August 2009

Fraud in Trademark Prosecution: Should Have Known Standard is Insufficient

In re Bose Corp. (Fed. Cir. 2009)

When renewing its trademark registration for the word-mark WAVE, Bose stated that the mark was still be used in commerce on various goods “including audio tape recorders and players.” By that time (2001), Bose had stopped making and selling audio tape recorders and players. The discrepancy was not picked-up until a few years later when Bose attempted to oppose registration of the HEXAWAVE mark filed by Hexawave, Inc., and Hexawave filed a counterclaim asking the PTO to cancel the registration for WAVE.

Willful Fraud in trademark prosecution is found when an applicant “knowingly makes false, material representations of fact in connection with his application.” The elements of fraud must be proven with clear and convincing evidence. Notably, the “knowingly” requirement excuses false representations if “occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or the like.” Here, the court goes on to hold that it is insufficient to show that an applicant “should have known” that its statements were false.

The TTAB improperly applied a should-have-known-better standard in this case.

By equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard.

Because there was no subjective evidence of willful intent, the Federal Circuit found that the fraud charges could not stick. However, the court authorized the TTAB to limit the coverage the mark based on the fact that it is no longer in use on audio tape recorders and players. “[T]he registration needs to be restricted to reflect commercial reality.”

Bits and Bytes No. 128: BRCA Gene Patents

  • Patentable Subject Matter During Prosecution: The PTO has asked for public comments on its interim examination instructions for evaluating patent subject matter eligibility. [PTO Request][Patently-O Discussion]
  • Breast Cancer Gene Patent Challenge:
    • The ACLU, PUBPAT, and others continue their fight against patents covering the breast cancer genes BRCA1 and BRCA2 held by Myriad and the University of Utah. The federal lawsuit argues (1) that the genes should not be patentable as “products of nature” and (2) that the patentee’s use of patent rights to limit scientific research on the genes violates constitutional First Amendment protections.
    • A key to ACLU’s argument is to look at what the patent prevents – i.e., making or using the isolated gene. The organization argues that “human genetic sequences and the scientific inquiry of looking at a gene or comparing two human genes constitute natural phenomena, laws of nature, and abstract ideas and thus are not patentable subject matter under 35 U.S.C. § 101.
    • The First Amendment argument has some merit because of the Supreme Court’s penchant for sharing principles between patent and copyright law. In copyright law, the idea-expression dichotomy is often used to ensure that First Amendment rights are protected. See Harper & Row v. Nation, 471 U.S. 539, 555-560 (1985). In patent law, the ACLU argues that “there can be little doubt that patenting of abstract ideas or thought or an entire body of knowledge would violate the First Amendment” protections of freedom of thought and speech. There are many interesting issues here – one in particular is a question of whether the bare patent could create a first-amendment violation, or does it also require aggressive enforcement.
    • Downside of eBay: Unfortunately, the cancer cells continue to ignore Myriad’s repeated warnings to stop making and using the gene. [joke]
    • Links: [ACLU Discussion][ACLU Summary Judgment Motion][Sarnoff's Discussion][Holman's Discussion]

Microsoft v. i4i: Briefing the Appeal

Microsoft v. i4i (On appeal at the Federal Circuit)

In the past several years, courts have somewhat weakened patent rights. Three cases have been particularly important: (1) KSR v. Teleflex (making it easier to find an invention unpatentably obvious); (2) In re Seagate (making it more difficult to obtain enhanced damages for willful infringement); and (3) eBay v. MercExchange (making it more difficult to obtain permanent injunctive relief to stop ongoing adjudged infringement). In its appellate brief, Microsoft pushes hard on these buttons – explaining their view that the district court misapplied the law.

This post discusses Microsoft’s appellant’s brief on the merits as well as the amicus briefs filed by Dell and HP. In a prior post, I discussed Microsoft’s separate motion for an emergency stay of permanent relief. The court has granted an expedited schedule and will hear oral arguments on September 23, 2009.

Microsoft’s frustrations with the court in the Eastern District of Texas are clear based on the company’s preliminary statements in its brief:

In patent cases, even more than most, the trial judge’s role as a gatekeeper is crucial. As gatekeeper, the judge must define the metes and bounds of a patent through claim construction and then ensure that the evidence presented by the parties’ numerous experts is both reliable and rooted in the facts of the case at hand. And after the jury has rendered its verdict, it is the judge who, before allowing that verdict to become an enforceable judgment, must ensure that the verdict is adequately supported by the evidence and supportable under the law. This gatekeeping function is especially important in patent cases because of the delicate balance struck by patent law to achieve its objective of promoting, rather than stifling, innovation. That balance can be lost if the district court does not protect the process, and patent litigation then becomes a tax on innovation rather than its guardian.

This case stands as a stark example of what can happen in a patent case when a judge abdicates those gatekeeping functions.

Microsoft’s best argument on appeal deals with claim construction. i4i’s asserted claim (see claim 14) covers a method of producing a map of metacodes where mapped content is stored in “distinct map storage means.” Microsoft argues that the “distinct” language requires that the mapped content be stored “separately and distinctly.” The district court rejected that argument and instead that the “distinct” limitation only required distinct addresses in memory. Because Microsoft Word stores the map and the metacodes in the same file, the company argues that it cannot infringe under a proper construction.

Moving from there, Microsoft argues that (1) the claims are invalid under KSR; (2) the injunction cannot be sustained under eBay; and (3) that the enhanced damage award conflicts with Seagate.

Amicus briefs by HP and Dell focus on the permanent injunction. Those two companies argue that the injunction against Microsoft would severely interrupt their business and harm consumers.

Documents:

Notes: Asserted Claim 14 reads as follows: A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising: providing the mapped content to mapped content storage means; providing a menu of metacodes; compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and providing the document as the content of the document and the metacode map of the document.

Law Review Student Note Topics for 2009

Dear Law Review Editors: Please send me a note (dcrouch@patentlyo.com) to let me know about patent law focused articles that you publish in your journal so that I can highlight them on Patently-O.

Student Note Topics: Here are some suggestions for patent law focused law review topics for 2009-10 that I would like to see for my own edification. Please send me a note if you choose one of these.

  • Injunctive Relief Pending Appeal: Proposing a clear jurisprudence for allowing stays of injunctive relief pending appeal in patent cases. See Microsoft v. i4i. Examine problems associated with the proposed stay-as-a-right found in earlier proposed patent legislation.
  • Using Patents Applications (and Invention Rights) as Collateral: Following Sky Technologies v. SAP AG, does a patent application work as a security interest? (can a security interest be perfected and foreclosed upon for rights to inventions that are not yet the subject of a patent application). [See final paragraph of my Sky Tech discussion]
  • Federal Circuit Timing: A statistical analysis of the timing of CAFC decisions (Including a comparison of the various judges and a discussion of how the various circuits reign-in slow judges).
  • Patent Term Extensions: A statistical analysis of patent term extensions granted by the PTO. (http://www.patentlyo.com/patent/2008/07/patently-o-bi-5.html).
  • International Patents: Cardiac Pacemaker (en Banc): Understanding the meaning of “component;” Here, I think that there should be special consideration for whether there is a need for a treaty arrangement to accommodate protection of inventions that easily operate cross-border.
  • Inequitable Conduct: The impact of Exergen Corp. v. Wal-Mart Stores, CVS, and SAAT, ___ F.3d ___, 2009 U.S. App. LEXIS 17311 (Fed. Cir. 2009). This paper would include a discussion of how procedural changes may often have more impact than do changes in the underlying substantive law. It may also discuss the tradition of appellate courts in dictating procedure apart from substance.
  • Inequitable Conduct allegations based on examiner interviews. See http://www.patentlyo.com/patent/2009/07/the-effectiveness-of-examiner-interviews.html.
  • Tell the story of the Pod-Ners case: http://www.patentlyo.com/patent/2009/07/mexican-yellow-bean-patent-finally-cooked.html.
  • Explaining the dying breed of Jepson claims: http://www.patentlyo.com/patent/2009/06/bits-and-bytes.html.
  • Obviousness as a Matter of Law: A recent petition to the Supreme Court challenged the procedure of allowing a lay jury (as opposed to a judge) to judge the ultimate question of whether a patent is obvious. See Medela AG v. Kinetic Concepts, Inc. (on petition for a writ of certiorari 2009). Several important papers could stem from this issue. Notably, there is a need for a more academic analysis of the historic circuit split (rather than the advocacy seen in the brief). One paper could work to resolve the conflict with the pre-federal circuit decisions. Another paper could focus on the best procedure for resolving mixed questions of fact and law.
  • Declaratory Judgment Jurisdiction: In 2007, the Supreme Court decided the Medimmune case in a way that makes it easier for potential patent infringers to file declaratory judgment lawsuits of non-infringement or invalidity. It would be interesting to see whether this has had an impact on patent filings.

Federal Circuit Vacates Ultracet Obviousness Decision

Ortho-McNeil Pharmaceutical, Inc. v. Teva Pharmaceuticals (Fed. Cir. 2009)(nonprecedential)

Ultracet is the brand name for Ortho's combination pill of the popular drug acetaminophen with light opioid tramadol. The current patent rights are found in Ortho's reissued patent RE 39,221. A prior Federal Circuit decision found that certain generic versions of the drug combination do not infringe the narrowed reissue patent. Link. In the present case involving Teva, the district court issued a summary judgment invalidating the asserted claims as obvious. On appeal, the Federal Circuit vacated and reversed holding that, although the elements of the claim are all "familiar" and were combined "according to known methods," the resulting combination "yield[s more than] predictable results."

A single tablet containing only tramadol and acetaminophen in a fixed dose ratio within the claimed range is not disclosed in the cited prior art. . . . The expert testified that [the Prior Art] Flick's broad statement that tramadol "often" displays synergistic affects when combined with other analgesics would not be enough give one of ordinary skill any expectations whether tramadol combined only with acetaminophen in a 1:5 to 1:19 ratio [as claimed] would exhibit the synergistic effects discovered by Ortho. . . . Ortho's proffered reading of Flick and the German references, as well as expert testimony regarding the understanding of one skilled in the art, raises material questions of fact as to whether a skilled artisan would have found the claimed combination of tramadol and acetaminophen to be obvious.

The majority opinion distinguished Claim 6, and agreed with the lower court that it was obvious. [Claims 1-5 were cancelled in the reissue, so claim 6 is the broadest independent claim.] The prior art taught a 1:10 ratio of tramadol to acetaminophen while the claim 6 required an about 1:5 ratio. In a prior decision, the Federal Circuit interpreted "about" to create a range "from 1:3.6 to 1:7.1." In its obviousness analysis, the court agreed that "the difference between 1:7.1 and 1:10 is so slight" and that the patentee provided no evidence of a "perceptible difference in synergy" between the different ratios. Therefore, that claim remains invalid.

Dissent: Judge Mayer wrote an eloquent dissent, which is partially reproduced below:

The claimed invention does nothing more than combine two well-known pain relievers—acetaminophen and tramadol—in a single tablet. Since the prior art clearly and unequivocally taught that these two analgesics could be combined for effective pain relief, the claimed invention is the epitome of obviousness. I therefore respectfully dissent.

Ortho-McNeil Pharmaceutical, Inc. ("Ortho") did not invent acetaminophen and it did not invent tramadol. Long before the critical date for U.S. Patent No. RE39,221 (the "RE221 patent"), acetaminophen had been combined with other pain relievers, including opioid pain medications such as tramadol. Such compositions include Tylenol® with Codeine, Tylox® (acetaminophen with oxycodone), and Vicodin® (acetaminophen with hydrocone bitartrate). Prior to the effective date of the RE221 patent, it was widely recognized that the combination of a peripherally-acting non-opioid analgesic, such as acetaminophen, and a centrally-acting opioid analgesic, such as tramadol, was an effective way to treat pain that did not respond to the use of non-opioid pain relievers alone.

In fact, a patent issued in 1972 specifically discloses the use of tramadol in combination drugs including phenacetin—which metabolizes into acetaminophen in the human body—to achieve synergistic effects. U.S. Patent No. 3,652,589 (the "Flick patent") teaches that acetaminophen can be combined with other analgesics including phenacetin, and instructs that such combinations are "proven to be of considerable therapeutic value." Example 23 of the Flick patent discloses a combination of phenacetin and acetaminophen in a ratio that falls squarely within that claimed in the RE221 patent. The only alleged difference between the tablet disclosed in the asserted claims of the RE221 patent and the tablet disclosed in example 23 is that the latter also contains two additional ingredients, pentobarbital sodium and ethoxy benzamide. Given that ethoxy benzamide was a known carcinogen and pentobarbital sodium was known to have antagonistic interactions with analgesics, it would have been obvious to remove these two drugs from Flick's formulation.

Indeed, Flick teaches that its four-agent tablet was merely an example of a possible combination tablet, stating that example 23 "illustrates the composition" of a combination tablet "without, however, limiting the same thereto." Flick also teaches that ingredients can be varied as desired. The patent states: "Of course, by variation and calculation of the ingredients tablets and other compositions are prepared containing lower or higher amounts of the essential active agents as desired." Nowhere does Flick state that pentobarbital sodium and ethoxy benzamide are required components in a tramadol/acetaminophen tablet. "If a person of ordinary skill can implement a predictable variation [of the prior art], § 103 likely bars its patentability." KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007). Here, the removal of pentobarbital sodium and ethoxy benzamide was a predictable and simple variation on the Flick formulation….

In addition to the Flick patent, several other prior art references (the "German references") explicitly teach that tramadol can be combined with acetaminophen to provide effective pain relief. Most of these references discuss combining tramadol and acetaminophen without any additional ingredients. Although the German references involve the administration of two separate tablets and adhere to an individualized, rather than fixed, dosing regimen, these differences are insufficient to preclude a finding of obviousness….

Combining acetaminophen with tramadol was such an expected and logical step that one of Ortho's own research fellows, Fred Minn, M.D., Ph.D., testified that acetaminophen was the "obvious" drug to combine with tramadol and that he could not "think of anybody who didn't think of it." Minn further explained that it was a "natural phenomenon" for Ortho to combine tramadol with acetaminophen since Ortho had a long history "of combining [acetaminophen] with everything in the world."

The situation presented here parallels that presented in Richardson-Vicks Inc. v. Upjohn Co., 122 F.3d 1476, 1480 (Fed. Cir. 1997). There we held that it would have been obvious to combine two drugs, the analgesic ibuprofen and the decongestant pseudoephedrine, in a single tablet since the drugs had been co-administered in the past. There, as here, it was manifestly obvious to combine two well-known drugs—which had previously been administered together—in a single tablet. See In re Diamond, 360 F.2d 214, 217-18 (C.C.P.A. 1966) (concluding that a combination of two therapeutic agents for inflammatory disease was obvious).

Simply put, there is nothing even arguably new about what Ortho claims to have invented. I would affirm.

Microsoft v. i4i: Relevance of the Pending Reexamination

[This post continues the discussion of emergency stays pending appeal that was begun here]

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

Pending Reexamination: Microsoft has submitted its motion for a stay of injunctive relief pending the outcome of its appeal to the Federal Circuit.  Oddly, the first sentence of Microsoft's introduction begins with a statement that the PTO "already had provisionally rejected upon reexamination as anticipated and obvious." By 'provisionally rejected' Microsoft means that a non-final office action has been mailed out in the ex parte reexamination that it requested in November 2008 (the litigation was filed in March 2007).

The opening is odd because of its irrelevance. The vast majority of third party requests for ex parte reexaminations are granted (over 95%) and then 'provisionally' rejected (83% of those). That usual course is simply the beginning of a typically long reexamination process. Even amongst reexaminations that received a non-final rejection – most resulted in a reexamination certificate that confirmed the patentability of at least one original claim. Of course, the final resolution of the reexamination is likely years away. (The figures are based on my own study of 5,000 ex parte reexamination file histories).

The opening is also odd because, to my knowledge, the Federal Circuit has never placed any weight on the fact that a co-pending reexamination has been provisionally rejected.

Finally, the opening is odd because it does not relate to Microsoft's arguments for a stay. In particular, the company does not argue for a stay pending outcome of the reexamination. Microsoft does argue anticipation and obviousness, but those arguments are based on the district court claim construction. As discussed on Patently-O extensively last month, claim construction in court has no direct legal link with the claim construction used at the patent office during reexamination. [Link]

The reexamination request by Microsoft focuses on two prior art references: U.S. Patent No. 6,101,512 ("DeRose") is apparently 102(e) prior art because it was filed prior to i4i's application, and i4i is unable to antedate the reference and a published description of the "Rita" SGML editor. Both of these references were considered by the jury in its analysis. In addition, Judge Davis reviewed the jury determination and found no cause for a JNOV. Interestingly, Microsoft never moved for summary judgment on any of its invalidity arguments based on these references.

To be clear, Microsoft's brief is still well written and presents compelling arguments. The only problem is that its first argument may lead the court astray. A ruling is expected prior to the October 10. 

Documents:

  • Microsoft Motion for Emergency Stay: Download 2009-1504 [Note – A complete brief was due August 25, for that brief, Microsoft was granted permission to file an 18,000 word brief instead of the normal 14,000 word brief]
  • Judge Davis Memorandum: Download 20090817i4imemo 
  • Documents from the Reexamination Download 90010347 

Notes:

  • An important aspect of this case from a policy perspective is that it the patent covers XML software whose function is to facilitate interoperability.  The patent enforcement is looking largely block (or at least control) that function.
  • As the role of reexaminations continue to rise as a litigation strategy, understanding the interplay and conflict between Federal Court decisions and USPTO decisions will become critical.  Important questions involve: waiver; preclusion; and deference.

Director Kappos: “Patent quality equals granting those claims the applicant is entitled to under our laws.”

In a recent e-mail to patent examiners, new USPTO Director Kappos focused on shifting examiners away from the mindset that rejection equals quality toward a focus on ensuring that patentable claims issue and that unpatentable claims fall.

One key is to expeditiously identify and resolve issues of patentability—that is getting efficiently to the issues that matter to patentability in each case, and working with applicants to find the patentable subject matter and get it clearly expressed in claims that can be allowed. The examiner and the applicant share the responsibility for the success of this process.

On the subject of quality, there has been speculation in the IP community that examiners are being encouraged to reject applications because a lower allowance rate equals higher quality. Let's be clear: patent quality does not equal rejection. In some cases this requires us to reject all the claims when no patentable subject matter has been presented. It is our duty to be candid with the applicant and protect the interests of the public. In other cases this means granting broad claims when they present allowable subject matter. In all cases it means engaging with the applicant to get to the real issues efficiently—what we all know as compact prosecution.

When a claimed invention meets all patentability requirements, the application should be allowed expeditiously. ... [B]y engaging with applicants early on, we certainly can get to the point more quickly, and efficiently allow those claims that are entitled to patent protection.

Interim Guidelines on Examining Statutory Subject Matter

The USPTO has issued a set of interim examination guidelines for determining whether a claim is properly directed to patentable subject matter under 35 U.S.C. ? 101, relevant Supreme Court precedent, and Bilski. The instructions begin with a realization that the area is in flux and that more permanent guidelines will be established once the Supreme Court rules on Bilski v. Kappos. In addition, these are guidelines rather than rules or laws. Thus, an examiner's failure to follow the guidelines is "neither appealable nor petitionable."

Download 101 Memo to Directors | Download 101 Examiner Instructions 8 24 09 | Download FLOWCHARTMORT 8 24 09 | Download FLOWCHARTPROD 8 24 09

The guidelines appear to do a good job of synthesizing the highly confusing area of law into a straightforward algorithm. The problem is that next spring the Supreme Court is almost sure to reject the Federal Circuit's Machine-or-Transformation test. At that point, all of the examiner time and applicant money focusing on this "threshold issue" will have been wasted. I understand that the business of the PTO must continue even in the face of potential policy shifts. However, I would have suggested that examination of Section 101 eligibility be put on a back-burner - especially in light of the fact that most questionable subject matter cases will also fail the tests of obviousness, enablement, and indefiniteness.

The guidelines bear the signature of Drew Hirshfeld, Acting Deputy Commissioner for Patent Examination Policy. The PTO recently posted a notice looking to permanently fill this extremely important position.

Bits and Bytes No. 127: Patentability shall not be negatived by the manner in which the invention was made.

Upcoming Conferences:

  • World Research Group, a Patently-O job board sponsor, will be holding a TechNet Patents Forum in New York on November 5-6. Patently-O readers will receive a $300 discount by using the promo code EAG476.

Federal Circuit En Banc:

  • On September 18, the Court of Appeals for the Federal Circuit will sit en banc to hear two non-patent cases.
  • Nebraska Public Power v. US:
    • The Nebraska case is one of several dozen Federal Claims actions against the US Government for breach of contract and takings for the Government’s failure to begin removing spent nuclear fuel.
    • Question: Does the mandamus order issued by the United States Court of Appeals for the District of Columbia Circuit in Northern States Power Co. v. United States Dep’t of Energy, 128 F.3d 754 (D.C. Cir. 1997) preclude the United States from pleading the “unavoidable delay” defense to the breach of contract claim pending in the United States Court of Federal Claims, and if so, does the order exceed the jurisdiction of the District of Columbia Circuit?
  • Henderson v. Dep’t of Veteran Affairs:
    • Equitable tolling of claims for veteran’s benefits
    • Question: Does the Supreme Court’s decision in Bowles v. Russell, 127 S. Ct. 2360 (2007), require or suggest that this court should overrule its decisions in Bailey v. West, 160 F.3d 1360 (Fed. Cir. 1998) (en banc), and Jaquay v. Principi, 304 F.3d 1276 (Fed. Cir. 2002) (en banc), holding that 38 U.S.C. § 7266 is subject to equitable tolling?.

Relevance of the “manner in which the invention was made:”

  • 35 U.S.C. 103(a) makes clear that “[p]atentability shall not be negatived by the manner in which the invention was made.” That final sentence of the paragraph was apparently intended to contrast the 1952 law from the Supreme Court’s loose statement in Cuno that a patentable invention must “reveal the flash of creative genius.” 314 U.S. 84 (1941).
  • Should this statement be interpreted to mean that the inventor’s actual process has no relevance to the questions of novelty and nonobviousness? Or, is there still room for a jury to consider the actual creativity and genius of the inventor and the process used. (This question was suggested by a comment on the blog).

Bits and Bytes No. 127: Patentability shall not be negatived by the manner in which the invention was made.

Upcoming Conferences:

  • World Research Group, a Patently-O job board sponsor, will be holding a TechNet Patents Forum in New York on November 5-6. Patently-O readers will receive a $300 discount by using the promo code EAG476.

Federal Circuit En Banc:

  • On September 18, the Court of Appeals for the Federal Circuit will sit en banc to hear two non-patent cases.
  • Nebraska Public Power v. US:
    • The Nebraska case is one of several dozen Federal Claims actions against the US Government for breach of contract and takings for the Government’s failure to begin removing spent nuclear fuel.
    • Question: Does the mandamus order issued by the United States Court of Appeals for the District of Columbia Circuit in Northern States Power Co. v. United States Dep’t of Energy, 128 F.3d 754 (D.C. Cir. 1997) preclude the United States from pleading the “unavoidable delay” defense to the breach of contract claim pending in the United States Court of Federal Claims, and if so, does the order exceed the jurisdiction of the District of Columbia Circuit?
  • Henderson v. Dep’t of Veteran Affairs:
    • Equitable tolling of claims for veteran’s benefits
    • Question: Does the Supreme Court’s decision in Bowles v. Russell, 127 S. Ct. 2360 (2007), require or suggest that this court should overrule its decisions in Bailey v. West, 160 F.3d 1360 (Fed. Cir. 1998) (en banc), and Jaquay v. Principi, 304 F.3d 1276 (Fed. Cir. 2002) (en banc), holding that 38 U.S.C. § 7266 is subject to equitable tolling?.

Relevance of the “manner in which the invention was made:”

  • 35 U.S.C. 103(a) makes clear that “[p]atentability shall not be negatived by the manner in which the invention was made.” That final sentence of the paragraph was apparently intended to contrast the 1952 law from the Supreme Court’s loose statement in Cuno that a patentable invention must “reveal the flash of creative genius.” 314 U.S. 84 (1941).
  • Should this statement be interpreted to mean that the inventor’s actual process has no relevance to the questions of novelty and nonobviousness? Or, is there still room for a jury to consider the actual creativity and genius of the inventor and the process used. (This question was suggested by a comment on the blog).

Bits and Bytes No. 127: Patentability shall not be negatived by the manner in which the invention was made.

Upcoming Conferences:

  • World Research Group, a Patently-O job board sponsor, will be holding a TechNet Patents Forum in New York on November 5-6. Patently-O readers will receive a $300 discount by using the promo code EAG476.

Federal Circuit En Banc:

  • On September 18, the Court of Appeals for the Federal Circuit will sit en banc to hear two non-patent cases.
  • Nebraska Public Power v. US:

    • The Nebraska case is one of several dozen Federal Claims actions against the US Government for breach of contract and takings for the Government’s failure to begin removing spent nuclear fuel.
    • Question: Does the mandamus order issued by the United States Court of Appeals for the District of Columbia Circuit in Northern States Power Co. v. United States Dep’t of Energy, 128 F.3d 754 (D.C. Cir. 1997) preclude the United States from pleading the “unavoidable delay” defense to the breach of contract claim pending in the United States Court of Federal Claims, and if so, does the order exceed the jurisdiction of the District of Columbia Circuit?
  • Henderson v. Dep’t of Veteran Affairs:

    • Equitable tolling of claims for veteran’s benefits
    • Question: Does the Supreme Court’s decision in Bowles v. Russell, 127 S. Ct. 2360 (2007), require or suggest that this court should overrule its decisions in Bailey v. West, 160 F.3d 1360 (Fed. Cir. 1998) (en banc), and Jaquay v. Principi, 304 F.3d 1276 (Fed. Cir. 2002) (en banc), holding that 38 U.S.C. § 7266 is subject to equitable tolling?.

Relevance of the “manner in which the invention was made:”

  • 35 U.S.C. 103(a) makes clear that “[p]atentability shall not be negatived by the manner in which the invention was made.” That final sentence of the paragraph was apparently intended to contrast the 1952 law from the Supreme Court’s loose statement in Cuno that a patentable invention must “reveal the flash of creative genius.” 314 U.S. 84 (1941).
  • Should this statement be interpreted to mean that the inventor’s actual process has no relevance to the questions of novelty and nonobviousness? Or, is there still room for a jury to consider the actual creativity and genius of the inventor and the process used. (This question was suggested by a comment on the blog).

Reissue Applications over Time

In 2008, the patent office reissued over 640 patents – breaking the prior record of 630 set in 1875. The historic numbers of reissued patents are shown in the first chart below grouped according to year of reissuance.

Although today's absolute numbers rival historic highs of the 19th century, today's relative number of reissued patents is close to the all-time low. The next chart shows the relative percentage of reissues as compared to utility patents granted (denominator based on a moving average of patents issued over of the prior ten years).

The final chart shows a time series of the average reissue pendency as measured from the reissue application filing date to the reissuance date. As is apparent, the pendency has been growing dramatically since 1997. 2009 looks to mark a second record – the first time that average prosecution pendency of reissues applications will be greater than five years.

Background: The reissue process is designed to allow a patent holder to correct a defective patent and is nestled between certificates of correction (minor errors) and reexamination. 35 U.S.C. §251 spells out particular defects that may be corrected in the process: Defect in the specification; Defect in the drawing; Error in claiming too much; or Error in claiming too little. In Medrad, the Federal Circuit broadly read these final two defects to "encompass any error that causes a patentee to claim more or less than he had a right to claim." Medrad, Inc. v. Tyco Healthcare Group LP, 466 F.3d 1047 (Fed. Cir. 2006). A major limit on the reissue process is that "[n]o reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent." Section 251, final paragraph. The limit on improper broadening of reissues is strict and applies when claims are "broader in any respect." Predicate Logic, Inc. v. Distributive Software, Inc., 544 F.3d 1298 (Fed. Cir. 2008).

Ariad v. Lilly: Federal Circuit Grants En Banc Request to Challenge Written Description Requirement

Ariad Pharmaceuticals, MIT, and Harvard v. Eli Lilly (Fed. Cir. 2009) (en banc)

The Federal Circuit has granted Ariad's motion for an en banc rehearing of its case. The motion boldly asks whether the written description requirement should be eliminated as a doctrine that is separate and distinct from enablement. The questions:

a. Whether 35 U.S.C. ? 112, paragraph 1, contains a written description requirement separate from an enablement requirement? and

b. If a separate written description requirement is set forth in the statute, what is the scope and purpose of the requirement?

Ariad's brief is due within 45 days, and Lilly's brief is then due within thirty days of that.

Briefs of amici curiae will be entertained, and any such amicus briefs may be filed without leave of court but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29. The United States is invited to submit an amicus brief.

Value of Amicus Briefs: In its recent Cardiac Pacemaker decision, the Federal Circuit expressly indicated that it was "appreciative of these [amicus] contributions." To make one particular point in the decision, the court emphasized that Cardiac's extreme position was "not even supported by the lone amicus brief we have received in favor of including method patents within Section 271(f)'s reach."

Although the written description requirement is primarily raised in pharmaceutical and biotechnology cases, it is an increasing aspect of software patent litigation. This decision could have a significant impact both on how patents are litigated and on how they are prosecuted. The inventors here discovered an important biochemical pathway and broadly claimed uses of that pathway.

Notes:

t minus 50: Microsoft Requests Emergency Stay of Injunctive Relief

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

On August 11, 2009, Judge Davis (E.D.Tex.) issued his final order in the i4i v. Microsoft patent litigation. That final order gives Microsoft 60 days to stop selling, using, or supporting infringing versions of MS Word. By my calendar, the injunction becomes effective October 10, 2009. I4i’s patent covers xml capabilities of the MS Word that were implemented in Office ’03 and ’07. At this point, it is unclear how difficult it would be for Microsoft to eliminate the adjudged infringing capability from its products.

Microsoft has already filed a motion with the Court of Appeals for the Federal Circuit demanding an emergency stay pending appeal. The Federal Circuit clerk immediately denied Microsoft’s motion for an “administrative stay.” Instead, a merits panel will consider the emergency motion at oral arguments calendared for a special session September 23, 2009. Microsoft’s brief-on-point is due August 25; i4i’s opposition is due September 8; and any reply is due September 14. If the Federal Circuit makes a decision quickly, Microsoft may have time to appeal directly to the Supreme Court for a midnight stay of execution.

The jurisprudence on stays pending appeal is somewhat lacking – largely because these cases are – by definition – decided in a rush and courts often do not have time to fully explain their decisions. Based on the lower court decision, Microsoft’s best arguments for a stay will be based on a combination of (1) its argument on claim construction; (2) the irreparable harm to Microsoft and its customers that would flow from the injunction; and (3) the relatively small amount of irreparable harm that i4i will feel during the few months while the appeal is pending.

Stay of Injunctive Relief Pending Appeal: Unless otherwise ordered by the court, a permanent injunction is not stayed during an appeal. In Hilton v. Braunskill, 481 U.S. 770 (1987), the Supreme Court outlined a four factor test used when determining whether to stay enforcement. The factors are essentially the converse of those used in determining whether to grant a preliminary injunction. These factors include: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits [of the appeal]; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.”

Patent Reform on this Issue: In 2006, patent reform legislation introduced in Congress would have added an automatic stay of permanent injunctions after a showing that “the stay would not result in irreparable harm to the owner of the patent and that the balance of hardships from the stay does not favor the owner of the patent.” Patents Depend on Quality Act of 2006, H.R. 5096, 109th Cong. §8 (2006) (proposing to amend 35 U.S.C. 283).

Notes:

  • Don Dunner (Finnegan) is representing i4i on appeal; Matthew Powers (Weil) appears to continue to lead the team for Microsoft.
  • The ABA Journal has an interesting discussion of the trial that focuses primarily on Microsoft’s attempts to paint i4i as a troll seeking a ‘bailout.’ [Link] [Seattle PI]
  • Prior Patently-O post on District Court Order.

Federal Circuit Rejects Challenge to Patent Rights Obtained Through Foreclosure

Sky Technologies v. SAP AG (Fed. Cir. 2009)

In an interlocutory appeal, SAP challenged Sky’s standing to bring its patent infringement suit – arguing that ownership rights had not been properly transferred. On appeal, however, the Federal Circuit affirmed the decision by Judge Folsom (E.D.Tex.) that title had been “properly transferred by operation of state foreclosure law” even without an affirmative assignment of rights.

Background: The chain of title is somewhat long. Mr. Conkin and his co-inventors assigned rights to the asserted patent to TradeAccess (a company founded by Conkin). TradeAccess later changed its name to Orzo. Orzo, in turn, used the patents as collateral for an investment from Silicon Valley Bank (SVB). SVB assigned its security interests to Cross Atlantic Capital Partners (XACP). Orzo then defaulted and XACP foreclosed. At the foreclosure sale, XACP was the only bidder at a public auction and purchased the patent rights. Then, XACP assigned the patent rights to Sky Technology (another company founded by Conkin and the plaintiff in this case).

Missing from this chain of title is any assignment from Orzo to any other party. Of course, a transfer of rights need not be done through explicit assignment. Interestingly, patent ownership is determined by local (state or foreign) law rather than federal law.

Assignment in Writing: In Akazawa, 520 F.3d 1354 (Fed. Cir. 2008), the Federal Circuit held that patent rights could be transferred through Japanese intestate statute. In the background, however, are (1) 35 U.S.C. Section 261′s requirement that all assignments of patent interest be in writing and (2) the 1881 Supreme Court case of Ager v. Murray holding that patent rights could not be transferred to satisfy a judgment without a written assignment. 105 U.S. 126 (suggesting that a trustee be appointed to assign rights if the inventor refused). In Akazawa, the court avoided those requirements by holding that non-assignment forms of transfer (such as intestate transfer) need not be in writing. I.e., “ownership of a patent may be changed by operation of law” without an explicit assignment from the prior rights-holder.

Likewise, in the present case the appellate panel found that the rights had been properly transferred without an assignment based on Massachusetts implementation of Section Nine of the Uniform Commercial Code (UCC).

We find that Akazawa controls in the instant case, and that the district court’s reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing. … [A]ssignment is not the only method by which to transfer patent ownership. As noted below, foreclosure under state law may transfer patent ownership. Here, XACP’s foreclosure on its security interest was in accordance with Massachusetts law; therefore, Sky received full title and ownership of the patents from XACP providing it with standing in the underlying case.

In the instant case the controlling state law is the Massachusetts UCC. Massachusetts UCC § 9-610 permits a secured party to sell the collateral after default, in a commercially reasonable manner, and that same party may purchase the collateral at a public disposition. Section 9-617 of the UCC states that once a secured party disposes of collateral after default, the transferee for value takes all of the debtor’s rights in the collateral. Because XACP foreclosed on the patents-in-suit in conformity with these provisions, XACP obtained title to the patents on July 14, 2003.

Patentee, His Heirs or Assigns: Section 154(a) of the Patent Act adds an additional complication. That section indicates that patent rights are always granted “to the patentee, his heirs or assigns.” Here, SAP argues that Section 154(a) limits the flow of ownership to only those three categories. The precedent of Akazawa does not create a problem under that theory because that case involved intestate transfer to an heir. Without elaborating, the Federal Circuit rejected that argument – holding simply that “Section 154 does not restrict patent ownership to these three classes of individuals, and moreover, this language fails to specifically address transfers of patent ownership.” Thus, although a patent is granted only “to the patentee, his heirs or assigns,” it may be latter transferred to other parties. This decision creates a potential implication that a creditor foreclosing on a pending patent application may not be able to enforce the future patent rights. Here, the court should have laid that issue to rest by noting that the Section 154 argument fails because a “patentee” includes any successor in title to the interest in the patent application. The definitions in Section 100 suggest this result, but is written in the Act’s typical circular fashion: “The word ‘patentee’ includes not only the patentee to whom the patent was issued but also the successors in title to the patentee.”

Notes:

  • The well written opinion was authored by Judge Spencer sitting by designation from the US District Court of the Eastern District of Virginia. Chief Judge Michel and Judge Bryson joined Judge Spencer on the unanimous panel. As noted in the final paragraph, however, the courts continued semantic distinction of an “assignee” needs reconsideration in light of modern securities law.
  • Read about the Akazawa decision; See also, How not to divide patent rights during bankruptcy. Morrow v. Microsoft (Fed. Cir. 2007).
  • At issue here are U.S. Patent Nos. 6,141,653; 6,336,105; 6,338,050; 7,162,458; and 7,149,724.
  • The patents describe and claim various iterations of a “multivariate negotiations engine for iterative bargaining” that allow buyers and sellers to do a deal online.

Estimated Workload of Preparing and Filing Reexaminations

As part of the Paperwork Reduction Act of 1995 (44 U.S.C. 3506(c)(2)(A)), the USPTO is required to evaluate its methods of collecting information from the public. In a recent Paperwork Act notice & publication, the Office offered the following estimates for reexamination practice.

Response

Estimated Time Response (hours)

Estimated Number of Annual Responses

Total Hours

Request for Ex Parte Reexamination Transmittal Form (PTO/SB/57)

18 minutes

845

254

Request for Ex Parte Reexamination

40 hours

845

33,800

Request for Inter Partes Reexamination Transmittal Form (PTO/SB/58)

18 minutes

380

114

Request for Inter Partes Reexamination

90 hours

380

34,200

Petition to Review Refusal to Grant Ex Parte Reexamination

15 hours

25

375

Petition to Review Refusal to Grant Inter Partes Reexamination

25 hours

9

225

Patent Owner's 37 CFR 1.530 Statement

7 hours

105

735

Third Party Requester's 37 CFR 1.535 Reply

7 hours

60

420

Amendment in Ex Parte or Inter Partes Reexamination

20 hours

1,165

23,300

Third Party Requester's 37 CFR 1.947  Comments in Inter Partes  Reexamination

25 hours

300

7,500

Response to Final Rejection in Ex  Parte Reexamination

15 hours

320

4,800

Patent Owner's 37 CFR 1.951 Response in Inter Partes Reexamination

25 hours

120

3,000

Third Party Requester's 37 CFR 1.951 Comments in Inter Partes  Reexamination

25 hours

95

2,375

Petition to Request Extension of  Time in Ex Parte or Inter Partes  Reexamination

30 minutes

475

238

Total

 

5,124

111,336

 

Are these estimates in the ball park? How many hours are spent preparing a request for ex parte reexamination? Perhaps most importantly - what is missing here from the time spent in reexamination practice? Comments may be submitted to Susan.Fawcett@uspto.gov (Subject: A0651-00XX Patent Reexaminations comment). Notice at 74 FR 39916.

Assuming that the total -- 111,336 hours -- represent the entire amount of attorney time spent on reexaminations. Those hours are the equivalent of about 60 full time patent attorneys.