February 2008

Court Refuses to Pierce Plutus/Orion/Taurus/Spangenberg Corporate Veil Without Better Evidence

Patent

PatentLawPic202Taurus IP v. Ford, Mazda, and Volvo (W.D.Wisc. 2008)

Erich Spangenberg owns Plutus IP. Plutus, in turn, owns a host of patent assertion companies, including Orion [Texas] IP, Constellation IP, Caelum IP, and the plaintiff, Taurus IP.  (Polaris IP is in the mix as well.) A September 2007 article tells the story of the asserted patents, [Link][PTT], and how they were acquired from Firepond in 2004 for $1,000 by Spangenberg (a former director of Firepond). 

Prior Settlement: After separate patent litigation in 2006, Orion IP settled with the defendants. (Taurus was not a party at that point).  The settlement included a mandatory alternate dispute resolution process. Although Taurus is owned by the same company as Orion, Taurus is a separate corporate entity. Consequently, without some proof of “alter ego,” Taurus will not be bound by a settlement agreement signed by Orion.

At this stage, defendants have failed to show that plaintiff and Orion are “alter egos” of Spangenberg [under Wisconsin law]. All that plaintiff has established is that Spangenberg was a sole managing member of both and was involved in the transfer of the patent from one entity to another in a suspicious time period. This is a far cry from the requirement that the entity have “no separate mind, will or existence” and be used to commit fraud against defendants.

Interestingly, the same Wisconsin court has already pierced the veil on Orion IP and Taurus IP — finding them merely alter egos. See Taurus IP v. DaimlerChrysler, 519 F. Supp. 2d 905 (W.D. Wis. 2007). The court refused to carry-over that holding made in a different case and “different context.” In particular, the court implied that the veil was pierced in that case because of the manner that Spangenberg and the his multiple parties dealt with the DaimlerChrysler defendants.

More Definite Statement: The court did require that Taurus provide a “more definite statement” that identifies the particular claims and products that it believes are infringing or to provide “a criteria by which defendants can identify the infringing products.” The Taurus IP patent appears to be directed at a way of selecting the features of an automobile through an interactive online system. (U.S. Patent No. 6,141,658).

Notes:

Signal Claims Are Not Patentable: Nuijten Stands — Rehearing Denied

Patent, , ,

In re Nuijten (en banc denied 2008)

The CAFC has decided not to hold an en banc hearing of the important Nuijten appeal.  In the original case, the CAFC (Judges Moore and Gajarsa) found that a transitory propagating signal is not proper patentable subject matter because it does not fit within any of the four statutory categories. That is, the signal is neither a process, machine, manufacture, nor composition of matter.

Three judges, including Judge Linn of the original panel, dissented from the en banc denial and offer a concise summary of their reasoning (some citations removed):

I respectfully dissent from the court’s decision not to rehear this case en banc. As I explained in my dissent from the panel opinion in this case, our decision conflicts with our own precedents as well as those of the Supreme Court. … It conflicts with our own precedent because our predecessor court’s decision in In re Breslow, 616 F.2d 516 (C.C.P.A. 1980), forecloses the majority’s conclusion that something “transient” or “fleeting” cannot constitute a “manufacture” under § 101. And it conflicts with Supreme Court precedent because it ignores the Supreme Court’s analysis of how, in general terms, § 101 is to be construed. As the Court discussed in Diamond v. Chakrabarty, patentable subject matter includes “anything under the sun that is made by man” except for certain enumerated exceptions: “The laws of nature, physical phenomena, and abstract ideas have been held not patentable.” The majority’s narrow construction of “manufacture” ignores this framework.

In addition, this case raises important questions about the relationship between § 101 and § 103. In this case, we affirm the PTO’s rejection of claims to a signal simpliciter, but the PTO has allowed a claim to a storage medium containing the very same signal, on the grounds that the storage medium is a manufacture that can be rejected, if at all, only under some provision other than § 101. In particular, the PTO considers the patentability of such claims under the “printed matter” doctrine of § 103. See In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994). These distinctions make no practical sense and are poorly supported by precedent, which, to the contrary, requires a more holistic approach to the question of whether a claim is directed only to an unpatentable abstraction or whether it is directed to a patentable application of such an abstraction to an otherwise statutory invention. Cf. Parker v. Flook, 437 U.S. 584, 591 (1978) (“The process itself, not merely the mathematical algorithm, must be new and useful.”); cf. also In re Abele, 684 F.2d 902, 909 (C.C.P.A. 1982) (“As was the case in [Diamond v. ]Diehr[, 450 U.S. 174 (1981),] . . . the algorithm is but a part of the overall claimed process.”). The distinctions that are drawn between signals and storage media containing those signals would appear to apply equally to the distinctions between software and hardware and are artificial at best.

Notes:

  • The Comiskey case is (apparently) still pending decision on rehearing. Comiskey arguablly stretches the 101/103 relationship even further than Nuijten. However, it may have an even smaller shot of rehearing en banc because of the lack of a dissent as well as a lack of amicus support for the en banc request.
  • Patently-O Discussion of Nuijten and Comiskey
  • CAFC Nuijten Decision

PharmaStem Appeals Stem Cell Patent: Asks for Greater Deference to Patent Examiners

Patent

Img036PharmaStem Therapeutics Inc. v. ViaCell Inc. (on petition for certiorari, January 2008)

In 2007, the CAFC found two of PharmaStem’s stem cell cryopreservation patents to be invalid as obvious. [Patently-O][Decision] Now, PharmaStem has petitioned the Supreme Court for a writ of Certiorari and and opportunity to challenge the legal basis of the ruling.

The CAFC found the patents invalid based on prior art that had already been examined by the PTO. In addition to the standard examination, the patents had also been reexamined twice and the PTO confirmed the validity of the claims.

Now, PharmaStem asks for some greater level of deference to “PTO determinations that patent claims are valid over particular prior art.” Is there ever any issue preclusion?; and Does the presumption of validity strengthen after successful reexamination?

Notes:

  • PharmaStem failed to discuss the CAFC’s finding that the Examiner’s reasons for allowance contained an important factual misstatement.
  • ImageThe Brief makes issue of the fact that Judge Newman (who dissented from the appellate decision) has a PhD and worked as a research scientist while Judges Bryson and Prost are not scientists.  “If this breakthrough in using cord blood was not ‘inventive,’ it is difficult to imagine many biotechnological or pharmaceutical achievements that would be patentable. Most discoveries made by biotechnology and pharmaceutical companies are rooted in diligent application of the scientific method. As a former scientist, Judge Newman appreciated this in a way that her colleagues could not.”  Perhaps Judge Newman’s dissents should be given greater deference as well.
  • Photo: Judges Bryson, Newman, and Prost intermingled with Nayar and Bunch in 2004.
  • Reexamination Request

 

 

Egyptian Goddess v. Swisa (en banc 2008)

Patent, ,

Egyptian Goddess v. Swisa (en banc 2008)

More than a handful of studies and articles have discussed how the rise in patent law power parallels the founding and evolution of the Court of Appeals for the Federal Circuit (CAFC).  Those articles gloss over the CAFC’s negative impact on design patent law. Today, design patent law is in the weakest and most confused state since before the Supreme Court’s landmark 1871 decision of Gorham v. White. (Although, the law is admittedly more uniform now than it was pre-CAFC).

Through its en banc rehearing of Egyptian Goddess, the CAFC now has the opportunity to change course and breathe new life into this languishing area of intellectual property.

In Gorham, the Supreme Court created the test governing design patent infringement. The so-called ordinary observer test considers whether an ordinary purchaser of the claimed product, “giving such attention as a purchaser usually gives” would consider that “two designs are substantially the same.”  Later, cases recognized a problem with this simple formulation — finding that the ordinary observer test could potentially capture prior-art designs as infringing.  In response, the CAFC added an additional “points of novelty” test that requires a showing that accused devices appropriate the specific novel features of a patented design.

To many, this points-of-novelty requirement and the apparent rule requiring transform the design-patent picture claims into paragraph form as unduly limiting the potential scope of a design patent. The requirements are also seen by some as unnecessary because of the parallel validity requirements of novelty and nonobviousness. Two additional points-of-novelty test issues that raise ire are whether the design as a whole can be a point of novelty and whether the points of novelty can include “trivial” points.

The en banc appeal will focus on three separate questions:

  1. Should “point of novelty” be a test for infringement of a design patent? 
  2. If so, (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee’s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or, ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one “point of novelty” in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? See Lawman Armor Corp. v. Winner Int’l (Fed. Cir. 2006).
  3. Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC (Fed. Cir. 1995).

Now, the plaintiff, Egyptian Goddess along with its amici have filed opening briefs in the case. (Attached below). Swisa’s opposition will arrive in a few weeks.   

Points of Novelty: Several of the briefs dismiss the points-of-novelty test as unnecessary in light of the validity requirements of novelty and nonobviousness.  That suggestion is ultimately unworkable because of a disconnect between a strict ordinary observer test of infringement and the obviousness test of invalidity. This disconnect would potentially allow a finding that a prior art design infringes a valid design patent. (Obviousness is in the eye of PHOSITA at the time of the invention while ordinary observer infringement is in the eye of an ordinary purchaser at the time of purchase).  The points-of-novelty approach is, however, seriously flawed — it is an odd process akin to separating a painting into various individual components and then making a list of those components that have never been used before. In most cases, the final list has little relation to the patented design. (This process is further facilitated by an overzealous Markman process).

The better approach is suggested in the AIPLA and Apple briefs. The ordinary observer test should necessarily include some consideration of the prior art, but that consideration should be at the level of the ordinary observer in a three-way visual comparison test.  Thus, in the Braun case (below), the accused design would be found to infringe if the ordinary observer finds it substantially the same as the patented design and more similar to the patented design than to the prior art.

ScreenShot030

Academics are Out: It is notable that for this important case, only one academic (Professor Fryer of Baltimore) filed an amicus brief. Perry Saidman’s brief for Apple was the only brief citing a law review article, and it cited one by Perry Saidman.  Saidman also cited a Patently-O comment made by Chris Carini (author of the AIPLA brief).

Tafas v. Dudas: Summary Judgment Hearing February 8, 2008

Patent,
Jill M. BrowningPatent attorney Jill Browning attended today’s Tafas v. Dudas hearing on behalf of Patently-O and provides the following report.
Judge Cacheris entertained arguments relating to the three pending summary judgment motions in the consolidated cases of Tafas and GSK vs. Dudas, taking the matters under advisement and indicating that the Court would present a final decision as soon as his docket permitted. A brief summary of the almost 2 hours of argument follows.

Substantive vs. Procedural: The Court actively directed the parties with questions throughout the argument, beginning with questions directed to why the proposed rule changes were “substantive” and following up with a question regarding the proposed remedy if the Court were to determine that the proposed rules were substantive.

GSK responded by indicating that the proposed rules were substantive because they (i) affect individual applicants’ rights and/or obligations (i.e., limit the number of continuations and claims); (ii) reflect a change in existing law and/or policy and (iii) interpret the patent statute.

In response, the USPTO argued that the debate between identifying the rules as either “substantive” or “procedural” was the plaintiffs’ attempt to distract the Court from the real issue, which, according to the USPTO, is whether Congress delegated the proper authority to the USPTO to enact the proposed rules.

The PTO’s authority arises from 35 U.S.C. § 2(b)(2). The arguments primarily focusing on subsections (A) and (B), which state, in relevant part, that the USPTO:

  • (2) may establish regulations, not inconsistent with law, which-
  • (A) shall govern the conduct of proceedings in the Office;
  • (B) shall be made in accordance with section 553 of title 5;

Plaintiffs read the above statute as requiring the USPTO to comply with both (A) and (B), which would mean that the USPTO may only enact rules that (i) are not inconsistent with law; (ii) govern the procedures to handle the applications at the USPTO; and (iii) that are enacted only after the USPTO engages in the notice and comment rulemaking procedures of the Administrative Procedures Act (“APA”). Thus, plaintiffs indicated that the USPTO would not properly be permitted to enact even procedural rules without engaging in the notice/comment procedures of the APA.

The USPTO advanced the position that a fair reading of 35 U.S.C. § 2 clearly supports its position that Congress delegated the authority to the USPTO to enact the proposed rules.

PatentLawPic199Further, the USPTO argued that the proposed rules are not “substantive” because they are not directed to the substantive eligibility requirements (such as novelty or written description) for an applicant to obtain a patent. According to the PTO, the proposed rules merely affect the “timing,” as they encourage applicants to claim their invention early.

To support this position, the USPTO analogized to powers granted to other agencies to impose timing restrictions, pointing out that agencies’ ability to completely cut-off third parties benefits applications have been upheld. In response, Plaintiffs pointed out that the USPTO, as an agency, is different from other agencies because the USPTO was not awarding “benefits” as other agencies such as, for example, the FCC when it grants the right to certain bandwidths. Here, the patents applicants have the “benefit” and are electing to confer that benefit to the public in return for the limited right to exclude others for the term of the patent.

Remedy – Void Rules: With respect to the proposed remedy, GSK and Tafas argued that, should the Court find that the rules proposed are “substantive” in nature, as opposed to only affecting the procedural aspects of examining patent applications, then the rules should be struck as void and not remanded to the patent office. The USPTO indicated that, should the rules be found to be “substantive,” then they should be accorded less deference.

Plaintiffs argued that the proposed rules retroactively impact applications already on file, abrogating the quid pro quo the applicants believed it had when it filed the application (i.e., disclosing its trade secrets to the public in return for the limited monopoly). When an applicant filed its application, it was permitted to file an unlimited number of continuations, RCE’s and claims (subject to extreme cases wherein the Federal Circuit has permitted the USPTO to refuse further applications).

PatentLawPic201Property Interest in Patent Application: The USPTO argued that the “quid pro quo” is a fallacy because an application is not a property right (only patents are property rights) and, moreover, there are no property rights in “procedures.” Further, the USPTO argued that the applicant is the party who elects to disclose the trade secret – the USPTO is willing to maintain the confidentiality of all applications filed. Further, the USPTO appeared to concede that substantive rules cannot be applied retroactively, but compared the proposed rules to newly enacted Federal Rules of Civil Procedure, indicating that newly enacted Federal Rules were routinely applied to pending cases, as these proposed rules should be applied to pending applications. The USPTO indicated that, should the Court find the rules have an improper retroactive impact, the Court should simply change the effective date of the Rules.

Mr. Walsh of the USPTO presented arguments relating to Sections 120 and 132. Echoing the concerns already articulated by his co-counsel, Mr. Walsh further indicated that the USPTO had experienced a significant increase in applications, particularly continuation applications. The proposed rules were a reasonable restriction on the growing numbers of applications and provide ample opportunity (at least 8) for the applicant to present its position to the Examiner, after which, they should appeal to the Board. Further, if the applicant believes that it requires additional applications, the applicant can petition for permission to file an additional application, he must only indicate why they need additional bites at the apple.

He further indicated that delay in presenting claims has never been favored and that Section 120 does not compel the USPTO to accept an unlimited number of continuation applications. With respect to Section 132, the USPTO’s proposed new rule 114 limits application families to a single RCE. The USPTO argued this limit is justified (and more stringent requirements could be imposed) because the wording of § 132 is that the applicant can “request” the continued application, indicating discretion on the USPTO’s part regarding whether or not to grant the request. The USPTO further argued that, should the petition to file additional RCE’s be denied, the applicant has the remedy of judicial review.

In response, plaintiffs pointed out that an increase in patent application filings or other administrative burdens cannot grant the USPTO the authority to enact rules.

Notes:

  • Arguing Attorneys included John Desmerais of K&E for GSK; Lauren Wetzler and Steve Walsh for the Administration; Jim Nealon of Kelley Drye for Tafas.
  • Insider prediction (not DDC): Court may rule that rules are substantive and that PTO lacks substantive rulemaking authority. This allows the court to give a clean ruling without worrying potentially more difficult secondary issues.

Patent Litigation Statistics for January 2008

Patent

The Patent Troll Tracker has released a new compilation of patent litigation statistics for January 2008.  [LINK] PTT continues to find that most patent law suits (74%) are filed by companies who manufacture or sell an associated product. However, because non-practising entities tend to sue multiple defendants only slightly more than half (58%) of defendants are sued by a practising entity. As usual, the non-practising entities overwhelmingly filed suit in the Eastern District of Texas. Patent veteran Sorensen Research (interest holder of Jens Sorensen) was the most prolific filer in January — filing 9 patent cases against 13 total defendants. (3 more have been filed in February as well).

Read PTT’s Article.

 

Tafas v. Dudas: Challenging PTO Rules Potential Feburary 8th Decision

Patent

The challenge against the USPTO’s implementation of its new continuation and claim rules continues into its seventh month. On Friday, February 8, Judge Cacheris is hosting oral arguments on the competing motions for summary judgment.  Previously in this case, Judge Cacheris indicated his holding from the bench — this case may be no different.  

As I have mentioned before, at best, this case is a likely partial-winner for Tafas. The patentee’s two best arguments are (1) the illegality of strictly limiting the number of continuations and (2) retroactivity problems.  Two additional arguments are also potential winners: (3) that the ESD requirements are vague (not just costly) and (4) that the PTO followed improper procedures in implementing the rules.

Even if the rule challengers win, the PTO would still be able to implement portions of the new rule that limit the number of claims in newly filed applications.  However, the court could potentially require that notice-and-comment process be entirely redone — thus changing the timing.

  • Docket & Briefs on Justia
  • Polestar Amicus is particularly interesting [as discussed by PatentHawk]
  • PLI’s Quinn will be blogging from the event.
  • Regarding Paragraph two above, I also predicted the Patriot’s to win. . .
  • One argument against the possibility of ‘splitting’ the rules is that no party has asked for that rule — both sides are going all or nothing.
  • It is also interesting to consider why none of the plaintiffs or amici have been able to pursuade the Senate to include limits on PTO power in the proposed Patent Reform Act of 2007.

Patently-O Bits and Bytes No. 10

Patent
  • Financial Services Event: The Securities Industry and Finance Markets Association (SIFMA) is hosting a half-day patent law symposium for the financial industry on March 11 in New York City. Speakers includes Chief IP counsel for several major financial institutions and Ocean Tomo. See www.sifma.org/patentlaw2008. The cost is regularly $595, but we’ve secured a $200 discount for Patently-O readers who use this registration document.

  • Standard Setting Event (STARTING NOW): The FTC’s recent decision in N-Data raises a number of dramatically important issues for how patent holders should operate during a standard setting process. The MoFo law firm is hosting a lunchtime event on Feb 6 (Noon PST) to discuss the FTC’s change in course. Via WEB or live (4290 El Camino, Palo Alto). Free.

  • IDS Rules Status: We expected to see the new IDS in January and receive an implementation schedule. We have no word on when or whether those will be forthcoming.
  • CyberLaw: A Legal Arsenal For Online BusinessPatent Blogs: Brett Trout is an Iowa patent attorney with a fun blog: blawgit.com. In a recent post, he provided a nice up-to-date list of patent blogs. LINK.  Brett is becoming well known for his book titled “Cyber Law.” The book is great (Brett sent me a free copy), but the fame comes from another attorney’s attempt to enforce a trademark to the “CyberLaw” phrase. (See also Stephen)

Claimed “Insert” Limitation Creates Product by Process

Patent,

AIPLATalk174Miken Composites v. Wilson Sporting Goods (Fed. Cir. 2008)

This case involve the same patent that prompted Judge Rader’s intriguing 2006 koan:

“while a claim is not to be construed in light of the accused device,
in an infringement case,
it must inevitably be construed in context of the accused device.”

See Wilson v. Hillerich.

The Wilson patent is directed to a type of softball bat that includes a internal structural inserts that allow for a lighter and stronger bat.  On summary judgment, Miken won a declaratory judgment non-infringment. In particular, the lower court found that Miken’s bats did not contain the required “insert.” Rather the internal structural members of thte Miken composite bats were created using a successive layering process.

Product by Process: Normally, a device claim can be infringed regardless of the construction methods used.  Miken argued that in this case, the patentee’s inclusion of the “insert” claim language transformed that portion of the claim into a product-by-process.

On appeal, the CAFC agreed with Miken that the insert limitation required an element that was “put or fit into something else.” Consequently, Miken’s products cannot infringe because the accused structural members were never “inserted or intended for insertion.”

Vitiation and DOE: Even without an insert, Miken’s products are arguable equivalents of the Wilson invention. However, the issue of ‘equivalent as a whole’ is irrelevant to whether a product infringes under the doctrine of equivalents. Rather, the all elements rule requires that each element of a patent claim be infringed either literally or by an equivalent element found in the product.  Here, that means that to infringe under the DOE, Miken’s bat must have an element that is the structural and functional equivalent of an insert.  Because Wilson did not provide evidence of such an element, the CAFC affirmed the lower court’s holding of non-infringement under the DOE.

Monsanto’s Roundup Ready GMO Patents Convincingly Upheld on Appeal (Again)

Patent

Monsanto v. David (Fed. Cir. 2008)

Once again, the CAFC has upheld Monsanto’s Roundup Ready Soybean patents and the company’s strategy of enforcing those patents against farmers.  The facts here are similar to the McFarling case. David  – is a big-time soybean farmer – was found to have saved a portion of his soybean seeds and planted them the following year.  David also signed Monsanto’s technology agreement, in which farmers agree not to save and re-plant.

Here, the CAFC refused to reexamine the question of whether plant genes are patentable under Section 101 and J.E.M Ag Supply. Rather, the court is precedentially bound by the McFarling and other cases to find the subject matter appropriately patentable. David’s “inconsistent testimony” allowed the court to also agree that no clear error had been made in the lower court’s factual findings in favor of Monsanto.

The court also agreed that this is an exceptional case: “It is a case of a farmer with apparent disregard for patent rights, license agreements, and the judicial process. With that in mind, as well as the record evidence of David’s inconsistent testimony, we agree with the district court that this is an “exceptional” case.” Thus affirming the award of costs and fees.

Notes:

 

 

 

Don’t forget to vote

Patent

PatentLawPic191There is a continuum of technology law interest amongst the leading five candidates. I’ve listed them from most-interested to least interested (in my subjective view):

  1. Romney (R)
  2. Obama (D)
  3. Clinton (D)
  4. Huckabee (R)
  5. McCain (R)

The issue for IP focused voters is whether interest is better than neglect.

CIAS Challenges Federal Circuit’s Interpretation of Prosecution History

Patent,

CIAS v. Alliance Gaming (On petition for Cert. 2008)

In a recent petition to the Supreme Court, CIAS asks the Supreme Court to think about how prosecution statements should be used for claim construction.

Issue: Whether the Federal Circuit’s use of patent prosecution history statements in claim construction is so erroneously inconsistent among its own panel decisions and incompatible with its prior en banc decision in Phillips as to make it impossible for the public to know with any degree of confidence the scope of patent claims; and whether that Court’s inconsistent judgment in this case should be reversed.

In this case, CIAS discussed a reference that had been cited by the Examiner. Although the reference was not asserted in a rejection, the CAFC found that CIAS’s discussion of the reference should shape how the patent claims were interpreted.

In its petition, CIAS argues that the CAFC’s approach to determine whether such prosecution history alters claim construction is much like the proverbial random walk.

Out of 16 district court cases since

Phillips specifically dealing with the issue of prosecution history disclaimer, the Federal Circuit has disagreed with the district court on that issue a total of 12 times. … [T]he Federal Circuit’s inconsistency has created a confused body of decisions. It is now extremely difficult for patent holders and the public to effectively gauge the meaning of claim terms in light of prosecution history statements.

Documents:

 

 

CAFC Holds Hard Line Against Mandamus Actions

Patent

Misc. Docket No. 854 (in re Roche Molecular Sys.) (Fed. Cir. 2008)

Stanford sued Roche for infringement of its patented method of monitoring and treating HIV/AIDS. Roche argued that it actually held license to the patents. However, ND Cal District Court Judge Patel denied Roche’s motion for summary judgment on the licensing issue and instead held those claims barred by a statute of limitations.

Roche demanded a writ of mandamus – but was denied.  The majority panel noted the extra special nature of mandamus appeals: noting that neither “reversible error”, “hardship, inconvenience, [nor] an unusually complex trial” provide a basis for mandamus. Here, the court found that Roche could not prove the necessary indisputable “right” to the writ and thus must wait until a final decision for its appeal.

Judge Newman dissented — arguing that the number of serious errors made by the district court level should not be overlooked.

PubPat: Proposed Post-Grant Review Cuts-Out Public Interest

Patent, Reexamination, ,

RavicherThere is a possibility that a passed Patent Reform statute would eliminate third-party-requested reexaminations (ex parte and inter partes) and yet fail to create any substantive third-party initiated post-grant procedure to replace the current options.

In addition, the proposed post-grant review procedure would block a non-threatened party from challenging the validity of a patent more than a year after its issuance. In a letter sent today to the Senate reformers, Dan Ravicher of PubPat asks that third-party reexamination be preserved.  The non-profit groups such as PubPat and EFF have filed dozens of reexamination requests asking the PTO to invalidate “wrongfully issued” patents.

The Current Proposal Found in S.1145: The proposed system of post-grant review would have two windows for third-party filings:

  • First Window: Post-Grant oppositions filed by anyone within one year of issuance.  Patents reviewed in the first window would not be given any presumption of validity.
  • Second Window: Opposition must be filed by party who has a likelihood of feeling “significant economic harm” based on the patent. A presumption of validity would apply in reviews within the second window.

The PTO would be required to complete its review work within 18 months. Post grant reviews would be conducted by a three-member panel of administrative judges rather than by examiners. Parties to the review may settle the case.

  • PubPat Recent Successes:
    • Forgent Networks ‘672 "JPEG" patent: Broadest claims finally rejected;
      Patentee abandoned assertion of patent.
    • Columbia ‘275 Axel Cotransformation Patent: All claims finally
      rejected; Patentee abandoned assertion of patent.
    • Microsoft ‘517 FAT Patent: Patentee modifies claims, which are allowed.
    • Pfizer ‘156 Lipitor Patent: Patentee modifies claims, which are allowed.
    • WARF Stem Cell patents and Gilead Tenofovir (AIDS drug) patents have had all claims non-finally rejected, but are still pending. 

Patently-O Bits and Bytes No. 9

Patent, Patent Legislation,
  • Bush Administration Opposes Aspects of Patent Reform: [LINK] (But will support an amended version)
  • Additional Senate Comments on Patent Reform: [LINK (836 KB)]
  • Senator Kyl: Congress should eliminate business method patents because they create monopoly costs without any new beneficial technology.
  • Senators Spector & Brownback: The S.1145 “remains a work in progress;” the damage apportionment language would create uncertainity and litigation — especially determining an invention’s “specific contribution over the prior art.”
  • Senators Feingold and Coburn — If the bill is passed without serious amendment “Patents will be devalued and many inventors will opt for trade secrecy instead, undermining the Framers’ intent to promote disclosure and public benefit through a strong patent system.”
  • General Remarks from a minority of Judiciary Committee members: “Primum non nocere is Latin phrase that means `First, do no harm.’ … In our opinion, the intervention the bill proposes will create real and certain damage to our patent system and the ability of America’s inventors and innovation industries to protect their intellectual property rights.”
  • The link above includes the formal Judiciary Committee report on the proposed patent reform legislation now pending in the Senate.
  • Spare Parts: Spare parts manufacturers continue to lobby congress to include a special provision in the reform bill that would eliminate the potential of protecting automobile spare parts with design patents.  Several car companies are currently attempting to limit the off-brand repair market. http://www.qualitypartscoalition.com/
  • KSR Rejections: PTO provides examples of how to use KSR to reject Business Method claims. [LINK] [via PatentHawk]
  • See the Forest: A new IP analytics site titled “See the Forest” is lets you create some interesting patent maps: http://see-the-forest.com.  The company behind the site is IPVision.

    •  

    CAFC Continues to Expand Doctrine of Full Scope Enablement

    Enablement, Patent, ,

    ScreenShot028Sitrick v. Dreamworks (Fed. Cir. 2008)

    Sitrick’s patented invention involves a method for a integrating user-generated audio and visual effects into a video game or movie. The solo-inventor sued Dreamworks and other defendants who use the “ReVoice Studio” software to allow users to add their own voice to the imagery.  The issue on appeal is whether the asserted claims are enabled under 35 U.S.C. 112 ¶ 1.

    Full Scope Enablement: Although loosely tied to the patent statute — the enablement requirement continues to grow and develop through Federal Circuit panel opinions.  Generally, the “requirement is satisfied when one skilled in the art, after reading the specification, could practice the claimed invention without undue experimentation.”

    When analyzing enablement, the court looks to ensure that the “full scope of the invention” is enabled — and thus looking beyond whether the particular accused design is enabled. The “full scope” doctrine has recently been applied by the Federal Circuit to invalidate several patents. (See below)

    Broad Claim Narrow Disclosure: It is easy to criticize patentees who attempt to enforce broad claims supported only by a narrow disclosure. This is especially true in cases such as Liebel’s where the claim scope had been expanded well after filing the original application. (i.e., “late claiming”).

    However, the “full scope” doctrine has serious deficiencies. The most notable are the potentially chaotic results from applying the doctrine to claims that include the comprising transition language.  The problem arises because the comprising transition allows a claim to implicitly encompass a wide variety of add on limitations that might be found in an infringing device. See, for example Automotive Technologies Int’l v. BMW (Fed. Cir. 2007) (claim scope that implicitly covered both mechanical and electrical sensor was not enabled by description of mechanical sensor); Liebel-Flarsheim v. Medrad (Fed. Cir. 2007) (claim scope that implicitly covered both jacketed and jacket-free needle holders was not enabled by description of jacketed needle holders).

    Here, the asserted claims were construed as covering both movies and video games. Thus, the patent must enable both types of applications. Here, the CAFC confirmed that Sitrick had failed to enable its use in movies — and thus that the claims are not fully enabled.

    • Buyer Beware: As with other recent enablement cases, this one may be best seen through the lens of the claim construction process. In each case, the patentee requested (or at least did not challenge) broad claim construction.  Consequently, the court was not sympathetic to enablement arguments that could have been avoided by a narrower construction of the claims. This line of thinking was spelled out by Judge Laurie in the Liebel case: “The irony of this situation is that Liebel successfully pressed to have its claims include a jacketless system, but, having won that battle, it then had to show that such a claim was fully enabled, a challenge it could not meet. The motto, “beware of what one asks for,” might be applicable here.”  This buyer beware theory is also useful to break the potential analytical morass of full scope enablement of claims drafted with comprising transitions. 
    • Don’t Begin with the Specification: One aspect of enablement that is continually bothersome. In the opinion, the court noted that “enablement analysis begins with the disclosure in the specification.”  That approach unduly confuses enablement with written description. Rather, I would contend that enablement should begin with the knowledge of one skilled in the art and move forward from there.
    • Johnson v. M’Intosh: In my property law class, we recently discussed Johnson v. M’Intosh and the doctrine of of sovereign authorized discovery of land. In those empire building years, we also saw over-zealous claiming.
    • David Sitrick: The inventor, David Sitrick, is a Skokie based patent attorney registered with the firm of Sitrick & Sitrick. (Reg. No. 29349).  Mr. Sitrick prosecuted the patent himself. His son, Greg Sitrick, is an associate at the Bell Boyd firm in Chicago. (Reg. No. 57195).

    Northern District of California’s New Patent Rules

    Patent

    Patent.Law059by Edward Reines

    The Northern District Of California posted on Friday substantially revised patent rules that apply to all cases filed on or after March 1, 2008.   ND Cal pioneered the first set of patent rules in 2001, as the vision of Judge Ronald M. Whyte, a leading jurist in the patent field.    Since then, seven other Districts have followed and promulgated patent rules that are modeled to a greater or lesser extent on those original rules. 

    ND Cal’s new 2008 patent rules feature two significant changes and a number of other updates.  First, the new rules require the parties to identify together the claim construction disputes that are most significant to the outcome of the case, including an identification of which may be case dispositive.  By default, under the new rules, the number of most significant terms (“MST”) to be identified by the parties is ten, but that number can be scaled by the court to suit the needs of each particular case.   The purpose of this new rule is to address the concern that parties identify too many terms, including many insignificant terms, for construction.   By identifying MSTs, resources can be focused on the most important issues without a court outrightedly capping the number of terms to be construed.  

    Second, the new rules eliminate the concept of “preliminary” contentions in favor of a single round of contentions which can be modified only for good cause.    Many had critiqued the old rules as allowing changes “as of right” in circumstances where such changes are not in fact warranted, while also creating undue barriers to their amendment when the circumstances did warrant modification.   For guidance, the new rules set forth recurring circumstances where the good faith standard might be satisfied.  

    The efficacy of the new rules will, in the end, be judged by the test of time.  In any event, the ND Cal judges deserve credit for staying at the forefront of case management innovation in the complex world of patent litigation.  The District has published on its website a committee report that provides helpful background on how the new rules were developed and explains the intent behind the changes that have been adopted.  

    • Ed Reines is a partner at the Weil Gotshal firm. He chaired the Northern District’s Local Rules Advisory Committee.
    • Read the Rules:Patent Rules2008.pdfCommittee Report.pdf