October 2012

USPTO Reopens the First-Inventor-to-File Comment Period

Patent

From Janet Gongola, Patent Reform Coordinator:

On July 26, 2012, the USPTO published a notice of proposed rulemaking and a notice of proposed examination guidelines to implement the first-inventor-to-file (FITF) provisions of the AIA. The notices set a comment deadline date of October 5, 2012. The USPTO has received several requests for additional time to submit comments. Therefore, the USPTO is reopening the comment period to provide interested members of the public with an additional opportunity to submit comments to the USPTO.

The new deadline for receipt of written comments in response to both the notice of proposed rulemaking and the notice of proposed examination guidelines to implement the first-inventor-to-file provisions of the AIA is November 5, 2012.

The proposed rules along with already-submitted commentary can be found here: http://www.uspto.gov/patents/law/comments/fitf_guidance.jsp. Discussion of whether the AIA eliminates Secret Prior Art is here.

Technology Patents LLC. v. T-Mobile (UK) Ltd.

Patent, ,

By Jason Rantanen

Technology Patents LLC. v. T-Mobile (UK) Ltd. (Fed. Cir. 2012) Download 11-1581
Panel: Bryson (author), Prost, Reyna

This case involves a suit brought by prolific inventor Aris Mardirossian's company Technology Patents LLC against more than 100 domestic and foreign defendants that TPL accused of infringing US Reissue Patent No. RE39870.  While the primary subjects addressed by the court are those of claim construction and infringement , there are several additional noteworthy issues discussed at the end of the post.

The '870 patent relates to a global paging system.  According to the patent, the prior art was deficient because "it did not fulfill the need for a cheap and efficient global paging system that allows users who expect to receive messages or pages abroad to 'remotely input country designations in which they are to be paged.'"  Slip Op. at 13, quoting '870 patent.  The '870 patent sought to cure the deficiencies of the prior art: "The ’870 Patent solved this problem by claiming a system which allows for paging of the receiving user (“RU”) in countries where the RU “may be located,” as per a list input by the RU." Id., quoting district court.  Claim 4, the primary claim addressed on appeal, recites  (claim terms at issue in the appeal are in bold):

4. A system for paging a receiving user in a country-selective paging system, comprising:

a paging system spanning a plurality of different countries of the world, the paging system including a plurality of servers, and wireless transmitters in different countries for transmitting paging messages to receiving users;

interconnecting servers so as to permit digital communication of signals between the plurality of servers via at least the packet-switched digital data network;

a first website or server located in a first country for allowing an originating user to page the receiving user who may be located in a second country different from the first country, the originating user not necessarily knowing what country the receiving user is located in;

wherein the paging system determines if the second country is currently designated by the receiving user as a designated country in which the paging system is to attempt to page the receiving user;

when the paging system determines that the second country has been designated by the receiving user, means for sending a paging communication via at least the packet-switched digital data network to a second website or server, the second website or server being in communication with a wireless transmitter located in the second country, and wherein the paging communication causes the second website or server to initiate paging the receiving user via the wireless transmitter in the second country; and

when the paging system determines that the second country has not been designated by the receiving user, the paging system initiates paging operations in another country in a predetermined order in an attempt to page the receiving user.

The over 100 companies companies that TPL sued roughly fell into three categories: (1) domestic carriers and handset companies, (2) software providers, and (3) foreign carriers.  Following claim construction, the district court granted summary judgment of noninfringement to the domestic carriers.  On appeal, TPL challenged the district court's claim construction and noninfringement rulings. 

Claim Construction: Much of the claim construction dispute revolved around the meaning of "receiving user."  The district court construed this term to mean a "person or party," while TPL contended that it means "the combination of the person and the handset."

Applying what has often been described as a holistic approach to claim construction, the Federal Circuit affirmed the district court's construction.  In other words, the court applied a flexible, relatively unstructured approach to construing the claim terms as opposed to a rigid rules-based approach.  In this particular case, that meant looking closely at the intrinsic evidence.  "The text of the patent makes clear that the term “receiving user” does not refer to a person-pager combination."  Slip Op. at 19. The court applied a similar approach to the two remaining claim terms.

Holistic Infringement Analysis: TPL also argued that, even if the CAFC affirmed the district court's claim constructions, it nevertheless erred in its grant of summary judgment of noninfringement.  On this point, too, the Federal Circuit affirmed.  While much of the CAFC's conclusion was based on the "receiving user" limitation, the court's overall approach bore many similarities to its holistic claim construction: the court made frequent reference back to the specification even as it assessed the question of infringement, rather than rigidly applying its claim construction. 

For example, in responding to TPL's argument that because the accused systems permitted users to select the carrier when traveling abroad, some of which contained country information (see below figure), the court pointed out that "The specification and the claims make clear that the invention is concerned with the country in which the receiving user is located, not with the receiving user’s carrier." Slip Op. at 29.  This carried through to the assessment of infringement under the doctrine of equivalents, as the court concluded that "the distinction betwen selecting a carrier and selecting a country is not insignificant in the context of the patent….That is a fundamental difference between the accused systems and the claimed invention that goes to the heart of the claimed invention."  Slip Op. at 34.  Figure 1

 

Additional notes:

  • This lawsuit was filed in 2007 – well before the September 16, 2011 enactment of the America Invents Act, which substantially altered the rules for joining multiple unrelated defendants within a single infringement lawsuit. 
  • The district court granted summary judgment of noninfringement to the software providers as well, in part on the ground that it concluded that certain claims required mutiple actors and TPL failed to show that the defendants have discretion or control over the end users.  The Federal Circuit concluded that it was unnecessary to consider the recent en banc decision in Akamai Technologies v. Limelight addressing divided infringement because the claimed software system could be "used" by a single actor even if the user did not have physical control over all elements of a system. Slip Op. at 36 (citing Centillion Data Sys. v. Qwest Communications, 631 F.3d 1279, 1284 (Fed. Cir. 2011).
  • The district court found that it lacked jurisdiction over the foreign carriers.  On appeal, the Federal Circuit did not address the jurisdictional question, instead concluding that "Our ruling sustaining the district court’s decision in favor of the domestic carriers thus dooms TPL’s claim of infringement against the foreign carriers as well. For that reason, it is unnecessary for us to decide whether the district court was correct in dismissing the case against the foreign carriers for lack of personal jurisdiction."  Slip Op. at 39.

UK Appellate Court Confirms Pan-European Win for Samsung on iPad Community Design Charges

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By Dennis Crouch

Samsung Electronics v. Apple, [2012] EWCA Civ 1339

The English (and Wales) court of appeals has issued a new decision in the ongoing global intellectual property battle between smartphone competitors Apple and Samsung. This case focused on Apple's Community Design No. 000181607-0001 and affirms the trial court ruling by the High Court Judge Colin Birss that the three accused Samsung Galaxy models do not infringe. The court has also affirmed Judge Birss's equitable order forcing Apple to advertise its loss (in order to partially correct damage done to Samsung's reputation).

Apple's iPad registered community design being asserted here is the simple design shown below.

A registered European Community Design is roughly equivalent to a US Design Patent. However, the Europeans have done away with the examination process and replaced it with registration without considering whether the design is actually novel. Thus, while the European law requires that a registered community design be novel (a lower standard than nonobvious), that issue is not raised in the initial registration process. The US continues to examine design patents for novelty and nonobviousness. However, the USPTO's examination of design patent novelty can best be described as a farce. In a 2010 study, I found that the vast majority of design patent applications do not receive even a single rejection during the examination process and only 1.2% are the subject of an obviousness or novelty rejection. In that essay I identified our system as that of de facto registration. Because of the in-expense and ease of registration, Community Designs have been quite popular.

Up to now, the process of obtaining Community Designs has been largely separate from that of US design patent rights. This will change, however, if the US finalizes legislation implementing the Hague Agreement. Earlier this year the US Senate passed the "Patent Law Treaties Implementation Act of 2012" (S. 3486) that would implement the Hague Agreement (as well as the procedural Patent Law Treaty PLT). If there is no major objection, the House of Representatives is likely to pass its version of the Act in the lame duck session of Congress following the November presidential election.

The opinion in the present case is written by Lord Justice Robin Jacob who has retired from the bench but is regularly called back to hear intellectual property cases. As you will find with virtually all of Lord Justice Jacob's decisions, the case is well written, layered, and informative. Lord Justice David Kitchin (another IP focused jurist) joined the panel. In addition to the related design patent litigation in the U.S., this particular community design is being litigated in Germany, the Netherlands, and Spain.

Infringement of a community design is defined in Article 10 of the Community Design Regulation EC 6/2002 and asks whether the accused design "does not produce on the informed user a different overall impression" after taking into consideration "the degree of freedom of the designer in developing his design." Although worded somewhat differently, this standard is on track with U.S. design patent infringement law that considers whether an "ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design." In both situations, the "most important things [to be considered for infringement] are the registered design, the accused object and the prior art and the most important thing about each of these is what they look like."

Jacob, LJ, begins his opinion with a statement about copying—notably that copying is irrelevant to the infringement analysis:

3. Because this case (and parallel cases in other countries) has generated much publicity, it will avoid confusion to say what this case is about and not about. It is not about whether Samsung copied Apple's iPad. Infringement of a registered design does not involve any question of whether there was copying: the issue is simply whether the accused design is too close to the registered design according to the tests laid down in the law. Whether or not Apple could have sued in England and Wales for copying is utterly irrelevant to this case. If they could, they did not. Likewise there is no issue about infringement of any patent for an invention.

4. So this case is all about, and only about, Apple's registered design and the Samsung products. The registered design is not the same as the design of the iPad. It is quite a lot different. For instance the iPad is a lot thinner, and has noticeably different curves on its sides. There may be other differences – even though I own one, I have not made a detailed comparison. Whether the iPad would fall within the scope of protection of the registered design is completely irrelevant. We are not deciding that one way or the other. This case must be decided as if the iPad never existed.

The appellate opinion fully supported Judge Birss's initial determination that substantial differences led to a rejection of the infringement contention. In particular, when compared with the registered design, Samsung devices are thinner and have substantial surface ornamentation. Other features – such as a flat rectangular screen – the court found to so "banal" as to not contribute to the infringement analysis. The court found the rounded corners also unremarkable and of obvious function for a handheld device. Normally, an accused infringer cannot avoid infringement with use of its distinctive trademark on the product. In this case, however, the court found that Samsung's trademark name on its device helped to distinguish the device from the Apple registered design because of the label was additional ornamentation that contradicted Apple's approach of substantially lacking surface ornamentation.

Taking all this as a whole, Judge Birss could not see any infringement. In the appeal, Jacob, LJ, agreed noting that "Overall I cannot begin to see any material error by the Judge."

54.    I would add that even if I were forming my own view of the matter, I would have come to the same conclusion and for the same reasons. If the registered design has a scope as wide as Apple contends it would foreclose much of the market for tablet computers. Alterations in thickness, curvature of the sides, embellishment and so on would not escape its grasp. Legitimate competition by different designs would be stifled.

European-wide declaration of non-infringement affirmed. Now, in all likelihood Apple will take its appeal to the EU Court of Justice (CJEU) who is the final arbiter of EU community design law.

Parallel Pan-European Preliminary Injunction by German Courts: Prior to Judge Birss's final decision, Apple applied ex parte for a preliminary injunction in a German court that was granted "without Samsung having an opportunity of being heard." In July 2012 (a few weeks after Judge Birss's decision) the German Court of Appeal (Oberlandesgericht) granted a pan-European preliminary injunction (interim injunction) against the Galaxy 7.7. Under community design litigation rules, Judge Birss's decision takes precedent and lifts that preliminary injunction. In his opinion, Lord Justice Jacob was highly critical of the German courts for taking that approach while the case was pending before Judge Birss sitting as a community design judge.

56. Firstly I cannot understand on what basis the [German] Court thought it had jurisdiction to grant interim relief. I do not think it did [have jurisdiction] for several reasons.

At minimum, a national court associated where interim relief is sought loses jurisdiction as soon as the court seized of the substance of the case (according to community design law) issues its decision.

In addition to wrongly hearing the case, Jacob, LJ also argues that the German Court wrongly decided the case.

61. … I regret to say that I find the Oberlandesgericht's reasoning on the merits sparse in the extreme….

62. What the Oberlandesgericht did not do was to consider Judge Birss's decision in detail. It gave only meagre reasons for saying "The Court cannot concur with the interpretation of the High Court". I regret that. …

63. … If courts around Europe simply say they do not agree with each other and give inconsistent decisions, Europe will be the poorer.

There are probably three ways to see this conflict: (1) as a lack of effort on the German court's part (unlikely); (2) as a lack of respect for UK courts (more likely); or (3) as an indication that German's support stronger design rights than do the UK courts (most likely).

The decision also suggests that the German court should force Apple to compensate Samsung for the trouble it has caused with its approach to obtaining a preliminary injunction:

Whether or not Samsung has any claim in the German courts for all the losses it has suffered as a result of preliminary measures which proved to be unjustified is obviously not a matter for us. I hope it does. If the position were the other way round, that the unjustified preliminary measures had been granted by the English and Welsh courts, the "injured" party would have a remedy under the cross-undertaking in damages which the English court normally requires as a condition of granting a preliminary measure which is not ultimately vindicated in a main trial.

At paragraph 78.

Ghost Lines in Design Patents: Although minor in the context of this appeal, Lord Justice Jacob has an interesting comment on the dotted "ghost" lines that have become common in US design patent drafting. According to the MPEP, those lines are allowed as "Environmental structure" so long as "clearly designated as environment in the specification." MPEP § 1503. The Apple registration included a dotted line frame showing the boundary of the operational portion of its screen. Samsung unsuccessfully argued that dotted line should not be given any patentable weight based upon what Jacob, LJ calls "a complicated point based on the guidelines for examination."

21. There is one other point about how the informed user would assess the registered design, a point decided by the Judge adversely to Samsung. Views 0001.1 and 0001.3 show the front of the tablet. There is a rectangular dotted line shown. Apple submitted, and the Judge accepted, that the dotted line indicated a frame below a glass face – of the kind now familiar on all sorts of touch-screen devices. Samsung ran a complicated point based on the guidelines for examination. It submitted these would lead the informed user to conclude that the dotted lines were there to indicate that a feature was not protected: thus the fact that the Samsung device does have a "frame" is to be disregarded.

22. This is faintly absurd: a bit like the notice-board reading "Ignore this notice." For if there were no dotted rectangular line, the front face of the design as registered would be entirely plain. So it would then be for the informed user to form a judgment as to whether a tablet with a frame created a different overall impression. In short, on Samsung's contention if there were no dotted lines the position would the same as if they were there.

This development if applied broadly could actually become a major source of contention and difficulty in implementing the global design rights system suggested by the Hague Agreement.

As an aside on the ghost line point, I briefly reviewed the prosecution history file of the US design patent that serves as the priority filing for the community design in this case. See U.S. Design Patent D504,889. In my review, I did not find any applicant remarks indicating that the dotted line in the frame is merely an environmental structure or indicating that the dotted line should not be considered as an element of the design patent. Judge Koh considered this issue during the US litigation of the '889 patent and agreed in dicta that "A reasonable interpretation of the dotted lines in the D′889 patent … is that the dotted lines are intended to show the inset screen below the glass-like surface. At this point, without the aid of prosecution history, evidence regarding drafting principles, or argument from the parties, the Court considers the dotted lines to most likely indicate an inset screen and are likely part of the claimed design." Apple, Inc. v. Samsung Electronics Co., Ltd., 2011 WL 7036077 (N.D.Cal. December 02, 2011). For its decision, the court cited Bernardo Footwear, L.L.C. v. Fortune Dynamics, Inc., 2007 WL 4561476 (S.D.Tex. Dec.24, 2007). In that case the court held that broken lines in a design patent were part of the claimed design because the drafter had failed to explain the significance (or significance) of the broken lines.

Notes:

Design Patent Damages: When is proof of copying required for profit disgorgement?

Patent,

By Dennis Crouch

In this post, I question whether copying is a required element for profit disgorgement under the design patent remedy provision of 35 U.S.C. § 289.

An important element of design patent protection is the special damages provision found in 35 U.S.C. § 289. According to the statute, design patent owners have an optional remedy available of disgorging the “total profit” of an infringer. It was this profit disgorgement that likely drove the bulk of Apple’s $1 billion award in the recent Apple v. Samsung jury decision. When the adjudged infringer is profitable, the disgorgement provision can lead to an enormous award.

Section 289 is titled “Additional remedy for infringement of design patent” and is written as follows:

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

In patent cases, copying is normally not an element of proving infringement. And, although proof of copying will be important in determining punitive damages, it is also not normally an element in determining the underlying damages. In the design patent cases, copying has not traditionally been seen as required in order to seek profit disgorgement. However, in my view, a plain reading of the old statute suggests that copying may in fact be required when the infringing product does not embody the identical design found in the patent. The key phrase repeated in the statute is “colorable imitation.”

The “colorable imitation” language was included in the original 1887 legislation. By that time, however, the term was already in frequent use in trade-mark cases and implied copying.* The suggestion here is that, when the infringement falls under the “colorable imitation” prong, that a disgorgement damage award should only occur when a plaintiff offers some proof of copying. A more aggressive position (and probably less defendable position) could also argue that the statute always requires some proof of copying because “appl[ying] the patented design” implies that knowledge learned from the original is being used to create the new article of manufacture.

Assuming that the distinction for the copying requirement is between whether the infringer “applies the patented design” or “applies … any colorable imitation thereof,” it will be important moving forward to understand how to differentiate between these two.

Notes:

IP in the US Presidential Debates

Patent

There was one reference to patents in this week’s debate between President Obama and his challenger Governor Romney:

CROWLEY: iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here?

ROMNEY: The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China’s been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents, our technology. There’s even an Apple store in China that’s a counterfeit Apple store, selling counterfeit goods. They hack into our computers. We will have to have people play on a fair basis, that’s number one.

Guest Post: New USPTO Proposed Ethics Rules, Part I

Patent,

Guest Post by Professor Lisa Dolak.

On October 18, 2012, U.S. Patent and Trademark Office issued a Notice of proposed rulemaking relating to "Changes to Representation of Others Before The United States Patent and Trademark Office." The essence of the proposal is to replace the current ABA Model Code-based USPTO ethics rules with a version of the ABA Model Rules, versions of which have been adopted in 50 jurisdictions (49 states and the District of Columbia).

In the Notice, the USPTO indicates that its goal is to modernize its ethics rules and to harmonize them with those that already govern most of the registered and non-registered practitioners who represent others before the USPTO, "while addressing circumstances particular to practice before the office". The Notice references several sources that may provide useful interpretative guidance regarding the proposed rules, including existing USPTO-specific precedent, "the Comments and Annotations to the ABA Model Rules", and "opinions issued by State bars and disciplinary decisions based on similar professional conduct rules in the States." Significantly, however, the Notice expressly disclaims the imposition of significantly new standards on those who are subject to USPTO enrollment and discipline oversight, stating "any change is not a significant deviation from rules of professional conduct for practitioners that are already required by the Office."

For the most part, the USPTO seeks to conform its rules governing professional conduct to the ABA Model Rules, with certain specific language tailored to the specialized nature of practice before the USPTO. The Notice also highlights, however, the ways in which the USPTO's new rules would deviate from the ABA Model Rules. And it proposes revisions to certain provisions of the rules governing the conduct of disciplinary investigations, which rules were adopted in 2008.

The first thing to note is the proposed numbering scheme for the new USPTO Rules of Professional Conduct. For example, proposed USPTO Rule of Professional Conduct 11.107 corresponds to ABA Model Rule 1.7. USPTO Rule 11.302 would parallel Model Rule 3.2, and USPTO Rule 11.804 – the proposed new USPTO rule relating to "misconduct" – corresponds to Model Rule 8.4. It appears, in fact, that the USPTO has endeavored to match up its proposed rules to the Model Rules by subsection, where appropriate. Thus, proposed "Sections 11.804(a) – (f) correspond to the ABA Model Rules of Professional Conduct 8.4(a) – (f), respectively."

Some examples of the many instances where the USPTO indicates an intent to conform with the corresponding ABA Model Rule include proposed sections:

  • 11.107, relating to concurrent conflicts of interest (see ABA Model Rule 1.7);
  • 11.109, relating to conflicts of interest and duties to former clients (see ABA Model Rule 1.9);
  • 11.110, relating to the imputation of conflicts within law firms (see ABA Model Rule 1.10);
  • 11.116, relating to a practitioner's obligations in declining or terminating client representations (see ABA Model Rule 1.16);
  • 11.401, relating to a practitioner's obligation to be truthful when dealing with third parties on a client's behalf (see ABA Model Rule 4.1); and
  • 11.501 and 11.502, relating to the responsibilities, respectively, of a supervisory practitioner and a subordinate practitioner (see ABA Model Rules 5.1 and 5.2).

In other respects, the proposed rules would be tailored to account for particularized aspects of USPTO practice. For example,

  • with regard to proposed Section 11.105 relating to a practitioner's responsibilities regarding fees, the Notice states that "[n]othing in paragraph (c) should be construed to prohibit practitioners gaining proprietary interests in patents" in accordance with USPTO rules.

In addition, there are several proposed rules that are modified to reinforce or accommodate the duty of disclosure or the inequitable conduct doctrine. The proposed rule (Section 11.106) relating to confidentiality obligations "includes exceptions in the case of inequitable conduct before the Office in addition to crimes and frauds". A subsection of this rule would permit a practitioner to reveal information relating to a representation to the extent the practitioner reasonably believes necessary "[t]o prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from . . . inequitable conduct before the Office." Significantly, another subsection of Section 11.106 would expressly reinforce a practitioner's duty of disclosure, notwithstanding his or her confidentiality obligations ("A practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions.").

Similarly, proposed Section 11.303(e) provides: "In a proceeding before the Office, a practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions." According to the USPTO, "[t]he practitioner's responsibility to present the client's case with persuasive force is qualified by the practitioner's duty of candor to the tribunal. See Lipman v. Dickinson, 174 F.3d 1363, 50 USPQ2d 1490 (Fed. Cir. 1999)."

Another manifestation of the USPTO's efforts to implement specialized patent-related policy is found in proposed Section 11.303(a)(2), which extends the practitioner's duty to disclose adverse controlling legal authority beyond inter partes situations to ex parte proceedings (where the authority is not otherwise disclosed). In the Notice of proposed rulemaking, the USPTO indicates that this rule is justified by the effect that USPTO decisions have on the public interest.

In other notable aspects of the Notice, the USPTO:

  • notes that it has not incorporated into the proposed rules any of the recently(August 2012)-adopted changes to the Model Rules, "since the states have not adopted those changes at this time";
  • reminds practitioners that "[f]ailure to comply with [state professional conduct] rules may lead to . . . possible reciprocal action against the practitioner by the USPTO"; and
  • proposes to remove the practitioner maintenance fee currently set forth in 37 C.F.R. § 11. 8(b), because "the Office has suspended collection of those fees".

Finally, proposed section 11.1 would provide definitions of terms used in the proposed professional conduct rules, including "practitioner" (which would include registered attorneys and agents as well as persons authorized to represent persons before the USPTO in trademark and non-patent matters and persons given limited recognition in patent matters), "informed consent", "reasonable belief"/"reasonably believes", "screened", "writing", and "written". One of the more notable subsections would define "[f]raud" and "fraudulent", as follows:

Fraud or fraudulent means conduct that involves a misrepresentation of material fact made with intent to deceive or a state of mind so reckless respecting consequences as to be the equivalent of intent, where there is justifiable reliance on the misrepresentation by the party deceived, inducing the party to act thereon, and where there is injury to the party deceived resulting from reliance on the misrepresentation. Fraud also may be established by a purposeful omission or failure to state a material fact, which omission or failure to state makes other statements misleading, and where the other elements of justifiable reliance and injury are established.

With regard to fraud and fraudulent behavior, the Notice expressly acknowledges the USPTO's decision not to adopt the corresponding ABA Model Rules definitions. "Instead, the Office believes a uniform definition based on common law should apply to all individuals subject to the USPTO Rules of Professional Conduct." "Accordingly," the Notice states, the proposed rules adopt "the definition of common law fraud . . . discussed by the United States Court of Appeals for the Federal Circuit." The proposed adoption of a specific definition of "fraud" is notable, given the USPTO's obligations under the AIA to report instances of detected "material fraud" in the context of supplemental examination to the Attorney General, and its decision not to include a definition of "material fraud" in the final rules governing supplemental examination.

Other aspects of the Notice, including key ways in which the proposed rules deviate from the Model Rules, and how the USPTO proposes to modify existing rules relating to disciplinary investigations, will be highlighted in subsequent posts.

Comments relating to the proposed rules are due 60 days after their publication in the Federal Register. Based on the anticipated publication of the proposed rules on Thursday, October 18, the deadline for comments will be Monday, December 17, 2012.

Apple v. Samsung: Adding Elements to Avoid Infringement

Patent, , ,

By Dennis Crouch

Apple Inc. v. Samsung Electronics Co., Ltd., — F.3d —, 2012 WL 4820601, App. No. 2012-1507 (Fed. Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This is my second post on the appellate decision that I term Apple II. [Read the First Apple II Post.] In Apple II, the Court of Appeals for the Federal Circuit vacated N.D. California District Court Judge Koh’s preliminary injunction order that would have forced Samsung’s Galaxy Nexus smartphone off the market pending conclusion of the infringement lawsuit. The appellate court provided two independent reasons for vacating the preliminary injunction order: (1) that Apple had failed to provide proof of irreparable harm due to Samsung’s continued use of the particular invention covered by the patent; and (2) that a finding of infringement is unlikely based upon the claim construction as corrected by the Federal Circuit. This post focuses on the claim construction issue.

The patent at issue in this case is U.S. Patent No. 8,086,604. That patent issued in December 2011 but stems from upon an application originally filed in January 2000 and appears to be largely directed to aspects of Apple’s Siri application (although the original invention is not tied to a mobile device). After construing claim 6 of the patent, the district court found that Samsung’s product likely infringes. On appeal, the Federal Circuit has reversed that claim construction in a way that substantially narrows claim scope and thus negates any likelihood that Samsung infringes. Although the claim-at-issue uses open-ended “comprising” language, the appellate panel held that an apparatus that includes additional similar (but non-infringing) elements would not be covered by the patent.

Claim 6 is directed to an “apparatus for locating information in a network” comprising various software elements. The basic idea is that the system has a set of heuristic modules corresponding to different search areas. We all use heuristics for searching. For example, if you want to find prior art relating to a chemical compound, you might hire an expert chemistry searcher. On the other hand, if your search area is airplane seat design, you might hire someone else. Under the language of the patent, these search strategies could be defined as two different heuristic modules each corresponding to their respective search area. In the lawsuit itself, Apple identified the three heuristic modules as (1) a Google Search Module; (2) a Module that allows for Search of Internet Browsing History; and (3) a Search of a user’s Contacts List. One difficulty with considering this case is that this invention appears in hindsight to be ridiculously obvious. However, obviousness is not the topic of the appeal.

The patent claim requires “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm corresponding to said respective area.” Samsung’s product allegedly uses a plurality of heuristic modules corresponding to different search areas. However, the accused product does not use “different, predetermined heuristic algorithm” for each and every different search area. I have modeled this below with a diagram of the Galaxy Nexus Search System associated with five different Search Areas (A,B,C,D,E) but only three different Heuristic Modules (X,Y,Z). Although some of the Heuristic Modules are re-used by the system, Apple argues that the system still infringes under standard patent law that would find the addition of non-infringing elements to an infringing core does not negate infringement. See CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 1356, 1360 (Fed. Cir. 2007) (infringing device may include additional, unrecited elements).

Writing for the unanimous panel, Judge Prost (joined by Judge Moore and Reyna) rejected Apple’s argument and instead agreed with Samsung that the claim “requires that [each and] every heuristic module within the accused device use a unique heuristic algorithm.”

[D]espite the use of “comprising,” claim 6 is not amenable to the addition of other modules that do not use different heuristic algorithms because such addition would impermissibly wipe out the express limitation that requires every module to have a unique heuristic algorithm.

It appears from the court’s remarks that a simple claim amendment might have saved Apple’s case:

  • Original: “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”
  • Proposed: “a plurality of heuristic modules … wherein: each of the plurality of heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”

However, Apple might not have been able to obtain patent protection if it had clarified that the system might use the same heuristic algorithm for a variety of search areas. In particular, during prosecution Apple used the limitation in question to avoid prior art. The company argued “Andreoli does not describe … that each of the local and remote search operations employs a different heuristic algorithm.” Although the appellate panel based its decision on what I see as odd linguistics, this prosecution history argument is probably the most damning evidence.

Apple has at least one continuation application pending and thus has the opportunity to further shape its claims in a way that captures the market while avoiding prior art. See U.S. Patent Application Pub. No. 2012-0166477. The USPTO is also in the early stages of conducting an inter partes reexamination that was filed in August 2012 by Motorola Mobility (Google). See Inter Partes Reexamination No. 95/000,685.

THOSITA: Obvious to a Team Having Ordinary Skill in the Art

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By Dennis Crouch

Inventors Per Patent: The number of inventors per patent has risen fairly steadily for the past 40 years. Today, most patents are directed toward inventions created by teams of two or more inventors working in a collaborative environment. When done well, teamwork can add tremendous value to the creative process and can also provide a combined depth of knowledge beyond most individuals.

Individual PHOSITA: From its inception, the 1952 Patent Act allowed for joint inventors. However, the question of obviousness focuses on a single hypothetical individual: "a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103. The AIA slightly amends this portion of Section 103 to clarify that the "said subject matter" is "the claimed invention." This is a change made throughout the statute and puts-to-rest ongoing arguments for identification of a "core" invention for each patent.

PHOSITA as a Team: In its most recent decision, the UK Royal Court of Justice appellate panel took a different path – finding that question of obviousness should be judged from the viewpoint of a "skilled team." MedImmune v. Novartis, [2012] EWCA Civ 1234 (Kitchen, LJ). For the case in question, the court found that the "patent is addressed to a team of scientists with differing backgrounds in areas such as immunology, in particular antibody structural biology, molecular biology and protein chemistry, but with a common interest in antibody engineering."

The skilled team construct is not entirely new to UK case law. See, for example, Schlumberger Holdings Ltd v Electromagnetic Geoservices AS, [2010] EWCA Civ 819 (Jacob LJ), and Halliburton Energy Services, Inc. v. Smith International (North Sea) Limited, [2006] EWCA Civ 1715 (Jacob LJ). The starting point for these UK courts is essentially identical to that of US courts. In particular, the UK Patents Act 1977 defines "inventive step" as being "not obvious to a person skilled in the art." The corresponding language is found in Article 56 of the European Patent Convention (defining inventive step with reference to being obvious to a person skilled in the art). In building the notional teams, the UK courts have been somewhat careful to avoid hindsight bias in the process. Dyson Appliances Ltd v Hoover Ltd [2001] EWCA Civ 1440. Despite the progress, it is clear to me that the UK courts are still working out what it means to be obvious to a team as opposed to obvious to an individual person.

What is added by a Team Analysis?: In 2011, I questioned whether obviousness analysis should reflect some nuances of teamwork:

As compared to a solo worker, teams often have an overall broader depth of knowledge, but are often plagued by communication difficulties. In the obviousness analysis, this shift could be reflected in a broader scope of potential prior art but a more rigorous analysis of whether the ordinary team would make leaps of analysis necessary to combine disparate prior art.

Despite providing arguments on both-sides, I suspect that a notional team would tend to make an obviousness conclusion more likely. The knowledge of those of skill in the art is considered in other areas of patent law such as claim construction, enablement, and definiteness.

THOSITA under US Law: One statutory question moving forward is whether a section 103 "person" can be interpreted to encompass a team of persons. The answer is almost certainly yes. Perhaps the greatest driving factor for this conclusion is found in Section 102 that begins with the statement that "A person shall be entitled to a patent unless…" For that statute, the term person certainly apply to teams of joint inventors.

One major problem with my starting point of increased-team-size is the reality that the obviousness question is not designed around a "skilled inventor" threshold but that of a skilled craftsman of "ordinary skill." This means that there is not really any statutory hook for pushing the obviousness analysis to track the culture of innovation and creative experimentation. Rather, the focus is merely on ordinary craftsmen and what would have been common sense at the time. By design, this creates a low inventiveness threshold intentionally does not consider the particular inventive path taken. "Patentability shall not be negated by the manner in which the invention was made." 35 U.C.C. 103 (post-AIA).

See:

  • Dennis Crouch, Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?, Patently-O (2011)
  • Jonathan J. Darrow, The Neglected Dimension of Patent Law's PHOSITA Standard, 23 Harvard JOLT 227 (2009)

Federal Circuit Rejects Galaxy Nexus Preliminary Injunction Finding No Irreparable Harm Despite a Market Shift in Samsung’s Favor.

Patent,

By Dennis Crouch

Apple v. Samsung, — F.3d —, App. No. 2012-1507 (Fed.Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This case is important because it further reduces the chances that the owner of a component patent will obtain injunctive relief.

Patent litigation is fairly slow and often takes years for a case to proceed through trial and appeal. One shortcut to action is a motion for preliminary injunction. Such a motion asks a court to exert its equitable power to immediately stop the harm of ongoing infringement – even before ultimately concluding that the patent is valid, enforceable and infringed. Following an extension of eBay v. MercExchange, courts require a patentee to satisfy a four-factor test before granting injunctive relief.

A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

Generally, these preliminary injunction factors can be thought of as being identical to the eBay permanent injunction factors with the addition of having to prove the likelihood of success on the merits. (In a permanent injunction scenario, the merits have already been decided.) An important aspect of preliminary injunctions in patent cases is that they are immediately appealable as a matter of right. This right of immediate appeal is different from almost every other district court decision except for the ultimate dismissal of the case.

In this case, Judge Koh issued a preliminary injunction ordering Samsung to stop sales of its Galaxy Nexus smartphone based upon the likelihood of its infringement of Apple’s Patent No. 8,086,604. I should pause for a moment to note that this case is different from the parallel Apple v. Samsung case that resulted in a $1b jury verdict for Apple that is currently being challenged by Samsung. The patent in the case-at-hand is related to Google’s Siri system that uses a set of heuristic modules for searching various types of information.

On appeal, the Federal Circuit has vacated Judge Koh’s decision – finding that the district court “abused its discretion” in issuing the injunctive order favoring Apple. The court found two basic problems: (1) that Apple had failed to prove irreparable particularly linked to Samsung’s use of this particular invention; (2) that the district court had construed the asserted claims too broadly with the result being that Apple probably cannot prove infringement. Either of these issues would be sufficient to reject the preliminary injunction.

In discussions of injunctive relief, this opinion will likely be termed Apple II in order to distinguish it from the federal circuit Apple v. Samsung decision issued earlier this year in Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012) (hereinafter Apple I). Both decisions build on the nexus analysis that links the patented invention to the alleged irreparable harm – “that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.”

This nexus analysis for irreparable harm is parallel to that employed in other areas of patent law such as consideration of secondary factors of non-obviousness and in proving lost profits. This development obviously makes it much more difficult to obtain injunctive relief in the typical high-tech scenario where a retail product includes thousands of small innovations that each contribute incrementally to the ultimate value of a product.

In Apple I, the court described the law as follows:

To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.

In Apple II the court continues:

In other words, it may very well be that the accused product would sell almost as well without incorporating the patented feature. And in that case, even if the competitive injury that results from selling the accused device is substantial, the harm that flows from the alleged infringement (the only harm that should count) is not. Thus, the causal nexus inquiry is indeed part of the irreparable harm calculus: it informs whether the patentee’s allegations of irreparable harm are pertinent to the injunctive relief analysis, or whether the patentee seeks to leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant.

It only follows that the causal nexus analysis is not a true or false inquiry. The relevant question is not whether there is some causal relationship between the asserted injury and the infringing conduct, but to what extent the harm resulting from selling the accused product can be ascribed to the infringement. It is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement and check the causal nexus requirement off the list. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Only viewed through the prism of the causal nexus analysis will the irreparable harm allegations reflect a realistic sense of what the patentee has at stake.

Here, Apple proved that its Siri application (also covered by the patent) is popular and also that demand for the Galaxy Nexus had come at the expense of iPhone purchases. However, the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature. Without proving that link, the court could not find that the (alleged) infringement caused irreparable harm.

Apple I was decided by Judges Bryson and Prost with a partial dissent by Judge O’Malley (concurring on this issue). This case, Apple II was decided by Judges Prost, Moore, and Reyna acting unanimously.

Taken as a pair, Apple I and Apple II are important because they further reduce the chances that the owner of a component patent will obtain injunctive relief. Before eBay, irreparably harm was hardly a consideration. Since eBay, the irreparable harm factor has largely focused on whether the patentee has a product or potential product being harmed by ongoing infringement. Now, the question will move to the next level of granularity in a way that will be difficult for patentees to prove.

Software Patents: 50 Years of Circuitous Artifices

Patent

By Dennis Crouch

I recently asked the courts for a decision on whether software is patentable. In my short essay, I argued that we have a de facto system that allows the issuance of software patents, but only after the innovative software elements are "hidden by innuendo and obfuscation." This makes software patents "harder to find, harder to examine, harder to understand, and thus much more problematic than they need to be."

In response, I received a nice note from longtime patent attorney Michael Rackman of Gottlieb Rackman in NYC. Rackman highlighted his 50-year-old article on the topic published as a student note in the 1963 volume of New York University Law Review. It turns out that my suggestions are simply a refrain echoing his thoughts from so long ago. Rackman's 1963 article concluded:

It is theoretically and practically possible to secure effective patent protection for computer programs. The patents issuing as a result of first attempts probably will obscure, or already have obscured, the true nature of the claimed inventions.

Perhaps naïve at the time, Rackman was hopeful that the intentional obfuscation would end soon. He wrote:

Perhaps in the future it will be common practice to seek and secure program patent protection without resort to circuitous artifices.

I guess that future is still ahead of us.

Notes:

  • Michael Rakman, Note, The Patentability of Computer Programs, 38 N.Y.U. L. Rev. 891 (1963).
  • See also, Orin Kerr, Computers and the Patent System: The Problem of the Second Step, 28 Rutgers Computer and Technology Law Journal 47 (2002) ("After almost forty years of debate and case law development, we seem no closer to a consensus than when we started.").

Did the AIA Eliminate Secret Prior Art?

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In many ways, prior art is the core of the US patent system. Patentability requires that any invention-to-be-patented be “new” as defined by 35 U.S.C. §§ 101, 102, and 103. Prior art serves as the underlying evidence to prove that the invention is not new. As implied by its name, prior art has a temporal aspect in that the “prior art date” must come before (i.e., be prior-in-time to) the critical patentability date of the invention in question. Sometimes, the identical invention is found within a single prior art reference. In that case, the newness doctrine of “novelty” as defined by 35 U.S.C. § 102 will do the invalidating work. However, more often than not, a prior art reference will only teach a portion of the purported invention. In that case, the prior art may still serve a useful roll when applying the obviousness doctrine defined by 35 U.S.C. § 103.

We’ve talked about two key features of prior art: (1) being earlier in time and (2) teaching some aspect of the invention being claimed. Those two elements are never sufficient to satisfy the evidentiary requirements of prior art. Rather, the law always requires one additional element to take this information from being merely prior private knowledge to being prior art. As part of the America Invents Act move to a first-to-file regime, this additional step will always involve (3) transferring knowledge.

One argument favoring a first-to-file regime is its focus on publicly available information rather than privately held knowledge. And, in most cases, the step of transferring of knowledge highlighted above is a public act. Thus, prior art may be created through publication, patenting, or public use. 35 U.S.C. § 102(a)(1) (post-AIA). The AIA retains one form of temporally-secret prior art in that the prior filing of a patent application by “another inventor” will be deemed prior art as of its filing date. 35 U.S.C. § 102(a)(2) (post-AIA; formerly defined by § 102(e)). This is secret prior art because patent applications are typically kept secret by the USPTO for 18-months after they are filed. However, I term § 102(a)(2) prior-art-as-of-filing-date as only temporally (or temporarily) secret because such a reference cannot be used as prior art unless and until the prior-filed application is made public through either publication or patenting. Perhaps because of the unfairness of associated with its secrecy, most other countries besides the US only allow this type of prior art for novelty arguments and not for questioning obviousness (inventive step).

The AIA did eliminate several types of secret of prior art, including prior secret invention by another inventor under pre-AIA § 102(g) and prior knowledge transferred from another to the patent applicant under pre-AIA § 102(f). The individualized secrecy of these prior art references created two main problems: (1) that patentability could not be fully evaluated with going through the arduous process of obtaining additional information from interested parties and (2) that the secrecy gave interested parties more of an opportunity to fraudulently create (or destroy) documents after-the-fact. Making patentability based upon publicly available information can hypothetically lead to some unjust outcomes, but it has the enormous benefit of providing clear(er) notice to anyone who cares to look.

Two important secret prior art questions remain — namely whether either (1) secret commercial uses (by the patentee) or (2) secret on-sale activity (by anyone) create prior art that can invalidate a patent on novelty grounds and contribute to invalidation on obviousness grounds. The Patent Act never expressly authorized the first type of prior art and has arguably now rejected the second. Advocates for a transparent prior art system argue that the AIA should be interpreted as eliminating both.

Secret Sales: One type of prior art that is traditionally thought of as potentially secret is created by what is known as the on-sale bar. An invention that is on sale before the critical patenting date will result in prior art that renders any patent invalid. There are a few ways that a sale or offer-to-sell could be secret: for example, (1) it might be an offer between two individuals that is subject to a (formal or informal) confidentiality agreement or (2) it might be an offer that does not fully disclose the scope of the invention.

The AIA retains the identical language of its predecessor statute regarding on sale activity that occurs prior to the defined critical date. Compare 35 U.S.C. § 102(a)(1) (post-AIA) with 35 U.S.C. § 102(b) (pre-AIA). Although the “on sale” term itself is identical, the context of the new statute is arguably different. In particular, the new statute has added a catchall phrase “otherwise available to the public” that suggests that the on-sale activity must also be available to the public. The new statute reads as follows:

A person shall be entitled to a patent unless — 1. the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or …

The open question is whether the language here creates a legally cognizable implication that the “on sale” activity must be available to the public as well.

Secret Commercialization by the Patentee: In his 1946 decision in Metallizing Engineering, Judge Learned Hand explained that a patentee’s commercial use of its process (even if done secretly behind factory walls) counted as a “public use” sufficient to invalidate the later-filed patent application. The court wrote “That it is a condition upon an inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or [a patent].” Under the rule, secret commercial uses of an invention by a third party does not count as a public use. This distinction is found nowhere in the patent statute, but has been judicially recognized for many years. While the new statute retains the “public use” language, many suggest that a strong congressional intent that the new statute eliminate the Metallizing rule.

USPTO Proposed Interpretation: In a set of proposed examination guidelines, the USPTO indicated its interpretations that the statute has altered these provisions in favor limiting the application of secret prior art. In particular, the USPTO’s position is that, while the statute is not entirely clear on these points, the legislative history indicates that that prefiling secret sales and commercial uses do not qualify as prior art under the revised Section 102. The PTO writes: “The legislative history of the AIA indicates that the inclusion of this clause in AIA 35 U.S.C. 102(a)(1) should be viewed as indicating that AIA 35 U.S.C. 102(a)(1) does not cover non-public uses or nonpublic offers for sale.

For the most part, patent attorneys appear to agree with the USPTO’s proposals. The American Bar Association’s IP Law Section writes:

ABA IPL respectfully submits that the passage “otherwise available to the public” reflects the touchstone of what constitutes prior art under the AIA under section 102(a)(1). This section requires availability to the public or public accessibility is an overarching requirement. Such accessibility is critical to provide a simpler, more predictable and fully transparent patent system. As such, for a “public use,” for a determination that an invention is “on sale,” as well as to assess whether an offer for sale has been made, the statutory requirements under the AIA require a public disclosure. Thus, non-public offers for sale (and non-public uses) would not qualify as prior art under the AIA.

The AIPLA agrees, writing:

AIPLA believes that an offer for sale needs to be public to qualify as “on sale” prior art under §102(a)(1). . . . AIA §102(a)(1), unlike pre-AIA 35 U.S.C. §102(b), contains the residual clause “or otherwise available to the public.” This is a major policy change achieved by the new legislation, which would further the goal of increasing objectivity in the identification of prior art. . . .

[T]he legislative history of the AIA indicates that the inclusion of this clause in §102(a)(1) should be viewed as indicating that §102(a)(1) does not cover non-public uses or non-public offers for sale. AIPLA believes that such an interpretation reflects the clear intent of Congress. It is also consistent with the broad goal of global harmonization under a first-inventor-to-file system.

The IPO agrees as well – arguing in its comments to the USPTO that the AIA “overrules Metallizing Engineering by excluding ‘secret’ commercial activity from the ‘on sale’ provision” and that the only on sale activity relevant to patentability under the AIA is when an invention is “publicly on sale.” LES is also on board with this interpretation.

Several individuals disagreed, including Lawrence Pope who wrote:

Certainly, any change in patent law which abandoned a long established policy and allowed inventors to engage in secret commercial exploitation of their inventions for as long as they liked without forfeiting their right to obtain valid patent protection on the same, would require quite explicit statutory language. In addition, it would be expected that any such major change would be reflected in a more extensive legislative history than the mere comments of two members. One would at least expect to see it reflected in the Committee Report reporting on the legislation to the House of Representatives.

Mark Lemley also argued that the PTO’s interpretation is quite problematic:

[T}he proposed Guidelines take the position that the AIA has reversed an unbroken line of precedent of both the Federal Circuit and the regional circuits tracing back to Judge Learned Hand’s decision in the Metallizing case. Those cases hold — for impeccable policy reasons — that the term “public use” in old section 102(b) should be interpreted to prevent an applicant from making a secret commercial use for more than a year while delaying the filing of a patent application. A contrary conclusion, as the PTO now proposes, will enable inventors to keep their process inventions secret for years or even decades, and then surface and file a patent application. That is directly contrary to the goals of first-inventor-to-file in the AIA, which encourage early filing of patent applications.

Concluding that Metallizing and the cases that follow it were abrogated will have another, even more pernicious effect. Metallizing, Gore v. Garlock, and other cases interpret the term “public use” in the old statute. One might reasonably conclude that those cases stretch the meaning of that term, but what the courts said they were doing was interpreting “public use.” The term “public use” appears unchanged in new section 102 under the AIA. For the PTO to conclude that the new law opens the door to reinterpretation of the settled meaning of terms present in both the old and new statutes opens a dangerous door. Parties and courts might be expected to try to revisit the meaning of “on sale,” “patented,” “printed publication,” and many other settled statutory provisions, creating enormous uncertainty. To take just one example, the inherency doctrine, like the Metallizing rule, is not articulated expressly in either the old or new statute. If the reenactment of the term “public use” opens the door to revisiting Metallizing, it also opens the door to revisiting inherency, the “ready for patenting” rule in on sale bar, and a host of other settled cases. The PTO, patent applicants, and litigants would be much better served by leaving existing precedent interpreting unchanged statutory terms in place.

Read more comments here: http://www.uspto.gov/patents/law/comments/. (Note, the equally major issue is the USPTO’s interpretation of the disclosure grace period that is also part of the commentary).

What’s the Big Deal?: The USPTO does not have substantive authority to shape the interpretation of 35 U.S.C. § 102. In the end, this issue will be resolved by the courts or else clarified by Congress in a technical amendment. In many ways, the arguments above are simply a preview for a Federal Circuit and Supreme Court ruling on the issue. One problem with the USPTO’s narrow view of the prior art is that it delays the eventual resolution of this issue since it gives patent applicants nothing to challenge. In any event, this is a debate that will continue for at least the next decade and likely beyond.

Making Software Patents Transparent and Understandable: Begin by Determining Whether Software is Patentable

Patent,

By Dennis Crouch

One major problem with software patents is their forced lack of transparency. The USPTO has granted hundreds of thousands of patents that should rightfully be termed “software patents,” but almost none of those patents include a claim directed to “software.” Rather, the innovative software is being hidden by innuendo and obfuscation because of the perceived ban on patenting software per se.

I contend that if we are going to allow software patents, we should do so openly and honestly. In that world, patent claims would be able to match the words of the computer scientist inventors and might simply be written as “Software comprising …” or “A computer program comprising …” We are not in that world.

In the 1960’s the USPTO began pushing against the patenting of bare computer software. Its 1968 guidelines formalized the USPTO’s position against computer programs as unpatentable mental steps under 35 U.S.C. § 101. That approach was largely vindicated by the Supreme Court cases of Gottschalk v. Benson (1972) and Parker v. Flook (1978). However, the combination of Diamond v. Diehr (1981); new leadership at the USPTO; and the formation of the Federal Circuit all rejuvenated the patenting of computer software. Many still hold to the idea that software per se cannot be patented because the software is not a machine or apparatus and because the software only becomes a non-abstract patentable process once implemented on a particular device. In Bilski v. Kappos (2010), the court rejected categorical exclusions of business method patents (and thus presumably software patents). At the same time, however Bilski and the subsequent case of Mayo v. Prometheus (2012) serve to revive the pre-Federal-Circuit case law and create further direct tension with software patents.

The result from this long history is that we still have software patents but they are hidden under the surface. They are harder to find, harder to examine, harder to understand, and thus much more problematic than they need to be. After fifty years of controversy; meandering administrative practice; and inconsistent Supreme Court decision making, it is time for the courts to take a stand and deliver the law in a way that is clear and precise. Finally answer the question: Is software patentable?

Federal Circuit To Announce Whether Software is Patentable?: En Banc Rehearing on Section 101 Issues

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By Dennis Crouch

CLS Bank Int’l v. Alice Corp, App. No. 2011-1301 (Fed. Cir. 2012) (en banc order)

The Federal Circuit has refocused its attention on the question of patentable subject matter and has ordered an en banc rehearing of CLS Bank Int’l. v. Alice Corp. (Fed. Cir. 2012). In its initial panel opinion, the Federal Circuit held that, when considered as a whole, the claimed data processing invention was patent eligible. Judge Linn wrote the majority opinion suggesting that a court should only reach Section 101 issues when subject matter ineligibility is “manifestly evident”. Judge Prost wrote in dissent and argued that the majority improperly ignored the Supreme Court’s most recent statements on the topic found in Prometheus. The patentable subject matter question in CLS Bank is virtually indistinguishable from the parallel issue in Bancorp v. Sun Life. In that case, however, the Federal Circuit ruled the invention ineligible.

In its en banc order, the court reformulated the questions presented as follows:

a. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?

The Federal Circuit has asked for the USPTO to file a brief as amicus curiae. Further amicus briefs may be filed without consent of the parties or leave of the court but must otherwise follow Federal Circuit’s Rule 29.

More Reading:

The Removal of Section 102(f)’s Inventorship Requirement; the Narrowness of Derivation Proceedings; and the Rise of 101’s Invention Requirement

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By Dennis Crouch (October 5, 2012)

In a prior Patently-O essay, I wrote that the removal of the inventorship requirement of Section 102(f) opens the door to patenting obvious variants of inventions created by someone else. In that essay, I mentioned the newly designed derivation proceedings, but opined that they would not be much use in this situation. I wrote that "it appears to me that those actions (even if timely filed by the originator) would be unsuccessful because derivation proceedings are limited to cases where the derived claims are "substantially the same" as the originator's innovation. The substantially the same limitation is much narrower in scope as compared with the potential wide variety of obvious variants." 102(f) Essay.

I received a response to that essay from Professor Sarnoff who reports that he and Chico Gholz have a soon-to-be-published article in IP Today addressing the PTO's new rules for triggering derivation proceedings. The punch line of their article is that the legal scope of derivation proceeding is even narrower than I suggested—thus allowing for a third party to patent quite minor variations of ideas obtained from someone else. (I encourage you to read the article once it is published.)

The America Invents Act of 2011 (AIA) entirely rewrote the section 135 of the patent act. That provision previously detailed the interference process and now focuses exclusively on derivation proceedings as they will apply to patent applications filed on or after March 16, 2013. New section 135(a) limits derivation proceedings to instances where an alleged wrongdoer files an earlier patent application "claiming" the original inventor's (but late filer's) "claimed invention." In their article, Gholz and Sarnoff correctly argue that there is not much room for variation here. Under the statute, the derived invention (as claimed) must be for the same subject matter as the original invention (as claimed), even if their language differs. This further confirms what I see as the problematic naming of "derivation proceedings." In my mind, the meaning of the word derivation suggests some amount of modification. While a derivation depends upon having an original source, the final results are ordinarily a modification of that source. With Gholz-Sarnoff, we learn that this ordinary meaning does not fit to the Derivation Proceedings as defined by the AIA. A better term for the AIA defined action might be "False Inventorship Claim Proceeding."

Gholz and Sarnoff recognize that the PTO took a different view when it codified the rules at 37 C.F.R. §42.405(a)(2). That provision broadly authorizes derivation proceedings when the petitioner's claims are "substantially the same" as the alleged deriver's claims, with "substantially the same" defined in 37 CFR 42.401 as "patentably indistinct." Gholz and Sarnoff argue that the PTO is wrong in this interpretation and that the Federal Circuit will eventually overrule the PTO's misapplication of the law.

Further, as noted by Sarnoff in his Patently-O article and as reiterated in the new Gholz-Sarnoff article in response to the views of Armitage, the original inventor may not have conceived of the obvious variant and thus may not be able to provide the required oath in regard to the obvious-variant claim so as to trigger the derivation proceeding.

In our prior e-mail communications (repeated here with permission), Sarnoff has also explored other ways to block patenting of the obvious variants. He writes:

  1. A person who conceives of an obvious variant is normally treated as an inventor of an invention (just of an obvious one), so lack of inventorship under Section 101 may not be a successful approach to invalidating the claim made by the deriver, although the deriver will likely be entitled at least to joint-inventor status; and
  2. Current inventorship law may not necessarily treat the originator of the underlying invention as a joint-inventor of the obvious variant of which the originator did not conceive, even if the originator added a significant contribution to conception by the deriver, and thus it may not always be possible to correct inventorship to permit the originator to obtain joint inventor status and joint ownership of the obvious variant.
  3. However, the courts have sometimes extended unpatentability to obvious variants even when the statute does not clearly provide for it, as they did in In re Foster, 343 F.2d 980 (C.C.P.A. 1965) (extending Section 102(b) to claims that were obvious in light of statutory bar art). [Note, this explains Professor Sarnoff's prior equivocation that I discussed here. DC.]

The bottom line here that I began with my recent essay and continue with this additional discussion revealed by Gholz and Sarnoff is that the elimination of section 102(f) and the narrow scope of derivation proceedings have created a potential problem by offering a roadmap for bad behavior. The law now apparently sanctions the patenting of minor variations of innovations created by someone else. This raises several levels of concern. Most directly, we are concerned about (1) how the obvious variant patent negatively impacts the idea originator and (2) how the obvious patent burdens the public who must either license or avoid infringement.

The current law basically places the burden on the idea originator to protect his or her rights by (1) keeping the idea secret and then relying on contract and trade secret law to protect that secrecy; (2) quickly filing for patent rights; or (3) quickly going public with the idea in a way that creates prior art. Any of these overlapping choices can be sufficient to block or invalidate an obvious variant patent. I am also not overly concerned that this approach unduly shifts a burden to the idea originator. My problem with that approach – as suggested by Anon – is that the idea originator might not be proactive enough to take the actions necessary to protect the public's interest in not being burdened by patents covering obvious innovations.

New Pressure on Section 101: This whole scenario then puts tremendous pressure on courts (including the Supreme Court) to expand the powerful (but ungainly) tool of 35 U.S.C. § 101 and use that fundamental statute to block these derived variant patents that are not otherwise prohibited by statute. The Supreme Court is unlikely to stand for the patenting of obvious variants of ideas derived from another. And, the most straightforward way for the court to act is with the return of something akin to the invention requirement that was thought to have been eliminated by the 1952 Patent Act. That action would likely add steel to the link between newness and subject matter eligibility in a way that many of us see as problematic. (Perhaps under the framework of "inventive contribution.") The better approach is a statutory change that shifts rights with fewer ripple effects.

Sarnoff's perspective is that Section 101 should have an active and engaged role in the patent eligibility doctrine. In his recent article on the post-1952 invention requirement, Sarnoff writes (with apologies to Dr. Strangelove): "[T]o those who believe in using private property to motivate creative advance, using eligibility determinations to restrict access to the patent system is the bomb that threatens our future viability. For the reasons discussed [in the article], I believe we need to learn to stop worrying and to love that bomb." Joshua Sarnoff, Patent Eligible Inventions after Bilski: History and Theory, 63 Hasting Law Journal 53 (2011).

Notes:

  • In addition to raising this interesting topic, I should (and do) also thank Gholz and Sarnoff for their editorial suggestions on this essay.

Supreme Court Questions Whether Patent Law Malpractice Claims “Arise Under” the US Patent Laws (And Thus Are Amenable to Federal Jurisdiction).

Patent, , , ,

By Dennis Crouch

Gunn v. Minton (Supreme Court 2012)

Over the past few years we have seen an ongoing subject matter jurisdictional battle between state courts, regional federal circuit courts of appeal, and the Court of Appeals for the Federal Circuit. The issue as raised in various context is when a complaint stating a non-patent cause of action should be considered to “arise under” the patent laws so as to ensure that the case is heard by a federal district court and subsequently by the Court of Appeals for the Federal Circuit. These non-patent / patent cases can arise in a variety of disputes, including disputes over legal malpractice, contracts and licenses, employment disputes, bankruptcy, challenges to arbitrations, and antitrust disputes.

The issue in the present case is whether state courts in Texas properly have jurisdiction over legal malpractice claims against patent attorneys (or patent litigators). Legal malpractice is generally a state law tort claim, but the Federal Courts have jurisdiction over claims arising under the patent laws. Although there is Federal Circuit precedent on point, this case actually arises from a Texas state court dismissal of Mr. Minton’s malpractice claim based upon the state court’s interpretation of federal law.

Now, the Supreme Court has agreed offer its final view on the question of when the Federal Courts (and the Court of Appeals for the Federal Circuit) have jurisdiction here. Although nominally a patent case, the case could have much broader impact because it will essentially be interpreting the generic constitutional and statutory limitation of “arising under” jurisdiction.

Background on the Dispute: The case started several years ago when Mr. Vernon Minton developed a set of software that he leased to the Texas Int’l Stock Exchange (TISE). That lease to TISE occurred more than one year before he filed a provisional patent application on the invention embodied by the product. The USPTO granted Minton U.S. Patent No. 6,014,643. However, in a later lawsuit against NASDAQ, the patent was invalidated via the on-sale bar of 35 U.S.C. § 102(b) and that invalidity finding was upheld by the Federal Circuit on appeal. Minton v. Nat’l Ass’n of Sec. Dealers, Inc., 336 F.3d 1373 (Fed. Cir. 2003). In that decision, the Federal Circuit confirmed that the lease to TISE constituted a “sale” for 102(b). In a post-judgment motion, Minton asked the district court to consider whether the use by TISE was an experimental use. However, the district court refused to consider that issue because of its untimely introduction.

The present lawsuit arose when Minton sued his patent litigation counsel (who have now joined the Fulbright & Jaworski firm). The crux of the malpractice claim is that the litigation counsel failed to timely plead the experimental use question. Minton filed the lawsuit in Texas state court and lost on a pretrial motion based upon the trial court’s judgment that Minton had failed to present “a scintilla of proof . . . to support his claims.” That no-damages judgment was affirmed by the Texas court of appeals. However, the Supreme Court of Texas took an orthogonal view and held that Texas courts actually lacked subject matter jurisdiction over case. In particular, the Texas Supreme Court held that Minton’s malpractice claim required resolution of a substantial question of patent law and therefore fell within the exclusive “arising under” jurisdiction of the federal courts and, eventually, the Court of Appeals for the Federal Circuit. This ruling gives Minton another shot at winning the case – this time in federal district court. The Texas court wrote:

This case arises out of patent infringement litigation. We consider whether federal courts possess exclusive subject-matter jurisdiction over state-based legal malpractice claims that require the application of federal patent law. The federal patent issue presented here is necessary, disputed, and substantial within the context of the overlying state legal malpractice lawsuit. Additionally, the patent issue may be determined without creating a jurisdictional imbalance between state and federal courts. We conclude that exclusive federal jurisdiction exists in this case. Accordingly, without reaching the merits of the legal malpractice claim, we reverse the court of appeals’ judgment and dismiss this case.

The 5-3 Texas Supreme Court decision follows the lead set by the Court of Appeals for the Federal Circuit in Air Measurement Tech., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007) and Immunocept, L.L.C. v. Fulbright & Jaworski, L.L.P., 504 F.3d 1281 (Fed. Cir. 2007). In those cases the Federal Circuit gave a broad interpretation to arising under jurisdiction based upon the court’s congressionally mandated goal of national uniformity in the patent system. Both the Akin Gump and the Fulbright Jaworski cases were decided on the same day by the same panel and both penned by then Chief Judge Paul Michel. (Judges Lourie and Rader joined). Although the Texas court did not treat the Federal Circuit decisions as binding precedent, the Court chose to adopt the logic of those decisions. The dissent argued that the State of Texas has a strong interest in (and a regulatory scheme in place for) ensuring that Texas attorneys maintain a high level of quality and that federalism concerns suggest that many of these cases should be adjudged at the state court level. In a non-patent case, the Supreme Court approved of this more nuanced analysis of arising under jurisdiction in the case of Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005). In 2012, the Federal Circuit has decided at least three other jurisdictional disputes over attorney malpractice. In each case, Judge O’Malley argued against federal circuit jurisdiction based upon her reading of Grable. See Landmark Screens, LLC v. Morgan Lewis & Bockius, LLP (Fed. Cir. 2012)(O’Malley, J., concurring); Byrne v. Wood, Herron & Evans, LLP (Fed. Cir. 2012)(O’Malley, J., joined by Wallach, J., dissenting from denial of the petition for en banc rehearing); and USPPS, Ltd. v. Avery Dennison Corp. (Fed. Cir. 2012)(O’Malley, J., joined by Mayer, J., concurring).

Question Presented: The attorneys challenging federal jurisdiction raised the following questions:

Did the Federal Circuit depart from the standard this Court articulated in Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005), for “arising under” jurisdiction of the federal courts under 28 U.S.C. § 1338, when it held that state law legal malpractice claims against trial lawyers for their handling of underlying patent matters come within the exclusive jurisdiction of the federal courts? Because the Federal Circuit has exclusive jurisdiction over appeals involving patents, are state courts and federal courts strictly following the Federal Circuit’s mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims – which involve no actual patents and have no impact on actual patent rights – into the federal courts?

In his responsive brief, Minton reframed the question as follows:

Minton filed a legal malpractice claim against the Attorneys arising from a patent infringement lawsuit. Do federal courts have exclusive “arising under” jurisdiction where the sole substantive issue is the application of a patent law doctrine which is an essential element of Minton’s malpractice claim?

Underlying Law: As suggested by both questions presented, the underlying law on federal court jurisdiction over patent cases begins with the federal statute – 28 U.S.C. § 1338(a).

The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases.

28 U.S.C. § 1338(a). There are two key phrases here. First, federal jurisdiction only exists when the civil action is considered to be “arising under [an] Act of Congress relating to patents.” Second, if federal circuit exists then it is exclusive of state jurisdiction.

Not a Constitutional Question: The statutory “arising under” language is intended to reflect the parallel language found in Article III, Section 2 of the U.S. Constitution that limits federal judicial power to cases “arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority…” However, the two sources have been interpreted somewhat differently. The constitutional “arising under” limits have been broadly interpreted to allow courts to hear cases even when the federal claim is only raised in a defense or counterclaim. See Osborn v. Bank of the United States, 22 U.S. 738 (1824). On the other hand, the “arising under” language in sections 1338 and 1331 have been more narrowly interpreted under the well pleaded complaint rule. In his 2004 article on Holmes Group, Professor Cotropia writes:

The phrase “arising under” originated from Article III of the Constitution, defining the jurisdiction of the federal court system. The Supreme Court interpreted this phrase, as it appears in Article III, to extend the constitutional grant of federal judiciary power to every case where federal law potentially forms an ingredient of a claim. Article III allowed “[t]he mere existence of a latent federal ‘ingredient’ that might in theory be dispositive of the outcome of a case . . . to bring the entire case, including ancillary nonfederal issues, within the jurisdiction of the federal courts.” An implementing statute is needed, however, for lower federal courts to exercise the powers conferred by Article III. With such an implementing statute, lower federal courts could enjoy some or all of the constitutional “arising under” grant of jurisdiction.

Christopher Cotropia, Counterclaims, the Well-Pleaded Complaint, and Federal Jurisdiction, 33 Hofstra L. Rev. 1 (Fall 2004); See also Donald L. Doernberg, There’s No Reason for It; It’s Just Our Policy: Why the Well-Pleaded Complaint Rule Sabotages the Purposes of Federal Question Jurisdiction, 38 Hastings L.J. 597 (1987).Because the Constitutional limitation has been so broadly interpreted, all of the practical discussion is focused on the meaning of “arising under” as it is found in the statutory context.

In Grable (following a long line of precedent), the Supreme Court confirmed that – under the statute – a case may “arise under” federal law even when the cause of action is purely a non-federal state-law claim. However, when the cause of action is not based on a federal claim, Grable requires (1) a substantial underlying contested federal issue and (2) that federal jurisdiction over the case “be consistent with congressional judgment about the sound division of labor between state and federal courts.” Grable interpreted the “arising under” language of 28 U.S.C. § 1331 rather than the patent jurisdictional statute of section 1338. However, in Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988), the Supreme Court recognized that those two statutes should be interpreted in parallel.

Is Patent Law Different?: Although I wrote above that the case has non-patent implications, patent law presents some particulars that might not exist in other areas of law. These involve the particular exclusive jurisdictional statute for patent law. Thus, although state courts have jurisdiction to also decide most federal claims, they cannot decide patent claims. In addition, Congress has spoken regarding its desire for uniformity in the application of the patent laws. These stated federal interests could be sufficient to explain a difference between federal jurisdiction over patent law malpractice claims and not over say trademark law malpractice claims. The malpractice is a relatively minor question compared with jurisdiction over contract claims that involve patent rights (such as a patent license or sale). It would be a big deal if the Supreme Court opened the door to greater federal jurisdiction over these claims. As I explain in the next paragraph, I think it is unlikely that this case would be a vehicle for expanding federal jurisdiction and instead will more likely be a vehicle for contracting federal jurisdiction – at least when compared with the holdings in Akin Gump and Fulbright jurisdictional decisions discussed above.

Grable is the Supreme Court’s most recent pronouncement on this issue and that case the court tempered federal arising under jurisdiction by requiring courts to be mindful of the appropriate balance of power between state and federal courts. Despite Grable, both the Federal Circuit and now the Texas Supreme Court have continued to maintain broad jurisdictional reach over these malpractice cases. In these cases, the minority dissenting viewpoint has argued for less expansive jurisdiction. In this setup, the Supreme Court is more likely to resolve the conflict between these ranges than it is to identify a result to the extreme. In addition, in the years since Grable, there has been a continued focus and recognition of legitimizing State’s rights. This notion of the importance of State’s rights places an additional thumb the scale of reduced federal jurisdiction over these types of cases.

AIA Expands Arising Under Jurisdiction: Although not applicable for this case, the Leahy-Smith America Invents Act (AIA) has altered federal court jurisdiction in a way that overrules the Supreme Court decision in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002). In that case, the Supreme Court interpreted the applied the well pleaded complaint rule to the Federal Circuit appellate jurisdiction statute (28 U.S.C. § 1295) in holding that patent issues raised only in counterclaims do not “arise under” the patent law in a way that creates Federal Circuit jurisdiction. The AIA amends the statute to clarify that Federal Circuit jurisdiction includes cases where the patent issue is first raised in a compulsory counterclaim. In addition, the new law indicates that “No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents” and also provides a right of removal from state court if either party raises a claim for relief “arising under any Act of Congress relating to patents.”

Self Replicating (and Alive) Inventions: Supreme Court Grants Certiorari in Monsanto v. Bowman

Patent

By Dennis Crouch

Mr. Bowman v. Monsanto Co., Docket No. 11-796 (Supreme Court 2012)

Beginning its 2013 term with a bang, the Supreme Court has granted Vernon Bowman’s petition for a writ of certiorari in the Indiana farmer’s longstanding battle against Monsanto Co. The patents at issue cover Monsanto’s genetically modified seed technology that protects broadleaf plants such as soybeans from being damaged by the application of the popular broadleaf herbicide glyphosate (another Monsanto invention known as RoundUp).

After losing at the Federal Circuit, Bowman presented the following questions to the Supreme Court:

Patent exhaustion delimits rights of patent holders by eliminating the right to control or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose – namely, for planting. The question presented is:

Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

In its brief-in-opposition, Monsanto reformulated the question as follows:

Whether the Federal Circuit correctly ruled that Monsanto’s patent rights in biotechnology related to genetically modified plants (here, patented technologies that make soybeans resistant to glyphosate-based herbicides) are independently applicable to each generation of soybeans embodying the invention, such that a grower who, without authorization from Monsanto, creates a new generation of genetically modified soybeans infringes Monsanto’s patents.

When asked for commentary on the case, the Solicitor General advised the Supreme Court to deny certiorari. In doing so, however, the Solicitor was harshly critical of the Federal Circuit’s precedent on exhaustion – stating flatly that the Federal Circuit’s “conditional sale” doctrine is inconsistent with Supreme Court precedent.

The Revival of Parker v. Flook

Patent

The Supreme Court’s much maligned 1978 decision in Parker v. Flook, 437 U.S. 584 (1978) is seeing something of a revival following the Federal Circuit’s substantial rejection of the case under Judge Rich. The chart above shows the citation count for the case over the past 30 years. Part of the revival is based upon revived interest in the subject matter eligibility doctrine in general. However, the Supreme Court in Bilski v. Kappos (2010) and Mayo v. Prometheus (2012) both treat the case favorably. The most controversial aspect of the Flook decision is its language regarding the “inventive concept” rather than merely focusing attention on a patent claim “as a whole.” In that case, the court wrote:

Even though a phenomenon of nature or mathematical formula may be well known, an inventive application of the principle may be patented. Conversely, the discovery of such a phenomenon cannot support a patent unless there is some other inventive concept in its application.

In analyzing merits briefs filed at the Federal Circuit, I found that the case was cited in 13 briefs from 1996-2006. In the past six years (2007-2012) the case has been cited by more than 130 briefs.

With 102(f) Eliminated, Is Inventorship Now Codified in 35 U.S.C. 101? Maybe, but not Restrictions on Patenting Obvious Variants of Derived Information.

Patent, ,

By Dennis Crouch

Before the America Invents Act (AIA), the Patent Act included a specific prohibition on patenting something the purported inventor did not actually invent. According to the statute, “[a] person shall be entitled to a patent unless … 102(f) he did not himself invent the subject matter sought to be patented.” 35 U.S.C. § 102(f) (pre-AIA). When that provision was eliminated, Congress was assured by various parties that the inventorship requirement was sufficiently protected by the U.S. Constitutional reference to “inventors” and by the “[w]hoever invents or discovers” preamble of 35 U.S.C. § 101. This position is exemplified by Joseph Matal in his recent article on the creation of the AIA.

Some may think that, because § 102(f) has been repealed, there is no longer any legal requirement that a patent for an invention be obtained by the inventor. Not so. Both the Constitution and § 101 still specify that a patent may only be obtained by the person who engages in the act of inventing. Indeed, even commentary on the 1952 Patent Act noted, with respect to § 102(f), that “[t]his paragraph is perhaps unnecessary since under § 101 it is ‘Whoever invents …’ who may obtain a patent and later sections provide that the inventor must apply for the patent and execute an oath of inventorship.”

Joseph D. Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 FED. CIR. B.J. 435 (2012).

To be clear, even under this duplicative construct we should recognize that Section 102(f) does have the important effect of eliminating 102(f)/103 prior art defined by the 1997 OddzOn Prods decision. The 102(f)/103 scenario is probably best termed a “derived knowledge” situation that occurs when an applicant learns of an invention created by someone else and then comes-up with an obvious variant of that invention. Under pre-AIA law, the resulting patent would properly be invalidated on 102(f)/103 obviousness grounds even if the prior-invention had never been made public or the subject of a sale. By removing 102(f), the AIA also removes the prospect of 102(f)/103 prior art. In his AIA article, Robert Armitage writes “subsection [102(f)] had become, as far as the courts were concerned, a prior art provision for assessing obviousness.” Understanding the America Invents Act its Implications for Patenting, 40 AIPLA Q.J. 1 (2012). Armitage explains why the change is particularly fitting as part of the move-towards transparency embodied by the AIA first-to-file rules.

Moreover, putting a “prior art” provision of pre-AIA § 102(f) ilk into the new law would have undone the transparency/objectivity reforms that its elimination by the AIA worked to perfect. Congress simply rejected the notion that every individual named as an inventor on a patent application should be queried to determine what secret or private information the inventor was already aware of, from the work of someone else, at the time the invention was made by that individual. Congress rejected the notion that the inventor’s private knowledge learned from others should then be provided to patent examiners to determine whether the inventor’s claimed invention could be nonetheless regarded as “obvious” (perhaps in combination with other prior art).

Armitage at 98. Armitage and Matal were both instrumental in the development and passage of the AIA. Their well written articles explain the choices made in the AIA legislation and attempt to explain their visions for how ambiguities should be interpreted. Professor Sarnoff agrees with Armitage here that the AIA removes knowledge that a putative inventor obtained from another is no longer prior art. In his Patently-O Patent Law Journal Article, Sarnoff wrote:

By eliminating existing § 102(f), the new act removes the substantive prior art basis that used to prevent patents on derived inventions that are the same as or obvious in light of the derived knowledge. Because § 102(f) was treated as prior art for obviousness, it provided substantive grounds for denying or invalidating patents on obvious variants of a derived invention (e.g., applications or improvements of, or additions to or modifications of, a derived invention) as well as to the derived invention itself.

Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12.

Sarnoff absolutely agrees with Armitage that the law will no longer prevent an applicant who derived an invention from obtaining a patent on an obvious variant of that invention. I.e., the USPTO has no tools to prevent a third party from patenting obvious variants of information obtained from another. Now, the AIA does provide for a third party to initiate a derivation proceeding or a civil action for derivation. However, it appears to me that those actions (even if timely filed by the originator) would be unsuccessful because derivation proceedings are limited to cases where the derived claims are “substantially the same” as the originator’s innovation. The substantially the same limitation is much narrower in scope as compared with the potential wide variety of obvious variants. Sarnoff largely agrees with my analysis here, but in a more equivocal manner.

The new derivation procedure and civil action also may be inadequate to prevent the deriving applicant from obtaining the patent on an obvious variant even when the originator does file a derivation petition, when the original inventor learns about the obvious variant from the deriver (and had not earlier conceived of the obvious variant). And in litigation defending against the deriver’s patent on an obvious variant, an unrelated third party may be unable to challenge the deriver’s patent for obviousness (although it may be able to challenge it for improper inventorship, but only if the elimination of § 102(f) has not undermined the substantive basis for such invalidation.

Sarnoff (emphasis added).

Unlike Armitage & Matal, Mark Stadnyk is a total Washington DC outsider. His company MadStad designs and sells after-market motorcycle parts (mainly windshields and accessories). MadStad and Stadnyk filed suit in 2012 challenging the AIA as an unconstitutional modification of the US patent laws and asking the federal court to render the law null and void. One of the argument MadStad presents is that the statutory elimination of 102(f) is problematic because it runs contrary to the IP enabling clause of the US Constitution. The US Constitution empowers Congress to develop a patent system that grants rights to “inventors.” And, according to MadStad, the new AIA creates a system where (1) non-inventors can apply for patent and (2) rights wrongly granted to non-inventors cannot be challenged in court by negatively affected third-parties.

In its response to MadStad, the USPTO recently presented its idea regarding inventorship. The USPTO rejects MadStad’s argument and instead follows Matal’s “duplicative” theory. (Matal is now an assistant solicitor at the USPTO.)

The USPTO writes:

The AIA does not sanction the award of patents to anyone but inventors. Retained verbatim—unaltered by the AIA—section 101 continues to restrict the grant of patents to inventors. Section 101 states: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101 (emphasis added); see AIA, passim (no changes to § 101). By retaining section 101, the AIA still requires as a condition of patentability that the named inventor actually invent the claimed subject matter.

Nevertheless, Plaintiffs remarkably allege that the AIA eliminates the inventorship requirement and thus will allow an individual who is not an inventor to obtain a patent. The basis of their claim is that the AIA deletes section 102(f), which provides that a person will not be entitled to a patent if he “did not himself invent the subject matter sought to be patented.” 35 U.S.C. § 102(f). Plaintiffs accordingly allege that, without section 102(f), “being an inventor is no longer a condition of patentability” nor “a requirement of patent validity under Section 282 of the Patent Act,” which establishes the defenses in any action involving the validity or infringement of a patent. Plaintiffs’ allegations are legally incorrect. Both the Supreme Court and the Federal Circuit have concluded that §101—which the AIA retains—is a condition for patentability and can be used as a defense in an action involving patent infringement and validity.

Thus, according to the USPTO, the AIA’s deletion of the redundant requirement in 35 U.S.C. § 102(f) is irrelevant, as section 101 will continue to require that a patent only be awarded to an inventor.

Moving forward, the question is what work do the US Constitution and Section 101 actually do on the inventorship front? The link between patents and their inventors is strong and deeply rooted. As such, it is unlikely (in my view) that MadStat is correct in its argument that Section 102(f) was the only provision guaranteeing continuation of that link. An important question, however, is what to do about the inventorship requirement of the IP empowering clause. Are the limits of that clause implicitly embedded into the conditions and requirements of patentability or, instead, do we use those limits to invalidate legislation that fails to conform to the constitutional restrictions.

Prior to the 1952 patent act, lack-of-inventorship was a condition for patentability under the precursor to our Section 101 and was explicitly listed as a defense that a defendant charged with infringement could plead under the precursor to our Section 282. Thus, “the defendant may plead … That [the patentee] was not the original and first inventor or discovered of any material and substantial part of the thing patented.” See RS § 4920 (Patent Act of 1870).

There are real ongoing questions that stem from the elimination of section 102(f): Is Armitage correct in his assessment of the law that a third party can now patent an obvious variation of an idea secretly learned from the true inventor? Is the USPTO correct that a patent can be challenged for improper inventorship as a violation of 35 U.S.C. 101?

Notes: