April 2008

Trade Secret Information can be Purely Mental

Ohio-sealAl Minor & Assoc v. Martin, 2008 Ohio 292 (2008)

One aspect of the upcoming Bilski considers whether “mental methods” can be patentable. There are various types of mental methods — running from the most innocuous situation where a portion of a process could be performed in the human mind to the most questionable situation where an entire process must be performed in the human mind.

Opining on Patent’s legal cousin – trade secret law – the Ohio Supreme Court has held customer lists compiled by former employees strictly from memory can be the basis for a trade secret violation.

“[W]e have concluded that the client information at issue in this case did not lose its status as a trade secret, or the protection of the UTSA, because it had been memorized by a former employee.”

As part of his employment contract with AMA, Martin was not required to sign a noncompete agreement or even an employment contract. When he left AMA, Martin was careful not to take any documents belonging to AMA. However, Martin did remember the names of 15 AMA clients and solicited their business.

In its decision, the Ohio court could not find any legal or policy reason to “distinguish between information that has been reduced to some tangible form and information that has been memorized.” (Noting that the statute makes “no mention of writings or other physical forms that such information might take.”

One real problem is that “employee will of course have memories casually retained from the ordinary course of employment.”  In response to this problem, the court gave the unsatisfactory statement that former employees can use their non trade secret memories. “The [UTSA] does not apply to the use of memorized information that is not a trade secret.”

This decision follows the “modern trend” amongst most states to eliminate any “written-memorized distinction.” See Pooley, Trade Secrets (7th Ed.2001).

Bilski Hearing to Include Amici Arguments

En banc oral arguments for Ex parte Bilski will be held at 2:00 pm May 8 at the CAFC Courthouse in DC. [Calendar] Room 201 is expected to be filled to capacity for this important case.

In addition to the parties, the CAFC has requested oral arguments from two amici: Regulatory Datacorp (RDC) and the “Financial Services Industry” group of seven that includes Bank of America, Morgan Stanley, and Wachovia.

Professor John Duffy will argue for RDC. Over the past several years, Duffy has firmly established himself as the country’s leading conservative patent thought leader.  RDC’s amicus brief makes the point that applied economics falls well within any reasonable definition of “useful arts.”  According to Duffy, statutory subject matter should only limit claims that are directed to abstract ideas, physical phenomena, or principles of nature.

On the other hand, BOA argues that State Street and its progeny are unduly broad both as written and as interpreted. BOA rejects any “technological arts” requirement that would allow a token inclusion of a ‘machine’ to render a claim patentable subject matter. Bill Lee, Managing Director of WilmerHale will make this argument.


Territorial Limits of Infringement via Sale

PatentLawPic282Litecubes v. Northern Light Productions (GlowProducts) (Fed. Cir. 2008).

Short Summary: (1) Subject Matter Jurisdiction is satisfied by a well pled complaint, even if the accused infringer is foreign and the infringing activity is potentially outside the US; (2) In an infringement analysis, a product may be considered “sold” in the US even though title is transferred abroad – so long as the seller deals directly with US customers and then ships the product to the US.

Litecubes are artificially illuminated pseudo-ice cubes. The company asserted both patent and copyright protection against GlowProducts of Canada.  Although GlowProducts has no US facilities or assets, the company does sell and ship directly to US customers.

Subject Matter Jurisdiction: On appeal, the CAFC raised the issue of subject matter jurisdiction. Specifically the court inquired whether the limits on subject matter jurisdiction require a patent plaintiff to establish some threshold level of infringement within the US. Or, are the elements of infringement merely factual elements to be proven at trial.

Well pled complaint rule: Under the well pled complaint rule, subject matter jurisdiction is satisfied by a complaint that establishes “either that federal patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law.”  Here, because Lightcubes complaint pled each element of the infringement statute (35 USC 271(a)), the federal court properly has jurisdiction. 

Furthermore, subject matter jurisdiction is not defeated by a failure to prove the allegations unless the allegations are “wholly insubstantial and frivolous.”

There are some prior that look at territoriality requirements as jurisdictional. However, the CAFC found that the territorial limitations of Section 271 are elements of infringement rather than requirements for subject matter jurisdiction.

“Thus, in these respects, a limitation on the extraterritorial scope of a statute is no different than any other element of a claim which must be established before relief can be granted under a particular statute.”

Thus, the district court should have rejected GlowProduct’s subject matter jurisdiction claims without even considering whether any products were actually imported into the U.S.  Rather, Litecubes satisfied the SMJ requirement by alleging US infringement in the complaint:

“by alleging a violation of § 271, has properly invoked federal question jurisdiction under § 1331 and § 1338. This jurisdiction does not depend on whether Litecubes is able to succeed on the merits in proving all of the elements of patent infringement that it alleged in the complaint.”

Applying a parallel analysis, the CAFC likewise held that the issue of territoriality of copyright infringement is “properly treated as an element of the claim which must be proven before relief can be granted, not a question of subject matter jurisdiction.”  Of course, foreign companies charged with infringement can still escape the court’s reach if there is a lack of personal jurisdiction. “In many such cases, the court may not have personal jurisdiction over the defendant.”

Sale in the US: GlowProducts argued that it had not made any US sales. In particular, the Canadian defendant argued that the sales were made in Canada and then shipped f.o.b.. On appeal, the CAFC found that that the location of a “sale” under Section 271 should not be limited by any formalistic rules.  Citing its 1994 North American Philips case, the appellate panel held that foreign company’s “sale” may properly be considered within the US if the seller deals directly with US customers and then ships to the US — regardless of whether title to the goods was legally transferred in another country.  

Interestingly, the court extensively relied on personal jurisdiction precedents interpreting constitutional law to broadly define the location of a sale. Yet, the court also argued foreign defendants should rely upon personal jurisdiction arguments to protect against constitutional due process violations — noting that those foreign companies “have substantial protection if the activity complained of took place wholly outside of the United States.  In many such cases, the court may not have personal jurisdiction over the defendant.” 

CAFC Judge Linn Expresses Disappointment over Failures by the BPAI and Patent Bar

In re Reuning (Fed. Cir. 2008)

The Reuning application claims to have invented a new method of targeting advertisements. In appealing a BPAI obviousness rejection, the inventors argued to the appellate panel that the claims should be allowable because they contain the limitations of “searching the internet”, “identifying web pages”, and identifying “web pages containing profile data.” During the appellate briefing, the applicant had admitted that each of those elements were already “known in the art” at the time of the invention. The CAFC applied the applicant’s admission to estop any argument that elements were not in the cited references:

“Having acknowledged that certain claimed elements are taught by the prior art, Reuning cannot now defeat an obviousness rejection by asserting that the cited references fail to teach or suggest these elements.”

This conclusion misses the somewhat subtle difference between elements being found in the art generally and those found in the cited references.

In a Concurring Opinion, Judge Linn wrote to “express . . . disappointment over the delays experienced in this case and . . . concern that the circumstances that led up to this appeal may be more symptomatic of certain failures of the patent system than merely reflective of the peculiar facts of this case.”

Here, Reuning filed the patent application in 2001, received a final rejection in 2003, and received the two-page BPAI decision in 2006. During the CAFC appeal, the PTO Director requested a remand so that the BPAI could reconsider all of the facts of the case:

After twice denying Reuning a substantive review of claims 3-66—and taking over three years in the process—the Board, via the Director, now requests that we remand so that the Board can do what it should have done in the first place; namely, substantively review the examiner’s rejection of claims 3-66. By taking nearly three years to decline to adjudicate the merits of claims 3-66 on a procedural technicality, and by forcing Reuning to appeal before recognizing the superficial nature of its actions, the Board squandered judicial resources and needlessly frustrated Reuning’s interests. This is not a reflection of the Board’s finest work. . . .

This wasteful course of proceedings does not promote the fair and efficient administration of justice and is inconsistent with the PTO’s mission “to ensure that the intellectual property system contributes to a strong global economy, encourages investment in innovation, and fosters entrepreneurial spirit.” . . . I have the utmost respect for the members of the Board, the leadership of the PTO, and the members of the patent bar, and while I would like to believe that this case represents an aberration from the standards of practice I have long admired and have come to expect, I am concerned that it does not.


Patently-O Bits and Bytes No. 30

  • PatentLawPic280Standard Setting & Patents: The Court of Appeals for the District of Columbia has overturned an FTC monopolization ruling against Rambus.  The FTC had found that Rambus deceptively failed to disclose its patentable DRAM technology to the JEDEC standard-setting body. On appeal, the DC court found no evidence of competitive harm and a lack of evidence that Rambus violated disclosure policies of the standard-setting body. File Attachment: rambusdecision.pdf.
  • Markush Update: The PTO has proposed new Markush rules (limiting the use of Markush groups in claims). Recently, the office published a “supplementary notice” regarding the reasons for and impact of the rules. [LINK] The office has also posted comments received from the public. [LINK] The comments include a paper from Hal Wegner arguing that generic claim groupings have been the law since Ex parte Eagle was decided in 1870. [LINK]
  • Mediation: Court of Appeals for the Federal Circuit has an ongoing mediation program. In Q1 of 2008, the program completed 20 patent appeal mediations resulting in 9 settlements. (26 other mediations are still ongoing). [LINK]
  • Blog Meister: Publisher & Author, Dr. Jeremy Phillips published an interesting article in the recent WIPO Magazine all about IP Blogging. Phillips heads the UK Patent Blog IP KAT. [Read the Article]
  • PatentLawPic281Community Design: IP Kat has a recent article on a patent dispute involving spiky balls.
  • Prevacid Patent: A Delaware District Court has upheld Takeda’s patents covering Prevacid. [Barkoff]

Finisar v. DirecTV: Software Means-Plus-Function Claim must be Supported by Particular Structure

Finisar v. DirecTV (Fed. Cir. 2008) [This is Part II of the case discussion. Read Part I]

In a cross-appeal, Finisar asked the CAFC to overturn the lower court’s findings that its means-plus-function claims were invalid for failing to disclose any particular structure to perform the claimed function.  A patent applicant is allowed to claim that her invention covers the “means” for accomplish certain results so long as the application also discloses the “structure” for accomplishing the result.  That structural disclosure must be found somewhere in the specification. Means plus function claims are generally easier to write and are thought by many to be quite broad. Over the past decade, however, courts have increasingly been wary of particularly overbroad claims.

In this case, the claimed means and functions were software related. A number of CAFC cases have required that software means-plus-function claims provide more structural disclosure than just a general purpose computer. Rather, the disclosure must be “the special purpose computer programmed to perform the disclosed algorithm.” WMS Gaming; See also Aristocrat. The CAFC sees its structure requirement as quite minimal and easy to satisfy. Here, however, the complete lack of structure leaves the claims so vague that “one of skill simply cannot perceive the bounds of the invention.”


  • One of the Finisar MPF clauses reads as follows:
    • database editing means, coupled to said one or more computer memory devices, for generating a hierarchically arranged set of indices for referencing data in said information database, including distinct indices for referencing distinct portions thereof, and for embedding said indices in said information database . . .”

Finisar v. DirecTV: Parallel Claim Construction and Construing the Prior Art

Finisar v. DirecTV (Fed. Cir. 2008)

After a jury found that DirecTV willfully infringed Finisar’s information broadcast patent, the Eastern District of Texas court (Judge Clark) awarded over $100 million to the patentee for past damages. Instead of an injunction to stop the infringement, Judge Clark also ordered a compulsory license rate for any future infringement.

Parallel Claim Construction: On appeal, the CAFC first reversed the construction of the claim term information database – leading to an order for a new trial on both infringement and validity.  The same patent term had also been later construed by a N.D. Cal. district court in Comcast v. Finisar, and “in the interest of uniformity and correctness” the appellate panel consulted the analysis of both courts.  Here, the CAFC essentially used the Comcast decision as an amicus brief arguing for a particular result. In its decision, the appellate panel praised the Comcast court for its rejection of the DirecTV claim construction.

It is appropriate to consider here what a district court should take away from the CAFC’s process – especially with respect to the court’s stated goal of uniformity. This decision leaves execution of that goal squarely in the hands of the appellate court. In this case, the California district court is encouraged to avoid uniformity and instead focus on contrasting its decisions from those of other district courts interpreting the same terms.  When several courts are deciding the scope of identical property rights in parallel infringement actions, there is some value in having a uniform interpretation or outcome. The practical implication of this case, however, is that a district court looking at a patent that was previously construed should not consider the value of uniformity in its decision.

Construction of Prior Art: A concept ripe for further analysis is the construction of prior art — a job that is currently left to the jury. Here, the court found that the database structure textbook reference should be interpreted based on “an understanding of English grammar and usage.” Ultimately, the court decided the anticipation issue based on the comma placement in a paragraph of the prior art book. Interestingly, although the court initially terms its interpretation a “stretch” in the end its interpretation of the facts means that no reasonable jury could hold otherwise.  (Based on its grammatical holding, one claim was held invalid and the others must be revisited by a jury).

Willful Infringement: The CAFC also reversed the willfulness decision — finding that there is no requirement for an opinion of counsel, and that an opinion of counsel can appropriately ignore validity if it sufficiently addresses noninfringement.


  • Read Part II of this decision later today.

Patently-O Bits and Bytes

  • The Supreme Court reviewed the certiorari petition of Biomedical Patent Management (BPM v. California Dept. of Health) and asked the Solicitor General to offer the US Government’s views on the issue of when a state waives its Eleventh Amendment Immunity. [SCOTUS Blog] In this case, BPM sued California for patent infringement.

Implied License: Purchases from Licensed Manufacturer Come with Implied License to Practice the Invention (Regardless of Non-Infringing Uses)

Zenith Electronics v. PDI Communications (Fed. Cir. 2008) [Part II] [Read Part I discussing anticipation]

Zenith’s patented remote TV control system is designed for hospital use. The invention includes both a remote “pillow speakers” and a TV receiver. Zenith accused PDI of infringing even though PDI had purchased Zenith-authorized remote pillow speakers from licensed manufacturers. PDI had, however, purchased off-brand TVs and receivers – Zenith wanted its own TVs to be used.

On summary judgment, the district court found that PDI could not infringe Zenith’s patent because the defendant was practicing the invention under an implied license from the patentee. On appeal, the CAFC affirmed.

Implied License: Under the first sale doctrine, a license to practice an invention will be implied when the patentee (or its licensee) sells a device that has “no non-infringing uses” under circumstances that “plainly indicate that the grant of a license should be inferred.” The no non-infringing use requirement is lifted when the patentee expressly licenses a manufacturer to sell its products for infringing uses. (Jacobs v. Nintendo).

Here, PDI purchased the pillow speakers from manufacturers expressly authorized to sell products for uses that would infringe the Zenith patent. Thus, potential non-infringing uses are “irrelevant” to the question of implied license. Interestingly, the Zenith licenses include aspirations that Zenith TV-equipment will be used. Those aspirations however are “simply the seller’s hope or wish, rather than an enforceable restriction.”

“We agree with the district court that customers who purchase pillow speakers from [the licensed manufacturers] Curbell, MedTek, and Crest obtain an implied license to use those pillow speakers in combination with any compatible television—not just Zenith televisions. That implied license is derived from the express licenses in place between Zenith and the manufacturers.”


  • This situation is similar to that of Quanta, now pending at the Supreme Court. However, in that case, the license made explicit restrictions.
  • This decision also is an interesting parallel to the recent DataTreasury decision. In that case, the CAFC decided that the restrictive burden (a requirement to arbitrate disputes) was not actionable to a subsequent purchaser. Here, the CAFC decided that the beneficial license to practice does automatically extend to the purchaser of a patented good. This is like the law of real covenants where the benefit of a covenant flows to the subsequent purchaser much more easily than the burden. (There is a difference here between purchasing a patent in DataTreasury and purchasing a patented good in Zenith.)

Patently-O Bits and Bytes No. 28

  • Stupid_Recognition_SoftwareHuman Tricks: A reader attempting to use PAIR’s bitterly awful reCAPTCHA software had a little trouble getting through. Can anyone figure out this example? 
  • A new site: www.inventorresource.co.uk.
  • APRIL 18 in CHICAGO: Northwestern’s Journal of Law & Technology is hosting a one-day symposium on the Future of Intellectual Property. FREE.
  • Law Jobs: According to a WSJ article, the lateral law firm market is slow. Bucking the trend: Patent Jobs. “There are anomalies, including demand for hard-core IP – the patent jobs for the engineering types.” [WSJ Blog] [Patently-O Law Jobs]

That which infringes if later, anticipates if earlier – But Elements of Anticipation Must Still be Proven

PatentLawPic278Zenith Electronics v. PDI Communications (Fed. Cir. 2008)

Zenith’s patents related to TV remote control devices for use in hospital beds.  In patent infringement litigation, the accused infringer (PDI) won on summary judgment of invalidity by anticipation. For its defense, PDI had argued that its accused system was identical to the prior art. 

On appeal, the CAFC found the practicing prior art defense lacking — holding instead that “anticipation cannot be proved by merely establishing that one ‘practices the prior art.’”  This decision flows from the 2002 Tate Access holding that, accused infringers are not free to flout the requirement of proving invalidity by clear and convincing evidence by asserting a ‘practicing prior art’ defense to literal infringement under the less stringent preponderance of the evidence standard.”

At first glance, this decision might appear in direct conflict with numerous Supreme Court and Federal Circuit opinions stemming from the 1884 Ohio Circuit Court statement: “That which infringes if later, anticipates if earlier.” Peters v. Active Mfg., 21 F. 319 (W.D.Ohio 1884) (affirmed and quoted in 129 U.S. 530 (1889)).  That initial notion, however, can be pushed aside by understanding that the CAFC’s problem with the pithy maxim is that it serves as a poor rule of evidence.  The court has established a specific element by element procedure for determining anticipation by a clear and convincing standard.  When those standards are applied the maxim will be upheld.

On remand, PDI must prove the elements of anticipation. I.e., the defendant must show “that each element of the claim at issue, properly construed, is found in a single prior art reference.” 

Arbitration Agreement Does Not Encumber Patent

DataTreasury v. Wells Fargo (and 50+ other banks) (Fed. Cir. 2008)

In 2006, DataTreasury obtained its electronic check clearing patents from WMR e-Pin — a company that had previously licensed its patents to Wells Fargo. The license agreement included a provision requiring arbitration of disputes.

Soon after DataTreasury obtained the patents, it sued Wells Fargo and more than fifty other major banking institutions for patent infringement. On interlocutory appeal here, is the district court’s refusal to stay litigation pending arbitration. DataTreasury argues that it is not bound by the arbitration agreement.

On appeal, the CAFC confirmed that the subsequent purchaser, DataTreasury, is not bound by the arbitration clause. Applying Fifth Circuit interpretation of the FAA and Minnesota law, the appellate panel found that the arbitration policy does not operate as a servitude upon the property. Rather, the arbitration agreement it is a personal contract binding only the original parties. “[R]equiring a non-signatory to arbitrate solely on the basis of an arbitration clause in a license agreement between signatory parties would be inconsistent with basic principles of contract law and the Federal Arbitration Act.”

The case is remanded to Judge Folsom (E.D.Tex.) to resolve the dispute.

Challenge to BPAI Appointments Moves to Supreme Court

Translogic Tech. v. Dudas (on petition for certiorari 2008)

In 2007, Professor John Duffy wrote a Patently-O Patent Law Journal article challenging the constitutionality of the current system for appointing administrative patent judges. The Patent Act requires the Director of the PTO to appoint BPAI judges. 35 U.S.C. §6. However, under Article II of the constitution, appointment of “inferior officers” such as these may only be delegated as far as a “Head of Department.”  In this case, the head of department would be the Secretary of Commerce – not the PTO Director.

Now, Translogic has repackaged Professor Duffy’s article in its petition for certiorari to the Supreme Court — arguing that the BPAI’s rejection of the Translogic patent during reexamination should be vacated because one of the APJs was unconstitutionally appointed. (Based on the BPAI decision, the CAFC Set aside an $80 million jury verdict against Hitachi).

The question presented:

Under the Appointments Clause of the Constitution, art. II, § 2, cl. 2, Congress may vest the appointment of inferior officers in the President, in the Courts of Law, or in the Heads of Departments. In this case, one of the three members of a panel of the Board of Patent Appeals and Interferences (“Board”) of the United States Patent and Trademark Office (“PTO”) that ruled on the claims of Petitioner’s patent was appointed by the Director of the PTO, who is not the Head of a Department.

The Questions Presented are:

  1. Whether one of the members of the panel of the Board was appointed in violation of the Appointments Clause; and
  2. If so, whether there must be a vacatur of the Board’s decision.

Translogic’s brief is clean and could be an easy grant. It raises questions that the Supreme Court is designed to answer: how the Constitution limits federal law. The only knock is that this issue was not raised at the BPAI or the CAFC (until a rehearing request) – primarily because Professor Duffy’s article was not yet published. 

Notes and Documents:

Interview Before The Examination (“First Action Interview Pilot Program”)

USPTOBy my count, well over eighty percent of patent applications are initially rejected by the PTO. Yet, most applications eventually result in an issued patent.  Many of the rejected patents are amended slightly. It is unclear, however, if those amendments are really made to overcome prior art or rather offered as negotiation chips to the examiner in order to obtain the patent as quickly and cheaply as possible.  The truth is that a non-trivial number of initial rejections might be termed “off course” because they miss the true nature of the invention. These off course rejections end up extending prosecution, increasing the PTO backlog, and causing endless patent attorney frustration.

In the hope of avoiding the problem of potentially off-course rejections, the PTO has created a new pilot program to allow an applicant to discuss the claims with the examiner before an initial rejection is issued (but after the examiner’s prior art search). Of course, under the current rules, pre-examination interviews are already allowed under MPEP 713.02 at the discretion of the Examiner.  This pilot program adds to the rules by forcing the Examiner to prepare a pre-examination search (upon request) and also meet for an interview.  The idea here is to ensure that everyone is on the same page regarding the invention and hopefully quickly issue patents for state of the art inventions.

The pilot program is limited to data processing inventions (Class 707 & 709) that have been pending for a couple of years. Likewise, a qualified application may only have three independent and twenty dependent claims. If successful, it may spread to art units with high-pendency.

Thoughts on Interviews: Over the last few years, in-person interviews at the PTO have lost much of their charm. In the past, a savvy attorney coupled with a tech-whiz inventor could convincingly elaborate the invention — without having the actual interview on record. After a tidy noncommittal “interview summary,” the case would issue.  As the record has become more important, Patent Office practice has also shifted toward examiners taking a harder post-interview look and often “renegotiating” the result. Still, interviews are useful for a patent applicant – just not as useful as they used to be.

My hope for this pre-examination interview is that it can create a communication link to help the PTO better understand the invention before crystallizing a particular position.  The PTO’s approach with the pilot is quite thoughtful because it requires the Examiner to prepare (by conducting a prior art search). This helps ensure that both sides will be ready to go when the interview begins.


Preamble Not Limiting in This Case (Despite Being Added in OA Response)

PatentLawPic271Symantec Corp. v. Computer Associates (Fed. Cir. 2008)

The district court granted summary judgment of non-infringement to the defendant CA. On appeal, considers preamble claim construction and also examines the defense of laches, inequitable conduct, and inventorship.

This is the third time that the antivirus patent at issue has been seen by the CAFC. In a prior appeal, Symantec was a defendant. After seeing the light, Symantec purchased the patent and continued a pending lawsuit against CA — this time as the plaintiff.

Preamble Limitation: The asserted claim preamble begins as follows: “In a system for transferring digital data for storage in a computer storage medium, a method of screening the data as it is being transferred.” The question on appeal is whether the preamble limits the claim to coverage of screening that occurs only “as [the data] is being transfered.” 

The CAFC found that the preamble term not limiting because the term does not recite “essential structure or steps” nor does is it “necessary to give life, meaning, and vitality” to the claim. One guidepost for ascribing meaning to a claim preamble is a prosecution history of argument based on the preamble. Here, although the preamble term had been added during prosecution, the court found no evidence that the term had its “own independent significance” or that the applicant demonstrated “clear reliance on the preamble during prosecution to distinguish the claimed invention from the prior art.” (Quoting Catalina Marketing, 289 F.3d 801 (Fed. Cir. 2002)).

[I]t is assumed that the preamble language is duplicative of the language found in the body of the claims or merely provides context for the claims, absent any indication to the contrary in the claims, the specification or the prosecution history.

Consequently the preamble term is given no effect. Claim construction reversed and the non-infringement decision vacated in Symantec’s favor. (Based on the new claim construction, validity must also be reconsidered).

Laches: The CAFC dismissed the defendant’s laches claim. Here, the court noted that that laches for delaying litigation is considered on a product-by-product bases and thus the delay is restarted when a defendant substantially changes its product line.

Inventorship: In a cross-appeal, a Mr. Levin asserted that he was a co-inventor to the asserted patent. As a matter of law, a co-inventor’s self-interested testimony is not sufficient to prove inventorship — rather, the inventor must provide corroborating evidence (that is sufficient to prove inventorship by a clear and convincing standard under a rule of reason). Here, Levin proved that he had a meeting with listed inventor and also that the listed inventor lacked proof that he invented a claimed portion. On appeal, the CAFC affirmed that this evidence was not sufficient to prove Levin’s inventorship and that the evidence regarding the listed inventor’s contribution was irrelevant.

Note: My former firm McDonnell Boehnen continues to represent Symantec in this matter.

Post Judgment Collateral Attack on IP through PTO Action Barred by “Defendant Preclusion”

NylookNasalok Coating v. Nylok (Fed. Cir. 2008)

The blue patch on Nylok’s bolts serves as a permanent bond. The blue patch is also protected by Nylok’s trademark covering “a patch of the color blue on a selected number of threads…” 

After Nasalok was charged with TM infringement and failed to appear in court, a district court entered a default judgment prohibiting Nasalok from selling bolts with a confusingly similar blue nylon locking element. Following that judgment, Nasalok attacked the mark by filing a cancellation proceeding at the USPTO. The TTAB, however, dismissed Nasalok’s arguments on summary judgment — finding the claims precluded by the district court’s default decision.  The CAFC considered two issues on appeal:

Claim Preclusion: Under federal court practice, claims may be precluded as res judicata when there has been an earlier final judgment between the identical parties on the same set of facts. However, the CAFC has narrowly interpreted those same facts — here, for instance, the CAFC found that Nasalok’s potential counterclaim of invalidity (or a cancellation proceeding) was not part of the same facts as Nylok’s infringement charges.

“In this case, therefore, the “essential facts” alleged by Nylok in its infringement action—related to Nylok’s ownership of the mark and Nasalok’s allegedly infringing behavior—do not form the basis of the cancellation claim now asserted by Nasalok, which is based on attributes of Nylok’s mark and on Nylok’s actions in obtaining registration of that mark. The two claims raise different legal and factual issues, will not be supported or refuted by substantially the same evidence, and are not “logically related” in the sense described by the Supreme Court in Moore.”

The court linked this decision with a public policy stemming from Lear that allows for challenges of intellectual property:

“[A] defendant in the first infringement suit should not be precluded from raising invalidity of the mark in the second action simply because it was not raised as a counterclaim in the first action. . . . public policy [is] in favor of allowing challenges to invalid marks weighs in favor of cabining the doctrine of res judicata at the Patent and Trademark Office.”

Thus, the CAFC found that the TTAB had improperly found Nasalok’s claims barred by claim preclusion

Collateral Attacks: Although the cancellation proceeding is not barred by res judicata, the CAFC found that it is properly barred by a rule against collateral attacks of final judgments — so called defendant preclusion. In particular, courts do not allow a former defendant to “undermine a previous judgment” through a collateral action that could have been asserted earlier. Here, the court found that allowing Nasalok to continue with the cancellation proceeding would certainly undermine the permanent injunction and thus “would constitute a collateral attack on the district court’s judgment.”

In a pointed concurring opinion, Judge Newman shows that the claim should be precluded because validity issues were decided by the district court. In addition, Judge Newman properly argues that the public policy for allowing challenges to established trademarks is much weaker than that for allowing challenges of issued patents.

“To state, even in dictum, that Lear favors a trademark system that facilitates attacks on trademark property ignores the differing public purposes of patents and trademarks, as well as misperceives the policy principles of Lear.”


  • Anti-Retroactivity: To my knowledge, this is the first case to indicate that a post-issuance decision by the PTO would require vacatur of a decision in a completed case.  This situation is, however, parallel to the Translogic decision where the CAFC used the PTO’s cancellation of Translogic’s patent to retroactively overturn a prior jury verdict simultaneously on appeal. [LINK]

Patentee has no “Presumption of Priority” Unless Specifically Adjudged by the PTO During Prosecution

ScreenShot017PowerOasis v. T-Mobile (Fed. Cir. 2008)

The district court granted summary judgment to T-Mobile — finding the PowerOasis cell-phone vending machine patents invalid.

The patent family history includes a continuation-in-part (CIP) preceded by a continuation and an original utility patent application. Based on the prior art date, the issue boiled down to whether the asserted patents could claim priority through the CIP to the original application.

Patentee Bears Burden of Proving Priority. Despite the statutory presumption of validity, the CAFC first held that the patentee normally has the burden of proving priority. The exception is when the PTO considers the issue of priority during prosecution.  In drafting the opinion, Judge Moore shifted the decision from a question of validity (where a presumption lies) to a question of effective filing date (where there is no statutory presumption). “When neither the PTO nor the Board has previously considered priority, there is simply no reason to presume that claims in a CIP application are entitled to the effective filing date of an earlier filed application.”

Interestingly, this decision falls runs parallel to Microsoft’s recent petition for certiorari in the z4 case.

Written Description: To claim priority to the original application date, that original application must “convey with reasonable clarity to those skilled in the art, as of the filing date sought, [that the inventor] was in possession of the [claimed] invention.” (Quoting Vas-Cath). Here, the original application disclosed a “display” and “user interface” while the asserted patent claimed a “customer interface.” Although these terms appear quite close, the CIP had added specific examples of a laptop customer interface while the original application only included interface embodiments attached to the vending machine.  This makes a difference because the accused device uses a laptop and the patentee asked for a construction of the term that would include the laptop interface.

Holding: “Because none of this support was present in the Original Application and because the Original Application did not disclose a customer interface apart from the vending machine, the asserted claims are only entitled to the 2000 CIP Application.” 


PTO Written Description Guidelines

PatentLawPic266The PTO has released a new set of Written Description Training Materials that include a series of Seventeen examples of proper written description rejections. According to the accompanying notes, these materials are intended to “supersede and replace the 1999 training materials.”

Because most of the action in written description continues to focus on biochemistry, the bulk of the document is directed toward those issues. However, all practitioners should review the following examples:

  • Example 1: Written description in relation to priority claims;
  • Example 2: Written description in relation to amended claims;
  • Example 3: Written description in relation to flow diagrams;
  • Example 15: Written description in relation to a genus with widely varying species; and
  • Example 16: Written description in relation to a process claim where the novelty resides in the process step.


Patently-O Bits and Bytes No. 27

Ex Parte Bilski: On the Briefs:

In Ex Parte Bilski, an en banc Federal Circuit plans to reconsider the scope of patentable subject matter as it relates to business methods and so called mental methods. Perhaps more importantly to the patent system as a whole, the court is considering the proper procedures going forward for determining whether a particular invention falls within the scope of 35 USC 101.

In its en banc decision, the CAFC invited non-party amici briefs, which were due April 7. (Scroll down to find the briefs).  In reading through the briefs, the first aspect that caught my attention was a common theme that institutional strengths and weaknesses of the PTO and Courts should help dictate the ultimate subject matter rule.  

  • Prof Morris: Through its examiners, the PTO has expertise in determining the technical questions of novelty, nonobviousness, and indefiniteness. On the other hand, examiners do not have the expertise to decide “philosophical and abstract” issues of statutory subject matter.
  • Prof Lemley*: Arbitrary subject matter boundaries have generally been difficult to enforce and usually result in patent attorneys using “magic words” to avoid the limits. (*NOTE: I signed Prof Lemley’s brief along with 21 other law professors.)
  • Prof Collins: A test that excludes “human cognition” elements is administrable.
  • EFF: Proposed three-step process provides a more “efficient and meaningful” way to administer the Section 101 threshold.
  • AIPLA: Section 112 should guard claim scope rather than Section 101.

Narrow or Expansive: The main thrust of the Bilski arguments, however, focus on whether patentable subject matter should be narrow or expansive. I have categorized the briefs on this axis:

Expansive Subject Matter:

  • Prof Lemley: We cannot predict the next area of innovation, and arbitrary limits on patent scope reduces incentives in those potential areas. “Bad patents” should be dealt with using the true tools of the Patent Act: Sections 102, 103, and 112. “Mental methods” should be allowed if they fall within the other requirements of patentability.
  • Regulatory Data Corp (Prof Duffy): Even under a narrow definition, applied economics is now part of the “useful arts.”  Statutory subject matter should only limit claims directed to abstract ideas, physical phenomena, or principles of nature.
  • AIPLA: We should continue to follow Diehr, State Street, & AT&T.
  • RMC: Business methods should be patentable.
  • American Express: Patenting of business and information management processes encourages the development of those useful societal tools.
  • Accenture: Business methods should be patentable regardless of any physicality limitations. Congress has deemed that business methods should be patentable via 35 USC 273.
  • Greg Aharonian: The Supreme Court’s 1876 Cochraine test does not exclusively define “process.” Rather, a patent eligible process should be broadly defined to include any process or method that yields a “useful concrete and tangible result.”
  • Koninklijke Philips: The court should be wary of relying upon precedent that focused on traditional manufacturing methods. Rather, the court should look at the broad definition of process required by Congress in 35 U.S.C. 100(b).

Narrow Subject Matter:

  • Prof Sarnoff: The court should return to the precedent of Flook. The inventive concept of a patent cannot be an abstract idea (such as hedging risk). Likewise, an information processing method must include significant post-solution activity. State Street is unconstitutionally over-broad.
  • End Software patents: Software should not be patentable even when loaded on a computer. Rather, to be patentable, there must be significant additional (non-information processing) physical activity.
  • American Civil Liberties Union: Patents mental processes would violate the first amendment.
  • EFF: There must be a technological component of a patentable invention.
  • Computer & Communications Industry Association: The CAFC should shed its “patentee-centric approach” and insted try to meet the needs of the modern world. In particular, the court should consider the systemic policy implications of its decisions. The policy implications of broader patent coverage is more litigation & rent seeking.
  • IBM: There is no sound policy for allowing business method patents.
  • American Institute of CPAs: Tax methods should not be patentable because they preempt free use of the tax laws. (Of course, the same could be said of CPAs charging corporations for their service).
  • SAP: A process should both (1) have a concrete, useful, and tangible result and (2) be “sufficiently machine-like” in order to avoid preempting work-arounds. However, software processes should be patentable.
  • Prof Collins: The court should add a “human cognition” exception to Section 101. Steps involving human cognition should receive no consideration in judging patentability.
  • Red Hat: Software patents put a huge kink in the open source software movement.
  • Financial Services Industry: State Street and its progeny are unduly broad. A token inclusion of a ‘machine’ in a claim would not render that claim patentable subject matter.
  • Dell & Microsoft: A patentable invention must operate on “something physical.” To be patentable, software should be tied to a computer and cause some physical transformation (such as movement of electrons). And, following Comiskey, a patent should not be granted under 103 if the inventor merely combined well known computer hardware with inventive but otherwise unpatentable software.


  • Yahoo! and Prof Merges: A strict “technology” requirement is too inflexible. State Street taught us that such a strict requirement does not fit well with “onrushing technology.” The Yahoo!/Merges test: a patent eligible process must itself be “stable, predictable, and reproducible” and its result must be “useful, concrete, and tangible.”  Bilski’s claims would not be eligible because they do not define a “stable” process.
  • Intellectual Property Owners Association: A process that is either implemented by a machine or that transforms matter into another state is patentable subject matter.  IPO favorably cites the Flook limitations on on information processing.
  • Business Software Alliance: Courts should err on the side of patentable subject matter because Sections 102, 103, and 112 make-up any slack. Software should be patentable. However, Bilski’s invention is not patentable because it is an abstract idea.
  • Washington State IP Law Assn: The CAFC should re-write State Street to be consistent with Supreme Court precedent.
  • Prof Morris: Subject matter questions should be avoided. Rather the PTO and courts should look to the substantive rules of 102, 103, and 112 to decide the issue. Section 101 jurisprudence has been both haphazard and unfair.

The elephant in the room is the recent Comiskey decision. There, it appeared that the court refused to give any patentable weight to the portion of the invention directed to non-statutory subject matter. In its brief, the Boston Patent Law Assn asks the court to clarify the following statement from Comiskey:

“The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness. Moreover, there is no pertinent evidence of secondary considerations because the only evidence offered is of long-felt need for the unpatentable mental process itself, not long-felt need for the combination of the mental process and a modern communication device or computer.”


  • I signed Professor Lemley’s brief along with twenty-one other law professors. The theory behind the brief follows the IPO brief that I helped draft in the Metabolite case.

Amici Briefs: