May 2011

Aristocrat v. IGT: Attorney Negligence, Revival, and Inequitable Conduct

Patent

Aristocrat Techs. v. Int’l. Game Tech. & IGT (N.D. Cal. 2011) (File Attachment: AristocratIneqCond.pdf (125 KB))

Patent attorneys regularly have hundreds of patent applications pending, each with their own due dates – far too many for anyone remember on their own. We keep track through docketing systems, paralegals, and attorney cross-checks. We are often overwhelmed – especially when firms change and staff leaves (as happened in this case). One of the comments to this post astutely introduced the old adage: “there but for the grace of God go I.”

The Aussie slot-machine manufacturer Aristocrat missed its US national stage patent filing deadline by one day. The patent was saved when the USPTO granted Aristocrat’s US attorney’s petition to revive the abandoned application based on the claim that the “entire delay” in filing the appropriate papers was “unintentional.”  During infringement litigation against market leader IGT, the district court first held the patent invalid based on a defense of improper revival. In particular, the district court held that the USPTO lacked authority to revive national stage applications unless the abandonment met the much higher standard of being unavoidable.  On appeal, the Federal Circuit reversed — holding that improper revival did not constitute a cognizable defense to allegations of infringement under 35 U.S.C. 282.

On remand, IGT shifted its focus to unenforceability — alleging that Aristocrat committed inequitable conduct in the revival of its abandoned application.

Late Filing and Hiding Abandonment from Client: The district court used one-hundred-twelve paragraphs to described the facts relating to the abandonment and revival.  Here are a few key facts:

  • January 10, 2000: On the day of the 30–month deadline, Aristocrat’s US patent counsel (Shahan Islam) used US Express mail to file the necessary documents to enter US national stage examination.  The USPTO received the documents the next day (January 11, 2000). However, according to the USPTO, Islam did not include sufficient evidence to prove the January 10, 2000 mailing date. And, Mr. Islam’s firm did not retain the filing evidence in a locally held file.
  • June 2001: The USPTO dismissed Islam’s petition to correct the filing date and indicated that the application remained abandoned.  Mr. Islam later testified that he did not remember receiving the June 2001 decision.  The court found that Mr. Islam likely saw the decision shortly after it was mailed.
  • November 2001: Aristocrat requested a status update on the application from Mr. Islam. (Up to that time, Aristocrat had been told nothing of the abandonment issues).  In December 2001, Mr. Islam responded in an e-mail that “we have learned that the application won’t be examined for at least another nine months(!) [or] so in view of the backlog.”  The e-mail did not indicate anything about the abandonment.  Mr. Islam also forwarded his response to another attorney at his law firm saying “lets discuss.”
  • During this same time period, eight other Aristocrat applications being prosecuted by Mr. Islam also went abandoned based on failure to respond to PTO notices mailed in 2001.
  • July 18, 2002: Mr. Islam (at this point with the KMZ firm) filed a petition for revival for unintentional abandonment — included a statement that “the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition under 37 CFR 1.137(b) was unintentional.”  In addition, Mr. Islam filed a preliminary amendment and petition for accelerated examination.  In a letter to Aristocrat, Mr. Islam incorrectly (and apparently intentionally) stated that the amendment & petition to accelerate had been filed in January 2002.  The letter did not mention the petition for revival.
  • September 3, 2002: USPTO granted the petition to revive. 
  • 2003: KMZ attorneys informed Aristocrat of the abandonments & revivals.

Revival: The USPTO typically does not require documentation to revive under the unintentional delay standard. Rather, the office relies on the applicant’s statements that the entire delay in filing a response was unintentional.  Here, the USPTO did not require specific documentation.

Unintentional versus Not Intentional: In its analysis, the district court held that the facts did not provide clear and convincing evidence that Mr. Islam had intentionally delayed the petition filing. In particular, the court could find no motive for the delay.  Instead, the delay appeared to be the result of Mr. Islam’s ongoing negligence rather than intentional misbehavior.  Negligence is the foundational non-intentional tort and therefore a finding of negligence does not suggest that the delay was intentional. In an odd logical analysis, Judge Whyte concluded that Islam’s failure to notify Aristocrat of the abandonment “actually suggests that the delay was unintentional.”

Mr. Islam did not want to disclose his errors [to Aristocrat] because he was likely embarrassed by his failure to act in accordance with his client’s instruction. Had it been granted, Mr. Islam’s Petition to Correct would have avoided abandonment altogether. Mr. Islam’s deflections in December 2001 show that he was fully aware that Aristocrat wished to proceed with the ‘717 application. Mr. Islam’s comments to Mr. Owen’s regarding the PTO backlog at the time further avoided acknowledging any personal responsibility for delay but it may have been correct, especially considering that the ‘717 application remained in an abandoned state even after the PTO had officially revived it. Still further, Mr. Islam’s incorrectly dated Second Preliminary Amendment is further evidence that Mr. Islam’s chief motive was to hide his failures from Aristocrat. Once the June 2001 Decision was sent, a decision to deliberately delay reviving the ‘717 application would not have helped to hide his errors from Aristocrat.

Although Judge Whyte found “Mr. Islam’s testimony was disturbingly vague and his lack of memory difficult to believe,” the Judge agreed with the notion the delay was entirely explained by Mr. Islam’s disorganization and the “out of control” state of his practice at the time. “Even if Mr. Islam failed to properly prosecute the ‘717 application, ‘unintentional’ delay does not require that the delay have occurred despite the exercise of due care and diligence (as does ‘unavoidable’ delay).”

After holding that the delay was not intentional, the court concluded that the statement regarding unintentional delay could not be a material misrepresentation and therefore that the defense of inequitable conduct could not stand.

Expert Opinion: Two leading patent law experts testified at the inequitable conduct hearing: Charles Van Horn for Aristocrat and Paul Gardner for IGT. While the court found the testimony helpful for explaining the prosecution of PCT applications, it found the experts’ extensive legal conclusions filled with “blatant advocacy” to be “not helpful.” Judge Whyte has been known to speak critically against expert testimony in patent cases.

Trade Secrets and Published Patent Applications

Patent, Trade Secret, ,

Tewari De-Ox Systems v. Mountain States (5th Cir. 2011)

In 2005, Tewari’s CEO (Dr. Tewari) visited Mountain Systems (MTSR) to demonstrate his “zero ppm oxygen meat-packing method” that greatly extends the shelf life of packaged meats. Prior to the demonstration, the two companies signed a non-disclosure agreement (NDA).  When MSTR allegedly began using the method without permission.

The major catch in Tewari’s breach of trade secret argument was that the bulk of the disclosed method could also be found in Tewari’s already published patent application. (The application was abandoned after receiving a final rejection on obviousness grounds).

Trade secret is derived from state law.  Under Texas law (the law of this case), a successful trade secret plaintiff must prove that (1) a trade secret existed; (2) the trade secret was “acquired through a breach of a confidential relationship or discovered by improper means;” and (3) that the trade secret was then used without authorization.

Patent Publication Eliminates Trade Secret: In a straightforward opinion, the appellate panel held once published, the information in a patent application should be considered “generally known and readily available” and therefore are no longer amenable to trade secret protection.

Tewari argued that the patent application publication should not matter in this case because the defendants obtained their information from him in a confidential transaction rather than from the public source. The appellate court, however, rejected that argument because the application was already published at the time of his disclosure.  (The court noted that the source of defendant’s trade secret knowledge may be important for trade secret analysis if the publication occurred subsequent to the fiduciary relationship.)

Although the material disclosed in the patent application is not protectable under Texas trade secret law, the court held that Tewari may have transferred protectable information that was not in the patent application — such as specific information regarding making and using the invention that was not particularly identified in the patent application.

Remanded for further consideration.

USPTO BPAI to Reconsider Restriction Practice and Markush Claims

Patent,

Ex parte DeGrado (BPAI 2011)

The University of Pennsylvania’s pending patent application No. 10/801,951 is directed to the treatment of microbial infections with an amphiliphilic oligomer. The amended claims define the oligomer with seven functional variables that are each independently selected from separate Markush-style groupings and ranges.  (Formula R1-[-x-A1-x-y-A2-y-]m-R2). The result is that millions of different oligomers fit within the claim scope. 

The case is now on appeal before the BPAI on grounds of obviousness-type double patenting based on a prior similar patent also coming from Professor Degrado’s Lab.  Penn has refused to file a term-limiting terminal disclaimer.

In a recent decision, USPTO Commissioner Robert Stoll asserted his role as an Administrative Patent Judge in joining a BPAI decision in the case. The particular decision here does not relate to the obviousness-type double patenting rejection, but rather to “whether Applicants may be required to restrict their claims to a single invention” and whether the claim as drafted is a “proper Markush Claim.” The BPAI has asked for further briefing on those issues.

Limits on Restrictions: The USPTO’s authority for restriction practice stems at least in part from 35 U.S.C. 121. That Section authorizes the USPTO Director to require applications “to be restricted to one” invention. However, in the 1978 Webber case, the CCPA limited that power –  holding that Section 112 gives applicants authority to present claims structured as they see fit. In that case, the court specifically held that patent applicants had the right to include multiple independent and distinct inventions within a single claim.  The BPAI has asked the parties in this dispute to brief this conflict between Webber and the language of Section 121.

Markush Claims: The BPAI has also requested briefing on the question of whether the claims here are proper Markush-type claims.

This case is likely to result in a precedential BPAI opinion and CAFC appeal and may have an important impact on restriction practice and Markush-style claiming.

File Attachment: DeGradoAppealBrf.pdf (1407 KB)

 

 

Malpractice: Failure to Thoroughly Advise in Settlement Negotiations

Patent

Viking Corp. v. Van Dyke Gardner (Mich. Ap. Ct. 2011) (VikingMalpracticeOpinion.pdf)

First Lawsuit & Settlement: In 2003, Viking and several other fire sprinkler manufacturers were sued for infringing Central Sprinkler's patent rights.  In 2005, the parties settled the case with a non-exclusive license agreement that included the payment of ongoing royalties and $1,000,000 for past damages. Although Central Sprinkler was (and still is) a subsidiary of Tyco International, the agreement did not expressly bind Tyco or its other divisions.

Second Lawsuit & Settlement: In 2007, Tyco sued Viking for infringement of two additional patents and Viking again settled the case by paying additional royalties and damages. One of the patents had already issued by time of the 2005 agreement. The other did not issue until 2007.

Malpractice Allegations: Viking then sued its original litigation counsel for malpractice.  Viking's position was that it had understood the 2005 agreement to bind the entire family of Tyco companies and that Viking would have no further liability to Tyco with respect to its large “K factor sprinklers.”  The particular alleged acts of malpractice were (1) advising Viking to enter into the 2005 agreement, (2) failing to include the new Tyco patents in the 2005 agreement or to at least advise Viking that they were excluded, and 3) failing to bind Tyco in the 2005 agreement or to at least advise Viking that Tyco was not bound.

On summary judgment, the trial court dismissed the case — holding that Viking was estopped from claiming that it did not understand the 2005 settlement agreement.  Critical to this holding were the conclusions that the law firm made no affirmative misrepresentations regarding the agreement and, as a signatory to the agreement, Viking was presumed to have read and understood the terms of the agreement.

On appeal, the Michigan appellate court affirmed — holding that absent fraud, coercion, or mistake, the law generally presumes that a signatory to an agreement knows the nature of the agreement.

Defendants claim, and we agree, that because plaintiff signed the 2005 agreement, it should be presumed to know and understand the nature of the document—especially the fact that Tyco was not a party to the agreement and Tyco would not be bound by it. In addition, plaintiff offers no evidence that defendants advised it otherwise. Plaintiff's executives claim that a release from Tyco was one of the goals of the 2005 settlement negotiations and that they believed Tyco and Central were the same entity. However, Van Dyke testified, and [Viking's Vice President] confirmed, that Van Dyke never told plaintiff that Tyco would be bound by the 2005 agreement. On the contrary, Van Dyke explained that Central flatly rejected a draft including Central and its parents, but plaintiff's executives thereafter continued reviewing and negotiating drafts that excluded Central's parents.

Here, the court went on to hold that there was no malpractice liability even if the firm's actions rose to the level of negligence because the alleged negligence was not the proximate cause of harm.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential. Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential. Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential.
    Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Odom’s patent confirmed invalid by Federal Circuit

Patent

Gary Odom v. Microsoft (Fed. Cir. 2011)

Gary Odom runs his own patent search firm as well as his own patent law blog – the Patent Prospector – where he provides piquant comments on patent law and practice.  Odom is also a patent holder. His Patent No. 7,363,592 is directed toward a modification of the “toolbar” and “tool groups” that are familiar aspects of most computer software displays.  

PatentLawImage122

At their broadest, the claims are directed to a method of (1) first displaying a toolbar made up of a set of tool groups with user-manipulable dividers located at the ends of the groups; and then (2) changing the position of the dividers based upon user input.

Odom filed for patent protection in 2000. In 2008, Odom sued Microsoft, arguing that the new “Ribbon” of Office 2007 infringed upon the patent. On summary judgment, the Oregon district court held the asserted claims (1) invalid as obvious and (2) not infringed either literally or under the doctrine of equivalents.

The district court based its obviousness holding on the conclusion that Odom had merely “cobbled together various pieces of what was already out there in a manner . . . that would have been obvious to anyone skilled in the art at the time of the invention.”  On appeal, the Federal Circuit affirmed.

The obviousness analysis began with Microsoft’s previously filed patent directed to a “composite toolbar” that can be manipulated by a user. (Patent No. 6,057,836 to Kavalam, et al.).  The Kavalam patent provides a mechanism for users to re-size toolbar groups.  The appellate panel found only one difference between Kavalam’s disclosure and Odom’s claim — that Odom’s tool groups “are on a single toolbar.”  However, the court found that difference merely “an insignificant advance over Kavalam.”  The court went on to hold that the “weak” secondary considerations presented by Odom could not overcome “strong prima facie” evidence of obviousness.

Considered by the Examiner? Odom’s patent at issue in this case issued as a continuation.  In the parent case, Odom had submitted the Kavalam patent in an information disclosure statement and Kavalam is cited as one of 11 references considered by the examiner. The same USPTO examiner worked on both the original and the continuation. However, Odom did not re-submit the Kavalam patent as material art (nor did he submit any other references) in the continuation case and the new patent cites only one reference on its face.  As David Jaglowski notes in the comments below, the MPEP indicates that the patent examiner is supposed to review and consider all information that had been filed in any parent application. M.P.E.P. Section 609.02.

The examiner will consider information which has been considered by the Office in a parent application when examining: (A) a continuation application filed under 37 CFR 1.53(b), (B) a divisional application filed under 37 CFR 1.53(b), or (C) a continuation-in-part application filed under 37 CFR 1.53(b). A listing of the information need not be resubmitted in the continuing application unless the applicant desires the information to be printed on the patent.

That rule of examination is followed by a subsequent admonition in M.P.E.P. Section 707.05: “In all continuation and continuation-in-part applications, the parent applications should be reviewed for pertinent prior art.”  The actual rules of practice (37 C.F.R. 1.98)  state that material must be resubmitted in a continuation unless the information was properly submitted in the prior application.

Whether the Kavalam patent was considered by the examiner is important because it relates to the the pending Supreme Court case of Microsoft v. i4i. In that case, the Supreme Court is likely to approve of some type of divided analysis between invalidity arguments previously considered by the examiner, and those not previously considered.  In my estimation, however, the court is unlikely to spell out the dividing line of when an argument may be deemed to have been previously considered.  I suspect that the situation presented here will likely fall on the side of not considered because, despite the rules, there appears to be no evidence that the examiner actually considered the reference in the continuation application. Of course that legal and factual conclusion may depend upon which panel of Federal Circuit judges is the first to decide the issue post-i4i.  (Note –  This issue is merely an aside for Odom’s case as the examiner’s consideration of the reference was not addressed by the Federal Circuit opinion.)

Judicial Bias: The Federal Circuit did address Odom’s argument regarding judicial bias by the Oregon court.  Odom’s argument was based on the court’s rulings on Odom’s motion to strike; Odom’s motion to stay;  Odom’s motion to block his (former) attorneys from withdrawing from the case; and by allowing Odom’s former attorneys to (allegedly) breach attorney-client privilege by talking with the judge.  The Federal Circuit rejected all of those arguments as lacking merit.

Impermissible Recapture Rule Curtails Potential for Broadening Reissue

Patent,

by Dennis Crouch

In re Mostafazadeh (Fed. Cir. 2011)

In 2001, National Semiconductor filed a broadening reissue request for its Patent No. 6,034,423 that had issued the year prior.  The invention itself is related to semiconductor packaging supports. During original prosecution of the application, the claims were amended to include a “circular attachment pad” limitation in order to overcome anticipation and obviousness rejections.  In the re-issue, the company is seeking claims not bound by the “circular” limitation.  The Examiner and BPAI both rejected the proposed amendment as an “improper recapture of subject matter surrendered during prosecution” of the original application.

The reissue process is designed to allow a patentee to alter the scope of the patent rights.  However, there are several limits on the ability of patent applicants to expand patent scope during reissue. First, claims can be broadened only if the broadening reissue is filed within two-years after issuance of the original patent. See MPEP 1412.03. Second, a patentee may not use a reissue to recapture subject matter that was surrendered in the original prosecution in an effort to obtain allowance of the originally filed claims. 

Because impermissible recapture is judged as a matter of law, USPTO determinations are reviewed de novo on appeal. The Federal Circuit has set out a three-step process for determining whether scope has been impermissibly recaptured:

  1. Consider whether aspect of the pending reissue claims are broader than the patented claims.
  2. Consider whether the broader aspects relate to material that was surrendered in order to overcome a prior art rejection.
  3. Determine whether a substantial portion of surrendered material “has crept into the reissue claim.”  

The key is to look to see whether the reissue claims cover embodiments that were not covered by the issued  but that were covered by the originally filed claims. 

The impermissible recapture rule is not strict — some small amount of recapture is allowed. The court has ruled, for instance, that attempting to recapture a portion of previously surrendered scope is permissible if the reissue “materially narrows” the claims relative to the originally filed claims in a way that relates to the subject matter surrendered.  According to the court, a narrowed limitation may be “modified . . . so long as it continues to materially narrow the claim scope relative to the surrendered subject matter such that the surrendered subject matter is not entirely or substantially recaptured.”  However, entirely eliminating a previously added limitation will always trigger the recapture rule prohibition.  Of course, this begs the question of “what is a limitation?”

Here, the patentee added the “circular attachment pad” limitation during prosecution and now want to eliminate the “circular” limitation.  The patentee argues that the claim is still substantially narrowed as compared to the original claims. The Federal Circuit rejected that argument because any broadening of scope in the reissue must be coupled by a material narrowing within the reissue in a way that relates to the subject matter being recaptured.

In an e-mail today, Hal Wegner of Foley & Lardner suggested prudent patent applicants should not rely on broadening reissues. Rather, the best practice is to file a continuation application to “cover miscellaneous embodiments that could not be fit within the claims as allowed by the examiner.”

Billups-Rothenberg v. ARUP: The Dangers of FIling Too Early…Or Too Late

Patent, ,

By Jason Rantanen

Billups-Rothenberg, Inc. v. Associated Regional and University Pathologists, Inc. (Fed. Cir. 2011) Download 10-1401
Panel: Gajarsa (author), Linn, and Moore

Billups is a classic example of the difficulties companies face when engaging in patent races.  Patent races occur when two or more entities are in competition to be the first to develop and patent a new technology.  In these sitautions, companies race to file patent applications, hoping to gain a competitive advantage.  Sometimes, however, the applications are filed before the inventors have really developed a patentable invention; othertimes, the applications are filed too late, after a competitor has filed its own application or published crucial information. In this case, Billups filed Patent No. 5,674,681 too early and Patent No. 6,355,425 too late, losing on both ends.

The patents-in-suit relate to a genetic test for Type I hereditary hemochromatosis that involves the detection of specific mutations in genes involved in regulating iron absorption.  The district court granted summary judgment of no written description for the '681 patent and anticipation of the '425 patent.

Lack of Written Description of Earlier Patent
On appeal, the CAFC first affirmed the district court's ruling that the '681 patent lacked written description, applying its customary approach to biotechnology inventions.  Here, Billups disclosed only the approximate location of the relevant mutation in the '681 patent, a disclosure that it argued was sufficient to place the inventor in possession of the invention (which in this case included the step of detecting the mutation) when combined with the knowledge that existed at the time of invention.  The CAFC disagreed.  "Given the lack of knowledge of sequences for the hemochromatosis gene and its mutations in the field, the limited extent and content of the prior art, and the immaturity and unpredictability of the science when the '681 patent was filed, Billups cannot satisfy the written description requirement merely through references to later-acquired knowledge."  Slip Op. at 11. 

The panel also, unnecessarily in my opinion, addressed the problem in genus-disclosure terms.  After quoting the relevant case law regarding disclosure of genus claims, the court concluded that the the patent failed because it "does not not identify even a single species that satisfies the claims.  In this case, the eventual discovery of only one species…within the claimed genus does not constitute adquate written description of that genus."  It is opaque to me what relevance a post-filing discovery of a species, let alone one by a third party, has to a species-genus analysis.

Anticipation of Later Patent
At the same time that Billups was conducting its  research, another group of scientists isolated and sequenced the hemochromatosis gene, published their results, and obtained Patent No. 6,025,130, filed nearly three years before the '425 patent.  The CAFC agreed with the district court that the '130 patent was anticipatory.

The inquiry focused on whether the '130 patent disclosed the diagnosis of an iron disorder using a specific mutation, the S65C mutation.  The '130 patent reports the genetic sequence of the S65C mutation, among with others that the inventors believed relevant to hemochromatosis, and describes techniques for conducting genetic assays that it states can be used to design a diagnostic device and method for screening the mutations.  Billups argued that this disclosure was not anticipatory because the '130 patent did not conclude that the S65C mutation was related to a hemochromatosis disease state, merely that there was a correlation and thus, Billups argued, the S65C mutation may have been only  a clinically insignificant polymorphism. 

Relying on the doctrine that a "reference is no less anticipatory if, after disclosing the invention, the reference then disparages it" (Slip Op. at 15), the CAFC rejected BIllups argument.  Here, "the '130 patent disclosed using the S65C mutation when diagnosing hemochromatosis, but qualifies that disclosure with the obseravation that the mutation "may only be a polymorphic variant."  Id., quoting '130 patent (emphasis in opinion).  Although the prior art questioned the utility of the application of the disclosed invention, it nevertheless disclosed it, thus rendering the '425 patent anticipated. 

Dir. Kappos Brings in New Chief Judge: James D. Smith

Patent

The USPTO has announced a new Chief Administrative Patent Judge to lead the Board of Patent Appeals and Interferences (BPAI). James Donald Smith will be leaving his role as Chief IP Counsel for Baxter International to take on the difficult task of shoring up the important section of the Office. Smith is expected to begin serving as Chief Judge on May 8, 2011 and is replacing Michael Fleming who stepped down in 2010 and Jay Moore who has been the Acting Chief Judge for the past several months.

The BPAI is struggling with a caseload that has grown dramatically over the past several years and a backlog of over 20,000 pending appeals. In addition a large and growing number of hotly contested inter partes reexaminations are reaching the Board and creating a heavy workload. These proceedings increasingly involve high profile patents involved in parallel infringement litigation. In many cases, courts stay litigation pending outcome of the reexamination and are looking to the USPTO for accurate and timely conclusions. The Board’s profile and its workload would likely both increase under the patent reform measures now pending in Congress.

Mr. Smith has a long background in patent law. He is currently the Associate General and Chief Intellectual Property Counsel of Baxter International. He previously clerked for former Federal Circuit Chief Judge Paul Michel, served in private practice as a patent attorney at Arnold White & Durkee and Dewey Ballantine (now Dewey Le Boeuf). He also spent time at Nokia (Director of IP Licensing), Lexmark (Chief IP Counsel) and Emory University School of Law (Dean of Students and Professor).

Mr. Smith has been a registered patent attorney since 1988. He graduated from Duke University (J.D.) and the University of Maryland at College Park (B.S.E.E.).

The upper management of the USPTO is now solidly in the hands of patent law professionals with extensive experience in corporate patent law and management practice. This includes Director David Kappos (20+ years at IBM); Deputy Director Theresa Stanek Rea (25 years law firm practice); BPAI Chief Judge James D. Smith (20+ years in law firm and corporate practice); and Administrator for Policy and External Affairs Albert Tramposch (years in law firm practice followed by governmental work). Two exceptions to this “rule” are the Patent Commissioner Robert Stoll and Deputy Commissioner Peggy Focarino. Both Stoll and Focarino started their patent careers as examiners and have been at the USPTO collectively for more than 60 years. Although very much a “political” position, the role of Commissioner is most often filled by individuals who have dedicated the bulk of their careers to the USPTO.

USPTO Press Release

 

Rembrandt v. AOL: Licensing and Indefiniteness

Indefinite, Patent,

By Jason Rantanen

Rembrandt Data Technologies, LP v. AOL, LLC (Fed. Cir. 2011) Download 10-1002
Panel: Gajarsa (Linn), Linn, and Dyk

In 2008, Rembrandt sued Canon and Hewlett-Packard, among others, for infringement of Patent Nos. 5,251,236 and 5,311,578.  Rembrandt contended that Canon and HP infringed by marketing office products containing modem chips capable of implementing International Telecommunications Union protocol V.32.  The modem chipsets in the accused products are manufactured by a third party, Conexant.

At the trial court level, the district court granted summary judgment in favor of the defendants on the basis that because Conexant was a licensee of the '236 and '578 patent, Rembrandt's rights were exhausted and it could not recover from Canon and HP.  The court further held that claims 3-11 of the '236 patent were invalid for indefiniteness as they improperly mixed method and apparatus elements and that claims 1-11 (all of the asserted claims) were invalid for indefiniteness for failing ot disclose algorithms corresponding to functions set out in the claims.  Rembrandt appealed.

Patent Rights Exhausted Through Prior License
The patents-in-suit were originally owned by AT&T, who granted a license to Rockwell International in the late 1980's.  Under a 1995 side letter, AT&T also granted Rockwell the right to sublicense "to any future divested present business of Rockwell."   That license was subsequently assigned to a reorganized Rockwell ("New Rockwell"), and then to Conexant as part of a spin-off of its modem business.  The patents themselves changed hands several times through a series of divestitures and acquisitions until  finally owned by Rembrandt.

On appeal, Rembrandt argued that patent exhaustion did not apply because Conextant was not a valid licensee under the terms of the agreements.  Looking to the terms of the contact, the CAFC held that contrary to Rembrandt's argument, sublicensing did not require AT&T's consent as long as it occured as part of a divestiture of Rockwell's present business.  Nor did the general rule that "the law does not recognize any right of a nonexclusive licensee to assign the license or to further sublicense" apply because the contract expressly allowed for such sublicenses to be granted.   

The CAFC also applied a pro-licensee interpretation of the scope of the license.  In connection with the sublicense provision, the 1995 Side Letter limited that right "only to the extent applicable to products and services sold by the future divested business prior to its divestiture."  Rembrandt contended that this meant the specific models being sold by Rockwell in 1996, when it divested its semiconductor business to New Rockwell.   The CAFC disagreed.  Looking to the 1988 and 1995 agreements, the court noted that neither refers to specific models of modems, instead specifying product types in general, functional terms.  Thus, because Old Rockwell sold modems prior to the transfer to New Rockwell, and because New Rockwell sold V.34 protocol-compliant modem chipsets prior to the divestiture to Conexant, the court concluded that the sublicensing conditions were satisfied. 

Indefiniteness
The CAFC also addressed three separate indefiniteness issues.  The court first affirmed the district court's grant of summary judgment that claims 3-11 of the '236 patent were indefinite because they contained both apparatus and method claims.  "[R]eciting both an apparatus and a method of using that apparatus renders a claim indefinite under section 112, paragraph 2."  Slip Op. at 15, quoting IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005).  Rembrandt's only argument in response was to request that the court insert apparatus language into claim 3, from which claims 4-11 depended.  Unsurprisingly, the court declined to do so.  "[T]he correction suggested by Rembrandt is "not minor, obvious, free from reasonable debate or evident from the prosecution history.'"  Slip Op. at 17 (quoting district court opinion).

Rembrandt fared somewhat better on claims 1 and 2.  The district court invalidated these claims (as well as claims 3-11), construing them to contain several means-plus-function elements and holding them indefinite due to the patent's failure to disclose an algorithm able to perform the recited functions. 

The CAFC disagreed that two of these elements were drafted in means-plus-function form.  Although the elements contained the word "means," that created only a presumption that the limitation was drafted in means-plus-function format.  "This presumption can be rebutted if the claim limitation itself recites sufficient structure to perform the claimed function in its entirety."  Slip Op. at 19.  That determination involves a 'one skilled in the art' analysis:  "When determining whether a claim term recites sufficient structure, we examine whether it has an understood meaning in the art."  Id.  

Here, there was no dispute that two of the claim elements, "fractional rate encoding means" and "trellis rate encoding means" recited sufficient structure.  Rembrandt's expert testified that these terms were used in publications and published patents in the early 1990's and were self-descriptive to one of ordinary skill in the art, testimony that went undisputed by the parties.   Thus, these elements recited sufficient structure by themselves to overcome the presumption of treatment under § 112, ¶ 6.

The CAFC did recognize a dispute over two other terms, "buffer means" and "combining means."  Here, the panel appears to have agreed with the district court's interpretation of these elements being in means-plus-function format.  However, the panel could not agree that the specification failed to disclose algorithms for these elements.  Remrandt's expert testified that the figures, text, and table in the '236 patent disclose complete algorithms to a person skilled in the art; Canon argued that they did not.  Thus, the court reversed the district court's grant of summary judgment of invalidity of claims 1 and 2 of the '236 patent.