February 2007

Prosecution Data

Patent

This morning, I pulled up 10,000 of the most recent patents to see what’s going on with pendency and other issues.

Pendency: About 65% of the patents were original applications (i.e., not based on a prior US filing).  The original applications issued after an average of 40.4 months delay (3 years, 4 months).*  The remaining 35% represented continuations, CIP’s, and applications based on prior provisional filings.  Those non-original applications had a pendency of just under 3 years (35.3 months).** The shortest original application pendency was 4 months (No. 7,172,439) and the longest stretched for over 13 years (No. 7,169,572).***  Chart I below shows the histogram of pendency for the whole group in 6-month buckets.

Examiner: About 63% of the applications were examined by an Assistant Examiner.  On average, the patented cases for assistant examiners took about four-months longer than examined only by a Primary Examiner.****

Foreign Priority: Unlike US Priority, a patent that claimed foreign priority did not seem to alter the expected time to issuance. About 41% of applications claim priority to a foreign patent document.  The biggest foreign locale was Japan.

Citations to Prior Art: As the PTO has reported, most patents cite fewer than 20 references. In our sample of 10,000 patents, the median number of citations was 13-14. The average number citations, however, was over 25.  That skewed average comes from a small number of patents that include a very large number of citations. Six patents issued to Shell (or a Shell shell) each cited over 1000 references and may have presented the entire history of oil drilling dating back to the 19th century. (See, No. 7,172,019). 15% of applications included 40 or more citations while 20% included 6 or fewer. The majority (64%) of the cited references were to US Patent Documents and over half of the patents cited no non-patent prior art.

Claimset Length: I also wanted to see whether longer claimsets increased the length of prosecution — they do.  Chart II below shows pendency as a function of claimset size percentile.***** This statistic is a bit odd because it is based on the number of characters in a claimset, but the character count appears to be a fairly-good single-variable proxy for the length and complexity of a claimset.

Technology Class: The greatest predictor of pendency is likely the technology classification. There are likely two primary factors driving the measured difference between technology areas: (1) Backlog; and (2) Heightened Scrutiny. Some art units have large backlogs of patent applications waiting to be examined while others have much smaller dockets.  Since patents are examined roughly in order, a longer backlog results in longer pendency. In addition, some of those same units with large backlogs are also the ones who have instituted the second-pair-of-eyes review to ensure that the patents that issue should be issuing. This heightened scrutiny is expected to increase pendency as well. Table I shows a handful of classes and their average pendencies.

Recently issued Business Method patents (Class 705) took over five years to issue, and DNA-type patents (Class 435) were over four years.

Inventorship: Most patents list only one or two inventors. This is reflected in Chart III below. The number of inventors did not prove to have a significant impact on pendency.  One patent did list 25 separate inventors. (No. 7,169,760). That patent was, however, quite far from the mean number of inventors calculated at 2.5.

 

Notes.

  • Cite as Dennis Crouch, Prosecution Data, Patently-O (February 15, 2007), https://patentlyo.com.
  • * 95% CI 49.96 – 40.83 months.
  • ** 95% CI 34.7 – 35.9 months. T-test shows difference between two sample averages at p<0.001. As can be seen from Chart I, the data is not exactly normal, but it is somewhat close. A more particular test would also factor in the skewed nature of the data.
  • *** I excluded No. 7,177,516, which was filed over 19 years ago because it was held under a secrecy order.
  • **** Average pendency for cases with assistant examiner was 41.4 months while the average pendency for cases signed only by a primary was 37.0 months. The difference between these averages is significant at p<0.001 using a t-test.
  • ***** Error bars are shown at the 95% CI.

Cargill v. Canbra: Extensive Prosecution Increases Likelihood of Inequitable Conduct

Patent, ,

Cargill T-Shirt Cargill v. Canbra Foods (Fed. Cir. 2007).

Cargill owns several patents related to more-stable fry-grease made from canola oil and sued Canbra (and others) for infringement.  The trial court found that two of the patents were invalid as on-sale before the priority date and that the other two were unenforceable due to inequitable conduct.  Cargill appealed.

A. Inequitable Conduct: A holding of unenforceability due to inequitable conduct requires two findings: That the patentee “(1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office.”

Information is material if either (1) “there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent” or (2) the information falls within the scope of the current Rule 56. (Reprinted below). Intent is often inferred from the facts and circumstances surrounding the “bad” conduct.

A district court’s determination of materiality and intent are reviewed only for clear error.

Materiality: Here the applicant failed to disclose two sets of test data that suggested a similarity between the invention and a prior art formulation. The district court found them to be “unquestionably” material and the CAFC panel agreed. In particular, the panel refuted the Cargill’s good faith assertions about materiality — reaffirming that “materiality is determined from the viewpoint of a reasonable patent examiner, and not the subjective beliefs of the patentee.”

Intent: The court indicated that there were several instances when the applicant should have brought-forth the prior art — such as when the patentee argued on five occasions that the invention was a nonobvious change from the prior art (even though the test data showed that they were similar).

An applicant should know information is material when the examiner repeatedly raises an issue to which the information relates. . . . The repeated nature of that rejection demonstrates that the applicant should have been aware of the materiality of the omitted test data, and, therefore, the district court properly considered it as significant circumstantial evidence of an intent to deceive the PTO about the evidence relevant to the application.

The implication here: A large prosecution history increases the likelihood of an inequitable conduct finding. Finding of inequitable conduct affirmed.

Notes

  • This decision was written by Judge Kent Jordan of the Third Circuit sitting by designation.
  • 37 CFR 1.56 (Rule 56) reads as follows:

[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim, or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.

A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

Love Means Business at the PTO

Patent

LoveAs an avid tennis player, love means nothing to me. However, this Valentine’s Day appears to be the perfect opportunity to profile the USPTO’s newly appointed Chief of Patent Examination Policy, Deputy Commissioner John J. Love.  Commissioner Love has always been quite responsive to requests for information and explanation.  Unfortunately, this reporter failed to contact Love for this report. . .

Rumors are that the Deputy Commissioner is difficult to sway, but that you will at least know where you stand.  Previously, as the head of the business method technology center, Love was a leader who helped institute the ‘second pair of eyes’ review and other quality initiatives.  As we have seen, those quality initiatives are thought to have increased patent quality while decreasing the allowance rate.

As the Deputy Commissioner for Policy, Love is part of the high-level PTO management that includes PTO Director Jon Dudas, Deputy Director Pinkos, Commissioner John Doll, and Deputy Commissioner for Operations Peggy Focarino [LINK].

District Court Patent Pilot moves Forward

Patent

IssaofficialpicDarrell Issa is a retired Army captain, patentee, and a former business owner (Remember the “viper” car alarm). Mr. Issa is also a member of the House of Representatives (R-Orange County).

On January 12, the House passed Issa’s patent court pilot program:

 H. R. 34: To establish a pilot program in certain United States district courts to encourage enhancement of expertise in patent cases among district judges.

(more…)

Gene Patenting; or Patenting Life

Patent

NextBookIts Patenting 101 — Patents are available for newly isolated DNA when the isolated gene is new and useful.  DNA fits well within the statutory categories of both a manufacture and a composition of matter.  And, although most genetic structures are derived from those found in nature, the isolated form is certainly ‘made by man.’

Michael Crichton agrees that genes are being patented, but argues that such patents are really really bad. Read here from today’s NYTimes Op-Ed.

YOU, or someone you love, may die because of a gene patent that should never have been granted in the first place. Sound far-fetched? Unfortunately, it’s only too real. . . .

Fortunately, two congressmen want to make the full benefit of the decoded genome available to us all. Last Friday, Xavier Becerra, a Democrat of California, and Dave Weldon, a Republican of Florida, sponsored the Genomic Research and Accessibility Act, to ban the practice of patenting genes found in nature. Mr. Becerra has been careful to say the bill does not hamper invention, but rather promotes it. He’s right. This bill will fuel innovation, and return our common genetic heritage to us. It deserves our support.

As the debate heats-up, Kevin Noonan is emerging as the backstop:

Writers like Dr. Crichton (particularly academics, who should know better) have created a “new vitalism;” in this philosophy DNA is “different” and patenting DNA should be prohibited.  One problem with their position is its intellectual dishonesty: as Dr. Crichton does here, they accuse gene patentees of having ownership rights to “your” DNA (the DNA in the cells of a person’s body).  This is nonsense, since anyone familiar with this space or any other truthful description of DNA patenting knows that patented DNA must be “isolated” or “isolated and purified.”  In short, no one has ownership rights over “your” DNA (or mine, or Dr. Crichton’s).

Read Noonan’s dissection of Crichton’s piece at PatentDocs.

Shield vs. Sword: CAFC Finds Inequitable Conduct But Not Antitrust Fraud

Patent, ,

PatentlyO2006047Dippin’ Dots v. Mosey and Dots of Fun (Fed. Cir. 2007).

[Note: This is the second post discussing Dippin’ Dots. Read Part I on claim construction] 

Inequitable Conduct: DD had used used part of its claimed method to make and sell Dippin’ Dots at a local fair more than one year before filing its application.  DD did not disclose that information to the PTO but did disclose information about the product’s market success that occurred after filing.

The CAFC affirmed that those facts properly led to a finding of inequitable conduct — showing both materiality and intent.

The prior sales were clearly were highly material as they served as the basis for invalidating the patent.  Intent to deceive was shown (even without a ‘smoking gun’) since DD touted some sales while concealing others.

Walker Process Antitrust Claims: A finding of inequitable conduct does not, by itself, support a finding of ‘common law fraud’ as required by Walker Process. Rather, a showing of fraud requires “a higher threshold showing of both materiality and intent.” Likewise, in these antitrust claims, both materiality and intent must survive on their own merits — without the balancing used in inequitable conduct determinations.

Where the fraud is based on an omission, the appellate panel held that intent must be shown with evidence that is “separable from the simple fact of omission.”

For instance, evidence may establish that a patent applicant knew one fact and presented another, thus allowing the factfinder to conclude that the applicant intended by the misrepresentation to deceive the examiner. That is not the case with an omission, which could happen for any number of nonfraudulent reasons—the applicant could have had a good-faith belief that disclosure was not necessary, or simply have forgotten to make the required disclosure.

Here, there was no additional evidence showing intent — giving the DD the win (on this minor point).

The Difference in proof for inequitable conduct and antitrust claims is discussed as the difference between a shield and a sword.

Weighing intent and materiality together is appropriate when assessing whether the patentee’s prosecution conduct was inequitable. Molins. However, when Walker Process claimants wield that conduct as a “sword” to obtain antitrust damages rather than as a mere “shield” against enforcement of the patent, they must prove deceptive intent independently. The defendants have not done so here to the extent necessary for a reasonable jury to find Walker Process fraud.

Claim Transitions: "Comprising The Steps Of"

Patent, Patent Cases 2007,

PatentlyO2006047Dippin’ Dots v. Mosey and Dots of Fun (Fed. Cir. 2007). [CORRECTED VERSION]

Everyone should remember their first experience with Dippin’ Dots. I was in Branson at Silver Dollar City. DD owns a patent covering its method of freezing, storing, and serving beads of delicious ice cream. 

Several of DD’s distributors decided to go a cheaper route.  They cancelled their orders with DD and found an alternative source. DD sued for patent infringement. The defendants counterclaimed with Walker Process antitrust claims based on DD’s enforcement of a “fraudulently acquired patent.”  The antitrust claim was based on the inventor’s pre-filing use of the invention that had not been disclosed to the PTO.

The patent was found obvious and DD, the patentee, was held liable for antitrust violations.

Comprising the steps of: The accused products included a diversity of shapes of ice cream pellets — some spherical and others irregular. DD made two infringement arguments based on its claim language of “comprising the steps of . . . beads . . .” DD’s first argument, that all the pellets, regardless of shape, are beads was shot-down by the appellate panel who decided beads must be “spherical” based on limitations explicitly written in the specification. (In this case, the addition of silly wiggle language would have likely saved the day — especially since the drawing being described did not show spherical beads.) 

DD’s second argument, that the “comprising” transition allows for infringement based on the accused spherical beads regardless of the existence of irregular pellets was also shot-down.  

“As to DDI’s second argument, we acknowledge that the term “comprising” raises a presumption that the list of elements is nonexclusive. See Genentech (Fed. Cir. 1997). However, “‘[c]omprising’ is not a weasel word with which to abrogate claim limitations.” Spectrum (Fed. Cir. 1998). “Comprising” appears at the beginning of the claim—”comprising the steps of”—and indicates here that an infringing process could practice other steps in addition to the ones mentioned. Those six enumerated steps must, however, all be practiced as recited in the claim for a process to infringe. The presumption raised by the term “comprising” does not reach into each of the six steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened.”

Thus, the claimed step of [(3)] freezing said dripping alimentary composition into beads, could not be interepted to as “freezing the alimentary composition into both beads and irregular pellets.”

At first glance, this case seems odd, but the underlying decision rests on a common sense approach to the claim language.  The court essentially found that “freezing said dripping alimentary composition into beads” meant that all of the dripping alimentary composition was frozen into beads. If the step was performed properly there would not be any ‘dripping alimentary compisition’ remaining to form the irregular pellets.

Signals Per Se; Nuijten; Textualism; and Floodgates

Patent

Continuing the debate on patenting of signals per se and the Nuijten case.

  • Professor Hricik continues our debate on whether the statute should be interpreted with back-looking textualism here.  His thought experiment is as follows:

Declaration_independenceWhat if we shortly conclude that there’s really no such thing as “matter” at all but it’s just vibrations of strings, and the ‘reality’ we perceive is only a manifestation of these vibrations that we cannot themselves perceive.   Does the conclusion that there is no “matter” as Jefferson understood the term mean nothing has patentable subject matter, since none of it is “matter” as that phrase was used back in Jefferson’s day?

  • Professor Duffy provides his new and fresh commentary on the oral arguments in PDF Form. (Duffy’s title is “Ten Points on the Oral Arguments in Nuijten”). Part of the debate explored by the judges is whether our 20th century knowledge of the relationship between energy and matter means implies that all energy forms should be patentable.
  • Expanding patentable subject matter always creates the potential for a flood of incoming patent applications.  We saw this type of flood with business-method and software-related applications in the past. The PTO continues to be severely criticized for allowing a number of ‘bad patents’ to issue in both of those areas during the earlier years. The general consensus is that the PTO is now doing a much better job (and is perhaps overzealous) at ensuring that business method patents meet the statutory requirements of novelty and nonobviousness. In my view, the examination problems began with the PTO’s prior art searching system — a system that, for the most part, assumes that all prior art is contained within prior US patents. As we know, the history of software and business method technologies is not primarily found in patents. For those areas, the PTO has been forced to rethink how it finds and examines non-patent prior art. In addition, these arts tend to have high cross-market uses — causing the issued patents to be potentially broader than they might have seemed in the context of the original application. Training and hiring issues also play a large role.  In the areas of software and business methods there is also a proportionally greater diversity of patent applicants because of the lower barriers to entry into those development arenas. The resulting greater amount of inexperience with the patenting process of those applications may have also resulted in a larger number of lower-quality patent applications.  That last point, however, is highly suspect considering the quality of applications being filed by many of the major players in the software arena.  In any event the PTO should be both cautious and ready to act.
  • In his paper, Professor Duffy notes that this particular case is unlikely to open any large floodgates.  Signals that are tied to some physical form (such as electronic memory) are already being patented.  As our regular commentator ‘Stepback’ and others have pointed out, Professor Noveck even has a patent covering a “computer data signal encoded in a carrier wave comprising . . .” (Claim 23 of US Pat. No. 6,823,363).

Links:

  • Professor Duffy’s Textualism Article
  • Professor Hricik’s Response
  • My Discussion of Hricik’s Response
  • Professor Osenga’s New Article: Ants, Elephant Guns, and Statutory Subject Matter.

    • Deposition Do’s and Don’ts: The Patent Interference Bar Is Warned

    Patent, ,

    BruceStonerby Judge Bruce Stoner and Jill Browning

    Senior Administrative Patent Judge McKelvey authored an opinion on January 12, 2007, joined by Chief Administrative Patent Judge Fleming and Administrative Patent Judges Schafer, Hanlon, Lane and Tierney.  The expanded panel addressed part of a Motion to Exclude Evidence filed by senior party Lan in Pevarello v. Lan, Patent Interference No. 105,394 (January 12, 2007), wherein party Lan sought the exclusion of evidence based on alleged violations of the Cross Examination Guidelines during a deposition.  The panel did not rule on the admissibility issues, but took the “opportunity to address practice under the Guidelines” as well as address permissible deposition testimony relating to the creation and execution of direct testimony affidavits.  Pevarello, at p. 2.   

    In interference proceedings, depositions are largely limited to the “cross-examination” of a witness who has given written affidavit evidence in support of a motion.  The Trial Section adopted Guidelines to govern the cross-examination of witnesses, included as an appendix to the Standing Order of January 3, 2006. See Appendix: Cross Examination Guidelines. The Guidelines were modeled after Hall v. Clifton Precision, 150 F.R.D. 525 (E.D. Pa. 1993), and the Board invited the bar to review that decision to answer questions that may arise with respect to deposition practice in interference proceedings.  

    It is not likely that the attorneys here were the only ones to have ever violated the Guidelines; if that were the case, the Board would not have felt the need for such an expanded discussion.  Presumably, the Trial Procedures Section of the Trial Division of the Board wanted to make clear that it was dead serious about the Cross Examination Guidelines and saw this case as a textbook example of the sort of behavior it would like to discourage.  Expanding the merits panel by the addition of Judges McKelvey and Schaffer, judges of long experience in inter partes matters, and the addition of Chief Judge Fleming, was clearly designed to send a message that the Guidelines are Board policy in interference proceedings before the Trial Procedures Section of the Trial Division of the Board. Applying the Guidelines to the case at hand, the Board emphasized the following practice points, with the aim toward re-establishing more decorum and control during a deposition.   

    Practice Points:

      1. Blanket objections waive the objection: An attorney lodging an objection during a deposition must state the legal basis for the objection.  “Motions to exclude based on blanket objections [a naked objection] will not be considered because blanket objections during a deposition fail to comply with Guideline [3].”  Pevarello, at p. 7. The legal basis for an objection, moreover, “must be found in the rules governing admissibility of evidence for contested patent cases, including the Federal Rules of Evidence.”  Id. at p. 6.  
        The Board determined that the parties’ stipulation to the contrary (the parties agreed that failing to state the basis for an objection would not waive the objection) abrogated Guideline 3 and was, thus, not proper. 
      2. Failing to object waives objection; objection as to the “form” of question is improper:  The parties also stipulated that “all objections are reserved until the time of trial, except those objections that are directed to the form of the question.” The Board made clear that failing to object during a deposition acted as a waiver of the objection, noting that in interference proceedings, there is no subsequent “trial.”  Pevarello at p. 18.   The Board further concluded that, in patent interference cases, counsel may not object to a question based on the “form” of such question.  The Board concluded that “form” objections are not sanctioned by the Federal Rules of Evidence and, thus, are improper in patent interference proceedings. Id. at p. 18. 
      3. Limit exchanges between counsel – call the Board instead:  Throughout the opinion, the Board cited many examples of, and admonished both attorneys for, debating the merits of an objection on the record.  The Board stressed that the objection and its legal basis must be stated in a “non-argumentative and non-suggestive manner”.  Pevarello, p. 5.  Should counsel continue to disagree regarding objections, particularly with respect to whether a certain line of questioning is proper, the Board invited counsel to call the administrative patent judge to resolve the dispute in real time.  Id. at p. 19.
      4. Defending attorneys should not ask for clarification of a question or an answer:  The Board criticized defending counsel for seeking clarification, on behalf of the witness, of a question, stating that this practice contravenes Guideline 1 (“At the beginning of a cross-examination, the party conducting the cross-examination may instruct the witness on the record to ask deposing counsel … for clarifications… See ¶ Guideline [1], Appendix to Standing Order, p. 71). The Board placed the burden of seeking clarification of a question squarely on the testifying witness, indicating that the Board found no legal basis for objecting to a question as “ambiguous, not clear or vague.”  Id. at p. 10.
        The Board further admonished defending counsel not to attempt to “clarify” the witnesses’ testimony, as that amounts to the “lawyer [taking] over control of the case from the Board.”  Id. at p. 14.  Thus, the defending attorney should not restate or question the witnesses’ testimony under the guise of an objection or correcting the record. 
      5. Prepare your witness before the deposition — not during the deposition: The Board strongly discouraged comments made by the defending attorney that could be perceived as “coaching” the witness to give (or stop giving) certain testimony.  This not only violates Guideline 3 (“Counsel must not make objections or statements that even remotely suggest an answer to a witness.”  See ¶ Guideline [3], Appendix to Standing Order, p. 72), but also the “decorum rule” of 37 CFR §41.1(c) (2006) (“Decorum. Each party must act with courtesy and decorum all proceedings before the Board, including interactions with other parties.”)
        The Board demonstrated a lack of tolerance for these antics, determining that the following remark made by counsel during the Witnesses’ answer: “‘I’m going to object because there’s no question pending’ translated into plain English means ‘Do not say anything more.’”  Id. at p. 15.  The Board also criticized counsel for coaching the witness when he objected to a question based on misstating the witnesses’ prior testimony.  The Board placed the burden of pointing out misstatements on the witness and indicated that the proper time for the defending attorney to clarify the witnesses’ testimony is on re-direct.  Id. at p. 17.  
      6. Avoid questions regarding the preparation of declarations:  The Board then turned to a separate, but related, topic regarding appropriate/inappropriate lines of questioning regarding the preparation of an affidavit or declaration.  According to the Board, attorneys should not question the witness regarding the mechanics of preparing the declaration, absent some compelling reason.  Id. at p. 23.  Thus, attorneys should refrain from asking who drafted the declaration (whether it was counsel or the witness), whether there were prior inconsistent drafts or whether there were discussions between counsel and the witness.  The Board, recognizing that its position conflicts with the majority interpretation of Rule 26(a)(2) of the Federal Rules of Civil Procedure, supported its decision with reasons given in the August 2006 American Bar Association report that advocates amending Rule 26 to limit expert discovery.  The Board also noted that the Federal Rules of Civil Procedure do not apply in interference cases before the Board.  The deposition of a witness should focus on the merits of the declaration, including: (i) The witnesses’ credentials; (ii) The invention; (iii) Relevant prior art; (iv) The basis for facts and opinions; and (v) Facts/issues relating to conception, diligence and reduction to practice.  Id. at p. 22.

    The panel hearing the interference (Administrative Patent Judges Hanlon, Lane and Tierney) will now, in view of the opinion, rule on Lan’s Motion to Exclude the Evidence. Failing to follow the Cross Examination Guidelines risks the imposition of sanctions under 37 CFR § 41.158, as noted in the Standing Order, ¶ 128.  The potential sanctions under § 41.158 can be serious, and include entry of: (1) An order holding certain facts to have been established in the proceeding; (2) An order expunging, or precluding a party from filing, a paper; (3) An order precluding a party from presenting or contesting a particular issue; (4) An order precluding a party from requesting, obtaining, or opposing discovery; (5) An order excluding evidence; (6) An order awarding compensatory expenses, including attorney fees; (7) An order requiring terminal disclaimer of patent term; or (8) Judgment in the contested case.

    Note: Judge Bruce Stoner spent seventeen years hearing patent appeals, including eight years as Chief Judge of the BPAI. In 2003 he joined the Greenblum & Bernstein firm. Jill Browning is a partner at the same firm and a director of the APLF.

    Peer-to-Patent Expected To Launch in April 2007

    Patent,

    Beth_noveck_webBeth Noveck recently published her most recent paper on Peer-to-Patent in the Harvard Journal of Law & Technology. As some of you know, Professor Noveck is on a mission to create a community-based open review system to assist patent examiners in determining whether an invention is patentable.

    We know from several studies as well as anecdotal evidence that plenty patents are issued covering obvious ideas.  It is hard work to find and sift-through prior art — not to mention the difficult task of comparing it to a patentee’s claimed invention.  Obvious patents make the patent system look bad and drag-down the system.

    One oft proposed quality promotion solution is to increase fees at the PTO and use the money to give Examiners more time to spend examining. This is a defensible answer, but it could end-up significantly increasing the cost of patenting. 

    Professor Noveck’s approach is to step outside the regulatory box and allow people in the community to review pending patent applications and provide relevant prior art.  Prior art can be ranked and discussed through an electronic exchange entirely outside of the PTO.  The results can then be submitted to the Examiner for review.  At best, an Examiner may receive a ranked list of ten references with indications of how relevant portion of the reference read upon various claims. 

    Receiving a packet of relevant info from the Peer-to-Patent group is intended to make the Examiner’s job of weeding easier, but it will only work if there is a real community of techno-experts willing to put in time to prevent patent applications from issuing.  Here, we can rely at least partially upon a competitive spirit — no one wants a competitor’s patent to issue, and the Peer-to-Patent approach provides a straightforward method to ensure that your path is not blocked. Several companies, including IBM and Microsoft have agreed to donate corporate time to assisting with the system.

    I’m intrigued with the approach. I think it is a fresh idea with some real potential—and have agreed to serve on the board of directors. One way or the other, the proof will come this Spring when the pilot is expected to begin.

    Patentable Subject Matter: Professor Hricik Discusses Duffy’s Textualism

    Patent

    Earlier this week, Professor John Duffy published his critique of the Patent Office approach to patentable subject matter. In particular, Duffy used textual analysis to examine the meaning of patentable subject matter under the Patent Act (Section 101) and under the laws as they existed prior to 1952. Duffy’s analysis shows that the four statutory classes (process, machine, manufacture, or composition of matter) should be seen as extremely broad.  This is especially true of the terms “composition of matter” and “manufacture.” Those subject matter terms have remained unchanged drafted by Thomas Jefferson in 1793. At that time, Duffy explains, these words certainly would have encompassed signals, and perhaps much more.

    Hricik_davidIn response, Professor David Hricik, a statutory construction scholar and a former patent litigator, has taken issue with this old-style textualism. According to Hricik, the Patent Act is different than many other statutes because it is contemplates a framework for future innovation. 

    I think we end at the same place, but I don’t think that we ought to limit the terms of 101 to what the terms meant in 1793, 1866, or even 1950.

    Underlying Hricik’s argument is the implicit sense that the government is not in a position to know what types of inventions we should be working-on. Rather, the scope of inventiveness should be controlled only by the creativity of inventors and their marketplace for funding. This is the same approach that we took in drafting the IPO brief in last-year’s Metabolite case.

    Hricik’s argument may actually go to far by implying that innovation related legislation should be interpreted differently than any other legislation.  All legislation looks to the future with the understanding that society is in a constant state of flux. And all legislation operates in the backdrop of technological change. If textualism is the wrong approach to interpreting patent legislation then it is the wrong approach across the board.

    Microsoft v. AT&T: Transnational patent Law

    Damages, Patent, Patent Cases 2007, Transnational

    Microsoft v. AT&T (Supreme Court 2007).

    Section 271(f) of the Patent Act expands the territorial scope of US patent protection by creating liability for exporting one or more “components” of a patented invention so that the whole invention may be practiced abroad. The statute is divided into parts one and two dealing with inducement and contributory activity respectively.

    The case at hand involves Microsoft’s infringement of AT&T’s speech coding technology patent. Microsoft has conceded that its software (once installed on a computer) infringes the patent in the US. However, Microsoft has fought against paying patent royalties for sale of the same software abroad.  Microsoft’s argument, spelled out in its brief, is two-fold: (1) Software cannot be a ‘component’ as required by the statute because software code is intangible; and (2) Software copies made abroad cannot be considered ‘supplied’ from the US as required by the statute because no physical particle that Microsoft exported actually became part of the finished product.  I have previously labeled these arguments as the tangibility requirement and the molecular conservation requirement. [Link]

    Now, AT&T and its supporters has filed their briefs that explain why 271(f) should encompass foreign copies of software shipped from the US. [Petitioner and Gov’t briefs are discussed here]

    AT&T’s Brief on the Merits:

    Tangibility: AT&T attacks the tangibility requirement head-on, arguing that there is no such requirement.

    [The software] is plainly a component of [the patented] device, just as a unique collection of intangible words is a component of any book bearing the title Moby-Dick, even though those words, too, must be combined with ink and paper before the book can be read.

    Of course AT&T is correct — the statute does not spell-out any tangibility requirement, and Microsoft’s statutory argument is, at best implicit. AT&T’s arguments are supported by business practice as well. Software and hardware are developed and sold separately, and each side can easily be though of as providing components of the whole.

    Molecular Conservation Requirement: AT&T takes a different view of the statutory requirement that the components be “supplied” from the US. In AT&T’s story, “supplied” means satisfying a need or furnishing.  Using a but-for analysis, AT&T makes clear that without Microsoft’s shipment of the code abroad, it would not have ended-up in the foreign computers.

    Here, the Windows object code is present in the foreign made computers only because Microsoft “provided” or “furnished”—in a word, supplied—it from the United States, via golden master disk or electronic transmission.

    As it stands, the AT&T brief is well written and convincing on its own — the major problem being that it leads with a petty argument for dismissal.

    Philips Corporation also filed a brief in support of AT&T.  Philips makes several arguments, two of which I discuss here:

    1. In today’s market, software and hardware companies do compete head-to-head.  A finding that software export is noninfringing would be at the expense of electronics companies because hardware exports would continue to be considered infringing.  Thus, awarding the win to Microsoft here may free the software industry, but will even further damage the hardware export industry.
    2. In many ways, this case is about the size of damages. Microsoft hopes that copies made abroad will not be seen as infringing because those copies were not literally shipped from the US.  Philips points out under the rules of consequential damage calculations, Microsoft would owe damages for sales of all copies even if 271(f) only covered the initial master disk shipment.

    WARF, California, and RCTech filed a joint brief in support of AT&T. These holders of strong bio-related patents see the potential that this case could narrow the scope of their protection. WARF points-out how Microsoft comes to the table with unclean hands:

    When it suits its interests, even Microsoft acknowledges that the number of units it supplies is not limited by the number of golden masters it sends abroad. In Microsoft Corp. v. Comm’r of Internal Revenue, Microsoft argued that it was entitled to tax deductions . . . for all foreign sales of software replicated from Microsoft’s golden master abroad, claiming that such copies were “export property” under the statute. The Ninth Circuit . . . agreed with Microsoft that all copies created from the golden master were export property, thereby providing Microsoft with another $31 million in claimed deductions for 1990 and 1991.

    BAYHDOLE25.inc is an educational NGO that supports, as you might guess, the Bayh Dole act (at its 25th anniversary).  In a brief supporting AT&T, BD25 argues for the protection of intangible assets — especially assets that are replicable and intended to be replicated.  These include software code, cell lines, patented seeds, DNA, etc. Replicable assets are important and should be protectable.

    Documents:

    • On the Merits
    • In Support of Microsoft
  • In Support of AT&T
  • In Support of Neither Party
  • Reply Brief:
  • On Petition for Certiorari

    • Important recent 271(f) cases:

    • NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
    • AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
    • Union Carbide v. Shell Oil (Fed. Cir. 2005) (271(f) “component” applies to method claims).
    • Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
    • Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
    • Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

    Earlier Discussion of this case

    Text of 35 USC 271(f)

    (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

    (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

    (more…)

    In re Nuijten: Patentable Subject Matter, Textualism and the Supreme Court

    Patent, ,

    DuffyBy Professor John F. Duffy, George Washington University

    [PDF Version of this Post] In re Nuijten, which is being argued to the Federal Circuit today, presents the important issue of whether a new type of artificially constructed signal may be patented.  The Patent and Trademark Office opposes patentability on the grounds that, as a matter of textual interpretation, signals do not fall within any one of the four categories of patentable subject matter – “process, machine, manufacture, or composition of matter” – identified in section 101 of the Patent Act.  PTO Br. at 12 (quoting 35 U.S.C. § 101).  Though Nuijten raises important issues concerning the scope of patentable subject matter under U.S. law (and that’s reason enough for most patent practitioners and scholars to care about its outcome), the case is also about much more.  It is about the fundamental approach to interpreting the Patent Act and the effect of the Supreme Court’s recent interest in patent cases.  To appreciate those larger issues, we must begin with a basic understanding of the facts at issue.

    PatentlyO2006044Modern signals (e.g., for carrying audio, video or data) may be constructed to contain embedded “supplemental data” or “watermarks,” which typically contain information such as the source or copyright status of the underlying information being transmitted.  The addition of such watermarks, which is old in the art, can distort the underlying signal.  Nuijten invented a new way to add watermarks that results in less distortion.  Nuijten filed a patent application with claims directed to (1) the new process for adding watermarks, (2) storage media containing signals encoded by the new process, and (3) the signals themselves.  The PTO has allowed claims for the process and for the storage media containing the signals, but not for the signals themselves.  The PTO does not disputed that the signals sought to be patented are demonstrably new and nonobvious.  The agency’s sole objection rest on section 101 of the Patent Act. 

    (more…)

    One for Slashdot

    Patent

    PatentlyO2006031Published patent application No. 20020029208 is described as a “data gathering and distribution apparatus and method.”  A reader e-mailed the following claim, which comes from the application:

    58. A data-gathering method, comprising: identifying source data to be gathered; automatically gathering at least a portion of the source data; and automatically distributing the gathered data to at least one selectable destination.

    Even when the provisional was filed in 2000, it is clear that this would not have passed the blush test.  Fortunately, the application appears to have been abandoned.

    Voda v. Cordis: Plaintiff May Not Assert Foreign Patents in US Courts

    Patent,

    VodaCatheter_smallVoda v. Cordis (Fed. Cir. 2007).

    Jan Voda, an Oklahoma medical doctor sued Cordis for infringement of his patent on an interventional cardiology catheter. Voda had obtained patents both in the US and abroad. Not wanting to waste time and money on multiple suits, Voda asked the US court to also determine his claims of foreign infringement based on his patents in the UK, Canada, France, and Germany.  The US court agreed, but Cordis appealed — arguing that the district court improperly extended its jurisdiction.

    In a 2–1 decision, the Federal Circuit (Gajarsa) has held that the district court cannot exercise supplemental jurisdiction over Voda’s foreign patent claims.  Judge Newman dissents.

    Supplemental Jurisdiction: Federal courts are designed to hear federal law. But, every day they exercise their power to decide issues that arise under the law of other jurisdictions. Usually the other jurisdictions are US states and municipalities. But, the courts are also regular interpreters of non-US law as well.  Non-Federal questions arise based on either “diversity jurisdiction” or “supplemental jurisdiction.”  Supplemental jurisdiction is spelled-out in 28 USC 1367:

    [after establishing] original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

    In many cases, supplemental jurisdiction has been found to extend to include foreign law claims. However, the “so related” portion of the statute has been interpreted to require that the supplemental claims arise from a “common nucleus of operative fact” and that the claims would “ordinarily be expected to [all be tried] in one judicial proceeding.”  Here, the CAFC did not determine whether supplemental jurisdiction exists because it found that the district court had abused its discretion (see below).

    Discretion and Comity: Even if jurisdiction exists, its exercise is “within the discretion of the district court.”  The CAFC found that the district court abused its discretion by ignoring the Paris Convention, TRIPS and concepts of comity.

     Like the Paris Convention, nothing in the PCT or the Agreement on TRIPS contemplates or allows one jurisdiction to adjudicate patents of another. . . . Based on the international treaties that the United States has joined and ratified as the “supreme law of the land,” a district court’s exercise of supplemental jurisdiction could undermine the obligations of the United States under such treaties, which therefore constitute an exceptional circumstance to decline jurisdiction under § 1367(c)(4). Accordingly, we must scrutinize such an exercise with caution. . . .

    The territorial limits of the rights granted by patents are similar to those conferred by land grants. A patent right is limited by the metes and bounds of the jurisdictional territory that granted the right to exclude. Therefore, a patent right to exclude only arises from the legal right granted and recognized by the sovereign within whose territory the right is located. It would be incongruent to allow the sovereign power of one to be infringed or limited by another sovereign’s extension of its jurisdiction. Therefore, while our Patent Act declares that “patents shall have the attributes of personal property,” 35 U.S.C. § 261, and not real property, the local action doctrine constitutes an informative doctrine counseling us that exercising supplemental jurisdiction over Voda’s foreign patent claims could prejudice the rights of the foreign governments.

    . . . Because the purpose underlying comity is not furthered and potentially hindered in this case, adjudication of Voda’s foreign patent infringement claims should be left to the sovereigns that create the property rights in the first instance.

    Judicial Economy: While the CAFC agreed with voda that “consolidated multinational patent adjudication could be more efficient,” the court worried that it would also cause additional problems of confusion and difficulty understanding and enforcing foreign actions.

    Changing Circumstances: Finally, the court left the door open if “circumstances change.”

    In addition, we emphasize that because the exercise of supplemental jurisdiction under § 1367(c) is an area of discretion, the district courts should examine these reasons along with others that are relevant in every case, especially if circumstances change, such as if the United States were to enter into a new international patent treaty or if events during litigation alter a district court’s conclusions regarding comity, judicial economy, convenience, or fairness.

    Vacated and Remanded

    (more…)

    Patent Law Tidbits

    Patent

    Comments: Thousands of patent attorneys read Patently-O every day. (This week, we’ll reach 3,000,000 visits).  In addition to ‘passive’ readers, Patently-O has also been recognized as fostering an open discourse on patent law and its application to particular cases. These discussions — usually through comments — are written at a fairly high-level and continue to help me develop an understanding of the changing law. Thanks to all of you who have left comments or otherwise contacted me about our recent patent law debates. Two things to put people on notice:

    • I allow anonymous and unfiltered comments because many patent attorneys don’t want to go ‘on record’ about much of anything. You should be aware that the Typepad software does record your network’s IP address. Thus, I can tell if you are writing from the FAA, US Courts, Quinn Emanuel, etc.  Although I don’t know, I suspect that a networking expert could potential drill-down for more specific information.  I won’t give this information out to anyone without a subpoena  — but Typepad does keep it on record. 
    • There should be no need to mention this, but perceived anonymity sometimes blinds people — comments sometimes get out of line. My tendency not to censor comments, but instead to simply block offending commenters from ever posting.

    Around the horn:

    Quote of the week comes from Dan Ravicher discussing Patriot Scientific’s troll-like behavior:

    “While one can’t blame them for doing what is in their self interest – much like one can’t blame cockroaches for appearing when it is you who left crumbs on the counter – it is past time for our policy makers to ask themselves whether such activity is beneficial for the public, or is instead a siphoning of resources that could be better spent on doing technological research or passed on to consumers in lower prices for goods.”