January 2012

IPCom Wins by Waiver – Federal Circuit Temporarily Revitalizes IPCom Case Against HTC

By Dennis Crouch

HTC v. IPCom (Fed. Cir. 2012)

IPCom is the German version of a “patent troll.” Or, as Lord Justice Jacob wrote in Nokia v. IPCOM, EWCA Civ 6 (2011), “IPCom is a ‘non practising entity’, i.e. a patentee with no business of its own in products covered by the patents.” The company is run by Bernhard Frohwitter, one of the most successful German patent litigators and backed by New York private equity. As suggested by this introduction, IPCom is pursuing patent battles against telecommunications device manufacturers around the world. [Even though I used the word "troll" here, I certainly believe that non-practicing entities should generally have a right to enforce their patents.]

In 2011, IPCom sued the Taiwanese company HTC Corporation in the US for infringement of its Patent No. 6,879,830. The patent covers an apparatus for solving the wireless communications problem of handing-over a data-stream connection to another base station as the wireless device travels geographically. The patent was originally owned by the German company Bosch who transferred rights to IPCom as part of a major IP asset purchase.

IPXL: The district court held the asserted claims invalid on summary judgment as indefinite under 35 U.S.C. §112. Following IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005), the district court rejected the claims as reciting an apparatus with method steps. On appeal, the Federal Circuit has reversed – holding that the lower court misconstrued the language of the claims.

I have reproduced a representative claim below, but the basic gist is that a mobile station apparatus is claimed that operates with a network. The network provides a number of functions regarding the handover process, including storing data, holding information in reserve, and then later deleting the information after the handover. The claim includes only one element for the mobile station – requiring that the mobile station comprises “an arrangement” for reversing the handover if it is unsuccessful.

Claim 1. A mobile station for use with a network including a first base station and a second base station that achieves a handover from the first base station to the second base station by: storing link data for a link in a first base station, holding in reserve for the link resources of the first base station, and when the link is to be handed over to the second base station: initially maintaining a storage of the link data in the first base station, initially causing the resources of the first base station to remain held in reserve, and at a later timepoint determined by a fixed period of time predefined at a beginning of the handover, deleting the link data from the first base station and freeing up the resources of the first base station, the mobile station comprising: an arrangement for reactivating the link with the first base station if the handover is unsuccessful.

In IPXL, the court held a claim invalid that was structured as an apparatus claim that also required the performance of method steps. Here however, the Federal Circuit interpreted the claim language as having an apparatus defined by its capability to perform a set of defined tasks. The legal distinction here is in whether the apparatus must perform the step or merely be capable of performing the step. In addition, the language discussing the function of the network does not create any problem because the claim itself is actually claiming a mobile station. Thus, the “prohibition on hybrid claiming” identified in IPXL does not apply to this case.

In interpreting the claim, the court relied on its old rule of construction that claim terms “are generally given their ordinary and customary meaning.” Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). Using ordinary meaning as a starting point ,the court also walked through the specification and prosecution history in reaching its conclusion that the seeming action-items were directed to the network rather than the mobile device itself.

Prosecution History: One basis of HTC’s argument came from the prosecution history where the applicant referred to the six action elements in the claim as a “process” and the examiner called them “steps.” The Federal Circuit held that HTC (and the lower court) placed too much emphasis on those statements – especially because “in most cases” the examiner was referring to parallel method claims not at issue here. In looking at the prosecution history, the court also sent the reminder that prosecution history is less important in interpretation than claim and specification language. “Although the district court was correct in considering the prosecution history, the claim language and specification in this case are better sources for the correct construction.”

Because the court identified the source of error claim construction rather than indefiniteness, the case was reviewed

Means-Plus-Function and Waiver: HTC also offered a separate invalidity challenge based on the claimed “arrangement for reactivating.” HTC argued that – as a means-plus-function limitation – the scope of the term is defined by the corresponding structure found in the specification. Further, HTC argued that the specification did not include any supporting structure and that the claim must therefore be held invalid as indefinite. The district court rejected that argument – holding that the disclosed processor and transceiver served as the corresponding structure. On appeal, the Federal Circuit identified that holding as in error because the claimed function must be tied to a more particular structure. Here that structure would ideally be an algorithm that defines in some terms how the arrangement would work. See Aristocrat Techs. Austl. PTY Ltd. v. Int’l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).

After identifying the error, the appellate panel refused to reverse because HTC had failed to properly preserve an objection for the appeal. The problem: At the trial court, HTC had argued that more hardware disclosure was necessary beyond the “processor and transceiver,” while on appeal, HTC (and in the reply brief) shifted its argument to focus on the need for an algorithm. The appellate court held that this late-stage argument was too late.

To be clear, HTC had argued that the means-plus-function limitation was indefinite because it lacked sufficient corresponding structure in the specification. HTC’s error was that it identified the patent’s problem as lacking sufficient description of the hardware that would perform the claimed function while the Federal Circuit saw the patent’s problem deriving from lacking a sufficient description of the algorithm that would perform the claimed function. The Federal Circuit’s point was that no more hardware need be disclosed so long as the algorithm is there. This result is a bit odd for a few reasons. The practical reason for this failing is likely that these issues were litigated before the Federal Circuit’s 2008 decision on point. However, from a factual standpoint I suspect that HTC is absolutely correct – the lack of disclosed structure could-have been entirely solved by further disclosure of specific hardware designed to achieve the claimed function and without any further disclosure of the particular algorithm. Thus, the disclosure of a video graphics processor would likely serve as sufficient structure for a computer graphic processing function with a known solution even without disclosing the particular algorithm used for the processing. In the same way a nail could serve as the structure of a fastening claim even without a description of the particular process for hammering the nail into place. Likewise here, a particularly designed and disclosed circuitry could serve as the structure for achieving the claimed reactivating function even without disclosing its process flow per se. The fact that the Federal Circuit here chooses a different structure that should-have-been disclosed does not suggest that HTC waived its argument that the claimed function lacked sufficient structure. This leads me to a second and broader point about the accused infringer’s role in the invalidation process. It is not normally the accused infringer’s role to identify what the patentee should have invented or disclosed. Rather, invalidity is more simply based on a showing that the patentee did not do enough. In this sense, the accused infringer takes on a role parallel to a food critic who can identify poorly presented food even if she herself cannot cook. In my world, this is akin to my own low level spelling prowess. I usually know when a word is misspelled. However, I can only rarely posit the correct spelling formulation without assistance. Thus, the Court’s ruling here leaves a bad taste because it puts a new burden on accused infringers to take the additional step of identifying what the patentee should have said in the patent and then binds them to their suggested counterfactual.

Harmless Error on Remand: The Federal Circuit identified an error in the lower court’s judgment but, because of waiver, did not require the lower court to re-open this issue on remand. Odds are that the lower court will not stick to its original opinion that has now been adjudged legally incorrect. Instead the court will more likely assert its discretionary power to take a fresh look at the issue of indefiniteness. This is especially likely if the district court broadly considers Supreme Court precedent such as Leer v. Adkins and the associated policy that “bad patents” should be invalidated even if that means bending some of the norms of civil procedure.

Court of Appeals: For Judge O’Malley (the opinion’s author), the waiver portion of the opinion appears to be written as a reminder to patent litigators that the Federal Circuit is a Court of Appeals rather than a trier of fact or court of first instance. This legal reality continues to be lost on some of her colleagues on the appellate bench.

Means-Plus-Function in Combination: A final MPF issue that could also create trouble for IPCom involves the fact that the Federal Circuit’s new construction of the claim includes only one element and that element is a means-plus-function language. The basis for means-plus-function claiming is found in 35 U.S.C. § 112¶6. That paragraph includes an apparent limitation that MPF elements are available only in “a claim for a combination.” The result: single element claims may not use MPF language to define that lone element. In re Hyatt, 708 F.2d 712 (Fed. Cir. 1983).

Ford Krippelz

By Dennis Crouch

Krippelz v. Ford (Fed. Cir. 2012)

This case involves an interesting 20+ year history between Mr. Krippelz and Ford Motor Company, including 14 years of litigation over a mirror lamp. Ford has won what appears to be the final round.

* * * * *

Back in 1991, Mr. Krippelz sent Ford Motor Company a copy of his patent covering a downward-facing side-mirror light and a license inquiry. Ford was not interested in a license, but in 1997 began selling cars with downward-facing side-mirror lights. Krippelz sued in 1998. A paper battle continued over the next decade and even after Mr. Krippelz death in 2010. During that time, the USPTO confirmed the patentability of the asserted claims in a reexamination, the judge awarded summary judgment of infringement, the jury the patent valid and awarded $23 million in damages; and the judge boosted that figure to $56 million based upon pre-judgment interest and enhanced damages for willful infringement.

On appeal, the Federal Circuit has reversed – finding the patent invalid as anticipated by a 1951 French Patent invented by Charles DuBois of the former French West African colonial territories.

A court may find issued patent claim invalid as anticipated only when presented with clear and convincing evidence that a single prior art reference discloses each and every element of a claimed invention.

The focus here was on the Krippelz patent’s claimed “conical beam of light” and whether that beam was disclosed by DuBois. In construing the claim, the district court held that the conical limitation required that “the filament of the light bulb is at or near the focal point of an optical reflector.” DuBois included a statement that his system may also include “a bulb at the focus of the reflector.” In reviewing the difference, the appellate panel found that any reasonable jury would find the asserted claim invalid based upon DuBois and that the district court had abused its discretion in denying the motion for Judgment as a Matter of Law.

Most appellants in Ford’s position would have appealed claim construction because of the lower standard of review. Here, Ford may have lost that right by not previously objecting to the claim construction. That said, the motor company was able to roll a hard eight to overcome the strong presumption of validity and the deference given to the jury determination.

Patently-O Bits & Bytes by Lawrence Higgins

2012 Student Writing Competition

  • The Virginia State Bar Intellectual Property Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia and relating to an intellectual property law issue or the practice of intellectual property law. The winner receives a cash prize of $4,000. The judge of the final round of the competitor is the Honorable Richard Linn, judge of the U.S. Court of Appeals for the Federal Circuit. The deadline for submissions is Friday, May 25, 2012 at 4:00 EDT. [Link]

New IP Message Board

  • IPtalk.pro is a new intellectual property law message board for the discussion of patents, trademarks, copyrights, trade secrets, and IP careers. It promises no spam, no downtime, and sensible moderation. [Link]

Intel buys IP for 120 million

  • Intel recently acquired about 190 patents, 170 patent applications, and video codec software from RealNetworks for 120 million dollars. Intel states that, the acquisition will enhance their ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media. [Link]

Next Patent Office Location

  • Many cities would like to be the next location of USPTO's next satellite office, including Austin, Texas, Denver, Boston, Silicon Valley and now Las Vegas. It seems that the USPTO has set a deadline for groups and individuals to submit written pitches for why their cities should get a satellite office. The patent office, in soliciting proposals, listed five areas that would play a large role in the selection. Those areas included improved recruiting and retention of examiners that would hinge on factors such as cost of living and number of attorneys in the field, contributions toward speeding and improving the process, and access to innovators as judged by measures such as the number of patents already held by residents in the area. Senator Majority Leader Harry Reid and others will draft their letter to the USPTO, explaining the advantages of Las Vegas. [Link]

Patent Jobs:

  • Nelson Mullins is searching for 1 or more new or lateral associates with a background in CS or EE to work at their Boston office. [Link]
  • Verenium is looking for a patent agent with a BS in molecular biology or biochemistry and a minimum of 5 years of experience to work at their San Diego location. [Link]
  • Vista-IP-Law-Groups is seeking a patent attorney with a background in ME or EE and at least 2 years of experience to work at their San Jose office. [Link]
  • Sterne, Kessler, Goldstein & Fox is seeking electrical IP attorneys with 1-4 years of experience to work at their Washington, DC office. [Link]
  • International IP Law Group is searching for an associate, Of Counsel to prepare and prosecute patent applications at their Houston office. [Link]
  • International IP Law Group is looking for a patent engineer/agent with 2-3 years of technical experience to work at their Houston office. [Link]
  • Microsoft is seeking a patent attorney with a BS in CS or EE and at least 5 years of experience to work in their Redmond, Washington location. [Link]
  • Toler Law Group is searching for patent attorneys with a BS in EE or CS and 0-2 years of experience to work in their Austin, Texas office. [Link]
  • Kilyk & Bowersox is looking for a biochem/chem patent agent with at least 4 years of experience to work in their Warrenton, Virginia office. [Link]
  • The Webb Law Firm is seeking an associate with a BS in chemistry or chemical engineering and at least 3 years of experience as an IP attorney to work at their Pittsburgh office. [Link]
  • Klarquist Sparkman is searching for lateral litigation associates with 1-2 years of experience to work in their Portland office. [Link]
  • Klarquist Sparkman is seeking a patent attorney or patent agent with an advanced degree in organic chemistry and 3+ years of experience to work in their Portland office. [Link]
  • Roberts Mlotkowski Safran & Cole is searching for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]

Upcoming Events:

  • The Synopsis under IP/Patents Telecom Sourcing (SUITS) Conference will take place January 31-February 3 in Miami, Florida. The SUITS Conference was launched to advance the knowledge innovators of telecommunications including developers, implementers, licenses, licensors, end users, carriers and enterprise patents. Guest speakers include: Jeffery Dalton, Christopher Douglas, Loren Pearson, Keith Bergelt, Todd Juneau, Michael Rouleau and many others. [Link]
  • The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
  • AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
  • The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
  • The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
  • The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]
  • C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conference brings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
  • American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
  • American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]

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

Patently-O Bits & Bytes by Lawrence Higgins

2012 Student Writing Competition

  • The Virginia State Bar Intellectual Property Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia and relating to an intellectual property law issue or the practice of intellectual property law. The winner receives a cash prize of $4,000. The judge of the final round of the competitor is the Honorable Richard Linn, judge of the U.S. Court of Appeals for the Federal Circuit. The deadline for submissions is Friday, May 25, 2012 at 4:00 EDT. [Link]

New IP Message Board

  • IPtalk.pro is a new intellectual property law message board for the discussion of patents, trademarks, copyrights, trade secrets, and IP careers. It promises no spam, no downtime, and sensible moderation. [Link]

Intel buys IP for 120 million

  • Intel recently acquired about 190 patents, 170 patent applications, and video codec software from RealNetworks for 120 million dollars. Intel states that, the acquisition will enhance their ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media. [Link]

Next Patent Office Location

  • Many cities would like to be the next location of USPTO's next satellite office, including Austin, Texas, Denver, Boston, Silicon Valley and now Las Vegas. It seems that the USPTO has set a deadline for groups and individuals to submit written pitches for why their cities should get a satellite office. The patent office, in soliciting proposals, listed five areas that would play a large role in the selection. Those areas included improved recruiting and retention of examiners that would hinge on factors such as cost of living and number of attorneys in the field, contributions toward speeding and improving the process, and access to innovators as judged by measures such as the number of patents already held by residents in the area. Senator Majority Leader Harry Reid and others will draft their letter to the USPTO, explaining the advantages of Las Vegas. [Link]

Patent Jobs:

  • Nelson Mullins is searching for 1 or more new or lateral associates with a background in CS or EE to work at their Boston office. [Link]
  • Verenium is looking for a patent agent with a BS in molecular biology or biochemistry and a minimum of 5 years of experience to work at their San Diego location. [Link]
  • Vista-IP-Law-Groups is seeking a patent attorney with a background in ME or EE and at least 2 years of experience to work at their San Jose office. [Link]
  • Sterne, Kessler, Goldstein & Fox is seeking electrical IP attorneys with 1-4 years of experience to work at their Washington, DC office. [Link]
  • International IP Law Group is searching for an associate, Of Counsel to prepare and prosecute patent applications at their Houston office. [Link]
  • International IP Law Group is looking for a patent engineer/agent with 2-3 years of technical experience to work at their Houston office. [Link]
  • Microsoft is seeking a patent attorney with a BS in CS or EE and at least 5 years of experience to work in their Redmond, Washington location. [Link]
  • Toler Law Group is searching for patent attorneys with a BS in EE or CS and 0-2 years of experience to work in their Austin, Texas office. [Link]
  • Kilyk & Bowersox is looking for a biochem/chem patent agent with at least 4 years of experience to work in their Warrenton, Virginia office. [Link]
  • The Webb Law Firm is seeking an associate with a BS in chemistry or chemical engineering and at least 3 years of experience as an IP attorney to work at their Pittsburgh office. [Link]
  • Klarquist Sparkman is searching for lateral litigation associates with 1-2 years of experience to work in their Portland office. [Link]
  • Klarquist Sparkman is seeking a patent attorney or patent agent with an advanced degree in organic chemistry and 3+ years of experience to work in their Portland office. [Link]
  • Roberts Mlotkowski Safran & Cole is searching for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]

Upcoming Events:

  • The Synopsis under IP/Patents Telecom Sourcing (SUITS) Conference will take place January 31-February 3 in Miami, Florida. The SUITS Conference was launched to advance the knowledge innovators of telecommunications including developers, implementers, licenses, licensors, end users, carriers and enterprise patents. Guest speakers include: Jeffery Dalton, Christopher Douglas, Loren Pearson, Keith Bergelt, Todd Juneau, Michael Rouleau and many others. [Link]
  • The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
  • AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
  • The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
  • The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
  • The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]
  • C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conference brings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
  • American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
  • American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]

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

Recap of Recent AIA-related PTO Activities

By Jason Rantanen

The America Invents Act contains several provisions that require the PTO to (1) issue new rules and (2) report back to Congress on specific patent-related issues.  In addition to the proposed Supplemental Examination rules I discussed yesterday, the PTO also recently published four other proposed sets of rules and completed two of its reports. 

Proposed Rules
Submissions to the PTO: Two related sets of rules address submissions to the PTO, one implementing the preissuance submissions by third parties provision of the AIA and the other addressing post-issuance submissions.  Paul Morgan recently wrote a guest post discussing these proposed rules.  The Federal Register sections are available here: /media/docs/2012/01/77fr448.pdf and /media/docs/2012/01/77fr442.pdf, and the rules are open for public comment until March 5, 2012.

OED: On January 5, the PTO also published its proposed rules to implement the statute of limitations provision for office disciplinary proceedings.  Dennis's discussion of these rules is available here, and the full set of rules is available at /media/docs/2012/01/77fr457.pdf.  The comment period for these rules runs until March 5, 2012

Inventor's Oath: The following day, the PTO published its proposed changes to the rules relating to the inventor's oath or declaration.  The public comment period for those proposed rules runs until March 6, 2012, and the rules are available at /media/docs/2012/01/77fr982.pdf

AIA-Mandated Studies
International Patent Protections for Small Businesses: As required by the AIA, earlier this month the PTO submitted to Congress a report on international patent protections for small businesses.  Based upon its study, the PTO declined to recommend a program of taxpayer-funded financial assistance to support small business foreign patenting at the present time. The report is available at /media/docs/2012/01/20120113-ippr_report.pdf.

Prior User Rights: The PTO also recently completed its report on prior user rights.  The report essentially concludes that there is an insufficient basis to recommend a change to the prior user rights scheme chosen by Congress, and is available at /media/docs/2012/01/20120113-pur_report.pdf.

Genetic Testing: Earlier this week, the PTO published a Request for Comments and Notice of Public Hearings in connection with its study on genetic testing.  Public hearings will be held on Febuary 16, 2012 in Alexandria, Virginia, and on March 9, 2012 in San Diego, California.  Written comments will be accepted until March 26, 2012.  The announcement is available at /media/docs/2012/01/2012-1481_genetic-testing-hearing-notice.pdf

PTO Announces Proposed Rules for Supplemental Examination

By Jason Rantanen

Yesterday, the United States Patent and Trademark Office announced the proposed rules for supplemental examinations and proposed revisions to ex parte reexamination fees.  These proposals detail the supplemental examination process, including the information that requesters must submit, as well as the substantial fees that will be associated with post-grant review in the future.  The PTO will accept comments on the proposed rules until March 26, 2012. 

The relevant Federal Register section is here: /media/docs/2012/01/77fr3666.pdf.

Major points include:

  • The request must be filed by the patent owner.  Only the patent owner will be permitted to participate in the supplemental examination or any reexamination ordered as a result. (§ 1.601)
  • Each supplemental examination request may identify up to ten items of information to be considered, reconsidered, or corrected.  Multiple supplemental examination requests may be filed at one time. (§ 1.605)
  • The cost for filing a supplemental examination request is steep: $5,180 for the initial request plus $16,120 for the ex parte re-examination fee. (§ 1.20(k))  Both must be paid at the time of initial request, and the $16,120 will be refunded if no re-examination is ordered in the supplemental examination certificate.  (§ 1.26(c))  In addition, there are substantial fees associated with documents over 20 pages, as well as with petitions filed in connection with the proceeding. 
  • The supplemental examination request must include ((§ 1.610(b)):
    1. a cover sheet;
    2. an identification of the patent for which supplemental examination is requested;
    3. a list of each item of information and its publication date, if applicable;
    4. a list identifying any other prior or concurrent post patent Office proceedings involving the patent to be examined;
    5. an identification of each aspect of the patent to be examined;
    6. an identification of each issue raised by each item of information;
    7. a separate, detailed explanation for each identified issue;
    8. an explanation of how each item of information is relevant to each aspect of the patent to be examined and of how each item of information raises each identified informaiton;
    9. a copy of each item of information; and
    10.  summary of the relevant portions of any submitted document, other than the request, that is over 50 pages in length.

The full requirement for item 8 is:

(8) A separate, detailed explanation for each identified issue, discussing how each item of information is relevant to each aspect of the patent identified for examination, and how each item of information raises each issue identified for examination, including:

(i) Where an identified issue involves the application of 35 U.S.C. 101 (other than double patenting) or 35 U.S.C. 112, an explanation discussing the support in the specification for each limitation of each claim identified for examination with respect to this issue; and

(ii) Where an identified issue involves the application of 35 U.S.C. 102, 35 U.S.C. 103, or double patenting, an explanation of how each limitation of each claim identified for examination with respect to this issue is met, or is not met, by each item of information. The detailed explanation may also include an explanation of how the claims distinguish over the items of information.

(Proposed § 1.610(b)(8)).  Note that if the PTO concludes that an examination request is not in compliance with the content requirements, it will not be entitled to the original filing date.  Rather, the filing date will be the date the corrected request is received.  (§ 1.610(d),(e))  This appears to mean that the PTO's three-month deadline for issuing a supplemental examination certificate will not begin until the corrected request is received and the safe-harbor provisions of 35 U.S.C. 257 may not be triggered even if a request is filed should the PTO conclude that requirement 8, for example, is not met.

The proposed cost to file an ex parte reexamination will increase from the current $2,520 to $17,750.    Given both this increase and the substantial cost to file a supplemental examination request, I'm skeptical of the PTO's prediction that it will receive about 800 ex parte examination requests and 1,430 supplemental examination requests annually.  The latter number, especially, seems to be based on some highly dubious assumptions.

 

United States Intellectual Property Organization?: Curing a Fractured Administrative Structure

By Dennis Crouch

Most operating businesses that rely on intellectual property (IP) rights do not focus on a single form of rights but instead take a layered approach that includes patent law along with trademark, copyright, contractual limitations, and design rights, for instance. Each form of IP has weak points and overlapping coverage provides a greater level of certainty that any underlying market value can be protected.  Of course, overlapping rights create difficulties for users that rely upon the public domain and fair use. The bulk of governmental money spent on administering intellectual property rights goes through the US Patent & Trademark Office (PTO) — an executive agency housed within the Department of Commerce.  Although the PTO only administrates patent and trademark issues, the Director of the USPTO also serves as the Undersecretary of Commerce in charge of Intellectual Property and has the role of advising the President and other federal agencies on all aspects of intellectual property – including copyright law.  Of late, this role is shared somewhat with the White House Office of the U.S. Intellectual Property Enforcement Coordinator.

Whither the Copyright Office: There is a clear structural reason why the President and executive agencies cannot rely on the US Copyright Office for advice about copyright law.  The Copyright Office is housed within the Library of Congress, which itself is managed by Congress rather than the President.  Thus the US Copyright Office does not officially represent the Administration or shape Administration policy.  This is an odd setup — especially with the rising and overlapping market role for intellectual property rights.  From a theoretical standpoint, it is unclear whether the fractured administrative structure leads to rights that are either too strong or too weak.  What we can tell is that the structure leads to a lack of coordination in administration of the various IP systems within the US.

In his 1995 Congressional testimony on the topic, Bill Patry identified the fractured structure as "an historical anomaly."

It is not the result of a judgment that the legislative branch is where the Copyright Office belongs. It occurred solely because there was a very clever, ambitious Librarian of Congress who figured out that rather than relying upon appropriated funds, which is not a great way for agencies to fund themselves, he would get free books. He got free books by convincing Congress to require publishers and authors to give the Library free books. That is how the Copyright Office got into the Library of Congress.

The answer: In 1995, the Senate proposed a solution – a United States Intellectual Property Organization (USIPO). (S. 1961).  Although the Bill did not emerge from committee at the time, the newly proposed organization would fall in line with many of our trading partners, including the UK IPO, the Canadian IPO, and the World Intellectual Property Organization (WIPO).

Back in 1995, then Register of Copyrights Marybeth Peters commented that such a move may unduly politicize the Copyright Office. Peters was also concerned that the historic and humanist value of the copyright registry would be soiled if joined with the commerce-focused patent and trademark administrators.

Bill Patry testified before the Senate in support of the concept of the USIPO and argued that the Copyright Office functions are executive not legislative:

Well, the Office doesn't perform any legislative functions. Why should it remain in the legislative branch? The answer that you are given is essentially that is the way it has always been and we like it that way. But if you have go the two other forms of intellectual property … why should the third one be over here and on the other side of the Potomac? It is really a quaint sort of nostalgia for the past. It is an obstacle for the future.

Members of Congress also expressed reticence about giving up direct control of the office. At the time, the Intellectual Property Owners Association and AIPLA suggested "further study."

In the years since 1995, we have seen a great convergence in the marketplace role of the various intellectual property schemes. It seems to me that the time is ripe to consider the issue once again.

Falana v. Kent State University

By Jason Rantanen

Falana v. Kent State University (Fed. Cir. 2012) Download 11-1198
Panel: Linn (author), Prost and Reyna

This case raises an important issue for developers of chemical compounds: when is an inventor's contribution to the method of making a claimed compound an inventive contribution?

The plaintiff in this Section 256 action, Dr. Olusegun Falana, was a post-doctoral researcher hired by Kent State and Kent Displays, Inc. to synthesize organic molecules in connection with a project to develop a temperature independent, high helical twisting power chiral additive for use in portable liquid crystal displays. During his employment, Dr. Falana developed a synthesis protocol for making a novel class of chemical compounds. Dr. Falana used this process to synthesize a compound within this genus designated "Compound 7." While Compound 7 possessed some of the desired characteristics, and represented "significant progress," it did not completely satisfy the project goals. Dr. Falana subsequently resigned from KDI and Kent State to take another position.

A few months after Dr. Falana's resignation, the Kent State professor who had selected Dr. Falana used Falana's synthesis protocol to synthesize another member of the novel class, "Compound 9." Compound 9 possessed the desired degree of temperature independence, and KDI and Kent State filed an application that led to Patent No. 6,830,789; the patent did not list Dr. Falana as in inventor.

Upon learning that he was not listed as an inventor, and after receiving an unsatisfactory response from the Chief Science Officer at KDI, Falana filed a Section 256 action to correct inventorship. The district court ruled in Falana's favor following a bench trial, further finding that the case was exceptional and awarding attorneys fees in an amount to be determined.

On appeal, the Federal Circuit concluded that Dr. Falana had contributed to the conception of the claimed invention. Drawing upon established law, the court first noted that "[c]onception of a chemical compound 'requires knowledge of both the specific chemical structure of the compound and an operative method of making it.'' Slip Op. at 12 (quoting Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997). Here, Dr. Falana contributed to the method of making the claimed compound in a way the required more than the exercise of ordinary skill. The court recognized an important limitation on its holding, however:

"[This] does not mean that such an inventor necessarily has a right to claim inventorship of all species within that genus which are discovered in the future. "Once the method of making the novel genus of compounds becomes public knowledge, it is then assimilated into the store-house of knowledge that comprises ordinary skill in the art." Id. at 15-16.

Comment: The court was also careful to limit its holding in another way. It could have concluded that Falana was inventor simply due to his contribution to the method used to make Compound 9. It did not. Instead, the panel held "that a putative inventor who envisioned the structure of a novel genus of chemical compounds and contributes the method of making that genus contributes to the conception of that genus." Id. at 15 (emphasis added). It was able to articulate the rule in this way because it agreed with the district court that the patent's independent claims do not include a temperature independence limitation – in other words, the claims as construed were not limited to Compound 9, but rather encompassed the genus of compounds produced using Falana's synthesis protocol. Falana thus contributed both to the method of making the genus as well as the structure of the genus itself. The opinion implies that the outcome could conceivably be different if the claims had been limited to Compound 9. See, e.g., Slip Op. at 17.

Finality of Judgment: Federal Circuit practitioners may want to pay particular attention to the section at the end of the court's opinion in which it concluded that the district court's exceptional case determination was not before it in this appeal. Although the court's ruling on the issue of inventorship represented a final judgment, the court concluded that absent a determination of the attorney fees, the exceptional case determination did not. Nor, the court concluded, was there a basis for it to exercise pendent appellate jurisdiction over the issue.

Patently-O Bits & Bytes by Lawrence Higgins

Microsoft and LG Sign Patent Agreement

  • Microsoft and LG singed a patent agreement that provides coverage under Microsoft's patent portfolio for LG's tablets, mobile phones and other products that runs on the Android Platform. Microsoft claims that more than 70% of all Android smartphones sold in the US are now receiving coverage under Microsoft's patent portfolio. It has been estimated that more than 700,000 Android based devices are sold every day and analyst have predicted that the number will reach 2.5 million devices per day. [Link] Microsoft most likely receives anywhere from $5-$15 dollars per device sold, meaning Microsoft makes $2.45 million-$7.35 million every day from Android operated phones. [Link]

Wal-Mart and Entrepreneurs

  • Wal-Mart has launched a "Get on the Shelf" contest to find the next new thing to put on their shelves. The contest is limited to categories that Wal-Mart carries, which makes the contest open to all kind of entrepreneurs. There will be 3 winners picked and their items will be sold on Walmart.com, with the grand prize winner being featured on the site's home page and stocked n select Wal-Mart stores. The public will vote for their favorite products, similar to other contest such as American Idol. [Link]

National Medal of Technology and Innovation

  • The PTO is seeking nominations for the 2012 National Medal of Technology and Innovation. The medal is presented by the President and is the highest award for technological achievement in the US. The medal is awarded to individuals, teams of up to 4, or companies for their contribution to America's economic, environmental, and social well-being. [Link]

Patent Jobs:

  • Cardinal Intellectual Property is seeking a patent search attorney to work at their Evanston, Illinois location. [Link]
  • Roberts Mlotkowski Safran & Cole is looking for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]
  • Cardinal Intellectual Property is searching for patent search professional to work remotely. [Link]
  • DIRECTV is seeking a senior patent analysis counsel with 6+ years of experience to work at their El Segundo, California location. [Link]
  • Dority & Manning is seeking patent attorneys with 1-4 years of experience and a BSEE or BSME to work at their Greenville, SC office. [Link]
  • The Sughrue Firm is searching for patent agents with 1-2 years of experience and backgrounds in computer science of software to work in their Silicon Valley office. [Link]
  • Whirlpool is seeking a patent agent with a minimum of 2 years of experience and a BS in engineering to work at their Saint Joseph, Michigan location. [Link]
  • Hiscock & Barclay is seeking patent agents/attorneys with a minimum of 3-5 years of experience to work at their New York offices. [Link]
  • Steptoe & Johnson is searching for IP associates with a minimum of 4 years of experience in patent litigation and a technical background to work in their DC or Chicago offices. [Link]
  • Edell, Shapiro & Finnan is looking for a patent attorney with 2+ years of experience and a degree in EE or physics to work at their Rockville, Maryland office. [Link]
  • Michael Best & Friedrich is seeking a biotech associate with 5+ years of experience and a Ph.D. to work at their Madison, Milwaukee or Chicago office. [Link]
  • Intellectual Ventures and Invention Law Group is looking for a Chief Policy Counsel with 15+ years of experience to work at their Bellevue, Washington location. [Link]
  • Telesign is seeking a IP analyst with 2+ years of experience to work at their Marina Del Rey, California location. [Link]

Upcoming Events:

  • The American Bar Association Section of Intellectual Property Law, Young Lawyers Division, ABA-IPL Young Lawyers Action Group and the ABA Center for Continuing Legal Education will sponsor a webinar on January 20 at 1 p.m. Eastern time. The webinar, Prosecution Strategies: Tackling USPTO Obviousness Rejections will explore how the KSR standards have been applied in various technology areas and provide guidance for effective avenues of argument based on the technology area. Speakers include: Janet Hendrickson, Gregory Hillyer, Michelle O'Brien, and Zachary Stern. [Link]
  • American University Washington College of Law Administrative Law Review will be hosting an afternoon symposium on January 25 on the creation and administration of a new trial-like review procedure, more commonly known as post-grant patent opposition, at the U.S. Patent and Trademark Office, titled Regulating Innovation: How the Patent and Trademark Office Intends to Create Adjudication From Scratch. The symposium will explore the rulemaking that will be required of the agency, the implementation of the post-grant review process, and industry reaction to the proposed changes.
  • International IP- Is the IP World Flat? Santa Clara Computer & High Tech Law Journal is hosting its annual symposium January 27 on SCU Campus. The symposium will include the following 4 panels: (1) International Patent Harmonization; (2) Non Practicing Entities: Going Global; (3) The Rise of Chinese IP; and (4) Comparative e-Privacy Regimes. Speakers include: David Abrams, Colleen Chien, Nancy Kremers, Francois Gilbert and many others. Also, PatentlyO's Dennis Crouch will be a Speaker discussing International Patent Harmonization. [Link]
  • The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
  • AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
  • The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
  • The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
  • The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]

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

Patently-O Bits & Bytes by Lawrence Higgins

Microsoft and LG Sign Patent Agreement

  • Microsoft and LG singed a patent agreement that provides coverage under Microsoft's patent portfolio for LG's tablets, mobile phones and other products that runs on the Android Platform. Microsoft claims that more than 70% of all Android smartphones sold in the US are now receiving coverage under Microsoft's patent portfolio. It has been estimated that more than 700,000 Android based devices are sold every day and analyst have predicted that the number will reach 2.5 million devices per day. [Link] Microsoft most likely receives anywhere from $5-$15 dollars per device sold, meaning Microsoft makes $2.45 million-$7.35 million every day from Android operated phones. [Link]

Wal-Mart and Entrepreneurs

  • Wal-Mart has launched a "Get on the Shelf" contest to find the next new thing to put on their shelves. The contest is limited to categories that Wal-Mart carries, which makes the contest open to all kind of entrepreneurs. There will be 3 winners picked and their items will be sold on Walmart.com, with the grand prize winner being featured on the site's home page and stocked n select Wal-Mart stores. The public will vote for their favorite products, similar to other contest such as American Idol. [Link]

National Medal of Technology and Innovation

  • The PTO is seeking nominations for the 2012 National Medal of Technology and Innovation. The medal is presented by the President and is the highest award for technological achievement in the US. The medal is awarded to individuals, teams of up to 4, or companies for their contribution to America's economic, environmental, and social well-being. [Link]

Patent Jobs:

  • Cardinal Intellectual Property is seeking a patent search attorney to work at their Evanston, Illinois location. [Link]
  • Roberts Mlotkowski Safran & Cole is looking for a patent attorney with 2-4 years of experience and a degree in EE to work at their McLean, Virginia office. [Link]
  • Cardinal Intellectual Property is searching for patent search professional to work remotely. [Link]
  • DIRECTV is seeking a senior patent analysis counsel with 6+ years of experience to work at their El Segundo, California location. [Link]
  • Dority & Manning is seeking patent attorneys with 1-4 years of experience and a BSEE or BSME to work at their Greenville, SC office. [Link]
  • The Sughrue Firm is searching for patent agents with 1-2 years of experience and backgrounds in computer science of software to work in their Silicon Valley office. [Link]
  • Whirlpool is seeking a patent agent with a minimum of 2 years of experience and a BS in engineering to work at their Saint Joseph, Michigan location. [Link]
  • Hiscock & Barclay is seeking patent agents/attorneys with a minimum of 3-5 years of experience to work at their New York offices. [Link]
  • Steptoe & Johnson is searching for IP associates with a minimum of 4 years of experience in patent litigation and a technical background to work in their DC or Chicago offices. [Link]
  • Edell, Shapiro & Finnan is looking for a patent attorney with 2+ years of experience and a degree in EE or physics to work at their Rockville, Maryland office. [Link]
  • Michael Best & Friedrich is seeking a biotech associate with 5+ years of experience and a Ph.D. to work at their Madison, Milwaukee or Chicago office. [Link]
  • Intellectual Ventures and Invention Law Group is looking for a Chief Policy Counsel with 15+ years of experience to work at their Bellevue, Washington location. [Link]
  • Telesign is seeking a IP analyst with 2+ years of experience to work at their Marina Del Rey, California location. [Link]

Upcoming Events:

  • The American Bar Association Section of Intellectual Property Law, Young Lawyers Division, ABA-IPL Young Lawyers Action Group and the ABA Center for Continuing Legal Education will sponsor a webinar on January 20 at 1 p.m. Eastern time. The webinar, Prosecution Strategies: Tackling USPTO Obviousness Rejections will explore how the KSR standards have been applied in various technology areas and provide guidance for effective avenues of argument based on the technology area. Speakers include: Janet Hendrickson, Gregory Hillyer, Michelle O'Brien, and Zachary Stern. [Link]
  • American University Washington College of Law Administrative Law Review will be hosting an afternoon symposium on January 25 on the creation and administration of a new trial-like review procedure, more commonly known as post-grant patent opposition, at the U.S. Patent and Trademark Office, titled Regulating Innovation: How the Patent and Trademark Office Intends to Create Adjudication From Scratch. The symposium will explore the rulemaking that will be required of the agency, the implementation of the post-grant review process, and industry reaction to the proposed changes.
  • International IP- Is the IP World Flat? Santa Clara Computer & High Tech Law Journal is hosting its annual symposium January 27 on SCU Campus. The symposium will include the following 4 panels: (1) International Patent Harmonization; (2) Non Practicing Entities: Going Global; (3) The Rise of Chinese IP; and (4) Comparative e-Privacy Regimes. Speakers include: David Abrams, Colleen Chien, Nancy Kremers, Francois Gilbert and many others. Also, PatentlyO's Dennis Crouch will be a Speaker discussing International Patent Harmonization. [Link]
  • The American Conference Institute (ACI) The Comprehensive Guide to Patent Reform For Life Science Companies, conference is scheduled for January 31- February 1 in New York. (Patently-O readers register with PO 200 for a discount). [Link]
  • AIPLA webinar, Selecting the Right Expert to Put on (or Poke Holes in) a Patentee's Case, will be held on February 1. The webinar will focus on the process of selecting a damage expert, recent cases that may influence the decision and some of the ways that a damage expert can assist with evaluating poking holes in the opposing expert's analysis. The webinar will be presented by Gillian Thackray and Philip Green. [Link]
  • The DC Bar's IP Section will host an event, Section 337 IP Investigations at the ITC: Lessons for District Court Practitioners, on February 2. The event will discuss what practitioners need to know before appearing at the ITC. Speakers include ITC Commissioner Shara Aranoff, ITC Judges Theodore Essex and Robert Rogers, Jr., Attorney Advisor to Commissioner Michael Diehl, Christine Lehman, Marcia Sundeen, Maureen Browne, and Jaime Underwood. [Link]
  • The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
  • The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 on London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]

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

Upcoming Events: Santa Clara

On Friday, January 27, I'll be speaking at the Santa Clara Computer & High Technology Law Journal's annual symposium at SCU's Locatelli Center.  The event is focusing on global intellectual property issues.  My morning panel will discuss the future of patent harmonization and cooperation amongst the world's patent systems.  Professor Chien's panel will raise the prospect of the global reach non-practicing intellectual property owners.  Ken Korea from Samsung is a great speaker and will keynote.  Ken may answer the symposium's titular question: Is the IP World Flat? Afternoon panels will address IP in China and comparative electronic privacy regimes.

 

The New Choice: Inequitable Conduct or Copyright Infringement

CopyrightSymbolMany patent applicants enjoy the fact that the USPTO lists all cited and considered references on the face of each patent. That listing provides an apparent presumption that the newly patented invention is a step beyond anything found in those references. Economists have even shown that patents with more cited references tend to be relatively more valuable. Patent applicants are also under a duty to submit prior art references that are material to patentability. 37 C.F.R. §1.56.

A negative side of citation is now emerging. Recently, copyright owners have begun trolling non-patent prior art citations to see whether any of their works were copied and submitted to the USPTO. Of course, following standard law firm practice additional copies were likely generated for the file and for review by the inventors or attorneys. These copies may be hard copes or electronic versions, but as MegaUploads can now attest, that makes no difference in copyright law. Statutory damages for copyright infringement range from $750 to $150,000 per work. The exact figure is largely within the discretion of the judge and is based upon what the "the court considers just" and whether the infringement was willful.

A number of scientific journals have begun to threaten law firms and their clients for submitting copies of journal articles to the USPTO.  The typical cease & desist letter that I've seen says something like the following:  

"We've been trolling through USPTO records and found that you submitted a copy of one of our articles articles to the USPTO and we suspect that you maintained other copies in your files and distributed additional copies within your organization. These actions constitute copyright infringement and are not fair use.  We will sue you unless you come into compliance with our CCC licensing scheme."

To be clear, the focus in the letter is on copies being submitted to the USPTO as well as copies retained in the file and distributed internally.

I looked-into the CCC automated licensing system and found that they offered the right to make copies of a NATURE article (one of the journals taking action) for $32 per copy. 

USPTO Response: In a surprisingly bold statement, the USPTO's General Counsel Bernie Knight released a statement late last week indicating the USPTO's belief that submission of unlicensed copies of copyrighted materials to the USPTO for the purpose of complying with Rule 56 cannot create copyright liability because that action is fair use under 17 U.S.C. 107.  This issue previously arose when the USPTO was building the PAIR electronic record system.  It was because of potential copyright concerns that the USPTO decided not to make available non-patent prior art through the PAIR system. However, the USPTO has offered its position that it is fair use for the agency to charge a fee to make and distribute paper copies of the copyrighted works (as part of the file history).

The USPTO took no position on whether applicant's creation of file-copies and internal distribution of copies also qualify for the fair use defense. In addition, applicants who have obtained limited licenses to works may be under a contractual duty to avoid making further copies even if those copies would have been fair use.

How much money?: On an annual basis, I would estimate that at least five hundred thousand journal articles are submitted to the USPTO for consideration.  Each submission probably results two local copies for the file & review by the attorney, inventors, and others in addition to the submitted copy.  That takes the annual licensing market to around $50 million.  Not a tremendous amount for a nationalmarket, but that may be enough to save the struggling scientific journal industry.

Fair Use: An interesting aspect of fair use analysis is that the outcome can change based upon market conditions and general custom.  Here, for instance, if it is very easy to obtain a license by simply paying a fee online and a number of patent applicants begin paying that fee regularly, an action that was once considered fair use may again fall under the copyright infringement umbrella. 

How will your firm respond? Should your engagement letter be amended? 

En Banc Federal Circuit To Reconsider Scope of Intervening Rights Defense

By Dennis Crouch

Marine Polymer Tech. v. HemCon, Inc. (Fed. Cir. 2011)

The Court of Appeals for the Federal Circuit has announced that it will hold an en banc rehearing of the Marine Polymer Tech case. Straying from its recent practice, the Court has not suggested any particular questions that it will address nor did the Court offer to receive friend-of-the-court briefs filed without leave. Thus, under the Federal Circuit rules of practice, any amicus curiae may file a brief only with either (1) leave of court or (2) leave of all parties to the appeal. (Fed. Cir. R. 29).

The initial appellate decision focused on the potential for intervening rights created by patentee arguments made during reexamination. Here, the court held that that a narrowing claim construction argument made by the patentee in a reexamination gives rise to absolute intervening rights for an accused infringer’s products made or sold prior to the reexamination request. An important quirk of the case is that the narrow construction that the patentee suggested to the PTO was the same construction that had been ordered by a district court in this case. Thus, at the time, the argued-for construction was seen as the true construction rather than a narrowing construction. However, the argued-for construction became narrowing after-the-fact once the Federal Circuit rejected the lower court’s construction as unduly narrow.

The majority opinion was written by Judge Dyk and Joined by Senior Judge Gajarsa. Judge Lourie filed a dissent that looked to the patent statute for guidance on the legal scope of intervening rights. He argued that the statute does not create intervening rights based upon arguments but rather only apply to “amended or new claims.” See 35 U.S.C. §§ 307(b), 316(b), and 252.

The question suggested by the plaintiff-appellate Marine Polymer follows Judge Lourie’s dissent:

Whether arguments made regarding a patent claim during reexamination of a patent give rise to intervening rights under 35 U.S.C, §§ 307(b) and 252, where the patent claim in question is neither “amended” nor “new” in the reexamination.

Intellectual Ventures filed a brief supporting the en banc rehearing – noting its “concern[] with the panel’s redefining of the term ‘amended claim’ to include original claims that have not been textually altered.”

In response, HemCon argued that Marine Polymer’s formalistic argument does not make sense. In particular, HemCom noted that it would be odd “to adopt a rule under which intervening rights would apply when claims are substantively changed during reexamination by altering the actual language of the claims, [but] would not apply when claims are substantively changed through arguments made to the USPTO.”

There is some tension between this decision and that of Bettcher Industries v. Bunzl USA (Fed. Cir. 2011). In Bettcher Industries, the court held that the estoppel provisions of 35 U.S.C. § 315(c) only apply once all appeal rights have been exhausted. In addition, the case is directly in tension with Laitram Corp. v. NEC Corp., 163 F.3d 1342 (Fed. Cir 1998). In that decision (penned by Judge Lourie), the court followed a two step process to determine whether intervening rights applied. First, the court looked to determine whether the text of the patent claim had changed. Since the text had changed in that case, the court then looked to see whether the change was “substantial.”

My expectation is that this decision will be reversed by a strong majority on rehearing.

Supreme Court Affirms Broad Congressional Authority to Offer Intellectual Property Rights for Public Domain Works

By Dennis Crouch

Golan v. Holder (Supreme Court 2011)

As widely expected, the Supreme Court today affirmed a lower court ruling that the "Copyright Clause" of the U.S. Constitution does not prevent Congress from providing copyright protection to public domain works. As also expected, Justice Breyer (joined by Justice Alito) dissented from the 6-2 decision.

The case was filed after Congress restored the copyrights to a thousands of foreign-authored works that had fallen into the public domain based upon the authors' failures to observes pre-Berne Convention formalities such as registration and notice ©. Many of the restored works had been known to be in the public domain for decades before the 1994 passage of the statute – the Uruguay Round Agreements Act. (Picasso's 1937 Guernica painting reproduced without a license below is an example of a work whose copyright was restored by the statute). The Supreme Court opinion is written as a further extension of the 2003 Eldred decision that affirmed Congressional power to extend copyright by an additional 20-years as part of the Sonny Bono Copyright Term Extension Act (CTEA). I had suggested to my students last semester that the best conceivable outcome for petitioners would be that the Court would determine that heightened scrutiny should apply to adjudge the free speech impact of the expansion of copyright law. However, the court also rejected that path.

The Supreme Court opinion authored by Justice Ginsburg rejected the three primary arguments made by petitioners:

  1. The Court held that allowing works from the public domain to be later copyrighted does not result in the potential for perpetual copyright in violation of the "limited terms" language of the Constitution. In its opinion, the court rejected any notion that the public has a "vested" right in works from the public domain. "Once the term of protection ends, the works do not revest in any rightholder. Instead, the works simply lapse into the public domain."
  2. The purpose of copyright law – to "promote the Progress of Science" – should be broadly interpreted to include both promotion of the creation of new work as well as promotion of knowledge and learning more generally. And, inducing of the dissemination of existing works is a permissible means to promote science. In addition, providing for access to foreign markets by acceding to treaty obligations can also provide an incentive for creation of new works and therefore promote the progress.
  3. In Eldred, the free speech rights embodied by the First Amendment to the U.S. Constitution do not limit Congress from modifying copyright law within its "traditional contours." Petitioners argued that the removal of elements from the public domain was outside of these traditional contours and that, under Eldred, the Supreme Court should use a heightened level of scrutiny to determine whether the new law offends free speech concerns. The Court rejected that analysis based upon its conclusion that Congress has, on several occasions, removed elements from the public domain and that, therefore, this action is within the traditional contours of copyright policy. In addition, the Court held that the impact of the particular law at issue was simply to place the foreign works in the copyright position that they would have occupied if the current copyright regime had been in place at the time. From that perspective, the new law fits well within the traditional contours of copyright law.

Impact on Patent Law: Copyright and patent share the same constitutional underpinnings and each is purposed to "promote the Progress" of their respective fields. This leads me to the conclusion that the reasoning in Golan would be equally applicable to Congressional expansions of patent law. In its decision, the Court explicitly refers to historic patent restoration bills as "informing" the inquiry into the scope of the clause as it applies to copyright. The converse should also be true. Thus, perhaps Congress would have authority to extend patent terms based upon a patentee's provision of data additional testing data or its promise to manufacture the product in the US.

An interesting caveat comes from the Court's 1996 Graham decision. That opinion includes the line that "Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available." In distinguishing that line, the Court wrote that the passage does not speak "to the constitutional limits on Congress' copyright and patent authority" but instead it addresses "an invention's very eligibility for patent protection." (quoting Eldred). The seeming distinction here is that Congress has more latitude in determining patent (and copyright) term or duration and less latitude in determining subject matter eligibility.

In dissent, Justice Breyer wrote, inter alia, that the "newness" requirement has always been a necessary and fundamental element of intellectual property (copyright and patent) protection. This newness requirement is offended by allowing copyright protection to be offered for works created long ago and already known to be in the public domain.

The political setup of this case is somewhat interesting because the government's pro-property position could be conceived as the conservative approach while Golan's more liberal position is suggesting that anyone should be able to use these works without payment to the creator. At the same time, the liberal Golan's legal argument was based upon the traditionally conservative suggestion of strong Constitutional limits on the powers of the federal government.

Note:

  • At several points in this article I would have linked to Wikipedia, but the site is not generally available today because of its ongoing protest against an expansion of intellectual property law that would require services such as Wikipedia and Google to remove links to sources of pirated material.

New Track I Prioritized Examination for RCE Applications

Guest post by Baltazar Gomez, PhD. Dr. Gomez is a Patent Agent at Teva Pharmaceuticals USA.

The United States Patent and Trademark Office published final rules on December 19, 2011 to implement a prioritized examination program for applications in which a Request for Continued Examination (RCE) has been filed. The Office expects that this program will provide patent applicants with added flexibility to accelerate processing of their RCE applications. An application is eligible for this program if only one RCE has been filed for the application.

The effective date for the program is December 19, 2011, and will apply to any patent application in which a proper RCE has been filed before, on, or after December 19, 2011. The requirements, set forth in 37 C.F.R. 1.102(e)(2), are the following.

  1. The RCE is for an original utility or plant nonprovisional application or a U.S. national stage application.
  2. The request for prioritized examination is filed electronically using request form PTO/SB/424. The request may be filed with, or after, the filing of the RCE. The request must be filed before the first Office Action after the RCE.
  3. At the time of the request, the application must contain or be amended to contain no more than four independent claims, no more than thirty total claims, and no multiple dependent claims.
  4. The request is accompanied by the prioritized examination fee ($4800), the processing fee ($130), and if not previously paid, the publication fee ($300).
  5. The request is one of 10,000 for the fiscal year.

The limit on the number of requests includes requests for prioritized examination for initial examination and requests for prioritized examination after filing an RCE. As of January 3, 2012, 1,694 Track I petitions have been filed. The Office has issued decisions on 1,231 requests, granting 1,218 (98.9%) of the requests it has decided. A first Office Action has issued in about 31 days after approval of the request, and about 66 days after filing of the request. The first patent on a Track I application issued on January 10, 2012 (U.S. Pat. No. 8,094,942), which was filed on September 30, 2011.

An application accorded special status after filing an RCE will be placed on the examiner's special docket throughout its entire course of continued prosecution before the examiner until a final disposition is reached in the application. An application under prioritized examination, however, would not be accorded special status throughout its entire course of appeal or interference before the BPAI, or after the filing of a subsequent RCE. The goal of the program is to provide a final disposition within twelve months of prioritized status being granted. A final disposition is any of the following: mailing of a notice of allowance; mailing of a final Office Action; filing of a notice of appeal; completion of examination under 37 C.F.R. 41.102; filing a subsequent RCE; or abandonment of the application.

Filing an amendment in the application that results in more than four independent claims, more than thirty total claims, or a multiple dependent claim is not prohibited, but it will terminate prioritized examination. An Applicant will not receive any refund of the prioritized examination fee if prioritized examination is terminated.

The new prioritized examination for RCE applications differs from that for an original application in at least two ways. First, a U.S. national stage application in which an RCE has been filed is eligible for this program. Such an application is not eligible for the basic Track I program (37 C.F.R. 1.102(e)(1)). Second, a request for prioritized examination can be filed after an RCE has been filed. In the basic Track I program, a request must be filed at the same time the application is filed.

The new prioritized examination for RCE applications appears to mitigate some effects of previous changes to Office procedures for handling RCE applications. These previous changes to RCE handling at the Office have significantly delayed examination of many RCE applications.

The Role of In-House Patent Counsel in Prosecuting Patents

Query: When a law firm is hired to prosecute patents, should the in-house patent counsel be included in the list of patent attorneys with power of attorney over pending patent applications?

My informal conversations suggest to me that most major patent applicants want in-house patent professionals listed as having power of attorney in their pending cases. Smaller companies – even when they employ an in-house registered patent professional – are much less likely to be listed on the power-of-attorney roll.

When associated with a customer number, the power of attorney allows in-house counsel to access unpublished application materials through the USPTO’s electronic “Private PAIR” system. In addition, the in-house counsel would then have the right and authority to discuss the case directly with patent examiners and file papers with the Office.

On the other hand, some in-house counsel want to avoid complicating prosecution control and keep all filing duties in the hands of the law firm experts. This allocation of duties can also help to shift blame to a law firm when problems arise or when information fails to reach decision makers. When in-house counsel holds power of attorney, I could conceive of a law firm potentially avoiding a malpractice claim by showing that the in-house counsel failed in its role as “backup.”

Guest Post: Should you Submit Third-Party Prior Art?

By Paul Morgan

Introduction and Summary

On January 5 the PTO proposed a new 37 CFR §1.290 in the Federal Register for third party pre-issuance submissions of prior art in patent applications of others. The new rule is needed to implement the new statutory provision – 35 U.S.C. §122(e) – found in Section 8 of the AIA [Leahy Smith America Invents Act]. 35 U.S.C. §122(e) will be effective as of September 16, 2012, and will be usable against any pending applications [including reissues but not reexaminations] filed before or after that date. It will permit anyone to submit patents, published patent applications, or other printed publications, to the USPTO for consideration and inclusion in the record of a patent application as long as the submission includes a "concise statement of relevance" and meets some other paperwork requirements, which need not be discussed here since they will be clearly spelled out in the final PTO rules. As discussed below, §122(e) includes a significant expansion of the time period for submitting prior art documents to be put into someone else's pending application. The statute also expands what you can say about the documents (accompanying explanations and arguments) well beyond the present limitations found in 37 CFR §1.99. The submission process will remain cheap and simple, but it will still present the same conundrums as to whether or not you should use it?

In the same Federal Register is the proposed PTO rulemaking for amending 37 CFR §1.501 to accommodate the amendment of 35 U.S.C. §301. This amendment will slightly expand what information anyone can submit to the USPTO for inclusion in an already issued patent file when accompanied by a written explanation regarding the "pertinency and manner of applying" the information to at least one patent claim. That expand [new] information which can be put into an issued patent file will include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent. But the Office's use of such written statements will be limited to determining the meaning of a patent claim in reexamination proceedings and post grant review proceedings. This provision is also effective on September 16, 2012.

The Present Situation [PRE AIA]

First keep in mind that the PTO considers it to be actionable unethical conduct to put any papers into anyone else's ex parte [normal] patent application file unless there is an express statutory basis for doing so. Furthermore, papers attempted to be filed in a reexamination in which you are not a party [other than just the initial request papers for an ex parte reexamination], will not be entered. Adverse prior art submissions for anything in the PTO are quite restricted.

37 CFR §1.291 "Protests by the public against pending applications" and 37 CFR §1.292 "Public use proceedings" have existed for many years, but have been rarely used, and I suspect that few PTO practitioners or PTO personnel have ever seen one. Some senior PTO officials I asked at a CLE meeting several years ago doubted if there had been more than a handful per year. The rare Rule 292 proceedings are mostly used in connection with a parallel interference. Rule 291's potential usage was significantly restricted when the statute providing for U.S. 18 month application publications went into effect, ending Rule 291 "protest" filing opportunities after an application publication date.

The PTO at that time also put severe rule constraints that were not statutorily required into a 37 CFR §1.99 limiting what could be submitted and when. Rule 99 has a short time limit of only two months following the application publication date. Rule 99 also expressly states at (d) that a "submission under this section shall not include any explanation of the patents or publications, or any other information. The Office will not enter such explanation or information if included in a submission under this section." There is also a limit of 10 submitted documents. The PTO even threatened to reject submitted prior art patent copies if they were merely marked or high-lined to show the examiner where the relevant teaching or disclosure was buried in the patent! It seemed obvious to me at that time that the PTO did not really want to be bothered with any extra examiner work from third party prior art submissions. [The AIA has now at least made it clear that that is not quite what Congress has in mind.] An English language translation must be provided for all relevant portions of any listed non-English language document to be considered by the examiner, and that requirement will continue under the proposed new rules. Some patent attorneys reportedly consider it preferable to just send prior art to an applicant's patent attorney by registered mail and rely on the inequitable conduct concerns of that patent attorney to get that patent attorney to file the prior art the application, or to set up an IC defense if they do not.

35 U.S.C. §301 above [with its original 37 CFR §1.501] was enacted years ago accompanying the first [ex parte] reexamination system. It is simply to allow people to place prior art in an issued patent file without having to initiate a reexamination, so that the art might hopefully be considered if anyone subsequently requested a reexamination. It is understood that §301 has rarely been used, and I am not aware of any PTO statistics to the contrary, even though §301 says that it can be done anonymously. My very limited experience was that the PTO clerical staff did not know what to do with the [rare] §301 submittal and it was not placed in the patent file until we made follow-up efforts. [A copy of the PTO submittal mailed to the patent owner was helpful for a licensing discussion, but I wouldn't count on that happening often.]

What's New?

New 35 U.S.C.122(e)(1) and its proposed new rule 37 CFR §1.290 will greatly expand when you can legally put prior art into someone else's pending application file. As shown below, that is awkwardly expressed as "before the earlier of .. or the later of" three events in an application. But clearly it will normally be available for a much longer time period than the mere 2 months after a patent application is published of present Rule 99. It may be submittable for several years for applications not yet having a first office action with a claim rejection, as long as there is as yet no notice of allowance. Nor can the present unreasonable Rule 99 prevention of any explanations or comments on the submitted art remain, since "a concise description of the asserted relevance of each submitted document" is specifically required by this new statute:

(e) Preissuance Submissions by Third Parties-

(1) IN GENERAL- Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of–

(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or

(B) the later of–

(i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or

(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.

(2) OTHER REQUIREMENTS- Any submission under paragraph (1) shall–

(A) set forth a concise description of the asserted relevance of each submitted document;

(B) be accompanied by such fee as the Director may prescribe; and

(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.

As noted, the proposed amended 37 CFR §1.501 for the AIA amendment of 35 U.S.C. §301 will just slightly add to the information can be submitted to the PTO to merely put into an issued patent file. That information can now comprise or include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent, and that information can supposedly be used in subsequent actual reexaminations. However, even if that made sense tactically or strategically in some situation, perhaps in anticipation of a potential ex parte reexamination initiated by the patent owner itself, I fail to see how that kind of material can affect that many reexaminations? The Fed. Cir. requirement that claim scope in a reexamination apply a "broadest reasonable interpretation" test is not the same as claim interpretation in patent litigation.

But Do You Really Want To Do It & How Likely Is the Overall Usage?

How likely is it that this somewhat increased opportunity to cite prior art in applications or patent files of others will be used? That depends largely on whether you think doing so is really a good idea or not. That obviously includes guessing how likely is a regular examiner in normal ex parte patent examination [not a reexamination] going to consider and apply that prior art to reject claims? A prior statistical study published by Prof. Crouch on his Patently-O blog of a low examiner usage rate of prior art cited by the applicants themselves is not encouraging. But perhaps a novel third party submission is more likely to get an examiner's attention and claim rejections than routine applicant IDS dumps?

Even if that effectiveness was predictable, there is clearly a serious risk in third party submissions of art into applications of others under any system. It will case the application owner to think that someone else thinks their patent application is important enough be worth attacking its claim scope. That is logically going to cause the patent application owner to put extra effort into getting that application allowed, with broad and variable scope claims, including possible RCE's and appeals if necessary, and possibly filing and keeping divisionals and continuations pending. Furthermore, the claims can be amended to distinguish the third party cited art without incurring "intervening rights" as would be the case in a reexamination. While the third parties citing the prior art do not face dangerous estoppels [as in inter partes reexaminations or PGR] they do risk greatly strengthening the enforceability of the resultant patent against that or similar prior art if not all potentially infringed claims are finally rejected.

The rare use of any of the present third party prior art submission systems does not suggest their likely future use, [unlike the increasing use of reexaminations]. The PTO has apparently never kept statistics on the number of prior art filings in other peoples patent applications under present 37 CFR 1.99 (in force since 2000), or otherwise. But I was cognizant of a docketing operation that was handling thousands of pending patent applications, and only one such third party prior art submission was ever identified as being filed against any of those thousands of U.S. applications [excluding those in interferences] and it was not successful in getting any claims rejected.

Perhaps there will be somewhat higher usage and success rates for the new 35 U.S.C.122(e)(1) and 37 CFR §1.290 because it will allow attached explanations of the relevance of the cited art. But until that is demonstrated, the conservative tendency of patent attorneys to save prior art defenses until they think they can be used more effectively later, especially in an inter partes reexamination [where the patent owner cannot make completely unchallenged ex parte arguments against the cited art] seems likely to prevail.

There is of course an academic myth, supported by some companies presumably for its PR value, that was at play in the lead-up to these AIA changes. Namely a strange inherent assumption that large numbers of the public have nothing better to do with their time and money than to undertake the tens of thousands of prior art searches and claim-relevant submissions that would be needed to have any significant effect on patent examination quality for the more than 500,000 patent applications a year, even though they are not aware of any that could ever threaten any of their products. A mere couple of hundred patent applications were provided with prior art submissions under a pilot "Peer to Patent" system, despite all its publicity, of which only a minority resulted in claims being rejected using the submitted prior art.

As usual, I would appreciate comments from others with relevant information on these subjects.

How does the USPTO Investigate Allegations of Misconduct?

by Dennis Crouch

In this post, I discuss the process that the PTO follows in investigating allegations of attorney or agent misconduct. In addition, I review two recent disciplinary decisions. Both involve the submission of information disclosure statement. In one case, the attorney improperly submitted documents subject to a litigation protective order. In the other case, the attorney improperly submitted prior art documents without properly reading and reviewing the documents.

In the recent proposed rule on the statute of limitations for USPTO disciplinary proceedings, new Office of Enrollment and Discipline director William Covey provided a nice summary of the process that his office uses to investigate allegations of improper conduct by registered patent practitioners.

Generally speaking, there are four steps taken by the OED Director prior to the filing of a Sec. 11.32 disciplinary complaint against a practitioner:

  1. Preliminary screening of the allegations made against the practitioner, see Sec. 11.22(d);
  2. requesting of information from the practitioner about his or her alleged conduct, see Sec. 11.22(f)(1)(ii);
  3. conducting a thorough investigation after providing the practitioner an opportunity to respond to the allegations, see Sec. 11.22(a); and
  4. submitting the investigated case to the Committee on Discipline for a determination of whether there is probable cause to bring charges against the practitioner, see Sec. 11.32.

The first step is the preliminary screening of allegations to evaluate whether they merit providing the practitioner the opportunity to address them. Allegations are often incomplete and do not provide the OED Director with a full picture of what may have transpired. In other words, mere allegations do not necessarily provide the OED Director with a reasonable basis for automatically seeking information from the practitioner regarding a possible ethical violation; therefore, the OED Director always conducts an initial review of the allegations. Moreover, the OED Director recognizes that issuing a request for information to the practitioner–the second step–typically triggers anxiety for the practitioner, may interfere with the practitioner's practice, and may cause the practitioner to incur legal expenses in responding to investigative inquiries by OED. For this reason also, OED does not contact the practitioner automatically upon receipt of information alleging a practitioner committed an ethical violation. In short, the OED Director seeks the practitioner's side of the story, if at all, only after the OED Director preliminarily screens the information and determines that possible grounds for discipline exist. See 37 CFR 11.22(d).

During the preliminary screening process, an OED staff attorney reviews the allegations to determine whether they implicate any of the Disciplinary Rules of the USPTO Code of Professional Responsibility. To this end, the attorney may seek out additional evidence (review Office records, request additional information from the person making the allegations or from third persons, etc.) to ensure that the matter is disciplinary in nature and the allegations are supported by objective evidence.

The OED's preliminary screening may obviate the need to seek information from the practitioner because the screening often reveals that the allegations do not present a basis for filing a Sec. 11.32 disciplinary action against the practitioner. Under such circumstances, the OED Director closes the case without contacting the practitioner. Hence, the preliminary screening helps ensure that a practitioner is not subjected to a premature request for information or its attendant stress, turmoil, and cost. The screening also ensures that the Office does not expend its limited resources seeking information from a practitioner unnecessarily.

After the preliminary screening, if the OED Director determines that the allegations establish possible grounds for discipline, the OED Director seeks the practitioner's side of the story–the second step prior to filing a Sec. 11.32 action. Specifically, the OED Director requests information or evidence from the practitioner pursuant to Sec. 11.22(f)(1)(ii). The practitioner will then have an opportunity to respond to the allegations levied against him or her. Typically, the OED Director does not and cannot have sufficient information to complete a thorough investigation–the third step–before the practitioner has had the opportunity to present his or her side of the story.

Based on current caseload and staffing levels, the OED Director has set a goal to complete the preliminary screening and issue a Sec. 11.22(f)(1)(ii) request, when warranted, to the practitioner under investigation within 60 calendar days of the initial receipt by the OED Director of information suggesting possible misconduct. OED will allow the practitioner 30 calendar days to provide a complete, written response and, as discussed below, may grant a reasonable request for an extension of time to respond.

A complete response to an initial Sec. 11.22(f) request frequently raises factual issues that require further investigation before the OED Director can determine whether actual grounds for discipline exist. Hence, after the OED Director receives the practitioner's response to the Sec. 11.22(f)(1)(ii) request, the OED Director moves to the third step: conducting a thorough investigation of the allegations to uncover all relevant incriminating and exculpating evidence. The third step is time-consuming because it involves the OED Director undertaking a thorough fact-finding (e.g., reviewing issues raised for the first time by the practitioner, obtaining information from any person who may be reasonably expected to provide information or evidence in connection with the investigation pursuant to Sec. 11.22(f)(iii) and from non-grieving clients pursuant to Sec. 11.22(f)(2)) and performing legal analyses of issues. It is in the interests of the public as well as the practitioner under investigation that OED conduct a thorough investigation prior to determining whether the matter should be submitted to the Committee on Discipline pursuant to Sec. 11.32. Hence, such additional follow-up investigative and legal work can take several months to complete.

After completing an investigation of the allegations against a practitioner, the OED Director has the authority to close the investigation without pursuing disciplinary action, issue a warning to the practitioner, enter into a proposed settlement agreement with the practitioner, or convene the Committee on Discipline to determine whether there is probable cause to file a Sec. 11.32 action against the practitioner. See 37 CFR 11.22(h). Based on current caseload and staffing levels, the OED Director has set a goal to submit a matter to the Committee on Discipline for a probable cause determination–the fourth step–within 10 months of the initial receipt by the OED Director of the allegations that a practitioner engaged in misconduct.

Over the past year, the USPTO OED has issued 38 Disciplinary Orders.  Most of the disciplinary problems come from mishandling of client funds, failure to communicate with clients, unauthorized practice of trademark law (for patent agents), and criminal convictions. However, two recent disciplinary orders relate directly to patent practice decisions relating to difficult issues that regularly arise for patent practitioners. Neither case involves any morality judgment, but both resulted in the (stipulated) finding of a violation of the USPTO's code of conduct.  

Conflict created by Parallel Litigation and Reexamination: One recent order involves a "public reprimand" of John Janka. Janka was put a tough position because his client's patent was being simultaneously litigated and reexamined (inter partes). Janka prepared and caused-to-be-filed an IDS in the reexamination that contained material subject to a protective order in the litigation. In addition, Janka sent the confidential documents to another patent practitioner (and asked him to file the IDS) without first obtaining guidance from the district court regarding the protective order. The district court later ruled that these actions violated the protective order. As part of a settlement, Janka agreed with the USPTO that these actions show a violation of 37 C.F.R. § 10.77(b) (handling a legal matter without preparation adequate in the circumstances).

This is a tough case because Janka is obviously under conflicting duties—to both obey the district court's protective order and to disclose material information to the USPTO. The best course of action in this situation would have been to ask the court to lift the protective order regarding the material information. If the court refuses, the patent attorney may have to withdraw from the case. (As an aside, the patentee won both the litigation and the reexamination).

Submitting IDS without reading documents: In a related OED settlement, William Bollman agreed to a 24-month probationary period. Bollman – himself a very experienced patent prosecutor – was the attorney who actually filed the IDS for Mr. Janka.  Bollman admitted that he did not actually read, review, or inspect the six boxes of documents that he received from Janka and filed at the PTO. The order includes the following statement: 

Pursuant to 37 C.F.R. § 11.18(b)(2)(i)[], a registered practitioner who presents a paper to the Office [implicitly] certifies to the best of his or her knowledge, information, and belief formed after an inquiry reasonable under the circumstances that, inter alia, the paper is not being presented for any improper purpose. A practitioner who submits an information disclosure statement without inspecting the submitted documents -i.e., merely acts as a conduit for another person – is considered to have made a false certification to the Office.

This rule follows former OED director Harry Moatz's 2008 statements regarding the submission of papers without proper inspection by the patent law professional responsible for the filing. 

Have you submitted an IDS without reading and reviewing the submitted documents?

The text of of the rule is provided below.

37 C.F.R. § 11.18(b). By presenting to the Office … any paper, the party presenting such paper, whether a practitioner or non-practitioner, is certifying that—

(1) All statements made therein of the party's own knowledge are true, all statements made therein on information and belief are believed to be true, and all statements made therein are made with the knowledge that whoever, in any matter within the jurisdiction of the Office, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or knowingly and willfully makes any false, fictitious, or fraudulent statements or representations, or knowingly and willfully makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 and any other applicable criminal statute, and violations of the provisions of this section may jeopardize the probative value of the paper; and

(2) To the best of the party's knowledge, information and belief, formed after an inquiry reasonable under the circumstances,

(i) The paper is not being presented for any improper purpose, such as to harass someone or to cause unnecessary delay or needless increase in the cost of any proceeding before the Office;

(ii) The other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;

(iii) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(iv) The denials of factual contentions are warranted on the evidence, or if specifically so identified, are reasonably based on a lack of information or belief.

Abbott Loses Patent Rights Due to Gap in Consultant Contract

Abbott Point of Care v. Epocal (Fed. Cir. 2012)

Abbott and Epocal both sell products used for point-of-care testing of blood samples. In 2009, Abbott sued Epocal in the Northern District of Alabama alleging infringement of its U.S. Patent Nos. 6,845,327 and 6,896,778 and asking the court to determine the legal title holder of the patents.

The patents list Dr. Lauks as the inventor and were filed in 2001 shortly after Lauks founded Epocal. The USPTO assignment database include a 2003 assignment from Lauks to Epocal and another assignment filed in 2009 shows the invention was assigned from Lauks to Abbott's predecessor company (i-STAT) vis-à-vis a 1984 employment contract. (Lauks himself did not sign another assignment). These assignments foreshadow the dispute: both Abbott and Epocal claim title to the patents.

It turns out that Lauks was an i-STAT employee in the 1980's and up through 1999 (apparently in New Jersey). He resigned in 1999 but took a position from 1999-2001 as a consultant to i-STAT. His employment agreement included a statement that he "hereby assign[s]" to i-STAT all rights to any invention that he "may make or conceive during [his] employment by … or which relate to any present or prospective activities of Integrated Ionics."

In reading this provision, the Federal Circuit first determined that the assignment clause ended in 1999 when Lauks resigned and the new consulting agreement signed by Lauks did not require that IP rights be transferred. And, in fact, the consulting contract included a provision that Lauks could also work on his own behalf. The Federal Circuit found such a clause to be in conflict with an automatic assignment. The court then concluded that – absent an agreement with i-STAT to assign his rights – Lauks was under no obligation to assign his patent rights to the company.

Because the 1999 Consultation Agreement is silent with respect to any assignment of Lauks' rights in inventions, improvements, or discoveries made or conceived during the consultation period, Lauks had no obligation to assign inventions from the consulting period to i-STAT. Thus, as the district court correctly concluded, the contract does not convey all substantial interest in the '328 or '772 patents.

These holdings were stated as being based upon New Jersey law (apparently the site of the contract). However, the court did not cite to New Jersey statute or precedent that would lead to these conclusions.

The appellate panel did look to New Jersey precedent in affirming the district court's refusal to allow Abbott additional discovery regarding the circumstances of the consulting contract. The court found the contract's plain language clear and unambiguous and that additional extrinsic evidence could not change that determination.

Chief Judge Rader penned the majority opinion, which was signed by Judge Lourie. Judge Bryson filed a dissent.

In dissent, Judge Bryson identified some ambiguity in the 1999 consulting contract as to whether the assignment provisions in the prior employment agreements were incorporated by reference. Based upon that ambiguity, Judge Bryson would have allowed Abbott additional rights of pre-judgment discovery.

The case did not address whether Abbott may have "shop rights" to practice the invention.

Estimate: Fewer than 26,000 Active US Patent Attorneys & Agents

by Dennis Crouch

USPTO records identify about 41,800 active registered patent practitioners.  That number is obviously wrong because many folks have retired from the practice of patent law or even passed-away in the many years since the many years since the USPTO last conducted a survey of active practitioners. Because the PTO has no CLE requirement or regular registration fee, non-practitioners often stay on the rolls even when they should have been dropped.

The Office of Enrollment and Discipline (OED) has a new director — William Covey — who has initiated a new survey of practitioners that will attempt to refresh the rolls. The USPTO will begin mailing survey letters later this month to practioners whose registration numbers are below 25,000.  A response must be returned to the PTO within 45–days in order to remain on the rolls.  Questions can be sent to: OED@USPTO.gov.

In addition to this survey, I am looking to find the rough number of patent attorneys that are actively practicing before the PTO.  As a first cut, I decided to identify all of the registered practitioners associated with one or more recently filed patent applications.  To do this, I pulled up the PAIR files of 47,000 of the patent applications that published in the calendar year 2011. (This represents about 15% of the applications published that year).  Using those documents, I identified all of the patent attorneys associated with each application (usually by PTO customer number). 

It turns out that this group of 47,000 patent applications is associated with about 21,500 patent practitioners — just over half of the 41,800 practitioners on file at the PTO.  Based on my rudimentary stats, this projects-out to an estimate of fewer than 26,000 patent practitioners associated with at least one application published in 2011.

As an aside, about 82% of these active practitioners are registered as attorneys and the remaining 18% as agents.  Not surprisingly, agents have a much greater drop-out rate than attorneys. About 8% of the applications listed no professional.

Notes:

  • I'm planning to work these numbers up a couple of different ways and would appreciate comments or suggestions. dcrouch@patentlyo.com
  • If anyone would like to help with the population estimate based on my sample, please let me know. The problem is a bit tricky because each attorney may be associated with any number of applications and each application may be associated with any number of attorneys. You can download the raw data listing each attorney for each application in my sample. [qryExportFile.zip]