction procedure. On appeal, the Federal Circuit noted that the second step of the claim at issue in the procedure comes only (if at all) after thrusters are fired and actual position error and historical position error are compared. According to the Federal Circuit, this “does not diminish the descriptive content of the specification.”

The Federal Circuit reversed the finding of invalidity, and remanded back to the U.S. District Court for the Northern District of California for further proceedings.

John Smith is an attorney at MBHB LLP in Chicago.  He earned both his JD and PhD (inorganic chemistry) from Vanderbilt University. He has co-authored numerous articles and served as a faculty member in the Chemistry Department of Lipscomb University in Nashville, Tennessee.

Notes:

Groklaw Patent Resource Page

Pamela Jones at GrokLaw, the fabulous pro-Linux blog, has created a patent resource page with links to all the patent resources that you would like to find:

GrokLaw’s Patent Page:

Bookmark this great new resource. -DDC 

Links:

PATENT REFORM: House and Senate to Hold Hearings this Week

House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures.  The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link].  The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA.  In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE -- Strong indications are that the Senate will postpone the hearing to April 25].

Links:

PATENT REFORM: Injunctions Only When Money Is Not Enough

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity."  The terms of the injunctions need only be "as the court deems reasonable."

The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions.  Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages."  In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors.  One of these factors is "the extent to which the patentee makes use of the invention."

One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm.  The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.

PATENT REFORM: Overturn Eolas v. Microsoft

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S.  The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.

The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."

This change would essentially overrule Eolas v. Microsoft.