April 2008

Lower Court MUST Construe All Disputed Terms

Claim Construction, Patent, Patent Cases 2008

Patent.Law073O2 Micro v. Beyond Innovation, et. al (Fed. Cir. 2008)

A jury found O2 Micro’s DC/AC converter patents willfully infringed and not invalid. The Eastern District of Texas court (Judge Ward) then issued a permanent injunction.

Waiver of Claim Construction Appeal: During a Markman hearing, the parties sparred over the definition of the term “ONLY IF”. Rather than issuing a claim construction decision, the district court decided that the common phrase needed no explanatory construction. After having lost to the jury, the defendants appealed the lower court’s failure to construe the ONLY IF phrase.  However, because the defendants did not specifically object to the jury instructions, O2 Micro argued that the the defendants has waived their right to appeal. 

The issue of waiver of claim construction has been raised before, and the CAFC dismissed it again — this time by quoting the CAFC’s own 2004 Cardiac Pacemakers opinion:

“When the claim construction is resolved pre-trial, and the patentee presented the same position in the Markman proceeding as is now pressed, a further objection to the district court’s pre-trial ruling may indeed have been not only futile but unnecessary.”

Thus, if disputed at a Markman hearing, claim construction appeal issues are not waived by failure to object to jury instructions. Furthermore, the CAFC will also allow new arguments to be presented on appeal justifying the previously proposed construction.

Construing all the terms: Although the meaning of the phrase “ONLY IF” was disputed by the parties, the district court failed to construe the term. In its decision, the CAFC vacated — finding that the disputed phrase should have been construed. By failing to define the term, the court essentially passed the construction dispute to the jury.

“When the parties raise an actual dispute regarding the proper scope of these claims, the court, not the jury, must resolve that dispute. . . . When the parties present a fundamental dispute regarding the scope of a claim term, it is the court’s duty to resolve it.”

In deciding this issue, the CAFC indicated that claim construction requires determining both the meaning of the words in the claim and the scope encompassed by the claim. Further, even ordinary terms need construed when they are susceptible to multiple interpretations.

Overburdening: Over the past decade, the number of terms being construed (and appealed) has risen dramatically. In its decision, the CAFC at least waived its hands at the problem — recognizing “that district courts are not (and should not be) required to construe every limitation present in a patent’s asserted claims.” (Emphasis in original). No, the court only needs to construe those claim terms that are disputed, subject to alternative theories, that could be helped by clarification, and when otherwise necessary to describe the claim coverage.

Meaning and Scope: This case is quite important because it shifts even more power and importance onto the issue of claim construction and away from a jury’s factual determination of infringement and novelty. 

 

Patent Assignment Must be in Writing; But Some Transfers are not Assignments

Patent, Patent Cases 2007

PatentLawPic260Akira Akazawa v. Link New Tech (Fed. Cir. 2008).

Yasumasa Akazawa was the inventor and owner of a patent covering a new way to change engine coolant. When he died intestate in 2001, his wife and daughters inhereted his entire estate. The daughters then transferred their interest to the mother, and the mother assigned the patent to Akira Akazawa. Akira Akazawa then sued New Link for infringement.

The question on appeal is whether Akira Akazawa properly holds title (because of the non-written intestate transfer).

35 USC §261 has been interpreted to require that patent assignments be in writing. “Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”  Thus, New Link questions whether the intestate transfer of rights satisfies the writing requirements of Section 261.

The CAFC rejected this argument — holding that although ASSIGNMENTS must be in writing, there are other means of transfering patent ownership that need not be in writing. In particular, transfer through “operation of law” need not be in writing under the statute.

On remand, the district court must determine whether, under Japanese intestate law, the title to the patent properly transferred as an operation of law – or whether an assignment was necessary.

If the district court concludes that the ‘716 patent was transferred to [the heirs] upon Yasumasa’s death, then the subsequent transfers between [the heirs] and Akira conveyed ownership of the ‘716 patent to Akira. If, however, the district court concludes that under Japanese law the ‘716 patent was transferred to the estate of Yasumasa which then fell under the control of an administrator or executor, a written assignment in accordance with § 261 may then be necessary to convey the patent from the estate to Yasumasa’s heirs.

Vacated and remanded.

 

Re-Litigating Gorham v. White: Design Patents at the Supreme Court

Design Patent, Patent,

ScreenShot016Saint-Gobain Calmer, Inc. (now MeadWestvaco Calmer) v. Arminak & Associates, Inc. (on petition for certiorari 2008)

In 2007, the Federal Circuit dealt a serious blow to design patent protection by determining that an intermediate corporate purchaser is the “ordinary observer” for infringement analysis.  A professional corporate purchaser is presumably more likely to see differences between the patented design and an accused infringing device — thus making infringement more difficult to prove.

Calmer’s design patent, for instance, covers a sprayer shroud that is then combined with the trigger mechanism, bottle, etc.; filled with some liquid; and shipped to Wal-Mart for retail sale. The Federal Circuit’s holding looks to the typical buyer at the point where the allegedly infringing shroud is first sold to determine whether that individual would believe that “the patented design as a whole is substantially the same as the accused design.”   

Calmer has now petitioned the Supreme Court asking two questions:

  1. Whether the [Federal Circuit’s] use of expert viewpoints to determine design patent infringement is in direct conflict with this Court’s decision in Gorham Co. v. White, 81 U.S. 511, 529 (1871)?
  2. Whether the [Federal Circuit’s] test for design patent infringement of a component product, which considers deceptive similarities only as to the first purchaser of any product including the patented design, directly conflicts with its own precedent and with this Court’s “ordinary observer” test mandated by Gorham Co. v. White, 81 U.S. 511, 529 (1871), by excluding not only unsophisticated purchasers but also later purchasers of products including the patented design as a component?

As I write in an upcoming paper, the justification for design patent protections is more akin to traditional trademark policy than utility patent policy. With that in mind, it makes some sense allow design patents to operate at the retail level.

Notes:

Challenging Patent Validity: Microsoft Asks Supreme Court to Reduce “Clear and Convincing” Standard

Patent,

Microsoft Corp. v. z4 Tech. (on petition for certiorari 2008)

After a jury verdict that z4’s patent was infringed and not invalid, the Eastern District of Texas district court ordered Microsoft to pay over $100M in damages to the patentee (a small Michigan company)  The award was affirmed by the Court of Appeals for the Federal Circuit (CAFC).

Now, Microsoft has asked the Supreme Court to hear its case. The appeal focuses on the CAFC’s hard-line stance of requiring “clear and convincing evidence” to invalidate a patent even when a defendant presents evidence of invalidity that was not considered by the PTO.  The question presented is:

When a defense of invalidity under Section 282 rests on documentary evidence that was not considered by the United States Patent and Trademark Office, whether the factual predicates of the defense must be proved by “clear and convincing evidence” or some lower burden of proof.

According to Microsoft’s brief (filed by Ted Olson), prior to the founding of the CAFC, “all twelve regional circuits” required a lower evidentiary burden when the invalidity argument “rests on evidence that the PTO never had an opportunity to consider.”  The petition also uses KSR as a hook — in that case, the Supreme Court stated in dicta that the “rationale underlying the presumption [of validity is] that the PTO, in its expertise, has approved the claim.” In KSR, the court found the rationale “seem[ed] much diminished” because the references were unavailable to the PTO during prosecution. 

In KSR, the Supreme Court truly did beg the question of whether the standard for proving invalidity should be lessened in certain cases. In its decision here, the the CAFC held the line, by quoting an old Uniroyal case: “The burden of proof is not reduced when prior art is presented to the court which was not considered by the PTO.”*

A weak point of Microsoft’s petition is that its claim for invalidity falls under 102(g). Microsoft is arguing that its own non-published prior invention should invalidate the z4 patent. (Specifically, Microsoft’s asserted prior art was included in a Brazilian version of Publisher). 102(g) cases provide additional rationales for a high evidentiary standard: 102(g) prior art is generally less trustworthy because the asserted prior art was not public but rather emerges from the accused infringer’s files at the opportune time. In addition, lowering the standard for 102(g) prior art encourages potential defendants to keep their developments in secret rather than publicly disclose them or present them to the PTO.  The same issues arise from non-documentary prior art, such as evidence of prior use.  In its question presented Microsoft attempts an end run around the issue by focusing on “documentary evidence.”

Related Notes:

Supreme Court News: Eleventh Amendment Immunity Question

Patent

Today is a Supreme Court theme day. The lawyers running SCOTUS blog have projected Biomedical Patent Management Corp. v. < ?xml:namespace prefix ="" st1 />California Dept. of Health Services as one of the more likely candidates to be granted certiorari after the Supreme Court’s April 18 conference. Hal Wegner also has the case on his updated top-ten patent cases to watch.

Information:

  • Case Name: Biomedical Patent Management Corp. v. California Dept. of Health Services
  • Docket No: 07-956
  • Questions Presented:
  • Whether a state’s waiver of Eleventh Amendment immunity in one action extends to a subsequent action involving the same parties and the same underlying transaction or occurrence; 
  • Whether a state waives its Eleventh Amendment immunity in patent actions by regularly and voluntarily invoking federal jurisdiction to enforce its own patent rights. < ?xml:namespace prefix ="" o />
  • Patently-O Discussion of Case
  • Opinion below (Federal Circuit)
  • Petition for certiorari
  • Brief in opposition
  • Petitioner’s reply
  • Amicus brief of the Chamber of Commerce (in support of the petition)

    •  

    Tafas v. Dudas: Appeal and Legislation

    Patent

    Tafas v. Dudas (Fed. Cir. 2008).

    1. CAFC Appeal: PTO General Counsel James Toupin has reportedly indicated that the PTO will appeal the ruling to the Court of Appeals for the Federal Circuit (CAFC). On average, CAFC appeals take over one year. The average is raised for “important” cases where or caess where precedential opinions are issued.  However, there is a large variance between timing of the various judges. When on the panel, a couple of CAFC judges tend to greatly increase the expected time to judgment.
    2. Patent Reform: The pending Patent Reform Act includes language that would provide substantive rulemaking authority to the PTO. That provision would directly overrule yesterday’s decision. [UPDATE: To clarify, the version passed by the House (H.1908) includes additional regulatory authority. That portion is not in the current Senate bill.]

    Tafas v. Dudas: PTO’s Proposed Limitations on Continuations and Claims are Invalid

    Patent

    In a twenty-six page opinion, District Court Judge Cacheris has granted GSK’s and Tafas’s Motions for Summary Judgment — finding the PTO’s proposed limitations to the number of continuation applications and claims per patent to be improper extensions of PTO authority:

    “Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as ‘otherwise not in accordance with law’ and ‘in excess of statutory jurisdiction [and] authority.’ 5 U.S.C. § 706(2).”

    The documents:

    ==== Discussion ====

    PTO Has No Substantive Rulemaking Authority:  35 U.S.C. § 2 provides various specific powers to the PTO. However, Section 2 does not provide the PTO with any “general substantive rulemaking power.” According to the Court, “Section 2(b)(2)’s authority is limited to rules governing the ‘conduct of proceedings’ before the Office, the USPTO does not have the authority to issue substantive rules, and it does not have the authority to make substantive declarations interpreting the Patent Act.”

    Substantive Rulemaking is Broadly Defined: The district court defines a “substantive rule” as any rule that “affect[s] individual rights and obligations” (Quoting Chrysler Corp. v. Brown, 441 U.S. 281 (1979))

    PTO’s Proposed Rules are Substantive: Applying the broad definition of substantive, the court then easily found that the proposed rules are “substantive rules that change existing law and alter the rights of applicants such as GSK and Tafas under the Patent Act.”

    “The 2+1 Rule and the 5/25 Rule, which limit continuing applications, RCEs, and claims, and the ESD requirement, which shifts the examination burden onto applicants, constitute a drastic departure from the terms of the Patent Act as they are presently understood. By so departing, the Final Rules effect changes in GSK’s and Tafas’s existing rights and obligations.”

    Limits on Continuations are Substantive: In particular, the court found that the continuation rule is runs contrary to the law because it imposes a “hard limit” that “deprives applicants of their valuable rights under 35 U.S.C. § 120 to an unlimited number of continuation and continuation-in-part applications as a matter of right.” Likewise, the limitations on RCE filings is a “clear departure from the plan language” of 35 U.S.C. § 132 (the PTO “shall … “at the request of the applicant …”).

    Limits on Claims are Substantive: For over eighty years, the courts (CCPA) have blocked the PTO from placing any “mechanical limits” on the number of claims. Although the PTO may object to duplicate claims, the court found that the law prevents any strict limit on the number of claims.  The Court saw the ESD requirement substantive because it shifts the burden of examination from the PTO to the Applicant:

    [T]he ESD requirement changes existing law and alters the rights of applicants under the current statutory scheme by shifting the examination burden away from the USPTO and onto applicants. . . . [T]he Federal Circuit has stated that applicants have “no duty to conduct a prior art search” and “no duty to disclose art of which an applicant could have been aware. . . . It is only after the USPTO makes a demonstration of unpatentability that the burden shifts to the applicant to rebut that showing. . . .  Thus, by requiring applicants like GSK and Tafas to perform prior art searches and by shifting the examination burden away from the USPTO, the ESD requirement manifestly changes existing law and alters applicants’ rights under Sections 102, 103, and 131.”

    Holding: “Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as “otherwise not in accordance with law” and “in excess of statutory jurisdiction [and] authority.” 5 U.S.C. § 706(2).

    From the order:  “Defendants Jon W. Dudas and the United States Patent and Trademark Office and their agents, servants, and employees are permanently enjoined from implementing the Final Rules”

    Notes:

    • The court made no attempt to carve-out portions of the rules that may be legal.
    • Although numerous other issues were raised by the parties and amici, the Court decided only on the substantive ground.
    • Weak points in the decision: TBD.

    Unpredictable Arts Overcome KSR; Bonus: AND = OR

    Patent,

    PatentLawPic256Ortho-McNeil Pharmaceutical v. Mylan Labs (Fed. Cir. 2008)

    Ortho-McNeil’s anti-convulsant Topamax is expensive and brings in over $1,000,000,000.00 each year. Hoping to produce a generic version, Mylan Labs filed an Abbreviated New Drug Application (ANDA) with the FDA along with arguments that the Topamax patent is invalid and not infringed.

    AND vs OR: Mylan’s primary argument relies on a specific construction of the word “AND.”  According to Mylan, AND should be construed logically as a conjunction. (i.e., AND = AND). Ortho, on the other hand, argues that its AND is not so restrictive. (I.e., AND = OR). 

    As you might guess, according to the courts, AND does indeed mean OR.

    The problem with Mylan’s argument is that it turns the claims into nonsense. In particular, a conjunctive AND would require the claimed R groups (above) to be both independent spurs and, at the same time, joined as ring groups.

    In the 2004 Chef America case, the CAFC allowed such a non-sensical construction — holding that the claim should be interpreted “as written, not as the patentees wish they had written it.” Here, however, Judge Rader distinguished Chef America — noting that here, the claim intrinsic evidence points toward the “alternative” interpretation:

    “In Chef America, the only possible interpretation of the claim led to a nonsensical result. This situation is distinguishable because claim 1 can and should be interpreted as the patentees intended, with the meaning of and connoting alternatives.”

    Because AND means OR, the claim properly covers the active ingredient topiramate.

    KSR and Unpredictable Arts: In what may become an oft-cited decision, Judge Rader outlines how the supreme court’s KSR decision should have little impact on the “unpredictable arts” such as the development of pharmaceuticals.

    Apparently, the anti-convulsive properties of topiramate were discovered by a researcher (Maryanoff) looking searching for FBPase inhibitor for diabetes. Oddly, both Mylan and the Court focused on whether the actual decisions of the researcher were logical, blocked by obstacles, or helped by serendipity.

    “In retrospect, Dr. Maryanoff’s pathway to the invention, of course, seems to follow the logical steps to produce these properties, but at the time of invention, the inventor’s insights, willingness to confront and overcome obstacles, and yes, even serendipity, cannot be discounted.”

    Of course, under 35 U.S.C. 103 patentability is not to “be negatived by the manner in which the invention was made.”

    A Flexible TSM Test: Focusing on KSR, the court promotes its new flexible TSM test:

    “The TSM test, flexibly applied, merely assures that the obviousness test proceeds on the basis of evidence – teachings, suggestions (a tellingly broad term), or motivations (an equally broad term) – that arise before the time of invention as the statute requires. As KSR requires, those teachings, suggestions, or motivations need not always be written references but may be found within the knowledge and creativity of ordinarily skilled artisans.”

    On the facts, the CAFC found agreed that the invention is clearly nonobvious.

    “In this case, the record amply supports the district court’s finding of nonobviousness. . . . As noted above, the challenges of this inventive process would have prevented one of ordinary skill in this art from traversing the multiple obstacles to easily produce the invention in light of the evidence available at the time of invention. Of particular importance beyond the prima facie analysis, this court also detects evidence of objective criteria showing nonobviousness. Specifically, the record shows powerful unexpected results (anticonvulsive activity) for topiramate. The record also shows skepticism of experts and copying – other respected sources of objective evidence of nonobviousness – as well as commercial success. As this court has repeatedly explained, this evidence is not just a cumulative or confirmatory part of the obviousness calculus but constitutes independent evidence of nonobviousness.”

    Notes:

    • Judge Rader wrote this opinion and was also a member of the 2004 Chef America panel