February 2009

Orion and Taurus: NPEs at the Federal Circuit

CAFC, Patent, Patentable Subject Matter

Erich Spangenberg has at least two pending appeals at the Federal Circuit: Taurus IP v. Daimlerchrysler (and Hyundai) and Orion IP v. Hyundai Motor. In the Taurus case, the Wisconsin District Court found the asserted patent (6,141,658) invalid and also asserted jurisdiction over Spangenberg and Orion IP via a veil-piercing theory. In a recent order, the Federal Circuit properly refused to allow Chrysler and Mercedes to present argument and documents “in camera” in that case. [Link] In the Orion case, a Texas court found Hyundai liable for infringement of the asserted patent (5,367,627) and awarded $34 million in damages. Hyundai has posted $25 million bond to stay the full payment until the appeal is concluded. [LINK ]. The general rule is that money damages will be stayed pending appeals if bond is posted, and that injunctive relief might be stayed.

The ‘627 patent is patent reformer’s poster child for damages reform. The patent covers a method that helps a sales clerk properly order the parts that match a customer’s needs. It is hard to know what the value of the incremental invention as compared with the prior art back in 1989 when the original application was filed. I will note that the $34 million patent has only 15 claims and includes means-plus-function language in the claims. Claim 1 of the patent is reproduced below:

1. A computerized method of selling parts for particular equipment specified by a customer, comprising the steps of:

a) receiving information identifying a customer’s parts requirements for the equipment, comprising the step of receiving equipment application information, comprising an identification of the equipment with which one or more parts are to be used;

b) electronically specifying information identifying a plurality of parts and specifications for the parts;

c) gathering parts-related information for one or more parts within the plurality of parts which meets the customer’s requirements, comprising the step of electronically associating at least one of the parts within the plurality of parts with the received equipment application information; and

d) receiving the gathered parts-related information and compiling the parts-related information into a proposal meeting the customer’s requirements.

Although the ‘658 patent does not claim priority to the earlier ‘627 patent, it does have one overlapping inventor and a large amount of overlapping scope.

USPTO News

Patent

Two items of USPTO News:

  • Deferred Examination Roundtable Webcast is Thursday Morning [Link]
  • E-OFFICE ACTION: After a successful pilot, the PTO is starting an e-Office Action program. Applicants to decide to use the program will receive e-mail notifications of PTO correspondence rather than waiting for hardcopy to arrive in the mail. Program participants will not receive a hardcopy. The program is expected to begin in March 2009. Contact pair@uspto.gov

Law Firms That Appeal

Academic Studies, BPAI, Patent

A patent applicant has several options after receiving a final rejection from a patent examiner. “After final” practice is a matter of strategy, tactics, and art. The primary approaches are (1) abandon the application; (2) appeal to the Board of Patent Appeals and Interferences (BPAI); (3) file a request for continued examination (RCE) arguing against the rejection; or (4) concede scope and narrow the application (probably through an RCE). Each of these approaches differs in cost, timing, and likelihood of success. Of course, success may depend upon whether broad claims are important. And, in the background, applicants know that alternate claims can later be pursued in continuation applications (for a fee).

BPAI Appeals are generally thought to have a higher up-front cost – both in terms of PTO fees and attorney costs. However, if you win, appeals have the benefit of dramatically changing the course of the examination. Often, an applicant’s successful appeal results in an issued patent soon thereafter.

In this study, I looked at law firms involved in ex parte appeals to the BPAI that were decided in the calendar year 2008. Of the 4000+ decisions, only about 75% of the decisions mentioned the law firm name in the case caption. Using those names, I constructed the following table of the firms associated with the most decisions during 2008. It is interesting to compare Oblon Spivak and Sughrue Mion – both firms handle over 3000 patents each year – many of them involving electronics owned by non-US entities. Oblon, however, appears to have taken the strategy of appealing while Sughrue may be using alternate strategies. Foley & Lardner is regularly listed in the top-ten firms in terms of the number of patent grants – however, that firm does not make the list of having the most appeal decisions.

Some words of caution on the numbers game: (1) These are ordinarily dominated by lower cost electronics and software patents. (2) Some clients request that docketing go through their office – in those cases, the firm name would not show up here. (3) Focusing on appeals, it may be that some firms not on the list actually filed more appeal briefs. It turns out that in most cases, examiners withdraw their final rejections in the face of a high quality appeal brief.

2008 Rank

Law Firm

Number of BPAI Decisions

Primary Location

1

OBLON SPIVAK

62

VA

2

FISH & RICHARDSON

46

MA

3

NIXON & VANDERHYE

42

VA

4

KENYON & KENYON

38

NY

5

TROP PRUNER

38

TX

6

GREENBLUM & BERNSTEIN

36

VA

7

CARLSON GASKEY

35

MI

8

FINNEGAN HENDERSON

34

DC

9

GIFFORD KRASS

33

MI

10

SUGHRUE MION

32

DC

11

BROOKS KUSHMAN

29

MI

12

TOWNSEND

29

CA

13

SCHWEGMAN

28

MN

14

HARNESS DICKEY

27

MI

15

PATTERSON & SHERIDAN

27

NJ

16

ARMSTRONG TEASDALE

23

MO

17

BAYER MATERIAL SCIENCE

22

PA

18

RYAN MASON

22

CT

19

FULBRIGHT JAWORSKI

21

TX

20

ALSTON & BIRD

19

NC

21

BARNES & THORNBURG

19

IN

22

WILLIAMS MORGAN

19

TX

23

BIRCH STEWART

18

VA

24

BLAKELY SOKOLOFF

18

CA

25

CAREY RODRIGUEZ

18

FL

Looking Ahead: Preclusive Effect of Prior Claim Construction

CAFC, Claim Construction, Patent

Shire v. Sandoz, M-893 (Fed. Cir. 2009)

In a recent order, the Federal Circuit agreed to hear an interlocutory appeal considering the issue preclusive effect of a prior claim construction decision. The patent in suit has been construed at least twice before, but the lower court here “refused to give preclusive effect” to either prior ruling. This will be an interesting case to follow.

2009-M893.2-6-09.1.PDF

Article One Partners Pays First Patent Slayer Prize of $50,000

Bits and Bytes, Patent

PatentLawPic665I spoke with Ricky Roberson today. Roberson is an Alabama based aerospace engineer who read about Article One on slashdot and was interested in their offer of $50,000 for invalidating prior art.

Roberson focused on Pat. No. 6,784,873 which covers a touch screen personal navigation device — a patent that he called “low hanging fruit” compared with other Article One subjects such as the multiple Rambus patents being litigated or a pharmacuetical formulation such as rosuvastatin calcium (Crestor).

The ‘843 case is important because the patentee (SPT) has accused Garmin of infringement. Roberson primarily used Google Scholar & Google Patents to search for prior art patents. He had never worked with patents before, but also found the WIPO, EPO, & JPO search engines useful.

In the end, the folks at Article One awarded two winners: Roberson’s submission (WO 91/12578 A1) and an anonymous contribution of a 1998 Microsoft CE programming guide. Roberson will receive $35,000 and the anonymous contributor will receive $15,000.

Article One indicated its belief that the two references would invalidate the ‘843 patent, however, they company is quick to note that “only a U.S. federal court or the U.S. Patent Office can invalidate a U.S. patent.”

Notes:

Patently-O Bits and Bytes No. 91

Academic Studies, Bits and Bytes, USPTO News
  • PatentLawPic666Statistics on the Use of Means Plus Function Language: Thus far in 2009 (1/1/2009 – 2/8/2009) the PTO has issued 17,206 patents. Of those, only 12% (2060) have a “means for” clause in the claim language.  Looking back one decade, 24% of patents issued in January 1999 included a “means for” clause in the claim language. Looking back two decades, 34% of patents issued in January 1989 included a “means for” clause in the claim language. Looking back three decades, 40% of patents issued in January 1979 included a “means for” clause in the claim language.
  • New Funny Blog: http://courtoons.wordpress.com/ by appellate attorney David Mills
  • Watch The Symposium: The hardworking folks at Santa Clara’s Computer & High Technology Law Journal (CHTLJ) have posted materials and video from their conference two weeks ago. Those of you who have practiced before Judges Whyte or Ware will certainly enjoy the tribute video. [LINK] [The best portion begins at 11:20 in the Whyte video].
  • PTO Transparancy: Readers submitted two additional suggestions for PTO Transparancy
    • The PTO should calculate and publish the expiration date of each patent.
    • The PTO should publish reexamination certificates so that they are searchable. [Via NIPPER]

Federal Circuit Applies KSR – Finding Combination Claims Obvious

Obviousness, Patent, Patent Cases 2009

PatentLawPic661Ball Aerosol v. Limited Brands, Bath & Body Works, etc. (Fed. Cir. 2009)

Ball’s patent covers a candle tin with a removable lid. The lid is designed to fit under the candle to help avoid scorching the underlying surface. According to the claims, the candle tin also has legs or “protrusions” that rest upon the cover.

On summary judgment, a Northern District of Illinois court found Ball’s patent valid as a matter of law. On appeal the Federal Circuit flipped the decision — finding the asserted claims invalid as a matter of law.

Here, it was undisputed that all of the elements of the claims can be found in the combination of two prior art references. In addition, the problem of candle-tin scorching was well known in the art. Finally, it is undisputed that the technology is “simple and easily understandable.”

This case falls squarely under the rule of law expounded by KSR where the Supreme Court held that “[i]f a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability.” Here, one prior art reference (Marchi) taught the candle with a cover that could be used as a base. The other reference (Wright) taught a candle with “bumps” on the bottom to avoid scorching the surface. In considering these two references, the Federal Circuit determined that the combination was obvious:

“The combination of a cover-stand and feet on the bottom of the candle holder was obvious to try in an effort to minimize scorching, as the combination would further raise the bottom of the candle holder above the supporting surface. The resulting, and desired, decreased heat transfer between the candle holder and the supporting surface from the combination would have been entirely predictable and grounded in common sense.”

Explicit Motivation: In KSR, the Supreme Court indicated that the reasons for combining prior art references “should be made explicit.” Here, the Federal Circuit clarified that statement – holding that the motivation need not be explicit in any prior art. Rather, the Supreme Court is referring “to the court’s analysis.” In other words, a court must explain its motivation in combining two or more references to invalidate a patent for obviousness.

Commercial Success: Even those who believe in objective indicia of nonobviousness admit that commercial success is one of the weakest forms. The problem is the general difficulty in tying the success of the product to the invention itself. Here, the Federal Circuit found that the “minimal indications of commercial success … do not outweigh the clear indication of obviousness apparent from the prior art.”

Holding: Judgment Reversed, Claims are invalid as obvious

Notes: I have pasted figures from the two prior art references. One shows a candle with “protrusions” on the bottom the other shows a candle using the lid as a base. At least one of the references specifically discussed object of creating space between the candle and the surface to avoid scorching problems. Neither reference was cited by the patentee during prosecution.PatentLawPic662

PatentLawPic663

Patent Reform in the House of Representatives

Patent, Patent Legislation

Tech Law Reporter Andrew Noyes has indicated that 2009 will likely see a repeat of the same patent reform measures of 2008. [LINK]. I thought it would be important to look at a few faces that might ordinarily be behind the scenes in the legislation process.

Dr. Christal Sheppard will be the House staffer leading the charge on Patent Reform from within the House Judiciary Committee. Sheppard is a patent attorney and has been working on the Hill since 2003. Her official title is Chief Counsel for the Subcommittee on Courts and Competition Policy (there is no IP subcommittee). Sheppard holds a PhD with a focus on molecular biology from the University of Michigan and has remained active in the patent bar. Other patent attorneys in the House include Garg Sampak (committee on rules) and Jonathan Pawlow (assistant to Rep. Adam Smith (D-Wa)). Susan Davies – who was the staffer in charge of patent reform at the Senate under Senator Leahy has moved to the White House. Davies is a resume superstar — a University of Chicago Law School graduate who clerked for both Justices Kennedy and Breyer. Aaron Cooper (formerly of the Covington firm) has apparently replaced Davies in the Senate.

The Judiciary Committee is headed by Representative Conyers of Michigan. Members include Berman (D-Cal), Boucher (D-Va), Smith (R-Tex), and Issa (R-Cal).

Patent Reform in the House of Representatives

Patent Legislation

Tech Law Reporter Andrew Noyes has indicated that 2009 will likely see a repeat of the same patent reform measures of 2008. [LINK]. I thought it would be important to look at a few faces that might ordinarily be behind the scenes in the legislation process.

Dr. Christal Sheppard will be the House staffer leading the charge on Patent Reform from within the House Judiciary Committee. Sheppard is a patent attorney and has been working on the Hill since 2003. Her official title is Chief Counsel for the Subcommittee on Courts and Competition Policy (there is no IP subcommittee). Sheppard holds a PhD with a focus on molecular biology from the University of Michigan and has remained active in the patent bar. Other patent attorneys in the House include Garg Sampak (committee on rules) and Jonathan Pawlow (assistant to Rep. Adam Smith (D-Wa)). Susan Davies – who was the staffer in charge of patent reform at the Senate under Senator Leahy has moved to the White House. Davies is a resume superstar — a University of Chicago Law School graduate who clerked for both Justices Kennedy and Breyer. Aaron Cooper (formerly of the Covington firm) has apparently replaced Davies in the Senate.

The Judiciary Committee is headed by Representative Conyers of Michigan. Members include Berman (D-Cal), Boucher (D-Va), Smith (R-Tex), and Issa (R-Cal).

Federal Circuit Begins Publishing Orders on Motions

CAFC, Patent

The Federal Circuit has taken another valuable step toward transparency in its operations. Notably, the court has begun to post electronic versions of orders resolving motions that are processed through its Senior Staff Attorney. Publication began on January 30, 2009. I have sought some clarification from the Court on its statement that “certain orders are not posted on this page.”

The outcomes of motions are important to the parties involved as well as amicus filers. There have also been occasions when the outcome of a motion impacts stock prices. Perhaps the most common stock-swinging issue involves the Federal Circuit’s decision on whether to stay injunctive relief pending appeal. Previously, these orders were difficult to obtain electronically or remotely.

Certain motions may be decided by the Clerk – especially when a motion is unopposed. Others go to a Federal Circuit judge assigned to handle motions that month. My understanding is that the Senior Staff Attorney will ordinarily present the motion (and response) to the judge with a potential order as well. If a case is already scheduled on the hearing calendar, motions will be transmitted to the panel for adjudication.

Most of the orders are mundane. Here is a sample from last week:

  • IGT v. Alliance Gaming: Denying motion to dismiss on for lack of subject matter jurisdiction (no final order).
  • Blackboard v. Desire2Learn: Granted motion to remove protective order covering the E.D. Tex. supplemental claim construction judgment.
  • Garber v. CME: Extension of time granted.
  • The Forrest Group v. Bon Tool: Motion granted to allow Paul Hletko to file an amicus brief. Forrest Group had opposed.
  • Excel Innovations v. Indivos Corp: Motion granted to allow Mark Davies to take over as principal counsel.

Links:

  • Search for CAFC Orders [LINK]
  • CAFC Guide to Motion Practice [LINK]
  • Top 10 easy-to-fix problems with motions [LINK]

Cardiac Pacemaker v. Jude: Challenging 271(f) Liability for Components of a Method

CAFC, En Banc, Patent, Patent Cases 2009, Transnational

Cardiac Pacemakers v. St. Jude Medical (On motion for en banc rehearing)

35 U.S.C. § 271 defines various types of patent infringement including direct infringement and contributory infringement. Section 271(f) details a special cause of action that captures some transnational activities. In particular, Section 271(f) creates a cause of action for supplying components of a patented invention to be assembled abroad.

In 2007, the Supreme Court ruled on a 271(f) case — finding that software per se cannot be considered a “component” under the statute. Microsoft v AT&T, 550 U.S. 437 (2007). In December 2008, the Federal Circuit decided Cardiac Pacemaker and held that the Microsoft v. AT&T did not overrule a prior precedential ruling that Section 271(f) does extend to cover components of a claimed method. “[T]he Supreme Court’s decision does not alter [the] holding” that “271(f) applies to components used in the performance of patented methods and processes.” The precedent in question is Union Carbide v. Shell. Although the Federal Circuit denied a request to rehear the Union Carbide case, Judges Lourie, Michel, and Linn, argued then that the issue was ready for en banc review. Judge Dyk also dissent from the en banc denial in Union Carbide.

In their decision, the panel (Judges Newman, Mayer, & Lourie) practically begged for en banc rehearing: “As a panel, we cannot reverse the holding of another panel of this court. We thus affirm the district court’s decisions relating to damages.” [Link] Of course, Judge Mayer signed-on to Judge Rader’s original Union Carbide opinion.

Now, the defendant (St. Jude) has asked for a rehearing en banc. If unsuccessful, we can expect a petition for a writ of certiorari. The FCBA and AIPLA joined forces in an amicus brief supporting the rehearing en banc and for a reversal of the Union Carbide analysis. Writing on behalf of Cisco, Intel, Microsoft, Oracle, and Symantec, Ed Reines also argues that the rule should be overturned. The tech companies argue in particular that the limit on exports creates major adverse economic incentives.

“A very common business arrangement is for United States companies to export instructions, materials, recipes, and other knowledge-exports to Asian and other off-shore locations where manufacturing processes takes place. An overbroad extraterritorial interpretation of § 271(f) to apply to process patents creates potential worldwide liability for companies based in the United States that export anything that can properly be considered a process step. Yet, if their competitors exist outside the United States, they are not exposed to liability for United States patent infringement for supporting foreign manufacturing processes.”

A good handful of judges have at least loosely indicated that they would support an en banc rehearing — making this a very likely candidate.

Notes:

Briefs:

Federal Split Decision Highlights Unpredictability of Claim Construction (Once Again)

Claim Construction, Obviousness, Patent, Patent Cases 2009,

Kinetic Concepts v. Blue Sky Medical Group (Fed. Cir. 2009)

Virtually every theory or defense in patent law requires claim construction before coming to a final conclusion. This case focused on obviousness and considered how the results turn on the construction of the claim term “treating a wound.” A two-member majority (Judges Prost and Bryson) narrowly construed the term to only include treatment of surface wounds (instead of internal organs) and affirmed a nonobviousness holding. The dissent (Judge Dyk) saw a broader definition leading him to a conclusion that the claims were obvious in light of the prior art.

Hal Wegner aptly notes that it would be “difficult without an intensive study of the record to determine whether the majority or the dissent has properly construed the claims under Federal Circuit precedent: Indeed, it is possible that both constructions are acceptable. Kinetic Concepts thus once again points to the continued imperative of statutory claim construction reform.”

As per usual, Judge Dyk’s dissent is sharp – finding that the majority erred first by finding that the term should be limited to the disclosed embodiments and erred again by narrowly misreading the scope of the disclosed embodiments:

“In my view, the majority improperly holds that the claim term “wound” can be limited to the disclosed embodiments in the specification, and, having done so, then misreads the specification as showing only embodiments treating harm to the surface of the body or skin wounds. Under the correct construction of this claim term, the asserted claims of U.S. Patent Nos. 5,636,643 (“’643 Patent”) and 5,645,081 (“’081 Patent”) would have been obvious.”

Notes: Read the decision 07-1340.pdf.

Classen v. Biogen: Request for Rehearing

Patent, Patent Cases 2009, Patentable Subject Matter

In Classen v. Biogen, the Federal Circuit issued a one paragraph non-precedential opinion rejecting Dr. Classen's claimed method for evaluating a vaccine immunization schedule. The problem with the claims stems from the Bilsmane or transformation test. The appellate panel found that "the claims are invalid under 35 U.S.C. § 101. Dr. Classen's claims are neither "tied to a particular machine or apparatus" nor do they "transform[] a particular article into a different state or thing." Bilski, 545 F.3d at 954."

Now, Classen has filed its request for a rehearing en banc and is looking for further amicus support. The brief cites only one case — Bilski — and argues the facts: that at least the claim limitation of "immunizing mammals" is a qualifying transformation of matter.

Notes: