On October 11, 2007, the PTO issued a MEMO instructing examiners to stop examination on pending applications that exceed the new 5/25 claim rule. Eight days later, on October 19, 2007, the PTO issued a new memo ordering examiners to begin examining those applications once again.
The politics of patent law is somewhat confusing. Those with the most at stake — innovator pharmaceutical companies — lean heavily toward a Republican party affiliation. Along that line, it is Democrats — with the support of California technology companies — who are pushing through Congressional patent reform measures that would weaken the strength of patent rights. On the other hand, the current US Patent Office Republican administration has taken major steps to tighten the patent prosecution rules of practice. These rule changes are most vehemently opposed by the innovator pharmaceutical companies and supported by many west coast technology companies.
The judiciary has also been thought to be a mixed bag — without any identifiable liberal-conservative ideologic divide. In a new paper, DePaul Professor Matthew Sag and his colleagues from Northwestern (Jacobi & Sytch) prove that presumption wrong — at least for Supreme Court decisions. They find that throughout the past several decades, liberal Supreme Court justices tend to rule Against the IP Owner (XIPO) significantly more often than their conservative counterparts. In other words — conservatives tend to support IP rights while liberals tend to deny those rights. The figure below, excerpted with permission from the paper, shows the trend based on Martin-Quinn scores of judicial ideology. Interestingly, the effect holds across all the various areas of IP law.
Notes:
International Gamco v. Multimedia Games (Fed. Cir. 2007).
A single patent can have multiple ‘exclusive licensees’ where each licensee has exclusive rights to a portion of the patent rights. Rights are often divided temporally, physically, by field of use, and by type of use. Here, Gamco received an exclusive license grant from gaming giant IGT to sell state authorized NY lottery games covered by the ‘035 patent.
On appeal, the CAFC found that Gamco does not have standing to file suit without the cooperation of the patentee, IGT.
An exclusive licensee possesses standing to sue in its own name if it holds “all substantial rights” to the asserted patent. Historic cases have held that an exclusive territorial licensee has standing without joining the assignee. Here, the court drew a line at exclusive field of use licenses — holding that an exclusive license to a portion of the patented subject matter does not include sufficient rights to create licensee standing. Relying on the Supreme Court’s 1892 Pope v. Jeffery opinion, the appellate panel found that field of use divisions create a real potential that a defendant could face suits from multiple licensees.
“In Pope, as in this case, the license only conveyed rights to a subset of the patented subject matter. For that reason, as in this case, the conveyance posed a threat of multiple suits based on the same allegations of infringement. This court therefore holds that Gamco lacks standing to sue in its own name without joining IGT.”
Senior Judge Friedman gave a different reading to Pope and filed a dubitante opinion — doubting the correctness of the decision.
Those of you following your docket through the PTO’s PAIR system may note that the Office has begun its ‘identification process’ of unexamined patents with either (1) more than 25 claims issued or (2) more than 5 independent claims. The docket report shows:
According to a telephone conversation with the Office of the Commissioner for Patents, these cases have been pulled from Examiner dockets because they exceed the 5/25 limit and are thus-far unexamined. We will be able to do a retrospective in Mid-November to estimate the number of cases impacted by this pre-rule activity. Of course, this appears to be a de facto implementation of the new rules prior to the stated November 1 effective date.
Air Measurement Corp v. Akin Gump (Fed. Cir. 2007).
Immunocept v. Fulbright & Jaworksi (Fed. Cir. 2007).
Through a pair of malpractice cases, the CAFC has expanded its reach over state law malpractice claims. These cases conclude that federal courts hold exclusive jurisdiction over cases involving state law malpractice claims that require resolution of a “substantial question of federal patent law” such as infringement, validity, enforceability, or patent claim scope. This general concept is not new, rather, these case incrementally expand the type of patent malpractice claims that require federal court decisionmaking. The issue is whether the particular form of malpractice asserted requires a determination of a substantial question of federal patent law.
In Air Measurement (AMT), the patent holder sued its attorney for malpractice based on a series of alleged mistakes, including filing after an on sale bar date, failing to submit two prior art references; and failing to properly inform AMT of the mistakes. AMT was still able to collect $10m in royalties on the patent family, but asserted that it would have collected more but for the alleged attorney error. Because adjudication of the malpractice claim requires a determination of (potential) patent infringement, the dispute properly ‘arises under’ the US Patent Law. 28 USC 1338.
In Immunocept, the patent holder attempted to license its patents to J&J back in 2002. J&J’s attorneys found that the patent was narrowly drafted and refused to take a license. (‘Consisting of’ claim language). In 2005, the Immunocept sued its patent attorneys for malpractice. On appeal, the CAFC agreed that federal courts holds exclusive jurisdiction over this case because it requires a determination of patent claim scope – a substantial patent law question.
“Because patent claim scope defines the scope of patent protection, we surely consider claim scope to be a substantial question of patent law.”
After finding jurisdiction, the appellate panel affirmed the lower court’s finding that the claim was barred by a two-year statute of limitations. (Clock begins running after reasonable notice of the facts underlying a malpractice claim).
Recently posted jobs from the Patently-O patent law jobs site:
Companies pay a $200 fee to post patent law related jobs. Job seekers can search the site for free.
Harry Moatz is the Director of the PTO’s office of Enrollment and Discipline. At the most recent IPO meeting in New York, Mr. Moatz reviewed several principles regarding compliance with the new PTO rules:
Links:
CIAS v. Alliance Gaming Corp. (Fed. Cir. 2007)
CIAS asserted its counterfeit protection patent against both Alliance Gaming and Bally’s but lost on summary judgment of non-infringement. On appeal, the CAFC reversed the claim construction, but affirmed the judgment.
‘Comprised of’ is an open-ended transition: Rather than the traditional “comprising” transition, CIAS wrote that its invention was “comprised of” several elements. The district court construed “comprised of” as a “closed-end term that excludes the presence of all [non-presented] elements.” On appeal, the CAFC reversed holding simply that “comprised of” is the same as “comprising” and should be interpreted as open ending.
The appellate panel did, however, give a narrow definition to the claimed “unique authorization information” — holding that it had been narrowed by prosecution arguments.
Notes:
Allvoice Computing v. Nuance Comm. (Fed. Cir. 2007)
Allvoice appealed after the Texas court found its means-plus-function claim elements indefinite under 35 U.S.C. § 112. The patent relates to voice recognition software.
PHOSITA Creativity: A means plus function element is considered indefinite if a PHOSITA “would be unable to recognize the structure in the specification and associate it with the corresponding function in the claim.”
On appeal, the CAFC took a cue from KSR v. Teleflex — finding that a PHOSITA is creative and “not an automation.” For software cases, this means that the specification “need only disclose adequate defining structure to render the bounds of the claim understandable to one of ordinary skill in the art. Here, the CAFC found that the algorithm flowchart (see figure) was sufficient structure.
Best Mode: The appellate panel also included the reminder that the best mode requirement only extends to the claimed invention.
Notes:
The U.S. Patent Office does not have substantive rulemaking authority. Thus, the office cannot change the meaning of “novelty” or “obviousness” even through a formal process of notice and comment rulemaking. The Office does, however, have the power to make rules that govern procedures within the office that are “not inconsistent with [the] law.” 35 USC 2.
GlaxoSmithKline has now sued the Patent Office to stop implementation of two new sets of PTO rules — arguing that the scope and effect of the new rules extend well beyond the PTO’s limited rulemaking authority. The main thrust of the rules is to limit the number of follow-on applications that can be filed that somehow relate to an original patent application and to limit the number of claims filed in each patent application.
Glaxo can easily show that these rule changes will harm its business — especially because the rules retroactively impact the UK company’s already pending patent applications.
The rules hit innovator pharmaceutical companies especially hard. Pharmaceutical companies typically file large original patent applications early in the drug development process. Those original applications typically disclose many variations of a class of drug along with various methods of manufacturing and using the drug. As development continues, follow on continuation applications are used to specify and claim particular subgroups. The continuations also typically include further information to prove utility and nonobviousness of the particular subgroups. These rule changes will severely limit GSK’s ability to file these continuations and, as a consequence, will hurt its position.
GSK notes that the PTO’s exceptions to the rule is primarily mythical because it requires a strict “could not have” limitation.
Schwarz Pharma and Warner Lambert v. Paddock Labs (Fed. Cir. 2007)
Schwarz sued after Paddock filed an ANDA for FDA approval to sell generic forms of Schwarz’s Univasc ACE inhibitor. Under 35 USC 271(e), the act of filing an ANDA is a form of patent infringement. Paddock won on summary judgment of non-infringement.
Standing: Schwarz is the exclusive licensee. Warner-Lambert actually owns the patent. On numerous occasions, the CAFC has held that the patent owner must be a named plaintiff in any patent infringement action. (An exclusive-licensee does not have sufficient standing on its own). The question on appeal is whether the patent owner must be part of an appeal as well.
Without any statutory or precedential guidance, the CAFC was forced to create its own rule — holding that – unlike district court standing – appeals to the CAFC do not necessarily need to include the patent holder.
The district court standing requirement is explained as a method of avoiding the potential of a defendant facing separate actions from a patent holder and its exclusive licensee. Because there is ‘no such danger’ for appeals, the CAFC found that the ‘prudential’ standing requirement is not necessary.
Prosecution History Estoppel: As a reminder not to rely on the doctrine of equivalents (DOE), the appellate panel held that DOE coverage was excluded based on the patentee’s narrowing amendment during prosecution. In its attempted end-run, Schwarz argued the amendment should not exclude DOE coverage for the accused product containing MgO because MgO was not covered by the originally filed claim. The CAFC rejected that argument — Somehow the court could not wrap its head around Schwarz’s argument that MgO was not an “alkali or alkaline earth metal salt” as originally claimed.
Notes: Interestingly, the court appears to have only applied a shorthand analysis for construing the original scope of the claims.
Abbott v. Torpharm & Apotex (Fed. Cir. 2007)
Depakote is one of the most popular anti-seizure medications on the market. In an ANDA dispute, Apotex was ordered from commercially manufacturing, using, selling, or importing generic versions of the drug that would violate Abbott’s patents.
Apotex was found in contempt of court after the generic manufacturer guided another company (Nu-Pharm) through the process of filing an ANDA on an allegedly non-infringing form of the drug. Sitting by designation, Judge Richard Posner issued the contempt order after finding no difference between the new product and the old product.
Remember here — Apotex is not being held in contempt for actually making or selling the drug. Rather, the contempt stems from filing the Nu-Pharm ANDA — which is a form of infringement under 35 USC 271.
On appeal, Apotex argued that district courts have no jurisdiction to hold contempt proceedings when the accused action is filing an ANDA.
In its opinion, the CAFC agreed with the patent holder that ANDA filings are infringement. As a form of infringement, the district court has the power to issue injunctions to stop the infringement and to issue contempt orders for violations of any injunction.
In this case, however, the appellate panel found that Judge Posner’s contempt proceedings made an error in law — because the original injunction did not include an express order not to “infringe” or not to “file an ANDA”, Apotex could not be held in contempt for those actions. Furthermore, Apotex cannot be held in contempt for foreign manufacturing or sales.
Judge Dyk in dissent argues that the contempt proceeding was improper. Rather, Nu-Pharm should receive a full hearing in court to determine whether the new product is infringing.
DDC Notes on EBay: Although not discussed by the CAFC panel, I cannot see how an injunction against filing an ANDA would qualify for injunctive relief under eBay v. MercExchange. This is an important issue because it is unclear at this point whether eBay applies to ANDA injunctions issued under 271(e)(4)(B). Additionally, the CAFC failed to provide any analysis on whether an injunction against ANDA filings is permissible under that statute. (I would argue that it is not permissible).
A few updates while I wait for my airplane:
Nilssen v. Osram Sylvania (Fed. Cir. 2007)
In a unanimous panel opinion, the CAFC has affirmed a district court finding that Ole Nilssen’s patents are unenforceable due to inequitable conduct. Although Nilssen prosecuted his own patents pro se, the CAFC cut him no slack since he was smart enough to “cite the [MPEP], patent statutes and regulations, and case law during prosecution.”
Unenforceability of Non-Asserted Patents: In a related family of patents, misconduct during prosecution of one of the patents can lead to the whole family being found unenforceable. Reversing that theory, the CAFC agreed that the lower court properly found several of Nilssen’s non-asserted patents to be unenforceable. (Although the court did not create any strict limit on the potential bleed-through, it should be noted that Nilssen originally asserted infringement of those patents, but later dropped those claims.)
Expert Testimony: Following Ferring, the CAFC agreed that Nilssen’s failure to disclose a close relationship with his 132 declarant constituted inequitable conduct.
Small Entity Fees: Although not during prosecution, pretending to be a small entity when paying maintenance fees can also lead to unenforceability. Here, the court found that payment of the small entity fee after licensing to Philips demonstrated an “obvious intent to mislead.”
Priority Claims: Misleading priority claims can also constitute inequitable conduct.
Notes:
In the wake of changes in prosecution rules at the PTO. Some may find Charles Dickens’ 1850 essay on the struggle of an independent inventor somewhat encouraging. (In this story, John didn’t even get to the struggle of enforcement). (more…)
EON-Net v. Flagstar Bancorp (Fed. Cir. 07-1132) (non-precedential)
In 2006, the Washington State district court granted summary judgment of non-infringement in Flagstar’s favor. The court also applied sanctions against the patentee’s attorneys – a NYC class action boutique — for filing the “baseless” litigation. [link]
Sua Sponte Summary Judgment: A summary judgment motion for non-infringement must at least point to “specific ways in which the accused system [does] not meet the claim limitations.” (Exigent Technology). Without at least that threshold level of information, the court must reject such a motion.
Here, the court issued its summary judgment decision on sua sponte grounds (i.e., using grounds that had not been particularly raised in the SJ motion). Because EON did not have an opportunity to respond, the CAFC vacated and remanded.
“The district court should have given Eon-Net an opportunity to fully present its arguments on these issues, even if the district court ultimately would have reached the same conclusion. We have previously held that where a district court construes a patent without following the necessary steps, we should remand the matter for further proceedings so that the district court can follow the appropriate steps.”
Sanctions: Normally, an attorney is required to perform a “reasonable pre-filing inquiry” that includes an infringement analysis prior to filing a patent infringement complaint. Here, the district court sanctioned Eon’s counsel for not performing such an inquiry.
In a major exception to the inquiry requirement, however, “an attorney may not be sanctioned solely for failing to conduct a reasonable inquiry as long as the complaint is well-founded.” Of course, in patent cases, a patent claim can rarely be deemed unfounded prior to claim construction.
“[W]ithout a full claim construction analysis it is impossible to assess whether Eon-Net’s claim construction was unrealistic.”
Furthermore, the “mere fact” that EON sent identical complaints to dozens of other companies is insufficient to establish that the complaint was filed for a sanctionable “improper purpose.”
Patent Attorney and Inventor Scott Harris is at the center of an interesting web of events. Harris is the inventor of dozens of patents and has successfully licensed those patents with the help of the plaintiff’s firm Niro Scavone. Until last month, Harris was also a principal at Fish & Richardson. Illinois Computer Research (ICR), a recent assignee of a Harris patent, is suing both Google (for patent infringement) and Fish & Richardson (for tortious interference, etc.).
For its part, Fish & Richardson allegedly claims title to the Harris patent – which was apparently invented while Harris was working at Fish.
In the lawsuit, ICR has asserted that Google infringes its US Patent No. 7,111,252. The patent at issue here apparently covers features for improving the look and feel of the internet — Google’s Book Search is the accused product. According to Information Week, this is at least the fifth patent lawsuit filed against Google in 2007. (Meanwhile Google stock …).
Two other Harris patents have also recently been asserted: See BarTex v. FedEx and Memory Control v. Honda, LG, Motorola, et al. Harris patents have also been asserted against Dell, GM, Panasonic, Kodak, cars.com, and move.com. Joe Mullin of the Daily Journal reports that Harris denies any involvement in the ownership or management of any of these companies. The owner instead is James Beauregard Parker — a member of the Florida Bar since 2005.
Short Article Request: In the wake if this case, I would like to post a short (600 word) article on determining an employee’s inventorship rights. This article might think about the default rule absent an employee agreement; may an agreement to assign implied; how does patent law differ from copyright work for hire.
Peer to Patent Press Release:
FACT: [You’ll wait]an average of 44 months before you … receive a First Office Action on the Merits of your patent application in Technology Center 2100 (Computer Architecture, Software, and Information Security).
FACT: If you participate in Peer-To-Patent you could have a First Office Action on the Merits for that same application in only 23 months, and as little as 7 months if you opt for early publication. … at no additional cost…
This pilot program runs only through June 2008 and is limited to 250 applications with special priority being given to inventors with fewer than 25 patents.
Join already-participating companies such as GE, HP, IBM, Microsoft and other small inventors in this historic initiative to open up the patent examination process for public submission of prior art and commentary.
Applicants interested in participating in the Peer-to-Patent pilot must first file a patent application with the USPTO. The patent application must be within Technology Center 2100 subject matter (covering computer architecture, software, and information security) in order to be eligible for the Peer-to-Patent pilot. Applicants must then submit a signed “Applicant’s Consent to Third-Party Comments in Published Applications and Consent to Pilot Participation” form available on the USPTO website at: http://www.uspto.gov/web
/patents/peerpriorartpilot . And email a scanned and signed copy of the completed consent form to: PeerReviewPilot2007@USPTO.GOV ./consent.pdf
Patent prosecution attorneys are dealing with dozens of fires started by the new PTO rules. This post deals only with the quickly approaching deadline of November 1, 2007 when the new rules become effective. The following tips come from practicing patent attorneys dealing who suggest potential actions to be taken prior to November 1, 2007 for currently pending applications.
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