March 2008

Moving to First-to-File

The potential move to a first-to-file system has received little attention — it is certainly not the most controversial in the current package of patent reforms.  Of course, this says more about the Patent Reform proposal than about the potential impact of the first-to-file change. Although not receiving the most press, in the end, this change would have the most impact on the reform package.

The entirely re-written Section 102 would create a bar to patentability if “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” prior to the filing of the patent application (the ‘effective date’).  [Use Thomas to obtain the most recent version.] The rule would also encompass 102(e) prior art, so long as the prior art filing was prior to the effective date.  A one-year grace period would remain in place, but only for public disclosures released by the inventors, the assignee, or a signatory to a joint research agreement.  

The first-to-file rule can be thought of as a “race to the courthouse” recording statute.  In the world of first-to-file, it does not matter who invented first, only who is the first to file the patent application.  A perhaps more salient way to think of the shift is that it primarily operates by shifting the ‘critical date’ of 102(b) to the filing date, thus creating a whole new set of prior art that can be asserted against an applicant.

Apart from whether a first-to-file system is a better system, the legislation itself has problems. Most critical is the inclusion of the ill defined clause “otherwise available to the public.” This clause could easily swallow the entire list of prior art types, except perhaps “on sale.” (patented, printed publication, and public use are all available to the public). We’re left wondering what additional activities will be encompassed by subsequent CAFC decisions. 

This amendment would greatly increase the value of creating a joint-research-agreement any time any research or information is shared between parties. In addition, some companies will increase their provisional application filing as a way to ensure that the invention is on file at the PTO ASAP.  Of course, this change will have negative little impact on foreign companies seeking US patents or US companies already filing patents internationally because these rules closely mirror the requirements already in place around the world.

The benefits of first to file:

  1. Encourages inventors to quickly file for patent rights;
  2. We avoid the potential for fraud in swearing-behind references;
  3. Interferences are gone (but derivation litigation is in);
  4. A patent would be more difficult to obtain – especially when the invention is easily conceived by another; and
  5. Global harmony .

Patently-O Bits and Bytes No. 23

  • Chicago Lawyers’ Committee for Civil Rights v. Craigslist, Inc., 2008 WL 681168 (7th Cir. March 14, 2008) (“Using the remarkably candid postings on Craigslist, the Lawyers’ Committee can identify many targets to investigate. It can dispatch testers and collect damages from any landlord or owner who engages in discrimination. . . . It can assemble a list of names to send to the Attorney General for prosecution. But given §230(c)(1) it cannot sue the messenger just because the message reveals a third party’s plan to engage in unlawful discrimination.”
  • Chicago Lawyers v. Craigslist: The point for Patently-O is that this case allows our comment lines to stay open without fear of substantial legal retribution. [Goldman has more]
  • International Aid (Through Technical Assistance): Prof Sokol recently analyzed how “donor countries” (such as the US) have increasingly been providing extensive technical assistance to other countries to help with antitrust law issues. Is there a similar need in the IP world?
  • PatentLawPic239Cited Prior Art: JAMES TOUPIN (PTO GC) makes the following statement: more than 50% of new patent applicants either cite no prior art references or cite more than 20 references.  The PTO Solution: require searches and penalize for too much cited art.
  • Abandonments are up: Former PTO power player Bruce Stoner presents data showing that both the number and proportion of of cases being abandoned is on the rise. [LINK]

The Costs and Benefits of Patents to Innovators

by James Bessen and Michael J. Meurer

Do patents encourage economic growth, stimulate R&D investment, or deliver wealth to innovators? In our previous post we reviewed the empirical research in economics and we could not find consistently positive evidence about the performance of patents.

In this post we narrow our focus. We ask whether the modern American patent system encourages innovation by large (publicly traded) American firms. We answer this question with empirical research that is presented in chapters 5 and 6 of our book Patent Failure. We find that the patent system discourages investment in innovation by the average publicly traded American firm. Although the patent system provides positive incentives in some industries like pharmaceuticals, it provides negative incentives in most industries. Further, the performance has deteriorated over time.

Our conclusion is based on separate estimates of the benefits and costs of patents to innovative firms. We use two different techniques to estimate the value of patents to their owners.

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Patent Litigation Statistics: Number of Patents Being Litigated

ScreenShot046

Over the past two decades, the number of patents being litigated has risen dramatically. More complaints are being filed and more patents are being asserted with each complaint. Since 2004, however, the numbers have been steady. A third factor, not shown in this graph, is an increasing trend to include more defendants in a single complaint. As a point of reference, in 2006, almost 200,000 patents issued.

Patently-O Bits and Bytes No. 22

  • PatentLawPic231Question on Patent Issuance: I know that I have read this before — Is there a standard time that patents issue?  E.g., is it proper to file a patent infringement case at 12:01 am on the day that the patent is scheduled to issue? What if the PTO’s website is delayed in its update? What about filing at 12:00:01 am?
  • Ward v. Troll Tracker – Now its a Federal Case: As an interesting litigation strategy, John Ward Jr. has also sued Frenkel & Cisco in Federal Court in the Western District of Arkansas (Texarkana). [Complaint] This filing has a hand-stamped date and hand-written time. (Filed March 13, 2008 at 10:45 am.) [Thanks to Ozark Patent Lawyer Brent Capehart for the tip]
  • More on Ward v. PTT: E.D.Tex. blogger and patent litigator Michael C. Smith provides his comments on the case.
  • Patent Reform: I’m working on a comprehensive patent reform post. However, Zura has some news on amendments to the Senate bill. [LINK]

Extending the Patent Term: Most Patents Are Extended Due to PTO Delay

ScreenShot04435 U.S.C. 154(b) provides for an adjustment of the standard patent term in cases where a patent’s issuance is delayed because of delay at the U.S. patent and Trademark Office.

I looked at all 6155 original utility patents issued between March 1 and March 13, 2008 to see how often patent terms are adjusted. In this sample, the vast majority of issued patents have an extended patent term due to Patent Office delay. Specifically, 72% of the issued patents include at least some 154(b) extended patent term. Among those with an extended term, the average extension is 392 days. A few patents from the group have very long extensions that approach five years. These are generally explained by (1) secrecy orders and (2) BPAI reversals. (See Patent Nos. 7,342,534 and 7,339,604). 

The first chart below is a histogram of the the patent extensions. As can be deduced from above, 28% of the issued patents have no extension. Slightly over 10% of the issued patents were granted an extension of three months (0.25 years) or less. A cumulative frequency chart of this same data would show that just over 50% of all the issued patents have a term extension lasting more than six months.

ScreenShot042

Of course, the extension term is correlated with the length of time in prosecution. The following scatter plot shows this relationship quite well. The demarcated boundary on the plot is an indication of the potential extension when the entire delay is attributable to the PTO.

ScreenShot043

Other studies show that primary examiners are “quicker” — i.e., that patents examined by a primary examiner issue more quickly and with fewer amendments than those examined by assistant examiners.   Here, I also found a difference between the type of examiner.  As may be guessed, issued patents associated with an “assistant examiner” are much more likely to have an extension. (78% of patents with assistant examiner have extension compared with 69% of patents examined only by a primary examiner). It appears that at least some of the quickness is due to the examiner actually acting more quickly (rather than merely compromising more easily).  Similarly, continuations are much less likely to receive extensions than patents without any ancestral history.  (78% of patents with no ancestry have extension compared with only 61% of patents that reference one or more parent).  That result is explained by the PTO’s procedure of reviewing continuation applications on a priority basis.  Combining these numbers, I find a recipe for delay: In this study a patent with no ancestry that is examined by an assistant examiner has an 83% chance of received extensions due to PTO delay.

As with every measure of patents, the results vary dramatically according to the area of technology. Here, we see that Computer & Communication related patents (according to classification) are much more likely to receive a term extension due to PTO delay and, when an extension is proper, those same patents have a much higher expected extension duration.

Category Percent Receiving Extension Count of Patents Average Extension (Days)
Chemical 73% 606 343
Computers & Communications 82% 1690 544
Drugs & Medical 74% 536 387
Electrical & Electronic 64% 1369 270
Mechanical 67% 900 268
Others 65% 713 297

There are several potential practical implications of these findings: (1) a prosecuting attorney should be careful to avoid delay because applicant delay will naturally push-back the issue date and additionally reduce the eventual patent term; (2) In many cases, quicker issuance is preferable to an equivalent extension. However, it is important to consider whether delay is preferable for your case. (Of course taking affirmative steps to increase delay could be interpreted as a form of laches.

Patently-O Bits and Bytes No. 21

  • ScreenShot041Disclose Disclose Disclose: APJ Richard Lebovitz argues (on his own) that scientific researchers should be required to disclose potential patent rights prior to publication of related research as part of the conflict-of-interest review. [6 Nw. J. of Tech. & Intell. Prop. 36].  In his study of Science and Nature articles, Lebovitz found that “almost one-third” of the research articles were associated with one or more patent filings.
  • Compulsory Licenses: Thailand plans to continue its plan of paying low compulsory license rates for patents covering important cancer drugs. In response, Novartis has proposed to offer Gleevec for free, but only to Thai patients that qualify as poor. [Noonan]
  • More Like Property: A major point of the Bessen & Meurer book is that the patent system can be improved by making patents work more like property. Should we work toward a system where patent rights are more predictably valid; where patent scope is more easily discernable; and where fragmented ownership of overlapping patent rights does not block further development?
  • Patent Reform: IPO reports that the “massive” Patent Reform Act of 2007 will likely receive senate floor attention in April or May.  According to the organization: “Patrick Leahy (D-Vermont) appears intent on moving the bill ahead even though it is unclear whether enough Senators will support it to break holds placed on it by some Senators.  Claims made every day by lobbyists that Leahy has or does not have the 60 votes required to cut off debate and pass an amended bill are speculation, because the amendments are not known.  Pronouncements that the bill is dead this year are premature.”

Do Patents Stimulate R&D Investment and Promote Growth?

James Bessen and Michael J. Meurer have authored a new book presenting a careful empirical analysis of whether patent rights encourage innovation. Their conclusion: for the most part, today’s patent system does not achieve its stated goal. I asked them to provide Patently-O readers with a cut from their analysis. The following post is the first in a series of four by the authors. The book is titled: Patent Failure and published by Princeton [Web Link]. The analysis done in this book put Bessen and Meurer at the forefront of leaders in economic analysis of patent laws. I suspect that their results will become the talking points of the next round of patent reform discussions. A live symposium will be held at UGA Law School on March 29 focusing on the book and its results. [LINK]

==========

by James Bessen and Michael J. Meurer

As background material, this post reviews the sizable body of empirical research analyzing the impact of patents on R&D investment and economic growth. Three future posts will present new empirical research featured in our book Patent Failure. The theme across all four posts is that patents often fail to perform effectively as property rights. [DDC: To work well as property, the right should be predictably valid; have discernible boundaries; and not have an overly fragmented ownership scheme.]

Economists cherish property rights that provide strong incentives for investment and trade, and that thereby contribute to economic growth. Potentially, patent rights could accomplish these three goals, and surely they sometimes do. Apparently though, it is hard to set up and maintain a patent system that works as property.

The rise of new market economies and strengthening of property rights around the globe in the last two decades provides economists with “natural experiments” that help us evaluate whether and how much property rights contribute to investment and growth. The empirical results are impressive. Countries that expanded the role of markets and strengthened property rights have prospered from these choices. Economic historians find the same results hold going back to the Industrial Revolution.

Comparable studies of patent systems are discouraging. The evidence certainly is consistent with the notion that patents encourage American pharmaceutical R&D. But otherwise, it is hard to find evidence suggesting patents are a major factor spurring R&D investment, that patents contribute to economic growth, or even that the patent system is a source of great wealth to important inventors and innovators (outside of a few industries like pharmaceuticals).

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Troll Tracker, Defamation, and Splitting the Bar

Rick Frenkel – who until recently was known only as the Patent Troll Tracker – has now been sued for defamation by two Eastern District of Texas lawyers: Johnny Ward, Jr. and Eric Albritton.  Frenkel recently revealed himself as an IP Director at Cisco Systems. Cisco is also a named defendant in the lawsuit. Ward has represented many plaintiffs in E.D. Texas patent cases and is the son of Federal Judge John Ward of the Eastern District of Texas.

The whole case seemingly stems from a Patently-O posting on October 16, 2007. That post, titled “Patent Office Has Stopped Examining Patents with 25+ Claims,” included a short blurb about a seeming “preemptive strike” by the patent holder ESN:

From Patently-O: In another preemptive strike, on October 15th, ESN sued Cisco for infringing Patent No. 7,283,519.  Unfortunately, the patent did not issue until the 16th of October. [Link

ScreenShot039Of course, a patentee has no standing to sue until after the patent issues, even if you know that the patent will issue the next day. The Patently-O post included a link to ESN’s complaint that had an October 15 electronic time-stamp and a civil cover sheet dated October 15.  Ward and Albritton were involved in this case, apparently serving as local counsel for the McAndrews firm.

ScreenShot040By October 18, the PACER filing information still reflected that the case had been originally filed on the 15th, but the PACER complaint filing date now indicated October 16. (See thumbnail screenshots.)  This date became potentially important because, in the meantime, Cisco had filed a declaratory judgment action against ESN in Connecticut.  (First-to-file with standing usually wins venue.)

On October 18, the Troll Tracker posted what are seemingly his most pointed comments about the case:

“I got a couple of anonymous emails this morning, pointing out that the docket in ESN v. Cisco . . . had been altered. One email suggested that ESN’s local counsel called the EDTX court clerk and convinced him/her to change the docket to reflect an October 16 filing date, rather than the October 15 filing date. I checked, and sure enough, that’s exactly what happened – the docket was altered to reflect an October 16 filing date and the complaint was altered to change the filing date stamp from October 15 to October 16. Only the EDTX Court Clerk could have made such changes. . . . This is yet another example of the abusive nature of litigating patent cases in the Banana Republic of East Texas.”

In a different post, PTT mentioned that Ward and Albritton represented ESN and that they might not “play well” in a Connecticut court.

Moot Point?: Since then, ESN v. Cisco has been dismissed by agreement of the parties, and the original filing dates have become meaningless and moot. However, Ward and Albritton remembered Frenkel’s comments. Within three days of Frenkel’s “outing” a defamation lawsuit had been filed in Texas state court. At this point, none of the parties are discussing either case in public except that Cisco “continue[s] to have high regard for the judiciary of the Eastern District of Texas and confidence in the integrity of its judges.” 

Seeing an opportunity, the Howrey firm has now declared that it “absolutely won’t represent trolls.”  Is the patent bar in the midst of a split? [Joe Mullin has the Howrey Advert]

Documents:

  • File Attachment: Defamation Complaint filed by WARD (383 KB)
  • File Attachment: Defamation Complaint filed by ALBRITTON (452 KB)
  • Original ESN v. CISCO complaint 
  • Notes:

    • Although I have not always agreed with Frenkel’s opinions, he has been a great addition to the public debate over patents and patent reforms. His analysis has always been fresh. On several occasions, I double-checked the factual basis of his reports, and each time found them spot-on.  I do hope that he’ll be back with more caustic analysis. I’ve been sitting on this story for a while now. Although not a named party, my name appears in the filings. Craig Anderson (DailyJournal) apparently broke the story in a hardcopy version.
    • This case may serve as a caution to Patently-O “anonymous” commentors. A defamed individual may have ways to figure out your identity.
    • ESN has explained that it actually filed the complaint at 12:01 am on October 16.
    • A couple of days after posting the comment above, PTT deleted the above quoted material and replaced it with the following: “You can’t change history, and it’s outrageous that the Eastern District of Texas may have, wittingly or unwittingly, helped a non-practicing entity to try to manufacture subject matter jurisdiction. Even if this was a “mistake,” which I can’t see how it could be, given that someone emailed me a printout of the docket from Monday showing the case, the proper course of action should be a motion to correct the docket. (n.b.: don’t be surprised if the docket changes back once the higher-ups in the Court get wind of this, making this post completely irrelevant). EDIT: You can’t change history, but you can change a blog entry based on information emailed to you from a helpful reader.” [Mullin]
    • Reporter, Joe Mullin has more background — According to his report, Ward filed the complaint in November and had been in the process of unmasking the troll.  
    • Joe Mullin Reports on the Case
    • Legal Blog Watch
    • Legal Pad reports on the Case
    • Forbes has a quite flippant view
    • Zura Reports
    • Mark Randazza
    • Robert Ambrogi

    Patently-O Bits and Bytes No. 20

    • PatentLawPic229SurveyMonkey: I am conducting an anonymous FOUR MINUTE readership survey.  Please help me to figure out who reads Patently-O and how you read Patently-O.  In a future survey, I’ll get your help improving the site. [Please Take the Survey]
    • 3/11/08 11:00 am: Over 1000 folks have submitted to the survey. Major comments (1) need a better way to forward interesting posts; (2) Need threaded and rated comments. 65% of readers have more than five years of IP law experience.
    • Bye Bye Markush: The USPTO has published its “Initial Regulatory Flexibility Analysis” of the proposed changes to Markush Claims. [IRFA][Proposed Rules]. According to the PTO, about 22% of all patent applications contain affected claims, with the highest percentages in Biotech and Chemical cases. The proposed rules would limit Markush alternatives only to those that are not overlapping and that do not make the claim difficult to construe. There is still some time to comment on the changes.

    Pharma Prosecution: CIP Breaks Priority for Restricted Claims

    Pfizer v. Teva (Fed. Cir. 2008)

    A family of three Pfizer patents covers aspects of the bestselling drug Celebrex. Seeing some possible holes* in the patents, Teva field an Abbreviated New Drug Application (ANDA) with the FDA with a Paragraph IV certification challenging the patents as invalid and unenforceable.

    Continuation-in-Part After Restriction: 35 USC 121 blocks the use of a parent application “as a reference … against a divisional application” if the divisional was the result of a restriction requirement. 

    One of the Pfizer patents (the ‘068) is a continuation-in-part (CIP) filed after a restriction requirement. On appeal, the CAFC confirmed that Section 121 does not apply to CIPs: “a divisional application contains an identical disclosure to its parent application, but a CIP introduces new matter. . . . [T]he protection afforded by section 121 . . . is limited to divisional applications.”

    Thus, the parent application of a CIP will potentially be used for an obviousness-type double patenting rejection. Here, the CAFC held that the CIP claims were indeed obvious when compared to the parent application.

    Pfizer’s Strategy: From Dan Feigelson’s comment below:

    Pfizer could have cured the problem with the ‘068 patent – even during the trial or the appeal – by filing a terminal disclaimer in that patent. I’m guessing they chose not to b/c they had nothing to lose and everything to gain by having the court adjudicate the question of 35 USC 121 to CIPs.

    Best Mode: A patent is invalid when the applicant fails to satisfy the best mode requirement of Section 112. The requirement can be broken down into two elements:

    1. Whether the applicant subjectively “possessed” a best mode for practicing the invention at the time the application was filed; and, if so,
    2. Whether the disclosure would objectively enable a PHOSITA to practise the best mode.

    Like other invalidity issues, best mode is determined on a claim-by-claim basis.  There was no real question here that the COX-specific claims did satisfy the best mode requirement. The appellate panel refused to speculate further on the moot issue of how the best mode requirement is met for claims covering a larger class of compounds.

    Note:

    • * The post was updated to ensure that Patently-O remains non-controversial (See comments below).

    Using Preliminary Injunction Decisions to Seek Immediate Appeal

    Patent.Law065University of California v. Dakocytomation California (Dako) (Fed. Cir. 2008)

    Plaintiffs UC and Abbott are the owner and licensee of a set of patents covering methods of identifying chromosomal abnormalities.  On appeal, the parties question whether the lower court improperly denied preliminary relief joined with an interlocutory appeal of summary judgment of non-infringement of some claims. 

    As in the recent Chamberlain Group decision, the appeal of preliminary relief offered a method for the parties to obtain an interlocutory judgment on claim construction.

    District Court Obviousness Trouble: On two separate occasions, the district court denied preliminary relief to the patent holder based on the likely invalidity of the asserted patents. First, the district court held that the patent was likely invalid based because the parent application was invalidating prior art. The court withdrew that analysis after realizing that the asserted patent claimed priority to the filing date of the parent. Next, the district court found the patent likely invalid for obviousness-type double patenting. That reasoning was also withdrawn by the district court after realizing that the patentee’s terminal disclaimer cured the double patenting defect.

    Nonetheless, the lower court’s decision in favor of the defendant stuck because the CAFC found that the prosecution history warranted a construction of the claims that was narrow enough to allow Dako to avoid infringement.

    Doctrine of Equivalents: In a decision to be contemplated further, the CAFC also decided that a narrowing amendment made during prosecution does not preclude application of the doctrine of equivalents because “the narrowing amendment was only tangential to the accused [] equivalent.”

    Judge Prost dissented from the DOE holding and argued that the amendment was absolutely related to the accused equivalent.

    Patently-O Bits and Bytes

    • March 6, 2008, I will be the keynote speaker at the Missouri Inventor of the Year award program sponsored by the Bar Association of Metro St. Louis (BAMSL).  I look forward to seeing my fellow Missourians there. 6:00 PM in Forest Park [LINK]
    • April 11–13, 2008, I will be part of the annual Oregon/Washington Patent Conference — This year at the Salishan Resort on the Oregon coast. The speaker list is stacked, including John Duffy on Obviousness, Ken Port on Trademark Extortion, Paul Janicke with a ‘top ten’ list, Lisa Dolak on Inequitable Conduct, and others. I’ll be speaking about forward looking damages and injunctive relief.

    Board of Patent Appeals and Interferences (BPAI)

    Eight Reasons: I am undergoing a project to better understand the role of the Board of Patent Appeals and Interferences (BPAI).  There are several reasons why BPAI is now receiving more limelight than ever. Here are eight such reasons: (1) every proposed patent reform bill includes an expanded role for a patent administrative court, such as the BPAI; (2) as various technology centers make patents more difficult to obtain, more cases are appealed to the administrative court; (3) under the proposed rule changes to limit continuation applications, more cases will likely be appealed; (4) as the value of patent rights continue to grow, important cases will continue to be challenged; (5) the publication of patent applications means that BPAI decisions can now also be immediately published; (6) the current large batch of examiners without much experience requires a serious check on potential abuses of naiveté; (7) under Judge Fleming, the BPAI has begun to open up to more public input and scrutiny; and (8) BPAI decisions are now available via Google search and Westlaw search.

    BPAI is a Busy Court: It is important to recognize that the BPAI is deciding 3,500 cases every year. Thousands more are ‘settled’ prior to a BPAI decision either because the patent examiner withdrew a rejection (and likely re-opened prosecution) or the patent applicant filed a continuing application or abandoned the case. The BPAI usually sits in three-member panels, although there are occasionally ‘stacked’ panels for important cases such as Lundgren or Bilski.  In my one-year sample, over seventy different Administrative Patent Judges (APJs) authored opinions. 

    As part of my initial study, this week, I created a database of information on recent BPAI decisions and coded them by issues discussed.  My database is derived from decisions available on Westlaw. Consequently, it is missing some decisions. In particular, Westlaw decisions do not include appeals associated with unpublished patent applications.

    The table below looks at board decisions for each technology center. The relative numbers are interesting — showing a low affirmance rate for rejection of business method cases (TC 3600) and a high affirmance rate for chemistry cases (TC 1700). The BPAI offers its own calculation of these numbers based on all of its decisions that are roughly parallel. [LINK] ScreenShot037
    (Note, the table does not add-up to 100% because I excluded decisions to remand and deny rehearing).

    Independence of the BPAI: One serious question about the competence of an internal patent appeal board is whether that body can act independently from the examining corps. Most of the BPAI judges are former examiners and they all work for the PTO Director. Although not conclusive, the above numbers give me some cause for hope that the BPAI does act independently. Over the past several years, many of the art units of TC 3600 has been notoriously difficult on applicants (especially e-commerce and business method groups). The BPAI’s low affirmance of rejections from that technology center may indicate that the Board has taken an independent stand against overzealous rejection practice.  There are many other explanations, including some selection bias or difference in quality of attorneys. In addition, there is a skew of judges — i.e., Judges with a technical background related to a particular technology center are more likely to judge cases from that technology center. The BPAI rightfully does this to ensure that every case has at least one administrative patent judge (APJ) who is prepared to understand the technology at issue.

    Issues on Appeal: Far and away the most decided issue is that of nonobviousness. Almost 80% of decisions involved a discussion of nonobviousness and 30 U.S.C. 103(a).  Unfortunately for patent applicants, nonobviousness decisions were also the most difficult for applicants to win. In my study, decisions involving Section 103(a) were affirmed 63% of the time; decisions involving anticipation under Section 102 were affirmed 55% of the time; and decisions involving Section 112 were affirmed 52% of the time. As more issues are added to an appeal, the chance of affirmance goes down, and the chance of a split (reverse-in-part) decision goes up.

    As might be expected, split decisions tend to be longer than others: 4500 words for split decision vs. 3500 words other decisions.  If a short decision arrives at your desk, you may assume it is a remand.

    Notes:

    Declaratory Judgment Jurisdiction: Later Filed Lawsuit by Patentee Serves as Admission that an Actual Controversy Exists

    Micron v. Mosaid (Fed. Cir. 2008)

    Of the four major DRAM manufacturers. MOSAID first sued Samsung. On the day that MOSAID settled with Samsung, the patent holder sued Hynix, then sued Infineon and settled. After a series of communications, Micron began to understand MOSAID’s unstated assertion of patent infringement.

    Not wanting to be sued next, Micron (the fourth major DRAM manufacturer) filed a declaratory judgment action, asking the N.D. Cal. federal court to find the patent not-infringed. A day later, MOSAID sued in E.D. Tex.

    On appeal, the CAFC found that the lower court had improperly dismissed Micron’s DJ action — noting again that a DJ Plaintiff is not required to show any apprehension of suit in order to request declaratory action. Rather, the Supreme Court’s MedImmune test only requires that the controversy be definite, concrete, real, substantial, and have some specific relief that is possible.

    Here, it is clear that there is an actual controversy between the parties based on communications between the parties and MOSAID’s actions against all manufacturers who could potentially be accused of infringement. MOSAID’s annual report promising “aggressive” enforcement of its patents also helps Micron’s cause.

    What is most interesting here, is the fact that MOSAID’s lawsuit, filed the next day in Texas, also serves as evidence of a controversy.  By filing suit, MOSAID admits that there is an actual controversy between the parties.

    Indeed, that suit, filed only one day later, was actually pending in Texas at the time that the California district court made its ruling. Thus, the parties in this dispute are really just contesting the location and right to choose the forum for their inevitable suit.

    In a foray into policy grounds, Judge Rader’s opinion notes that the “more lenient” MedImmune standards for declaratory judgment jurisdiction will likely lead to “forum-seeking race[s].” Judge Rader suggests that district courts (and litigants) may need to change their focus from jurisdiction (which will now almost always exist) to the convenience factors of 28 USC 1404(a).

    Moving to the CAFC role as a district court, the panel then found that the more convenient forum is the Northern District of California. In particular, the court relied on the fact that (1) the California case was first filed and (2) MOSAID’s US home office is in California. The fact that the Eastern District of Texas had previously seen and decided cases involving the identical patents in suit was discounted because the record did not show any ‘ongoing litigation’ in that locale. Because of no ongoing litigation, the CAFC found that the prior litigation “does not suggest a better forum in Texas.”

    Applying these factors, the panel unanimously agreed that “it would be an abuse of discretion to transfer the action.”

    Reversed and Remanded

    Notes

    • In what looks like a subtle jab at the Eastern District of Texas, the appellate court discussed the district as the “well-known patent forum.”
    • Judge Rader took a hard stance against using related litigation in another district as a factor in making a transfer decision. The implication from the opinion is that related litigation should only be considered as a factor if it “ongoing litigation requiring consolidation.”

    Claim Construction Reversal Rates III – Additional Measures of Experience and Some Possible Explanations

    By David Schwartz

    How do district court judges with varying levels of experience perform on claim construction?  Are judges more likely to have their decisions affirmed when they have previous claim construction experience?  Previously here and here I provided some background on the large database I compiled and some of the results.  A draft of the paper, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, can be downloaded here.

    Today’s post provides an analysis of the data based upon two measures of district court judge experience: (1) the size of the district court judge’s total patent docket over an eleven year period; and (2) the performance after a first reversal by the Federal Circuit.  As for the first measure, I determined the reversal rate (as measured by cases in which an incorrect claim construction required the case to be reversed or vacated) based upon the number of patent lawsuits a district court judge was assigned.  Figure X below illustrates the results.

    ScreenShot035

    Figure X shows that the claim construction reversal rate varies little with the total number of patent lawsuits handled. The reversal rate was between 26.7% and 34.1%.

    I turn now to the second measure of experience. It may be that a district court judge pays little attention to a Federal Circuit opinion if the case was affirmed. In contrast, when the result of a case is affected, the district court judge takes note. A remanded case is often returned to the same district court judge for further proceedings. As these further proceedings are time-consuming, the district court judge likely will remember the opinion remanding a patent lawsuit to his or her docket. Figure N below illustrates the reversal rate on all subsequent claim construction appeals after a particular district court judge has been reversed or vacated at least once due to an erroneous claim construction.

    Figure N shows that the first reversal does not have a significant effect on the future performance of the district court judges, with the rate the varying from 25.0% and 44.4% for reversals, and from 31.4% and 44.4% for errors. The percentages in this breakdown vary to a greater degree than the percentages based upon number of prior appeals (reported

    yesterday).  However, the trend is not linear and the differences among the judges illustrated in Figure N are not statistically significant. 

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    The data illustrated above and described yesterday do not suggest that district court judges learn from having their claim construction rulings appealed.  As I explain in more detail in the paper, there are many possible explanations for the surprising results.  Three likely explanations are (i) that claim construction is inherently indeterminate; (ii) that district court judges are incapable of or not interested in learning how to perform claim construction; and (iii) that the Federal Circuit decisions do a poor job of teaching district court judges how to construe claims.  (Another possible explanation is that limitations in the data, as described in detail in the paper, affect the results.)  If the indeterminacy explanation is correct, then it will be difficult to lower the claim construction reversal rate, especially as long as those decisions are reviewed de novo.  If the district court judge explanation is correct, then a primary rationale for adopting the Issa patent pilot program is likely faulty.  In other words, if district court judges cannot learn how to perform claim construction, creating quasi-specialized patent judges is unlikely to reduce the reversal rate.  If the Federal Circuit explanation is correct, then the Federal Circuit must redouble its efforts to create a uniform body of claim construction case law.

    For those who are interested, the paper also analyzes the data based upon various other characteristics of the district court judges including age and years of judicial experience.

    I’d like to thank Dennis for permitting me to share my results with the readers of Patently-O.  I’d like to also thank the readers of Patently-O for their comments.