August 2012

Micro-Entity Status: Can We All Qualify?

On his blog, Mike Kondoudis highlights an important point regarding fees. Once an applicant properly establishes small entity status the small entity fees can continue to be paid until the issue fee is due (even if actual status changes). 37 CFR § 1.27(g)(1). However, in the proposed micro-entity rules, the USPTO has proposed that the micro entity status must be repeatedly established throughout prosecution (except for University applicants). In its response to the proposed rules, the AIPLA argues that this process makes the micro-entity status overly confusing and burdensome. "AIPLA's overall recommendation is to simplify the procedures created by the rules."

In a major giveaway to universities, the America Invents Act includes a provision that allows US Universities to take advantage of the 75% reduction in fees offered by the micro entity status. Independent inventor and author Raoul Drapeau wrote to the PTO with the following response: [This] is another sad example of how large organizations have influenced rulemaking to suit their own ends, to the disadvantage of small inventors. How could an institution of higher learning under any interpretation be considered a small – much less a micro-entity." An ongoing question regarding the micro-entity fees is whether university IP holding companies (such as WARF) and university-esque entities (such as Scripps) will receive the reduction in fee status.

Major Loophole: In an e-mail to the USPTO, well known patent attorney Rick Neifeld highlighted a major potential loophole in the statute that would allow virtually any patent applicant to take advantage of the micro entity status by licensing the invention to a US university. The issue stems from the language of newly added 35 U.S.C. 123(d)(2) that allows patent applicants to qualify for micro-entity fees if the subject applicant is licensed to (or under obligation to license to) a US university. The statute:

(d) INSTITUTIONS OF HIGHER EDUCATION.–For purposes of this section, a micro entity shall include an applicant who certifies that—

… (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education [as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))].

Since US universities are – for the most part – non-practicing entities, granting a limited license to a university would have little negative impact and would open the possibility of qualifying for a 75% fee reduction.

In its proposed rules, the USPTO has offered to close the loophole with a requirement that anyone claiming micro-entity status must also qualify for small entity status. In most situations, the USPTO would not have the authority to make such a dramatic change in the law. However, the new Section 123(e) gives the USPTO Director authority "in the Director's discretion, [to] impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section." Of course, it is quite possible that the USPTO's broad limit set here actually surpasses its discretion. In that case, the rule would be struck-down as in Tafas v. Dudas. Neifeld suggests a more narrow rule that would block micro-entity claims in cases where the university-license was created in order to take advantage of the micro-entity status.

Guest Post: Federal Circuit Continues Split on Scope of 271(e)(1)

The following is a reprint from the Orange Book Blog and was written by my former office-mate Aaron Barkoff.  Aaron is an IP litigator at McAndrews in Chicago –  Dennis Crouch


by Aaron Barkoff

Momenta Pharms. v. Amphastar Pharms., No. 2012-1062 (Fed. Cir.)

Last year, in Classen v. Biogen IDEC, a three-judge panel of the Federal Circuit held that the safe harbor of Section 271(e)(1) "does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained."  The majority opinion was written by Judge Newman, with Chief Judge Rader concurring and providing additional views, and Judge Moore dissenting.  A petition for certiorari in the case is currently pending at the Supreme Court, and the Court recently asked the Solicitor General's office to weigh in with its views.

Last Friday, in Momenta v. Amphastar, a case between two manufacturers of generic Lovenox (enoxaparin), a slightly different three-judge panel of the Federal Circuit held that the safe harbor does apply to certain post-approval activities.  In the case, Judge Moore wrote the majority opinion, joined by Judge Dyk, and Chief Judge Rader wrote a blistering 29-page dissent.  The decisions in the two cases do not seem entirely consistent with each other, which likely raises the odds that the Supreme Court will agree to hear the Classen case.

Momenta is the assignee of U.S. Patent No. 7,575,886, which generally relates "to methods for analyzing heterogeneous populations of sulfated polysaccharides, e.g. heparin [and] . . . LMWH [low molecular weight heparin--e.g., enoxaparin]."  Two days after Amphastar received final FDA approval to market its generic enoxaparin (and more than a year after Momenta received its own approval), Momenta filed suit against Amphastar, accusing Amphastar of "manufacturing generic enoxaparin for commercial sale" and performing "in their process for manufacturing batches of enoxaparin" an analytical method that infringes the '886 patent.  According to the majority opinion, Momenta also alleged that this infringing testing was necessary to "satisfy the FDA's requirements."

The district court granted Momenta a preliminary injunction, concluding that Amphastar's testing falls outside the scope of the safe harbor under Section 271(e)(1):  "although the safe harbor provision permits otherwise infringing activity that is conducted to obtain regulatory approval of a product, it does not permit a generic manufacturer to continue in that otherwise infringing activity after obtaining approval."  Amphastar appealed, contending that the district court adopted an overly restrictive view of the safe harbor.

The Federal Circuit majority opinion began by addressing Momenta's "contention that the information in question was not 'submitted' to the FDA, but rather was retained by the ANDA holder."  Here, the majority concluded that "the fact that the FDA does not in most cases actually inspect [Amphastar's manufacturing test records] does not change the fact that they are for the development and submission of information under a Federal law."  The majority cited the Supreme Court's Merck v. Integra decision for "holding that uses which are not ultimately included in a submission to the FDA are nonetheless exempted by the safe harbor."

The majority then turned to whether Amphastar's submissions are protected by the safe harbor.  Here, the majority took pains to distinguish Classen:

At issue in Classen were [post-marketing] studies to evaluate the association between the timing of childhood vaccinations and the risk of developing certain immune-mediated disorders.  The studies themselves were not mandated by the FDA, but any vaccine license holder was required to report to the FDA "adverse experience information," such as adverse side effects, it acquired as a result of vaccine studies.  We found that the studies conducted by the vaccine license holder according to patented methods were not insulated by the safe harbor because the studies did not facilitate marketing a generic drug by "expediting development of information for regulatory approval."  We, of course, are bound by the Classen decision unless it is overruled en banc or by the Supreme Court.  Accordingly, the scope of the safe harbor provision does not extend to "information that may be routinely reported to the FDA, long after marketing approval has been obtained."

This case, however, fits well within Classen because the information submitted is necessary both to the continued approval of the ANDA and to the ability to market the generic drug.  Here, the submissions are not "routine submissions" to the FDA, but instead are submissions that are required to maintain FDA approval.  . . .  Failure to comply with these requirements could result in suspension or revocation of Amphastar's ANDA approval to market the drug.

We also note that, unlike in Classen where the patented studies performed were not mandated by the FDA, the information here is not generated voluntarily by the manufacturer but is generated by FDA requirements the manufacturer is obligated under penalty of law to follow.  Under such circumstances, the information can be said to have been gathered solely for submission to the FDA and not, as in Classen, primarily for non-FDA purposes.  While Momenta urges us to adopt the pre-/post-approval distinction used by the district court, we cannot:  Classen did not turn on this artificial distinction, and the plain language of the statute is not restricted to pre-approval activities.

Unlike Classen, where the allegedly infringing activity "may" have eventually led to an FDA submission, there is no dispute in this case that Amphastar's allegedly infringing activities are carried out to "satisfy the FDA's requirements."

In a strongly-worded dissent, Chief Judge Rader repeatedly refers to Amphastar as a "trespasser" and "infringer."  He traces the legislative history of Section 271(e)(1)–which is curious given that the Supreme Court has twice minimized the legislative history and based its decisions instead on the plain (and broad) language of the statute.  And he takes great exception to the majority opinion's basis for distinguishing Classen.  Finally, he claims that the majority's "interpretation of 271(e)(1) would essentially render manufacturing method patents worthless."  While this is an exaggeration, the Supreme Court might reply:  "that is a problem for Congress to fix, if they so choose."

Where the scope of the 271(e)(1) safe harbor ends up matters a great deal, particularly as we approach the era of biosimilar patent litigation.  Like enoxaparin, biologics are complex molecules and thus analytical-method patents figure to be in the patent portfolios protecting them.  The sooner the courts can agree on the scope of the safe harbor, the better for everyone.

Apple wins $1.05 billion verdict

By Dennis Crouch

Apple v. Samsung (N.D.Cal 2012)

The jury must have read my recent post on Monsanto's $1b verdict and wanted to do one better – awarding Apple $1.05 billion in patent infringement damages.

Apple has won its patent case against Samsung and the nine-member jury has awarded $1.05 billion to the iManufacturer. The jury has also rejected Samsung's countersuit – finding the Samsung patents not-infringed.

Samsung's infringement is identified as "willful" – opening the door to potential punitive damages against Samsung. In patent cases, the judge (here, Judge Koh) is given the responsibility of determining whether to award punitive damages based upon a set of factors outlined in the law. In this case, the statute would limit potential patent damages to three-times the damages calculated by the jury. (The trade dress damages are not so limited).

Apple has also asked for an injunction to stop Samsung's ongoing infringement. However, US patent law places the decision on injunctive relief in the hands of the district court judge. The briefing on injunctive relief will take several weeks and Judge Koh has announced a September 20 hearing date. Judges have discretion to grant/deny injunctive relief based upon the four "eBay factors" defined by the US Supreme Court in 2006. When granting injunctive relief, the judge also has discretion to shape the relief as she sees fit. Some courts have issued broad injunctions that essentially say "stop infringing the patent" others issue much more narrow orders directed only toward the particular products that are adjudged to infringe. The reality is that Samsung has been planning for the likelihood of injunctive relief and is surely ready to stop selling any of the infringing products and replace those products with ones that at least have not yet been adjudged as infringing. Apple has another lawsuit pending against Samsung focusing on Samsung's newer handheld devices.

If an injunction is issued, a big question is whether relief will be stayed pending appeal. An adjudged infringer generally has no right to continue infringing while the case is on appeal. However, courts will stay injunctive relief when the stay prevents great potential harm and/or the appellant has a strong case on appeal. Under the Federal Rules of Civil Procedure, Apple will NOT receive the $1 billion damages until after the appeal is complete. However, Samsung would be required to post a "supersedeas bond" that may be to be set by the court, but will certainly be several hundred million dollars. During the appeal or any other delay in payment, the damages will collect interest.

Next Steps: Samsung has two basic shots at overturning the jury verdict. First, the company can file a motion for judgment against the verdict (JNOV) arguing that the jury verdict goes against the weight of the evidence. Although I do not have specific numbers, it is not uncommon for judges to at least partially reject a jury verdict in complex cases such as this. Based upon what I have read of the case, I believe that Judge Koh is unlikely to alter the jury verdict. Anyone researching this point should consider Judge Koh's history of JNOV motions. If Samsung's pleas to the court fail, the company can appeal to the Court of Appeals for the Federal Circuit. In that appeal, the odds are also with Apple. On this note, Samsung has announced that it will follow my strategy outlined above. In a press release, the company wrote "This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple's claims."


Patently-O Bits and Bytes by Dennis Crouch

  • Professor TJ Chiang is blogging on PrawfsBlawg. Topics include: Mossoff’s Trespass Fallacy; The Supreme Court’s NEW patent law textualism; and The Paradox of Patents.
  • As we await the verdict, read the 20-page jury form for Apple v. Samsung: [Link]. In the end, the jury is deciding infringement of one-claim from each of three different utility patents; four different design patents; a claim to both registered and unregistered trade dress; breach of contract and monopolization. Samsung’s countersuit includes five utility patents.
  • I’ll be speaking at the IPO annual meeting on Sept 10 in San Antonio along with my former boss Paul Berghoff – see you there.

Whitserve v. Computer Packages

By Jason Rantanen

Whitserve, LLC v. Computer Packages, Inc. (Fed. Cir. 2012) Download 11-1206-1261
Panel: Prost, Mayer (dissenting), O'Malley (majority author)

Much of this opinion deals with relatively typical appeal issues of infringement, anticipation, and damages.  Two issues are worth highlighting, however.

Prove Every Claim Element: During the district court proceedings, CPi had focused its anticipation case on claim 10 of Patent No. 6,981,007, and the Federal Circuit agreed that claim 10 was indeed anticipated.  However, the CAFC also concluded that CPi had failed to present detailed evidence explaining how each claim element of the remaining claims was discussed in the prior art, and thus affirmed the jury verdict of no anticipation as to those claims.  The moral of this story? In the absence of a stipulation that the validity of all the claims will rise and fall on a representative claim, patent challengers should make sure to present detailed evidence on every element of every claim they are challenging when advancing one claim as a representative claim.  Here, CPi had presented cursory evidence, at best, asking its expert only "are all the elements of those claims disclosed in the Schrader patent?” to which its expert replied “Yes, they are.”

Patentable Subject Matter: Writing in dissent, Judge Mayer would have sua sponte found three of the asserted patents invalid due to lack of patentable subject matter.  "Because the WhitServe patents simply describe a basic and widely-understood concept—that it is useful to provide people with reminders of important due dates and deadlines—and then apply that concept using conventional computer technology and the Internet, they fail to meet section 101’s subject matter eligibility requirements."   Slip Op. at 51.  This issue, in Judge Mayer's view, was appropriate for the court to take up despite not having been specifically raised by the parties on appeal because there were significant changes in the law since the trial court's decision rejecting CPi's section 101 argument, namely, Mayo v. Prometheus, 132 S. Ct. 1289, 1303 (2012). 

Claim 1 of Patent No. 5,895,468, which is representative of these patent claims, is below.

A device for automatically delivering professional services to a client comprising:
a computer;
a database containing a plurality of client reminders, each of the client reminders comprising a date field having a value attributed thereto;
software executing on said computer for automatically querying said database by the values attributed to each client reminder date field to retrieve a client reminder;
software executing on said computer for automatically generating a client response form based on the retrieved client reminder;
a communication link between said computer and the Internet;
software executing on said computer for automatically transmitting the client response form to the client through said communication link; and,
software executing on said computer for automatically receiving a reply to the response form from the client through said communication link.

Edit: The post should have read "present detailed evidence," not "prevent detailed evidence."  Patent challengers certainly don't want to prevent evidence of patent invalidity! – Jason

A new highest patent court for Europe? Not as long as the Court of Justice of the EU is here

This guest post is by Angelos Dimopoulos, Assistant Professor at Tilburg Law School and Petroula Vantsiouri, Doctoral Candidate at the University of Cambridge, Faculty of Law. I invited the pair to write this post to help explain how the new pan-European patent court might fit within the current EU structure (that already includes the EU Court of Justice. – DC

+ + + + +

Any practitioner who has been involved in patent litigation in the European Union (EU) is well aware of the inconsistencies in the Member States patent law and the differences among national litigation systems. Disturbingly often the same case is litigated in several jurisdictions, under different procedural and evidentiary rules with uncertain timing of outcomes. In that respect, it comes as no surprise that the recent initiatives regarding the creation of a European patent with unitary effect (EPUE) and a ‘Unified Patent Court‘ (UPC) are currently the hottest IP topics in Europe. In short, the EU intends to introduce a EU-law based patent right that will be valid throughout the territory of 25 of the 27 EU Member States (Italy and Spain remaining outside) and a single patent court at the European level with exclusive jurisdiction as regards infringement and revocation proceedings, covering the same territory.

The UK government and a number of patent holders are lobbying for limiting the role that the Court of Justice (CJEU), the highest court in the EU in matters of EU law, will play in patent litigation in Europe. In our view this is simply wrong. In our recent paper called “Of TRIPS and traps: The interpretative jurisdiction of Court of Justice of the EU over patent law“, we provide two main arguments in support of this claim. First, we argue that regardless of the final wording or the adoption of the proposed EU legislation, the Court of Justice can acquire a stronger role in the application of patent law by using its interpretative jurisdiction over the patent provisions of the TRIPS Agreement. Secondly, we argue that this role is a significant tool in the process of establishing a complete and uniform framework for patent protection in the EU.

So far the CJEU has been hesitant to apply and interpret the TRIPS patent provisions. In a series of cases concerning the TRIPS Agreement, as they were crystallised in Merck Genericos, the CJEU clarified that the interpretation of the substantive patent provisions of the TRIPS Agreement lie outside its jurisdiction. This means that up to now Member States can decide according to their national laws how to interpret the TRIPS provisions on patents. However, after the entry into force of the Lisbon Treaty (which amended the constitutional charter of the EU in 2009) Merck Genericos is no longer good law. Article 207 of the Treaty on the Functioning of the European Union (TFEU) vests the EU with exclusive competence over commercial aspects of IP and brings the TRIPS agreement within the scope of EU law. In that respect, the CJEU has now acquired significant powers to determine whether national (and in the future Union) patent rules are interpreted consistently with the TRIPS agreement.

This has significant implications for the development of patent rules in the EU. Currently, patent law in the EU is characterized by a lack of harmonization, although there are some uniform rules. All 27 Member States have acceded to the European Patent Convention (EPC), which established the European Patent Organisation (EPO) and a system of law for granting patents for inventions. Thus, national laws of EU Member States are de facto harmonized in the field of patentability and validity but only as regards the grant of patents. Issues of validity and infringement after the patent grant are matters for national law and national courts. But even in the fields covered by the EPC, uniformity is not always present. In many instances the EPO and national authorities interpret the EPC in diverging ways. Many national authorities do not take each other’s case law into consideration, and even if they do, differences in legal traditions, policy choices or practicalities can lead to different outcomes.

The proposed EU patent with unitary effect and the proposed Unified Patent Court cannot change all that. The proposed legislation does not guarantee the establishment of truly uniform rules. As the proposals now stand, substantive issues (prior user rights, assignments, voluntary and compulsory licensees and government use) are left outside the scope of the proposed Unitary Patent Protection. Moreover, if adopted, the proposals will lead to four different types of patents within the EU. Finally, with Spain and Italy not participating in these projects, the EU will be partitioned in three territories.    

So, how can the Court of Justice fix that?

First, although the TRIPS agreement is very broad as regards the subject matter of patent protection, it contains specific rules on prior users’ rights and exceptions, including in particular compulsory licenses, which are subject matters left outside the scope of the proposed regulation. Article 1 TRIPS requires that WTO members “give effect” to its provisions, which signifies that a WTO member should take all reasonable measures to ensure consistency between domestic law and the agreement. So, the CJEU can use its interpretative jurisdiction to establish common minimum rules with regard to the subject matters that could be left outside the scope of harmonization.

Secondly, the Court’s interpretative jurisdiction can result in the establishment of minimum, uniform standards of protection for the different types of patents. In its previous caselaw (Hermes and Dior) the Court held that “where a provision can apply both to situations falling within the scope of national law and to situations falling within the scope of [Union] law, it is clearly in the [Union] interest that, in order to forestall future differences of interpretation, that provision should be interpreted uniformly, whatever the circumstances in which it is to apply.” Considering that the regulation on European Patents with Unitary Effect will be part of Union law, the Court of Justice can employ the TRIPS agreement in order to determine the standards of protection under national and EPO-granted patents by reference to the standards of protection of European Patents with Unitary Effect, so as to ensure uniform implementation of the TRIPS agreement in the EU.

Thirdly, the interpretative jurisdiction of the Court can mitigate the danger that arises from the existence of parallel adjudication regimes for patent protection. By allowing the CJEU to determine whether national courts abide by the TRIPS when they adjudicate patent infringement cases, the CJEU can act as the single, ultimate judicial authority in the EU, ensuring coherence and consistency in the interpretation of the different regimes of patent infringement rules.

In short, although it cannot contribute to the reduction of litigation costs, at least initially, the CJEU’s interpretative jurisdiction over TRIPS provisions can promote legal certainty, and the establishment of uniform and comprehensive patent protection in the EU that would be attractive to the industry and conducive to technological progress. Nevertheless, the power to interpret the TRIPS is not a panacea. It does not result in the establishment of uniform substantive rules, as the TRIPS is a minimum standards agreement, while its success depends on the number and subject matter of the actual cases that will reach its jurisdiction under the preliminary reference procedure.

Analyzing the Role of NPEs in the Patent System

Guest Post by David L. Schwartz, Associate Professor at Chicago-Kent College of Law and Jay P. Kesan, Professor and H. Ross & Helen Workman Research Scholar, University of Illinois College of Law

Understanding the role of non-practicing entities (or "NPEs" for short) in patent litigation is important. For one reason, patent litigators appear to be polarizing into a plaintiffs' bar and a defense bar. This polarization in lawyers is new to patent litigation, but has existed for many years in other areas of the law, such as medical malpractice, products liability, and labor law. In addition to the lawyers, certain industries have experienced more infringement allegations by NPEs, which have created rifts in many debates about patent reform. The topic of NPEs in patent litigation – their costs and benefits – has been featured prominently in the press, including extensive coverage of a study reporting that the "direct cost" of NPEs was $29 billion in 2011.

We recently wrote a short paper called Analyzing the Role of Non-Practicing Entities in the Patent System, which attempts to set forth a coherent way to conceptualize NPEs.

Before we can meaningfully study or even discuss NPEs, it is important to precisely define what is an NPE. Unfortunately, there is very little agreement on this point. Technically, individual inventors and universities are non-practicing entities. However, they appear very different from each other, and they are also different from start-up companies that have unsuccessfully attempted to commercialize their patented technologies. In addition, the term NPE is often used to refer to both small patent holding companies and large patent aggregators who purchase portfolios of patents from inventors and others for the primary purpose of enforcement. Any credible study of NPEs should distinguish among these different constituents and report empirical information separately.

Beyond the definitional issue, numerous arguments have been offered about the positive and negative aspects of the rise of NPEs in patent litigation. We discuss below several of these arguments, and what the existing empirical evidence suggests.

1. Criticisms of NPEs:

One common criticism of NPEs (however that term is defined) is that they initiate patent infringement lawsuits seeking to enforce patents of dubious quality or with questionable infringement claims, and then settling for amounts far less than the defendants' litigation costs. The story is that NPEs take strategic advantage of the notoriously high cost of patent litigation, which requires several million dollars in attorneys' fees to litigate through the close of discovery.

There is a little firm empirical evidence supporting this scenario of the combination of dubious patent assertions with low settlement demands. There is evidence that NPEs settle more quickly compared to other patent holders, which could indicate the possibility of nuisance settlements. But there is also evidence that the patents asserted by NPEs are similar to patents asserted by practicing entities. There is some evidence that the most litigious NPEs lose more often when the cases are taken to a final judgment, but like other types of complex civil litigation, the vast majority of patent cases settle before judgment.

If widespread opportunistic conduct by NPEs is in fact true, then we need less expensive ways to invalidate patents (e.g., cheaper post-grant review and inter partes review) and to resolve infringement actions (e.g., with a small claims court for cases with less than $3 million in damages or with early ADR).

But before we conclude that such widespread opportunistic conduct is occurring, we need better data on the merits of NPE patent cases, settlement amounts in those cases, the length of time they last, and the amount of attorneys' fees paid by defendants and NPEs to get a true picture of what the reality is. Recently, James Bessen and Michael Meurer from Boston University released a highly publicized study estimating that the direct cost of NPE patent assertions is "substantial, totaling about $29 billion in accrued costs in 2011." We have criticized their methodology and findings, which has been reported on here, here, and here. Briefly, we believe that the $29 billion estimate is likely skewed too high for several reasons. The estimate is based upon a biased sample of NPE defendants. It also includes the settlements, verdicts, and judgments to NPEs as part of the costs, when in reality these are the transfers to patent holders at the very core of the patent system. We find their analysis unsatisfying, and our article offers various suggested improvements to their methodology. Their study also does not consider the merits of the underlying cases.

A second common criticism is that certain types of NPEs – those who are unrelated to the original inventors – pocket a large part of the settlement amounts received and pass little on to the inventors who initially developed the patented technology. We need more data to assess this, but what we currently know appears to point to the opposite conclusion. For instance, Acacia Research Group, perhaps the largest publicly traded NPE, reported that in 2011, it paid more in royalties to inventors than it did to contingent fee attorneys who enforced their patents in litigation.

A third common criticism is that NPEs are not true innovators. Rather, they wait for another to expend resources to commercialize a product with the patented technology and then demand a "tax" on it. We think that existing patent law doctrines can be used to analyze this criticism: Are the asserted patent claims invalid as obvious? Does the accused product embody the asserted claims? Is there some other defense to infringement that has merit? What is the appropriate amount of damages for infringement? And does equity support the entry of an injunction?

2. Benefits of NPEs:

Most agree that university faculty and graduate students are often true innovators. But even NPEs unrelated to the original inventors may provide benefits. This is difficult to empirically assess because nearly all such NPEs are privately-held companies, and there is little publicly available information about these entities. If the concern is that settlement dollars transferred to NPEs are not provided to R&D or inventors, we suggest that private NPEs be surveyed. A survey of NPEs on issues such as litigation costs, settlements, transfers to inventors, and other issues, could be of tremendous value. We do not believe that any such survey has ever been conducted. A survey of NPEs has the additional advantage of exploring both sides of this issue. It could reveal a more complete and balanced picture of patent litigation than what can be obtained from surveying only one side, the accused infringers.

Even NPEs who merely purchase patents with an eye toward enforcement may serve a useful purpose by creating a market for patent rights. They purchase patents from those who do not have the resources or expertise to take their patented technologies to market such as individual inventors. These individual inventors often do not have the resources to hire lawyers that bill by the hour and instead must look for alternate arrangements, such as contingency fee representation or a sale of their portfolios to NPEs. Thus, NPEs create opportunities, perhaps the only opportunities, for non-manufacturing patentees to monetize their patents.

From an economic perspective, many believe that NPEs may serve an important market need. They absorb the risks and uncertainties of patent litigation, and yet may provide an important service permitting non-manufacturing patentees to reap some monetary rewards for their innovations. This potential benefit is premised upon the assumption that the patents are not of dubious quality. With respect to the debate about NPEs, we believe that focusing solely on the costs from and the distributions of funds by NPEs is somewhat beside the point. The better question is whether NPE lawsuits are being brought because the defendants are infringers of a valid patent, or because the defendants are merely easy targets for a nuisance lawsuit. This determination requires looking beyond the identity of the patent holder. Rather, it means we need to evaluate the patents being asserted to determine if there are credible patent claims that are valid, enforceable, and infringed. To the extent changes are needed to the patent system, we suggest focusing on reducing transaction costs (e.g., lawyers' fees) in patent litigation, offering cheaper mechanisms to challenge issued patents (the AIA's post-grant challenges and other administrative procedures for challenging validity appear to be a step in the right direction), and providing cheaper and quicker adjudication through a new small claims court for patent lawsuits, instead of focusing solely on whether the patent holder is a non-practicing entity.

In sum, the debate about NPEs underscores the fundamental point that patent litigation is about whether a valid and enforceable patent claim has been infringed. The more efficiently we can determine this answer in a lawsuit, the better off we will be.

The full article, which includes suggestions for improving the patent system, areas for future study, and criticisms of the study by other academics is available here.

AIA Practice Tips: Using New Inventor Declaration Forms

The following is a guest post from Carl Oppedahl. Oppedahl is the founder of his self-named, Colorado-based patent law firm.


On August 14, 2012, USPTO published its new Rules relating to the Oath and Declaration of the inventor. These Rules take effect on Sunday, September 16, 2012 and it is not much of an exaggeration to say that they change everything about the Oath and Declaration of the inventor. USPTO has also posted several new forms on its web site, forms which will be usable starting on September 16, 2012. In this guest post I will talk about two particular forms and the ways that they will make a big difference in your daily patent practice.

We are all familiar with Form PTO/SB/01 and Form PTO/SB/01A, which I call the "long form" declaration and the "short form" declaration. These two forms are to be used for any patent application filed before September 16, 2012. They contain the "magic words" that are required for a declaration that is used in an application filed before September 16, 2012. I call these "old" declarations. When I say an "old" application I mean an application filed before September 16, 2012.

The long form declaration contains all of the bibliographic data, for example the foreign priority information, the mailing address of the inventors, and lots of other things. The short form declaration contains the bare minimum of information and "magic words" permitted by the Statute and the Rules for an "old" application.

This leads us to one of the very big changes in the new Rules. For a new patent application filed on or after September 16, 2012 (which I call a "new" application), the "magic words" and the information content for a declaration are different than before. The new form is PTO/AIA/01. I call this the "new" declaration.

Here is one of the important things to know. If your application is a "new" application, then the declaration has to be a "new" declaration. If your application is an "old" application, then the declaration has to be an "old" declaration.

We all know that under 35 USC § 363, a PCT application designating the United States is a US patent application. This means that if your application is a US national phase of a PCT application, then the way you know whether it is "new" or "old" is by looking at the international filing date.

If you are getting ready to send a blank declaration to an inventor for signature, you need to send the correct one ("old" or "new") depending on the filing date of the application. If you already have a signed declaration in hand and you are thinking about sending it to the USPTO, you need to look at it to see if it is "old" or "new" If it is the wrong kind, then you need to prepare one of the correct kind and get it signed.

Go to the web site of the USPTO and print out the "old" and "new" declarations. What you will see is summarized in this table:

Filing date of application

Before September 16, 2012

On or after September 16, 2012

How many inventor documents are filed?

One declaration with N signatures lines, one signature line for each inventor

One form for each inventor, each with one signature line and one signature

Does the declaration take a position on who the other inventors are?



How many "magic words"?






Citizenship stated in form?



When an inventor cannot be found or refuses to sign?

Rule 47 practice

Form PTO/AIA/02 ("Substitute Statement")

One of the first things you will see is that the new declaration has no place to list any inventors other than the particular inventor who is signing the declaration. Instead, it turns out that the way the USPTO learns who the inventors are in a particular case is by means of an Application Data Sheet.

For an old application, there will be a single declaration form, with places for as many signatures as there are inventors. Each inventor is taking a position as to who the other inventors are. In contrast, for a new application, there are as many declaration forms (Form PTO/AIA/01) as there are inventors, each having only a single signature line for that inventor.

Another thing you will see is that the "magic words" count is far smaller for a new declaration compared with an old one. The magic word count is 90 compared with 203.

The new declaration does not aver that the signer has reviewed and understood the application including the claims. And it does not acknowledge the duty of disclosure. But the new Rules state that anyone signing a declaration must have reviewed and understood the application including the claims. And the new Rules state that the signer must be aware of the duty of disclosure. So you will need to do whatever it takes to ensure that these requirements are satisfied for anyone signing a new declaration.

What happens if an inventor cannot be found or refuses to sign the declaration?

For an old application, the answer is of course the well-known Rule 47 procedure. You assemble one or more statements signed by various persons having knowledge of the pertinent facts, you prepare a Petition, you pay a fee, and then you wait to find out what the USPTO thinks about your papers. Maybe the USPTO grants the Petition, maybe the USPTO asks for more statements or more detailed statements. I've heard stories from practitioners who had to go around as many as three times with the USPTO before the USPTO would grant the Petition.

For a new application, it's all different. You simply fill out Form PTO/AIA/02 and send it in. No fee, no statements, no petition. This form all by itself replaces the inventor's declaration. So for example if you have seven inventors, and two of them refuse to sign and another cannot be found, then you will hand in three Forms PTO/AIA/02, and four signed Forms PTO/AIA/01, and an Application Data Sheet, and Bob's your uncle.

So for some categories of inventor signature problem, the legacy Rule 47 procedure is a thing of the past. Anyone who has suffered through a difficult Rule 47 Petition in the past will be delighted at this change.

Which gets us to the Application Data Sheet (ADS). The ADS with which many of us are familiar is Form PTO/SB/14 ( /media/docs/2012/08/sb0014.pdf ). It is a Best Practice to use this form (which is computer-readable) because it can auto-load its bibliographic data directly into EFS-Web and from there into Palm. This eliminates several possible sources of error when compared with an approach in which USPTO personnel hand-key such information into Palm.

Under the new Rules, the use of a ADS is mandatory except under a small handful of rare fact situations. So you might as well get used to preparing and filing ADSs.

Within the next week or two, USPTO will post the "new" application data sheet for use with "new" patent applications. When this ADS becomes available, it will likewise be a Best Practice to use it, and to e-file it so that it too may auto-load into Palm. The key is to include the computer-readable ADS in the first e-filing submission for a particular patent application. Only then will it auto-load into Palm.

After you have carried out the e-filing submission that contains the ADS (the first e-filing submission for a particular patent application), be sure to open the application in Private PAIR and click on the Publication Review page. You can proofread this page and you can check all of the bibliographic data for accuracy. In the event of some error or omission, you can get started right away on getting it fixed even before the Filing Receipt gets mailed.

Well, there we are. I've told you about one-twentieth of the things that are completely different as a result of USPTO's new rules relating to the oath and declaration. For the rest, you can read the new Rules (/media/docs/2012/08/fr_inventor_oath.pdf ).


Carl Oppedahl will present a webinar (brochure) about the new Rules on Oath and Declaration on August 30, 2012. Carl has made this posting available as an Epub file which you could load into a Nook or any other Epub reader.

© OPLF 2012

Two Upcoming eSeminars

For many years, Carl Oppedahl has been a leader in helping the patent world understand how to make the most of the USPTO's electronic filing systems. This fall, Oppedahl has two eSeminars.

  • August 30 – Understand the complexity and simplicity of the new oath/declaration rules that go into effect September 16, 2012. Oppedahl is charging $89 minus a $40 discount for Patently-O readers (coupon code PLAW4) (first 20 coupons).
  • August 29 – Learn about WIPO's version of Private PAIR (ePCT). Free.

Libertarians and Patents: Kinsella vs Mossoff

Libertarian writer and patent attorney Stephen Kinsella has written a critique of Prof. Mossoff's Trespass Fallacy paper.  LINK.  Libertarian thought on intellectual property is somewhat unsettled.  Kinsella is one of the thought leaders of the modern anti-patent libertarians while Mossoff represents the pro-patent side.

One of Kinsella's basic arguments stems from the traditional libertarian support for individual liberties and strong private property rights.  When some third party holds a patent, that patent limits what I can do with my scarce private property as well as my individual freedoms. 

The Case or Controversy in AMP v. PTO

By Dennis Crouch

A substantial number of patent lawsuits are declaratory judgment actions that involve a user asking a federal court to rule that it is not liable for patent infringement (either because the user does not infringe or because the patent is invalid/unenforceable). A preliminary issue in these cases is always a determination of whether a sufficient legal dispute exists (a case or controversy) between the parties. Under the U.S. Constitution (as interpreted), a federal court cannot pass judgment on cases that do not meet this threshold. When multiple plaintiffs are present (as in the Myriad case), the court must find at least one plaintiff-defendant relationship that meets this threshold or else the case must be dismissed for lack of standing.

In Myriad, the Federal Circuit ruled that the research of at least one individual (Dr. Ostrer) was hampered by Myriad's patent enforcement activities. Although the court found a controversy in this case, the language that it used to permit the case to continue is quite narrow.

Public Interest Patent Litigation: An important element of the Myriad case is that it has been driven largely by public interest groups operating with an agenda of denuding patents that they see as harmful to public health and fundamental liberties. These parties include the ACLU, PubPat, and the first-named plaintiff, the Association for Molecular Pathology (AMP). Those advocacy groups have no intention of using the patent themselves, but challenging the patent fits within their agenda of protecting the public. In its opinion here, the court holds that those organizations do not have standing in the case.

We … reverse the district court's holding that the various plaintiffs other than Dr. Ostrer have standing to maintain this declaratory judgment action. Simply disagreeing with the existence of a patent on isolated DNA sequences or even suffering an attenuated, non-proximate, effect from the existence of a patent does not meet the Supreme Court's requirement for an adverse legal controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The various organizational plaintiffs in this suit in particular were not the target of any enforcement action or offered license agreements by Myriad and had made no preparation to undertake potentially infringing activities. They accordingly suffered no injury and thus lack standing to bring this action.

This result obviously makes it more difficult for public interest organizations to take this type of action in the future. However, the court provides a roadmap – simply identify an individual with an actual controversy as the named plaintiff.

Patient / Health Insurance Plaintiffs: Another set of plaintiffs in this case are patients who would like to run the DNA test using an alternative laboratory – either because they want a second opinion or because they want a cheaper test. The court also wrote that those patients likely lack standing to bring a declaratory judgment action in the absence of some affirmative act by the patentee against those defendants.

Certain patients also allege an injury based on their inability to gain access to affordable BRCA genetic testing because of Myriad's patent dominance of such services. While denial of health services can, in certain circumstances, state a judicially cognizable injury, Plaintiffs have not pressed this as an independent ground for standing. Moreover, we fail to see how the inability to afford a patented invention could establish an invasion of a legally protected interest for purposes of standing.

This quote from the court conforms well to the Supreme Court's recent copyright decision Golan v. Holder (2012). In that case, the court wrote that individuals do not have enforceable rights to use the "public domain."

In a sense, it appears that the court here strained to claim jurisdiction over the case, but was careful to attempt to avoid expanding the scope of declaratory judgment jurisdiction in the process.

Gene Patent Debate Continues: Federal Circuit Finds Isolated Human Genes Patentable

By Dennis Crouch

Association for Molecular Pathology (AMP) and ACLU v. USPTO and Myriad Genetics (Fed. Cir. 2012)

On remand from the Supreme Court (GVR), a three-member panel of the Court of Appeals for the Federal Circuit has released its highly anticipated decision in AMP v. Myriad. The key results:

  1. Affirmed: The courts properly have jurisdiction over the declaratory judgment case.
  2. Reversed: Myriad's composition claims to isolated DNAs, including cDNAs fall within the scope of Section 101 patentable subject matter.
  3. Affirmed: Myriad's method claims directed to comparing or analyzing gene sequences are not subject matter eligible.
  4. Reversed: Myriad's method claim to screening potential cancer therapeutics via in vitro changes is subject matter eligible.

This decision largely follows the decision previously released by the same panel in 2011. Each member of the court wrote separate opinions, with the opinion of the court filed by Judge Lourie, Judge Moore concurring in part and Judge Bryson dissenting in part. In dissent, Judge Bryson again employed his leaf analogy – arguing that a gene that was merely isolated from the human body cannot itself be patentable in the same way that a naturally grown leaf does not become patentable simply because it is plucked from its tree. Judge Bryson writes:

[E]xtracting a gene is akin to snapping a leaf from a tree. Like a gene, a leaf has a natural starting and stopping point. It buds during spring from the same place that it breaks off and falls during autumn. Yet prematurely plucking the leaf would not turn it into a human-made invention. That would remain true if there were minor differences between the plucked leaf and the fallen autumn leaf, unless those differences imparted "markedly different characteristics" to the plucked leaf.

The majority (here judges Lourie and Moore) disputed the leaf analogy based upon the apparent technical difficulty of isolating human DNA.

It is also important to dispute the dissent's analogy to snapping a leaf from a tree. With respect, no one could contemplate that snapping a leaf from a tree would be worthy of a patent, whereas isolating genes to provide useful diagnostic tools and medicines is surely what the patent laws are intended to encourage and protect. Snapping a leaf from a tree is a physical separation, easily done by anyone. Creating a new chemical entity is the work of human transformation, requiring skill, knowledge, and effort.

Although it may well be comparatively difficult to isolate DNA, at the time of the invention (and even more so today) the process of isolating human DNA was well known and (once the gene sequence was known) was not something difficult for one skilled in this art. I personally isolated selected portions of DNA (non-human) back in 1992 (before the priority date) as part of the introductory biology course that I took in college. It was easy. The majority's analysis here essentially rejects any notion that the Mayo court would find an invention consisting of a combination of old-technology + newly-discovered-product-of-nature to be subject matter ineligible.

The core of the majority argument regarding the isolated DNA claims is that the process of removing the DNA from the human body necessarily transforms those molecules into something new and different. As Locke might say, the mixture of the naturally occurring DNA with human ingenuity and labor resulted in a new arrangement of matter heretofore never seen. The Judge Lourie writes:

The isolated DNA molecules before us are not found in nature. They are obtained in the laboratory and are man-made, the product of human ingenuity. While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today's medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules. . . .

While purified natural products thus may or may not qualify for patent under § 101, the isolated DNAs of the present patents constitute an a fortiori situation, where they are not only purified; they are different from the natural products in "name, character, and use." (quoting Chakrabarty).

To be clear, the change in the molecule that the court is discussing is that the isolated DNA molecule is cleaved from the larger chromosomal DNA molecule by enzymatically cutting it off at each end and slightly altering the terminal amino acid groups. In a concurring opinion, Judge Moore agreed that the isolated DNA is patent eligible, but rejected the notion that the chemical difference between the in situ gene (part of the chromosome) and the isolated gene is sufficient to justify the conclusion. Rather, Judge Moore identified the altered chemical along with the new and beneficial utility achieved because of the isolation as dual keys to patent eligibility. (Note – for further study – Lourie's dicta that isolation for new purpose is insufficient).

The point of this rehearing was to consider the impact of Mayo on this case. As suggested by the above paragraph, the Judge Lourie's answer here is basically that Mayo has no impact here. Of importance, the court indicated that the holding in Mayo should be limited to method claims and thus cannot be applicable to Myriad's DNA composition claims.

The principal claims of the patents before us on remand relate to isolated DNA molecules. Mayo does not control the question of patent-eligibility of such claims.

This cabining of Mayo will be the key to any petition for a writ of certiorari. To be fair, when considering the Supreme Court's analysis in Mayo v. Prometheus, the CAFC found that precedent applicable to analysis of the method claims. Of course, the CAFC had already held those method claims ineligible even before Mayo (in its prior decision). Interestingly, even though in dissent, Judge Bryson agreed that the "Supreme Court's recent decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1293 (2012), does not decide this case." Judge Bryson implicitly agrees that the distinction is based upon claim form – because Mayo "involved method claims." However, he did draw the same analogy that I penned immediately following the Mayo decision – that the discovery of the DNA sequence is the heart of the invention and that the rest of the claim structure is merely window dressing.

In Mayo, which involved method claims, the representative claim involved the steps of administering a drug to a subject, determining a metabolite concentration in the subject's blood, and inferring the need for a change in dosage based on that metabolite concentration. The [Supreme] Court found that the method was not directed to patent-eligible subject matter because it contributed nothing "inventive" to the law of nature that lay at the heart of the claimed invention. . . . In concluding that the claims did not add "enough" to the natural laws, the Court was particularly persuaded by the fact that "the steps of the claimed processes . . . involve well-understood, routine, conventional activity previously engaged in by researchers in the field."

Just as a patent involving a law of nature must have an "inventive concept" that does "significantly more than simply describe . . . natural relations," a patent involving a product of nature should have an inventive concept that involves more than merely incidental changes to the naturally occurring product. In cases such as this one, in which the applicant claims a composition of matter that is nearly identical to a product of nature, it is appropriate to ask whether the applicant has done "enough" to distinguish his alleged invention from the similar product of nature. Has the applicant made an "inventive" contribution to the product of nature? Does the claimed composition involve more than "well-understood, routine, conventional" elements? Here, the answer to those questions is no.

Neither isolation of the naturally occurring material nor the resulting breaking of covalent bonds makes the claimed molecules patentable. We have previously stated that "isolation of interesting compounds is a mainstay of the chemist's art," and that "[i]f it is known how to per-form such an isolation doing so 'is likely the product not of innovation but of ordinary skill and common sense.'" Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1302 (Fed. Cir. 2007). Similarly, the structural changes ancillary to the isolation of the gene do not render these claims patentable. The cleaving of covalent bonds incident to isolation is itself not inventive, and the fact that the cleaved molecules have terminal groups that differ from the naturally occurring nucleotide sequences does nothing to add any inventive character to the claimed molecules. The functional portion of the composition—the nucleotide sequence—remains identical to that of the naturally occurring gene.

The majority suggests that I have "focus[ed] not on the differences between isolated and native DNAs, but on one similarity: their informational content." In light of Mayo, that approach seems appropriate. The informational content of the nucleotide sequences is the critical aspect of these molecules; the terminal groups added to the molecules when the covalent bonds are broken—to which the majority and concurring opinions attribute such significance—are not even mentioned in the claims. The nucleotide sequences of the claimed molecules are the same as the nucleotide sequences found in naturally occurring human genes. In my view, that structural similarity dwarfs the significance of the structural differences between isolated DNA and naturally occurring DNA, especially where the structural differences are merely ancillary to the breaking of covalent bonds, a process that is itself not inventive.

Regardless of your policy perspective on patent eligibility, Judge Bryson's opinion is clearly the most faithful to the Supreme Court's Mayo decision. The only problem is that Judge Bryson ignores other relevant subject matter eligibility cases such as Chakrabarty and Funk Bros. Of course, this highlights a real problem with subject matter eligibility doctrine – the cases do not fit together in any coherent fashion.

+ + + + +

An interesting aspect of Judge Lourie's opinion is his attempt to wash his hands of the public policy results of the decision:

[I]t is important to state what this appeal is not about. It is not about whether individuals suspected of having an increased risk of developing breast cancer are entitled to a second opinion. Nor is it about whether the University of Utah, the owner of the instant patents, or Myriad, the exclusive licensee, has acted improperly in its licensing or enforcement policies with respect to the patents. The question is also not whether is it desirable for one company to hold a patent or license covering a test that may save people's lives, or for other companies to be excluded from the market encompassed by such a patent—that is the basic right provided by a patent, i.e., to exclude others from practicing the patented subject matter. It is also not whether the claims at issue are novel or nonobvious or too broad. Those questions are not before us. It is solely whether the claims to isolated BRCA DNA, to methods for comparing DNA sequences, and to a process for screening potential cancer therapeutics meet the threshold test for patent-eligible subject matter under 35 U.S.C. § 101 in light of various Supreme Court holdings, particularly including Mayo.…

Congress is presumed to have been aware of the issue [of gene patents], having enacted a comprehensive patent reform act during the pendency of this case, and it is ultimately for Congress if it wishes to overturn case law and the long practice of the PTO to determine that isolated DNA must be treated differently from other compositions of matter to account for its perceived special function. We therefore reject the district court's unwarranted categorical exclusion of isolated DNA molecules.

In other words, we don't make policy, we just call balls and strikes.

Next Steps: In my estimation, this case is not over. There is a strong possibility of either an en banc rehearing by the full 12-member Federal Circuit and/or a grant of certiorari by the US Supreme Court.

More to come, but for now read the opinion here: /media/docs/2012/08/10-1406.pdf


Logical Conclusion?: Claimed Open-Ended Ranges Lack Enablement

By Dennis Crouch

Magsil Corp. and MIT v. Hitachi (Fed. Cir. 2012)

In a unanimous opinion, the Federal Circuit has affirmed a district court summary judgment holding that the asserted claims of MIT's patent are invalid for a lack of enablement. The patent covers read-write sensors for computer hard disk drive storage systems and relies upon quantum tunneling in operation.

The courts have derived an enablement requirement from Section 112 of the patent statute. Under the doctrine, after studying the patent specification, a person of skill in the relevant art should be able to (theoretically) make and use the full scope of the claimed invention without undue experimentation. Patents ordinarily include many different claims that identify various legal rights given to the patentee. Enablement is judged independently on a claim-by-claim basis. Any claim that lacks enablement will be deemed invalid and thus unenforceable.

One of the murkiest areas of the doctrine is determining whether the "full scope" of the claim is enabled. The commonly used open ended "comprising" claim language allows for an infinite number of potential variants to be embodied within the scope of a single claim. In almost every case, it is possible to theoretically define an embodiment that falls within the claim scope but that is not fully enabled by the specification. Obviously, the fact that a particular theoretical covered embodiment is not enabled can't be sufficient to invalidate a claim. The difficult legal issue then is finding when a patent claim crosses the threshold from legitimately having a few non-enabled potential embodiments to illegitimately failing to enable the full scope of the claim.

Unbounded Range: Here, the patent claims that the device switch has a change in resistance of "at least 10%." Although it is desirable to have a device with a greater ΔR, the inventors best pre-filing device only reached 11.8%. The accused infringing devices had a greater ΔR and thus the patentee argued that the "at least 10%" claim scope could cover a ΔR of 100% or even 1,000%." The defendant (Hitachi) was able to prove that those ΔR levels could not have been achieved at the time of the patent filing without undue experimentation. The Federal Circuit found this sufficient to find the claim lacking enablement.

In sum, this field of art has advanced vastly after the filing of the claimed invention. The specification containing these broad claims, however, does not contain sufficient disclosure to present even a remote possibility that an ordinarily skilled artisan could have achieved the modern dimensions of this art. Thus, the specification enabled a marginal advance over the prior art, but did not enable at the time of filing a tunnel junction of resistive changes reaching even up to 20%, let alone the more recent achievements above 600%.

This case follows in re Fisher (CCPA 1970). In that case the court ruled that a claimed potency of "at least 1 International Unit of ACTH per milligram" was invalid as lacking enablement after the patentee attempted to enforce the patent against products with potentials of much greater than the 2.3 IUs disclosed in the specification.

The court particularly addressed the comprising issue discussed above. One key distinction is that the high ΔR range here is an explicit element of the claimed invention rather than being a mere latent vestige of the claim structure.

Not a Groundbreaking Invention: In both Fisher and here, the patentees' actual experiments were at ranges just above that already known in the art. That seeming small advance reflected in claiming a range that barely avoided the prior art at the lower bound but then attempted to claim an infinite range at the upper bound. In this case, the court identifies the advance as "marginal over the prior art." The suggestion from the court is that a marginal advance such as this is deserving of a much narrower scope than would be given a groundbreaking invention. The court is on the right track with this approach however, the language of the opinion can also be read to limit potentially broad scope of even groundbreaking inventions when the accused infringer (or others) have spent significant time and energy on developing a particular embodiment covered by the invention.

Whither Open-Ended Ranges and a Plurality of Members?: The opinion can also be read to eliminate the potential for open-ended ranges. The court writes that "the '922 patent specification only enables an ordinarily skilled artisan to achieve a small subset of the claimed range." Of course, a mathematician will explain that any claim with a range that potentially reaches to infinity (e.g., "a plurality of members") will suffer from this same defect – that only a small subset of the claimed range will be enabled (assuming that infinity is not enabled).

Transformative Research to Avoid Infringement: As mentioned above, the opinion relies somewhat heavily on the fact that extensive post-patent-filing research was conducted; and that the research eventually led to a new state-of-the-art that is much more advanced than that imagined by the inventors (even though still literally covered by the claims). This opens the door to manufacturing companies to offer testimony related to their extensive research and development programs and offer an argument akin to transformative copying in copyright law. If the research is sufficiently transformative (and took sufficient effort) then the patent will be deemed invalid for failing to enable that covered embodiment.

Enablement Doctrine Allows Follow-on Research: The court is straightforward in stating that a strong enablement requirement will help prevent over broad patent claims and thus allow room (and incentives) for "follow-on or improvement inventions."

Invalidity affirmed.

Meyer v. Bodum: A Waste of Public and Private Resources?

Meyer Intellectual Properties Limited v. Bodum, Inc. (Fed. Cir. 2012) Panel: Dyk (concurring), Moore, O'Malley (author) Download 11-1329

At its heart, Meyer v. Bodum is essentially an obviousness case, although for reasons having to do with the procedural posture, the court never gets to the merits of that issue, instead remanding the case for further proceedings based on numerous errors committed by the district court, which the opinion portrays as misguided and lacking an understanding of the basics of patent law.  

Judge Dyk's concurrence, reproduced in its entirety at the end of the post, goes even further, concluding that "this case is an example of what is wrong with our patent system…Such wasteful litigation does not serve the interests of the inventorship community, nor does it fulfill the purposes of the patent system."  Slip Op. at 46-47.

BodumBackground: Frank Brady was an independent sales representative for Bodum from 1986-1996, during which time he marketed and sold products including Bodum's French press coffee makers.  In the mid-1990's, Brady came up with the idea of a milk frother that used aeration instead of steam, and in 1996, he filed a patent application directed to a "Method for Frothing Liquids" that led to two issued patents, Nos. 5,780,087 and 5,939,122.  The claims essentially involve four steps: "(1) providing a container that has a height to diameter aspect ratio of 2:1; (2) pouring liquid (e.g., milk) into the container; (3) introducing a plunger that includes at least a rod and plunger body with a screen; and (4) pumping the plunger to aerate the liquid."  Slip Op. at 5. Brady also sold milk frothers through his company, BonJour, which was subsequently sold to Meyer. 

Bodum2In 1999, Bodum began selling the first generation of its accused milk frothers.  The figures  accompanying this post are the opinion's comparisons of Bodum's Version 1 frother with the '087 patent. Shortly after Meyer filed an infringement suit in 2006, Bodum changed its designs, removing the spring element holding the screen against the inside wall of the container and replacing it with an O-ring.  The O-ring was later removed to create the Version 3 frother. 

Following a jury trial in which the jury held the patents to be valid and willfully infringed, awarding $50,000 in damages, the district court trebled the damages, declared the case exceptional, and awarded Meyer its attorney fees of $756,487,56.  Bodum appealed, alleging a panopoly of errors by the district court.  The Federal Circuit agreed. 

Infringement: The CAFC vacated the district court's grant of summary judgment of infringement due to a lack of any evidence of direct infringement in the record.  Rather, the district court relied only on assumptions of direct infringement.  "We find it troubling that the district court based its direct infringement analysis on what it assumed happened, rather than on actual evidence of record. This assumption contradicts our well-established law that a patentee must prove infringement by a preponderance of the evidence."  Slip Op. at 26.

Evidentiary Rulings: Prior to and during trial, the district court made a number of evidentiary rulings that sharply limited Bodum's ability to present its case.  In an uncommon move, the Federal Circuit concluded that the district court had abused its discretion in these rulings, holding that (1) the district court erroneously limited the scope of prior art to only two references (one of which was subsequently excluded), despite sufficient disclosure of several additional references; (2) the district court  erroneously excluded Bodum's expert from testifying despite a report containing a sufficiently detailed statement of his opinions and the bases for his conclusions, especially given the non-complex nature of the technology; and (3) the district court erroneously precluded lay witnesses from testifying to authenticate one of the two allowed prior art references.  The CAFC thus remanded for a new trial on obviousness.

Inequitable Conduct: The CAFC also held that the district court erred by dismissing Bodum's inequitable conduct claims on a motion in limine.  Under Seventh Circuit law, "a motion in limine is not the appropriate vehicle for weighing the sufficiency of the evidence."  Slip Op. at 41-42.  The district court thus "erred in addressing the sufficiency of Bodum's inequitbale conduct defense on an evidentiary motion." Id. at 42. 

Willful Infringement and Enhanced Damages: Because the CAFC remanded the case for a new trial on infringement and invalidity, it vacated the wilfulness verdict and enhanced damages award.  In doing so, it suggested that the district court use Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 682 F.3d 1003 (Fed. Cir. 2012) (in which the Federal Circuit held that threshold "objective prong" of the willfulness inquiry is a question of law) as a starting point.

Judge Dyk's Concurrence: Writing in concurrence, Judge Dyk questioned why this patent issued in the first place and why it was not found obvious on summary judgment: 

While I agree with and join the thorough majority opinion, in looking at this case from a broader perspective, one cannot help but conclude that this case is an example of what is wrong with our patent system. The patents essentially claim the use of a prior art French press coffee maker to froth milk. Instead of making coffee by using the plunger to separate coffee from coffee grounds, the plunger is depressed to froth milk. The idea of frothing cold milk by the use of aeration rather than steam is not new as reflected in the prior art Ghidini patent.  Under the Supreme Court’s decision in KSR International Co. v. Teleflex, Inc., 550 U.S. 398, 420 (2007), and its predecessors, it would be reasonable to expect that the claims would have been rejected as obvious by the examiner, and, if not, that they would have been found obvious on summary judgment by the district court. But no such thing. The parties have spent hundreds of thousand of dollars and several years litigating this issue, and are invited by us to have another go of it in a second trial. Such wasteful litigation does not serve the interests of the inventorship community, nor does it fulfill the purposes of the patent system.

Judge Dyk specifically refers to the private costs of this litigation – the hundreds of thousands (at least a million, if both parties' costs are taken into account) of dollars spent by the parties on legal fees.  The public, too, has spent a substantial amount of resources on this case: the district court's time and resources, the jury's time (and perhaps a future second jury), and the Federal Circuit's own time spent correcting the errors – as evidenced by its thorough 44-page opinion.  Beyond these monetary costs, Judge Dyk's concurrence hints at an even greater public cost: the undermining of public confidence in the ability of the patent office and the courts to get patentability decisions on even relatively technologically simple inventions right.

Recent Federal Circuit Nonobviousness Opinions: Kinetic Concepts

By Jason Rantanen

Kinetic Concepts, Inc. v. Smith & Nephew, Inc. (Fed. Cir. 2012)  Panel: Bryson, Dyk (concurring in the result), O'Malley (author) Download 11-1105

Dennis will be writing about the advisory jury issue in Kinetic Concepts in more detail, so I'll provide only a brief summary here.  Wake Forest, the patent holder, appealed a district court grant of JMOL of invalidity for obviousness of a claimed invention for treating difficult-to-heal wounds by applying suction (negative pressure).  The CAFC reversed, holding that (1) the jury's "advisory" opinion on the ultimate issue obviousness gave rise to implied findings of facts that the district court was required to accept provided that they were supported by substantial evidence, despite the presence of special interrogatories on the verdict form; (2) the jury's implied findings of facts on the Graham factors were supported by substantial evidence; and (3) the ultimate conclusion of obviousness was that the claims were not obvious. 

In arriving at the ultimate (legal) conclusion of nonobvious, the Federal Circuit focused its discussion on the lack of a reason to combine the prior art references (itself a factual finding), referencing concerns about hindsight reconstruction.  In a statement suggesting a technology-based limitation on the use of common sense, the court held that "although expert testimony regarding motivation to combine is not always required, the technology at issue here is not the type of technology where common sense would provide the motivation to combine these references."  Slip Op. at 45.

Recent Federal Circuit Nonobviousness Opinions: Alcon v. Apotex

By Jason Rantanen

I'm catching up with recent Federal Circuit opinions this week.  First up, a trio of precedential opinions involving nonobviousness, a surprisingly hot topic.

Alcon Research, Ltd. v. Apotex Inc. (Fed. Cir. 2012).  Panel: Prost, Moore (author), O'Malley Download 11-1455

Apotex submitted an Abbreviated New Drug Application to the FDA seeking approval to market a generic version of the anti-allergy eye drop PATANOL; in response, Alcon sued Apotex for patent infringement under 271(e)(2)(A).  In a bench trial, the district court held that eight of the asserted claims of the patent were nonobvious, and Apotex appealed.

The Federal Circuit reversed on six of the claims.  Focusing on the primary issue, whether there was a motivation to adapt the formulation disclosed in the prior art (which was tested in guinea pigs) for use in in treating humans, the CAFC concluded that the district court had applied an overly strict reason to modify requirement to the six claims involving a range that overlapped with the prior art.   Given the district court's factual finding that "animal tests, including guinea pig models, are predictive of a compound's antihistaminic activity and its topical ocular activity in humans," the "district court clearly erred when it concluded that a person of skill in the art would not have been motivated to use the olopatadine concentration disclosed in Kamei in human eyes."  Slip Op. at 12.  It did not help Alcon's argument that its patent was based only on in vitro tests of the compound in human cells. 

The CAFC reached a different conclusion on two claims that did not cover a range of the active compound that overlapped with the prior art, finding no clear error in the district court's conclusion that "a person of ordinary skill in the art would not have a reasonable expectation of success for increasing the highest dosage used in [the prior art] by an order of magnitude."  Slip Op. at 17. 

While the CAFC considered the objective evidence, it played a relatively secondary role.  On the six claims that the panel concluded were obvious, despite agreeing with the district court that the objective considerations fell in Alcon's favor, the CAFC nevertheless concluded that after balancing the objective evidence against the strong case of obviousness presented by Apotex the claims were obvious.  No explanation of why this was so was offered.  Similarly, on the two claims in which there was no reasonable expectation of success, the court commented that the objective evidence "further supports" the nonobvious holding, citing particularly evidence of commercial success.

Comment:  The opinion avoids labeling the first part of the analysis as a "prima facie" case of obviousness, perhaps in response to recent concerns about the confusing use of that term in infringement suits.  See In Re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, 676 F.3d 1063 (Fed. Cir. 2012)The court refers to it only as the "evidence of obviousness discussed above" when contrasting it with the objective indicia of nonobviousness.  But this is somewhat cumbersome, and sparks the question of how should we refer to this stage of the obviousness analysis if not as the "prima facie case of obviousness?"  Possible suggestions, all of which have their problems: the first three Graham factors; the 'paper case' of obviousness; the 'theoretical' case of obviousness. Other suggestions? 


The Proposed Unified Patent Court for Europe: conditio sine qua non for a Unitary Patent or unavailing venture into the unknown?

The following is an invited guest post by William Bull. Mr. Bull is a researcher at the Maastricht European Private Law Institute (M-EPLI) at Maastricht University in the Netherlands

European countries have now almost reached agreement on the creation of a European Union patent with unitary effect and a 'Unified Patent Court' (UPC) to be established (primarily) in Paris in 2014 or so. The plan is to introduce a patent right valid throughout the territory of 25 of the 27 EU Member States (Italy and Spain remaining outside the process due to objections to the proposed linguistic regime) and, in tandem, a single patent court at European level with exclusive jurisdiction in infringement and revocation proceedings covering the same territory, in lieu of domestic courts. The UPC is to consist of two divisions; a Court of First Instance and a Court of Appeal. The former is to be further sub-divided into a Central Division (located in Paris, albeit itself with 'thematic branches' in London and Munich!) and additional regional and local divisions situated in various Member States.

It is by now de rigueur for any commentary on the European patent project to begin with a reminder of its protracted history. The idea of creating some form of common European patent system can be traced all the way back to the 1960s, and has been plagued by drawbacks and delays ever since. The most recent attempt to revive the project came in 2000 with a proposal for a Regulation on a Community Patent (following on from the Regulation establishing a Community Trade Mark (CTM) adopted some years earlier), and continued with an accompanying proposal for a Community Patent Court of 2003. The former would introduce a unitary patent right covering the entire European Union, while the latter would lead to the creation of a unified patent court with exclusive jurisdiction over both the new patent right and existing 'European' patents (that is, bundles of national patents) obtained under the European Patent Convention (EPC) system. Together, these proposals were to be the 'building blocks' for a future EU system, designed to overcome the difficulties posed by the need to acquire and litigate patent rights in different Member States.

Of course the European legislator is faced with this core dilemma in virtually any of the areas of law in which it has some competence to act, and European intellectual property law is by no means the only field where there have been lengthy deliberations over the need, form and likely success of measures seeking to instigate some 'harmonisation' of the law (in one way or another). The debate on the harmonisation of European private law (and particularly contract law) immediately springs to mind as an example, for this also began some decades ago, leading to the drafting of various academic principles, from the Principles of European Contract Law (PECL) in the course of the 80s and 90s, through the Draft Common Frame of Reference in the 2000s, and culminating in a proposal for a Common European Sales Law only last year. What makes the European patent project unique is the fact that it has focused on the introduction of an apposite pan-European court system as well as on matters of substantive law. The creation of a unified patent court for the EU is considered by many – not least the European Commission – to be a conditio sine qua non for the proper functioning of the proposed unitary patent. This is the case even though such a court would be unprecedented, and was not seen as necessary for either the CTM or the Community design introduced in 2002 (both of which are adjudicated upon by designated national courts collaborating with the Court of Justice of the EU (CJEU) via the general EU preliminary reference procedure). So it is the importance attached to this aspect of the patent debate that will readily come as a surprise to those operating in other areas of European law, including the sphere of European private law (EPL).

In spite of the many parallels that can be drawn between the debate on harmonisation of European IP law and that of private law more generally (not to mention other areas of EU law), however, there is a distinct lack of interaction among actors in the various subfields. This means that often similar arguments are used, but without benefiting from insights in the other field. It is therefore against this backdrop of academic fragmentation that we would encourage further comparison between the European harmonisation debate in areas such as patent law and contract law, as this should lead to lessons on what to encourage or to avoid in developing the two fields. In particular, since in EPL there has been hardly any discussion about the introduction of a European court in order to ensure uniform interpretation, we cannot help but wonder whether the significance of this issue in patent law is not overestimated. This is a particularly worthwhile question bearing in mind that if an alternative to the unified patent court could be found, this would greatly help the present political process, which now appears to be stuck on the issue of involvement of the CJEU.

In our view, there is nothing against splitting the two building blocks: in a paper that I wrote together with Jan Smits (available on SSRN) I argue that it may indeed be useful to introduce the unitary European patent, but I do not see the advantage of creating the proposed European patent court system, given a) the disadvantages of such a system and b) the possible alternative. First: the disadvantages of the proposed patent court system. From the perspective of end users, a rational patent litigation system depends on three main factors; expertise of the judges, the ability to make a speedy decision, and low costs. We doubt whether the new system would be able to provide these, certainly (but not only) in the short- to medium-term. Given that the regional and local divisions of the Unified Patent Court will be spread across Europe and necessarily composed of multi-national panels with the discretion to decide whether or not to bifurcate proceedings, it is difficult to see why the UPC as it is envisaged would fare much better against the obstacles to efficient litigation and uniform interpretation of differing levels of judicial expertise, patent cultures and language barriers. Second, a possible alternative to the now proposed unified patent court could consist of a competitive model of convergence of patent law. This model is based on the present European practice in which 50 to 70% of all patent cases in Europe end up before the courts of a very limited number of countries (and in particular before the German courts, of which the Düsseldorf district court is seen as market leading, dealing with more than 600 new infringement cases every year from all over Europe). The popularity of the German court system among European litigants apparently stems from its speed, high quality, commercial sense and the fact that the staying of an infringement procedure due to revocation is only rarely allowed.

In short, our point is that successful harmonisation of IP law may indeed be dependent on uniform interpretation of European rules, but this uniformity need not come from a common European court. It can also be provided by a national court, as long as individual claimants are allowed to choose the court of their liking. In fact, in the absence of any meaningful political compromise on a European court system in the last 40 years, such a market for patent litigation has already partly come to exist. Of course that is not to say that such an alternative is not without its own problems, but we believe that a competitive model of convergence has a lot of merit over the proposed European court system, which could easily prove to be an unavailing venture into the unknown.

* * * * *

These questions are discussed in detail in the working paper by Jan M. Smits and William Bull entitled 'European Harmonisation of Intellectual Property Law: Towards a Competitive Model and a Critique of the Proposed Unified Patent Court', available at:

Google’s Improved Patent Search

by Dennis Crouch

Two updates on Google’s patent search tools:

  1. EU patents are now available; fully searchable; and automatically translated.
  2. Google has implemented a new prior art search button that attempts to identify the ten most relevant prior art documents in its search database.  In my 10–minute test, the identified prior art did not appear to be directly on-point. Of course, my criticism likely suffers from the Nirvana fallacy.  Every prior art search methodology suffers from major deficiencies.  The proper question for Google’s tools is whether the new system has a role in the patenting process.  At minimum, it is likely an improvement on the quick pre-filing “sanity check” searches that are often conducted by patent applicants and patent attorneys. In its press release, Google indicated that the company will “be refining and extending the Prior Art Finder as [it] develop[s] a better understanding of how to analyze patent claims and how to integrate the results into the workflow of patent searchers.”

AIA Shifts USPTO Focus from Inventors to Patent Owners

by Dennis Crouch

The new rules on inventor oaths make practical business sense, but they leave me somewhat pessimistic.  Metaphysically, the rules serve to crystallize the the US patent system's shift in focus away from inventors and toward corporate owners (and other non-human juristic entities).  Up to now, corporations were never considered patent applicants.  Rather, inventors were the applicants.  Even when the ultimate rights were owned by a corporate entity, the USPTO still focused on the inventors as the patent applicants.  Under the new rules being implemented on September 16, 2012, the status of “patent applicant” will no longer be keyed to inventorship but instead ownership.  Thus, any juristic entity who can show a proprietary interest will be permitted to file and prosecute a patent application as the patent applicant.  Of course, this change makes a fool of the first-inventor-to-file label given to the new US priority system during the political debates. Rather, the system truly is the first-owner-to-file. However, the change does fit within the same mental construct as the shift to a first-to-file system that largely turns a blind eye to inventive activities and instead focuses on paperwork (the essence of a corporate entity).  In recent years, we have seen a steady decrease in the percentage of inventor-owned patents.  For better or worse, there is no reason to believe that trend will change any time soon.

On a practical level, the change to the oath requirement itself is fairly narrow and will not ordinarily arise.  Under the new rules, the inventor will still ordinarily submit an oath or declaration of inventorship unless the inventors are unavailable or refuse. However, there are two major important changes: (1) a right-holding entity may file the patent application and wait to file the inventor's oath until the time that the application is otherwise in condition for allowance; and (2) defects in the listing of inventors can now (apparently) be corrected even if the original filing was done with deceptive intent.  These changes relieve some headache for corporate patent attorneys. However, I believe that this streamlined process does increase the likelihood that unscrupulous entities will overreach.

One “cure” for this potential problem is that the Office will now require all juristic entities (non-people) prosecuting applications to do so via a registered patent practitioner.  “Thus, all papers submitted on behalf of a juristic entity must be signed by a patent practitioner…”  Obviously, this is a boon for US patent attorneys and patent agents.  It will create some struggle for very small corporate entities that continue to file applications pro se. However, my understanding of the rules is that the requirement to use a patent attorney/agent only exists if the juristic entity files as the applicant.  To avoid the requirement, the application could still be filed in the name of the actual inventors who retain the option of prosecuting the application pro se.