August 2013

The Disappearing Federal Circuit Advisory Council Model Orders

Patent

By Jason Rantanen

In late July, a model order relating to the number of asserted claims and prior art referenes in patent litigations was released on the Federal Circuit Advisory Council's webpage.  (You can read the PatentlyO post here.)  This new model order followed an earlier order relating to discovery issues in patent litigation that Dennis wrote about in September 2011.  In a surprising development, however, within two days of being released, all content on the Federal Circuit Advisory Council webpage was removed and replace with the message "This site is being updated and will be posted soon."

Recently, the Advisory Council webpage was mostly restored with the exeption of the two model orders.  Instead, the webpage contains the following text:

The Advisory Council published model orders concerning e-discovery and limitations on claims and prior art, and posted a disclaimer that the Court did not approve the model orders.  To avoid the risk of any misperception that the Court has endorsed or taken any position on the model orders through the Advisory Council, or otherwise, the Advisory Council confirms that it does not sponsor or endorse orders.

A linked PDF adds simply:

Model Orders
Model orders concerning e-discovery and limitations on claims and prior art were posted on the court’s website. Those orders have now been removed since the court has not sponsored or endorsed the orders. In light of the court’s determination, the advisory council should not be viewed as having sponsored or endorsed these orders on behalf of the court.

While not speculating on the court's internal reason for taking this action, it's worth noting that there's an interesting tension here between the Federal Circuit's historical mandate to bring uniformity to patent law (a mandate that is usually thought of as applying to substantive patent law but might involve procedural issues unique to patent law) and the statutory basis for the Advisory Council, 28 USC § 2077:

(b) Each court, except the Supreme Court, that is authorized to prescribe rules of the conduct of such court’s business under section 2071 of this title shall appoint an advisory committee for the study of the rules of practice and internal operating procedures of such court and, in the case of an advisory committee appointed by a court of appeals, of the rules of the judicial council of the circuit. The advisory committee shall make recommendations to the court concerning such rules and procedures. Members of the committee shall serve without compensation, but the Director may pay travel and transportation expenses in accordance with section 5703 of title 5.

(emphasis added).  Despite the issues surrounding the creation and distribution of the model orders themselves, they're still useful tools for patent litigators to be aware of and draw from.  The E-Discovery model order formed the basis for an E-Discovery model order adopted in the Eastern District of Texas (albeit with some variation), has been employed in litigation in other districts, and (according to a quick search on Westlaw) has been referenced or quoted in full in over two dozen secondary sources (include a few articles that discuss the order in depth).

Copies of the now withdrawn model orders are available here:

Download Model-order-excess-claims

Download Ediscovery-model-order

Update: Steve Joncus dropped me a note to tell me that the District of Oregon has adopted the E-Discovery model order in its entirety (LR 26-6), available here.

Federal Circuit: Preliminary Injunctions More Available in Trade Secret Cases (Than in Patent Cases)

Patent, Trade Secret

Core Labs v. Spectrum Tracer Services (Fed. Cir. 2013)

This case is about stopping former employees from becoming marketplace competitors. Two of Core Labs employees left the company and started a competing firm (Spectrum) servicing the hydraulic fracturing (fracking) industry. Core sued alleging trade secret misappropriation (under Texas Law), copyright infringement and patent infringement. During the lawsuit, Cole received the following email from a new Spectrum employee/whistleblower:

I recently have been contracting with Spectrum. . . . Not long ago I was handed some documents that have your company logos and such on them and had them ask me to recreate the same functionality in other documents and programs for them. From what I have been able to learn I believe you have been in a law suit with my company, and I am not very happy with trying to re-create someone else’s work. I have provided one of the worksheets I have been provided with and have others I can provide if they would be of any assistance. I am not sure if you gave my company permission or not to use these, but it is my intention to learn what the truth of the matter is.

The documents were in fact a copy of Core’s particular Microsoft Excel template file that it used to for its fracking services. In addition to making calculations, the file also includes some customer and price lists. And, the whistleblower had been asked to “incorporate field work functions” into the Spectrum software he was developing.

Despite this evidence, the district court rejected Core’s plea for a preliminary injunction based on the company’s failure to show irreparable harm due to ongoing infringement. On appeal, however, the Federal Circuit has reversed and ordered that the preliminary injunction be instituted.

Patent plaintiffs have been having some difficulty proving irreparable harm at the preliminary injunction stage. Here, however, the Core Labs requested the PI as a mechanism to support its Texas state law trade secret rights. Under Texas state law, a defendant’s possession of a plaintiffs’ trade secret rights is sufficient to create a presumption of irreparable harm. In general, irreparable harm tends to be easier to show in trade secret cases as compared with patent cases since information secrecy is so difficult regain once it is lost. The U.S. Supreme Court wrote on this point in a 1984 Monsanto case: “The economic value of [a trade secret] lies in the competitive advantage over others that [the trade secret holder] enjoys by virtue of its exclusive access to the data, and disclosure or use by others of the data would destroy that competitive edge.”

= = = = =

In most cases, parties must wait until to appeal until a district court makes its final decision concluding the case. However, the appellate jurisdiction statute provides for interlocutory appeals based on a district court’s grant or denial of injunctive relief. 28 U.S.C. 1292. One interesting aspect of this case is the fact that the Federal Circuit has jurisdiction (rather than the 10th Circuit Court of Appeals since the District Court is located in Oklahoma). The Federal Circuit has jurisdiction over patent cases, but the original complaint (filed in Texas in March 2011) did not include a patent claim. The Texas District court granted defendants’ motion to transfer the case to Oklahoma (10/2011). The plaintiff (Core) later added the patent infringement claim alleging infringement of U.S. Patent No. 6,659,175. Spectrum then filed an inter partes reexamination request and the district court litigation stayed pending resolution of that USPTO procedure. What is unclear to me is how (under old §1295) is how this case “arises under” the patent laws.

= = = = =

Section 101 issue? The claims of the ‘175 patent are interesting because they look very similar to those invalidated by the Supreme Court in Mayo v. Prometheus. In the fracking process, liquid is injected into the well to create small fractures in the subsurface in order to allow better access to the valuable hydrocarbons. For environmental reasons, it is important to recover as much of the injected liquid as possible (it basically squirts back out under pressure). Thus, it is important for the process to measure amount of fluid recovered. The proposed method here is to add a “chemical tracer” to the injected liquid and then use the concentration of chemical tracer recovered as a basis for measuring the amount recovered.

1. A method for determining the extent of recovery of materials injected into a oil well comprising the steps of:

a) preparing a material to be injected into an oil well;

b) admixing therewith a chemical tracer compound at a predetermined concentration;

c) injecting the admixture into an oil well;

d) recovering from the oil well a production fluid;

e) analyzing the production fluid for the concentration of the chemical tracer present in the production fluid; and

f) calculating the amount of admixture recovered from the oil well using the concentration of the chemical tracer present in the production fluid as a basis for the calculation.

= = = = =

As per its usual, the Federal Circuit did not enter into a debate on the benefit/detriment of invention in question – here fracking.

Working out the Kinks in Post-Issuance Reviews: Versata v. SAP

Patent, , , , , , , , ,

By Dennis Crouch

The Versata saga provides an important case history showing the power of the new post-grant review procedures before the USPTO and the Office’s seeming new power to operate without fear of judicial review. However, over the next year the Federal Circuit will have its opportunity to review the PTAB’s controversial decisions.

= = = = =

Versata’s hierarchical pricing engine software had strong sales in the mid 1990’s, that ended when SAP and others added the component to their product line – an extra add-on was no longer needed. SAP indicated that its software replaced the need for Versata’s add-on and actively discouraged customers from using Versata.

Versata’s In-Court Victories: Versata eventually sued SAP in 2007 and won a first jury verdict and then a second jury verdict (finding that SAP’s “patch” did not cure the infringement) with a $300 million + damage award. That final decision was later affirmed on appeal.

Petition for Post-Grant Review of Covered Business Method: Meanwhile, following the district court’s second finding of infringement (but prior conclusion of the aforementioned appeal), SAP filed a petition for Post Grant Review available to “Covered Business Methods” as part of the America Invents Act. SAP had clearly been anxious to use this approach and filed the PGR petition at its first opportunity on September 16, 2012 (the first day such petitions were allowed). CBM2012-0001.

If you remember, post-grant review (including CBM review) allows for challenge on “any ground that could be raised under paragraph (2) or (3) of section 282 (b) (relating to invalidity of the patent or any claim).” This has been interpreted by the PTO to include validity challenges raised under 35 U.S.C. § 101, 102, 103, or 112. But see Can a Third Party Challenge Section 101 Subject Matter Eligibility in the USPTO’s new Post-Grant Review Procedure?

SAP’s petition challenged the patent claims as (1) directed toward unpatentable subject matter under §101; (2) lacking written description; (3) indefinite; and anticipated.

USPTO Grants Petition for Post Grant Review: In a January 2013 order, the USPTO’s Patent Trial & Appeal Board (PTAB) granted the petition after finding that the challenged claims are “more likely than not unpatentable.” In particular, the PTAB allowed the challenge to move forward on the Section 101 and 102 grounds.

The PTAB made two additional important rulings:

What is a Covered Business Method?: First, the Board ruled that the ‘350 patent claims qualified as covered-business-methods because the claims are directed to a method for the “management of a financial product or service” and are not “technological inventions.” The PTO’s working definition of “technological” is rather unhelpful in that it simply asks whether the claim recites a new “technological feature” or “solves a technical problem using a technical solution.” Relevant claims of the patent (U.S. Patent No. 6,553,350) are shown below (claims 17 and 26). And, you will note that the method claim 17 does not recite any steps that could not be done with pencil and paper.

Issue Preclusion / Collateral Estoppel Does Not Apply: The ordinary rule in federal courts is that preclusion applies following final judgment by a district court. The fact that an appeal is pending does not impact the finality of the district court judgment unless & until the appellate court takes some action. In Pharmacia, the Federal Circuit wrote that the “vast weight of case law” supports the notion that a judgment should be given its full preclusive effect even when an appeal is pending. Pharmacia & Upjohn Co. v. Mylan Pharm., 170 F.3d 1373 (Fed. Cir. 1999). Here, Versata argued that the PTO should follow that general rule and since SAP already had a full and fair opportunity to challenge the patent validity and had lost its federal lawsuit resulting in final judgment. The PTAB rejected Versata’s argument finding instead that it would would not respect any final judgment subject to a pending appeal to the Federal Circuit.

As the final judgment in the related Versata v. SAP litigation is currently on appeal to the Federal Circuit, we hold that the district court’s judgment is not sufficiently firm to be accorded conclusive effect for purposes of 37 C.F.R. 42.302 as it is still subject to reversal or amendment.

On this issue, it is interesting to note that the appeal brief filed by SAP did not challenge district court’s validity finding. Thus, although the district court decision in general could have been rejected on appeal (it wasn’t), there was simple no chance even in January 2013 that the appellate panel was going to opine on patent validity issues.

At this point, in January 2013, the PTAB was beginning its review of the ‘350 patent’s validity and, in parallel the Federal Circuit was considering SAP’s appeal that focused on noninfringement and remedy arguments.

No Challenge to PTO Decision to Grant Post-Issuance Review Petition: Versata also opened a third-front – filing suit in Virginia district court to overturn the PTO’s decision to grant the post-issuance review petition. In a recent decision, the Virginia court rejected that request in Versata Development v. Rea (as Director of USPTO) and SAP AG, 2013 WL 4014649 (E.D. Va. 2013) (no subject matter jurisdiction). The AIA indicates that the PTO’s determination of whether or not to institute post-grant proceedings are “final and nonappealable.” 35 U.S.C. 324. Versata argued that “nonappealable” in the statute should be seen as merely limiting direct appeals to the Federal Circuit and that its request for review was akin to a “civil action” under 35 U.S.C. 145 and not an “appeal.” Bolstering that argument is the language of 35 U.S.C. 329 and 141 that define appeal in post-issuance proceedings as appeals to the Federal Circuit. However, the district court rejected Versata’s argument and held that the court lacked jurisdiction under the statute and that, in any case, the decision to grant the review was only an interlocutory decision. It is unclear, but Versata may appeal this decision soon. [As an aside, the language of the district court opinion suggests that petition is denied

Federal Circuit Decision (Largely) Affirms Lower Court: The next event in this long saga came in May 2013 when the Federal Circuit affirmed the district court’s determination of infringement and the damages award. The only modification of the judgment was to ask the lower court to be more particular in injoining infringement without injoining sales of SAP products in general.

PTAB Final Judgment: The following month in June 2013, the PTAB came out with its final ruling holding that the patent claims are invalid under 35 U.S.C. §101 as unpatentably abstract. This decision obviously temporally follows both the district court decision and that of the Federal Circuit. Yet, the PTAB found itself to differ on both claim construction and validity.

In particular, the PTAB determined that it would apply the “broadest reasonable interpretation” (BRI) standard to claim construction during post-issuance proceedings even though the terms had already been construed by the district court in a final judgment. The PTO’s rational is that (1) it is not bound by the district court judgment since “appeals from this proceeding are exclusively the Federal Circuit rather than to district courts” and that (2) the patentee’s ability to amend claims during review suggests that BRI should apply.

In the 101 analysis, the panel found that the claimed method of determining a price using product group hierarchies was a “disembodied concept” capable of being performed mentally, on paper, or on a general purpose computer. The PTO final judgment did not substantially revisit the issues of preclusion or whether the PTO has standing to challenge the patent under Section 101.

At the PTAB, the current status is that the Board is considering a rehearing request by Versata with the primary new focus being on the Federal Circuit’s Ultramercial decision. Versata again raised the contention that §101 is not a permissible ground for post grant review. Versata writes “Because § 101 is not a condition for patentability, much less specified as such as required by 35 U.S.C. § 282(b)(2), it is not reviewable in a post-grant review (or CBM review).”

All these issues are likely to come to a head as the case is appealed to the Federal Circuit over the next year.

= = = = =

Claims at Issue:

17. A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group; arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches in a subset of the higher product group; storing pricing information in a data source, wherein the pricing information is associated, with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups; retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product groups in which the product is a member, and each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a member; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information.

26. A computer readable storage media comprising: computer instructions to implement the method of claim 17.

Bits & Bytes from Jonathan Hummel

Patent

RECENTLY

#1. Obama Grants Reprieve to Apple…and why it matters.

An ongoing story, the editors at Bloomberg report on the effects of President Obama’s granting a reprieve to Apple. ON August 1, Susan Decker and Peter Burrows reported that Apple was seeking a reprieve from President Obama to allow the company to continue selling versions of its iPhone4 and iPad2 in the United States. The reprieve was granted and Bloomberg reports that Samsumg’s market value dropped by over $1 billion.

#2. Google wins Patent Battle over Predetermined “UnLocking” Patterns

Don Reisinger for CNET describes, in a recent report, how Google’s “Alternative Unlocking Patterns” are different from other technologies. “Currently, software allows for different unlocking patterns, but all they do is open up the handset's software. Google's technology would unlock the device and bring people to a certain place within the software.”

#3. Raymond T. Chen Affirmed as Newest Justice on US Court of Appeals for the Federal Circuit

Gene Quinn at IPWatchdog reports on the newest Justice. Justice Chen was formerly the Deputy General Counsel for Intellectual Property Law and Solicitor at the United States Patent and Trademark Office.

#4. Cadbury and Nestle have a Row over KitKat Design

The crunchy confection beloved by chocolate enthusiasts around the world has a dicey future after the IPO ruled the bars distinctive shape could not be trademarked in the UK. James Tozer, reporting for the UK’s Daily Mail Online, explains that a real tricky legal situation arises becauset the distinctive KitKat design is already trademarked at the EU level.

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Litigation Associate – Law Firm – Seattle, Wash.

  • Seed IP Law Group, one of the country's leading intellectual property law firms, is looking for a litigation associate with a minimum of two years of patent litigation experience and a degree in chemistry.

Patent Attorney – Law Firm – Portland, Ore.

  • Marger Johnson McCollom, P.C., a Portland, Oregon, full-service IP boutique, seeks a registered patent attorney with 2-5 years of patent prosecution experience in the electrical/computer/software technical areas.
Related articles
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Protecting Intellectual Property – Law

Bits & Bytes from Jonathan Hummel

Patent

RECENTLY

#1. Obama Grants Reprieve to Apple…and why it matters.

An ongoing story, the editors at Bloomberg report on the effects of President Obama’s granting a reprieve to Apple. ON August 1, Susan Decker and Peter Burrows reported that Apple was seeking a reprieve from President Obama to allow the company to continue selling versions of its iPhone4 and iPad2 in the United States. The reprieve was granted and Bloomberg reports that Samsumg’s market value dropped by over $1 billion.

#2. Google wins Patent Battle over Predetermined “UnLocking” Patterns

Don Reisinger for CNET describes, in a recent report, how Google’s “Alternative Unlocking Patterns” are different from other technologies. “Currently, software allows for different unlocking patterns, but all they do is open up the handset's software. Google's technology would unlock the device and bring people to a certain place within the software.”

#3. Raymond T. Chen Affirmed as Newest Justice on US Court of Appeals for the Federal Circuit

Gene Quinn at IPWatchdog reports on the newest Justice. Justice Chen was formerly the Deputy General Counsel for Intellectual Property Law and Solicitor at the United States Patent and Trademark Office.

#4. Cadbury and Nestle have a Row over KitKat Design

The crunchy confection beloved by chocolate enthusiasts around the world has a dicey future after the IPO ruled the bars distinctive shape could not be trademarked in the UK. James Tozer, reporting for the UK’s Daily Mail Online, explains that a real tricky legal situation arises becauset the distinctive KitKat design is already trademarked at the EU level.

JOBS

Litigation Associate – Law Firm – Seattle, Wash.

  • Seed IP Law Group, one of the country's leading intellectual property law firms, is looking for a litigation associate with a minimum of two years of patent litigation experience and a degree in chemistry.

Patent Attorney – Law Firm – Portland, Ore.

  • Marger Johnson McCollom, P.C., a Portland, Oregon, full-service IP boutique, seeks a registered patent attorney with 2-5 years of patent prosecution experience in the electrical/computer/software technical areas.
Related articles
Apple succeeds on appeal: dismissed ITC patent case against Google's Motorola Mobility alive again
Protecting Intellectual Property – Law

Bits & Bytes from Jonathan Hummel

Patent

RECENTLY

#1. Obama Grants Reprieve to Apple…and why it matters.

An ongoing story, the editors at Bloomberg report on the
effects of President Obama’s granting a reprieve to Apple. ON August 1, Susan
Decker and Peter Burrows reported
that Apple was seeking a reprieve from President Obama to allow the company to
continue selling versions of its iPhone4 and iPad2 in the United States. The
reprieve was granted and Bloomberg
reports that Samsumg’s market value dropped by over $1 billion.

#2. Google wins Patent Battle over Predetermined
“UnLocking” Patterns

Don
Reisinger for CNET describes, in a recent
report, how Google’s “Alternative Unlocking Patterns” are different from
other technologies. “Currently, software allows for different unlocking
patterns, but all they do is open up the handset's software. Google's
technology would unlock the device and bring people to a certain place within
the software.”

#3. Raymond T. Chen Affirmed as Newest Justice on US
Court of Appeals for the Federal Circuit

Gene
Quinn at IPWatchdog reports
on the newest Justice. Justice Chen was formerly the Deputy General Counsel for
Intellectual Property Law and Solicitor at the United States Patent and
Trademark Office.

#4. Cadbury and Nestle have a Row over KitKat Design

The crunchy confection beloved by chocolate enthusiasts
around the world has a dicey future after the IPO ruled the bars distinctive
shape could not be trademarked in the UK. James
Tozer, reporting for the UK’s Daily Mail Online,
explains that a real
tricky legal situation arises becauset the distinctive KitKat design is
already trademarked at the EU level.

JOBS

Litigation
Associate – Law Firm – Seattle, Wash.

  • Seed IP Law Group, one of the country's
    leading intellectual property law firms, is looking for a litigation
    associate with a minimum of two years of patent litigation experience and
    a degree in chemistry.

Patent
Attorney – Law Firm – Portland, Ore.

  • Marger Johnson McCollom, P.C., a
    Portland, Oregon, full-service IP boutique, seeks a registered patent
    attorney with 2-5 years of patent prosecution experience in the
    electrical/computer/software technical areas.
Related articles
Apple succeeds on appeal: dismissed ITC patent case against Google's Motorola Mobility alive again
Protecting Intellectual Property – Law

Rembrandt v. Johnson & Johnson: Expert Reports and Inconsistent Testimony

Patent

By Jason Rantanen

Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc. (Fed. Cir. 2013) Download Rembrandt v J&J
Panel: Dyk, Clevenger, Moore (author)

While this opinion is precedential, it does not contain any major legal prouncements.  It does, however, illustrate the importance of procedural rules in patent litigation.  Here, Rules 26 and 37 of the Federal Rules of Civil Procedure played the pivotal role in the outcome of the infringement suit. 

Rembrandt sued Johnson & Johnson Vision Care (JJVC) for infringement of a patent covering a type of soft gas permeable contact lenses.  At issue during trial was whether JJVC's lenses were "soft" under the parties' agreed upon claim construction ("a contact lens having a Hardness (Shore D) less than five"). To support its position that JJCV's lenses met this limitation, Rembrandt relied on the testimony of its expert witness who allegedly conducted a hardness test using procedures described in his expert report.

While on the stand at trial, however, Rembrandt's expert "suddenly changed course in the middle of cross-examination and testified that he did not follow the procedures listed in his expert report."  Slip Op. at 4-5 (quoting district court).  Instead, he testified that he followed a different procedure that was less susceptible to many of the criticisms that JJVC was leveling at the methodology described in the report.  Based on the inconsistency, the court struck the expert's testimony under FRCP 26 and 37 and, because his testimony was the only evidence that the "soft" limitation was met, granted JMOL in favor of JJVC.

The Federal Circuit affirmed the district court's rulings on appeal.  "Rule 26 requires an expert witness to disclose an expert report that contains “a complete statement of all opinions the witness will express and the basis and reasons for them.” Slip Op. at 7, quoting FRCP 26(a)(2)(B)(i). Furthermore, "[a]n expert witness may not testify to subject matter beyond the scope of the witness’s expert report unless the failure to include that information in the report was “substantially  justified or harmless.” Id. (quoting FRCP 37(c)(1)). 

At issue was whether the expert's failure to comply with the requirements of Rule 26 was "substantially justified or harmless.  The Federal Circuit agreed that it was not substantially justified: 

The court rightly found that “[t]here is simply no excuse for Dr. Beebe waiting until cross-examination to disclose his testing procedures.” JMOL Order, 282 F.R.D. at 664. Dr. Beebe submitted his expert report nearly six months prior to trial. Id. at 663–64; J.A. 96. Leading up to trial, the contents of his expert report were the subject of his deposition and were at issue in the pre-trial briefing, including dispositive motions. JMOL Order, 282 F.R.D. at 663–64. JJVC moved to exclude Dr. Beebe’s testimony on the basis that his Shore D testing did not comply with industry standards. Id. at 658. JJVC also moved for summary judgment on the ground that the testing was not sufficient to raise a genuine issue of material fact as to the Shore D Hardness values of the accused lenses. Id. Nevertheless, even though the adequacy of his Shore D Hardness testing methodology was in dispute prior to trial, Dr. Beebe never attempted to supplement his expert report. As the district court observed, “Dr. Beebe thus apparently either did not review his expert report or forgot how he had actually performed the test.” Id. at 664.

Slip Op. at 8.  Nor was it harmless:

JJVC prepared its noninfringement defense based on the methodology disclosed in Dr. Beebe’s expert report, and opted to challenge that methodology rather than introduce competing expert testimony. JMOL Order, 282 F.R.D. at 664. Nothing during the course of the proceedings alerted JJVC to the possibility that Dr. Beebe would change his testimony. To the contrary, Rembrandt stood behind Dr. Beebe’s expert report at summary judgment and Dr. Beebe testified to the veracity of his report on direct examination. Id. at 657–58. Dr. Beebe even initially defended his testing methodology upon cross-examination. Id. at 658–59. Dr. Beebe only recanted his expert report when, after being “repeatedly challenged on cross-examination,” he was “[u]nable to explain how his written procedures complied with the standards” that govern hardness testing. Id. at 659, 668. While Dr. Beebe characterized the errors in his report as “typo[s],” it is undisputed that the shift in his testimony was both substantive and substantial. Such a late change in course significantly hampered JJVC’s ability to adequately cross-examine Dr. Beebe and denied it the opportunity to develop or introduce competing evidence.

Id. at 8-9.  The expert's testimony was the only evidence that Rembrandt pointed to on the Shore D Hardness requirement.  What about other evidence of the "soft" limitation?  Because Rembrandt agreed to the construction of "soft" as requring the lenses to have a Hardness (Shore D) less than five, JJVC's characterization of its lenses as "soft" was irrelevant.  "Generic statements that the accused lenses are “soft” had the potential to confuse the jury and did not bear on whether the accused lenses had a Shore D Hardness of less than five."  Id. at 10.

Impact of Restriction/Election on Claim Scope and Integrating Objective Indicia Into the Obviousness Analysis

Obviousness, Patent

By Dennis Crouch

Plantronics is an important case for patent prosecutors both for its discussion of proper restriction/election technique and for its language requiring the consideration of objective indicia of nonobviousness prior to reaching a conclusion of obviousness.

= = = = =

Plantronics, Inc. v. Aiph, Inc. (Fed. Cir. 2013)

On summary judgment, district court Judge Bernard Zimmerman found Plantronics’ concha-style headset patent (5,712,453) to be both invalid (obvious) and not infringed. On appeal, the Federal Circuit has rejected that decision on several grounds.

Impact of Election on Claim Scope: Early in prosecution, the PTO issued a restriction requirement – noting that the original application improperly included multiple inventions. Plantronics elected to limit the claim scope to claim species of “Figures 1a and 1b.” Those figures both show the headset stabilizer support as an elongated member while other non-elected figure-species were structurally different (arguably without the elongated member). The district court relied upon that the restriction/election to construe “stabilizer support” as an elongated member that is longer than it is wide. On appeal, the Federal Circuit rejected that claim scope narrowing because the reason for the restriction requirement was not necessarily the elongated structural difference. Judge Wallach writes:

The PTO’s restriction requirement did not suggest that the different inventions it found were based on differences in structure (i.e., “elongated” versus an “arch”). Indeed, the PTO found four patentably distinct inventions in the figures of the ‘453 patent without providing any reasons why in its view the application presented differing inventions. Likewise, other figures of the ‘453 patent depicting other unelected species of the invention also reveal a “stabilizer support” that appears “elongated,” which refutes Aliph’s contention that the restriction requirement was based on that structural difference. The election of an invention in response to an ambiguous restriction requirement in turn cannot be said to provide any guidance forming a basis for narrowing a broadly drafted claim. … Neither the PTO nor Plantronics made any particular remarks regarding the differences (e.g., in structure) of what the PTO found to be different inventions, and while Plantronics elected without traverse the invention of Figures 1A and 1B, Plantronics did disagree with the PTO’s comments on claim 11 when it responded that claim 11 is a generic claim that read on all the embodiments illustrated in the application. This exchange with the PTO thus does not amount to anything clear or unambiguous to disclaim claim scope otherwise encompassed by the broadly drafted claims.

The court thus indicates that restriction/response do have the potential of limiting claim scope, but not in this case.

Further, the court went on to note the standard rule that structure found in the patent drawings should not be seen as limiting to the claim scope – unless the structure is written into the claims. Further, because the drawings do not provide particular dimensions, they “may not be relied upon to show particular sizes” or proportions. See MPEP 2125.

Because the district court had unduly limited the claim scope, the Federal Circuit vacated the non-infringement finding and remanded for additional review.

Obviousness: The district court also found the claims invalid as obvious. On appeal, the Federal Circuit vacated – finding that the record was not sufficiently clear for such a ruling as a matter of law. Rather, on remand, the issue of obviousness will go to trial.

In its analysis, the district court missed two key points: (1) identifying the motivation for combining prior art references and (2) fully considering objective indicia that may negate obviousness.

Motivation to Combine: It is often the case that combination inventions are deemed nonobvious (and thus patentable) even when all of the claim elements are individually found in the prior art. In KSR v. Teleflex, the Supreme Court noted that there must also be some reasoning as to why someone of skill in the art would seek to combine the reference in the manner claimed. That motivation to combine may be found explicitly or implicitly in market forces; design incentives; as well as by considering the background knowledge, creativity, and common sense of the person of ordinary skill in the art.

Although KSR added flexibility to the process, the motivation to must still be based upon evidence. Here, the district court indicated that “common sense” serves as the motivation. On appeal, the Federal Circuit found that explanation insufficient without more extensive reasoning with evidentiary support. As the court wrote in Mintz, “the mere recitation of the words ‘common sense’ without any support adds nothing to the obviousness equation.”

Objective Indicia of Nonobviousness: The appellate court linked the above discussion of “common sense” with an analysis of objective indicia of nonobviousness – noting that these considerations (such as commercial success, copying, or prior failures) could weigh against a KSR-style finding of common-sense motivation to combine.

Here, the district court did consider the patentee’s evidence regarding copying and commercial success however, the appellate panel found that the district court’s decision provided insufficient written analysis of the patentee’s evidence. In addition the appellate panel found that the lower court had mis-ordered its analysis by first finding a prima facie case of obviousness and then considering whether the objective factors negate that original conclusion. Rather, according to the panel here, the objective indicia of nonobviousness must be considered prior to reaching an obviousness conclusion.

Here, the district court concluded that the ‘453 patent was invalid as obvious before considering objective indicia of nonobviousness. . . . The district court addressed Plantronics’ objective evidence of nonbviousness—including copying and commercial success—only after reaching this conclusion. It stated: “Even accepting as true Plantronics’ assertions on these secondary considerations, they do not save Plantronics from summary judgment here since such secondary considerations simply cannot overcome a strong prima facie case of obviousness.” To the extent the district court conducted a post hoc analysis of objective considerations, it was improper.

This court has consistently pronounced that all evidence pertaining to the objective indicia of nonobviousness must be considered before reaching an obviousness conclusion. See, e.g., In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1076 (Fed. Cir. 2012). The significance of this fourth Graham factor cannot be overlooked or be relegated to “secondary status.”

When done properly, this ordering could be irrelevant. However, the court argues that including the secondary factors as an integrated element of the analysis helps “guard against the dangers of hindsight bias.” The court writes:

Failure to give proper consideration to such evidence, as in this case, can be fatal because “common sense” may not be so apparent in view of objective evidence of nonobviousness (e.g., commercial success and copying), particularly when all reasonable inferences are drawn in favor of the patentee.

In the end, the court sided with the patentee – finding that the evidence presented raise a genuine issue of material fact – sufficient to overcome the summary judgment motion and proceed to trial.

The commercial success of Aliph’s alleged copied product and the failure of attempts to combine the prior art elements before the ‘453 patent provide a genuine issue of material fact as to whether it would be “common sense” to combine the elements in the prior art to arrive at the claimed invention. Because evidence pertaining to objective considerations raises genuine issues of material fact, the district court’s decision is reversed as to all the asserted claims in this case.

End.

Failing to Use Post-Grant Review as a Bully Club

Patent, , , ,

by Dennis Crouch

Inter Partes Review of U.S. Patent No. 7,582,051 (Heart Failure Technologies,LLC v. CardioKinetix, Inc.) (P.T.A.B. IPR 2013-00183)

In early 2013, Akin Gump attorney Sanford Warren sent an interesting letter to the medical device start-up company CardioKinetix on behalf of Akin Gump's clients Heart Failure Technologies. Heart Failure is a non-practicing entity looking to license its U.S. Patent No. 7,485,088. Oddly, Heart Failure did not threaten to sue CardioKinetix but rather threatened to file an inter partes review against one or more of the company's unrelated patents. Warren wrote: "If we have not received a substantive response by [1:00pm Central Time on December 21, 2012], we will file an inter partes review petition against one or more of CardioKinetix's patents on [December 21]." File Attachment: AkinGumpThreatLetter.pdf (1481 KB). Heart Failure eventually did file the IPR against CardioKinetix's U.S. Patent 7,582,051 – alleging that two of the claims were invalid as obvious based upon a combination of three prior art references.

At the outset, the Patent Trial and Appeal Board (PTAB) must determine whether to grant or deny a petition for inter partes review. Here, the PTAB denied the petition – finding that "the record … does not demonstrate that there is a reasonable likelihood that Petitioner would prevail with respect to at least one challenged claim. We consequently deny the petition and decline to institute an inter partes review of the '051 patent." File Attachment: PTABDecision.pdf (438 KB).

The decision is somewhat interesting – the basic failure of the petition was that the petitioner gave no reason why someone of skill in the art would combine the elements taught by the various references (other than the fact that they all relate to heart treatments).

The fact that [the three prior art references] all concern human heart repair is not in itself sufficient rationale for making the combination. Many heart repair devices exist. That fact alone would not make it obvious to combine their features. Petitioner must show some reason why a person of ordinary skill in the art would have thought to combine particular available elements of knowledge, as evidenced by the prior art, to reach the claimed invention. See KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 418 (2007). This, the Petitioner has not done. That the references relied upon all relate to human heart repair does not amount to "some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness." See id. (internal quotations omitted).

At this point, Heart Failure can ask the Board to review its decision. However, under 35 U.S.C. §314, the decision is "nonappealable."

I corresponded with CardioKinetix outside counsel Rick Shoop (ShayGlen) who indicated that the defense was fairly inexpensive (compared with patent litigation) at roughly three times more costly than filing an ex parte appeal to the PTAB.  

* Note –  A reader asked if I meant to use “bully club” or instead the more common “billy club.”  My intent here was to focus on the potential for bullying and so I thought the term fit.  

Judge Plager: Construe Ambiguous Terms Against the Drafter

Patent,

3M Innovative Properties Companies v. Tredegar Corp (Fed. Cir. 2013)

In 2009, 3M filed sued – alleging that Tredegar’s elastomeric laminates (used for diaper waistbands) infringed four 3M patents. U.S. Patent Nos. 5,501,679; 5,5691,034, 5,468,428, and 5,344,691. After claim construction, District Court Judge Donovan Frank 3M stipulated to a finding of non-infringement. The appeal focuses on construction of the asserted claims.

In its decision, the Federal Circuit panel issued three different opinions – each offering different notions on the correct construction of the various claim terms and each offering some disagreement with Judge Frank’s initial opinion.

The most interesting opinion of the four is Judge Plager’s concurring opinion that focuses on the intentional ambiguity inserted into the claims by 3M. Judge Plager argues that courts should begin to apply the contract doctrine of contra proferentem and construe ambiguous terms against the drafter (i.e., the patent holder). Judge Plager writes:

I appreciate that there are four different patents involved, and that the particular technology for manufacturing the product is quite detailed, although the products themselves are fairly basic—the material at issue is used for example in diapers. Nevertheless, when claims are larded with terms such as “substantially,” “preferentially,” and “relatively,” and when it takes four judges and some seventy pages of densely written opinions to find meaning in these terms, there is considerable evidence of a failure by the claim drafters to be clear and precise, and, beyond that, of a shortcoming in the patent examination process that permits claims to be so drafted.

Sometimes such ambiguity is the result of sloppy drafting, and sometimes it appears that claims are drafted with a degree of indefiniteness so as to leave room to later argue for a broad interpretation designed to capture later-developed competition. The problem is exacerbatedwhen, as here, there is a conflicting or indeterminate written description and prosecution history with regard to the claim terms at issue. Claim construction then becomes a game of crystal ball gazing, not resolved until this court’s gaze is announced.

The particular claim construction issue that divides the three appellate judges provides a perfect example of the problem. The claim term, “continuous microtextured skin layer,” truly is perplexing. Does “continuous” apply to the microtexturing, the skin layer, or both? Does it mean the microtexturing is everywhere (except perhaps for manufacturing flaws), or can it cover only a part of the skin layer as long as that part is continuous? Relying on the Chicago Manual of Style, 3M argues that “continuous” and “microtextured” are adjectives that separately modify “skin layer,” and thus, the claim term does not require that the microtexturing itself be continuous. According to 3M, if the applicant wanted “continuous” to modify “microtextured,” the applicant would have used the adverb “continuously.”

3M makes an interesting argument to be sure. But the argument creates its own grammatical problems. For example, there is no comma between “continuous” and “microtextured.” And the Chicago Manual of Style also tells us that adjectives that separately modify a noun are generally separated by a comma, unless of course the second adjective is a unit with the noun being modified (which would favor Tredegar’s construction). The Chicago Manual of Style § 6.33 (16th ed. 2010). The applicant seems to have understood this comma concept, and in fact used it when referring in the written description to a “continuous, deeply textured, microstructured surface.” ‘034 patent, col.15 ll.2-3. But the nuances of comma usage, like 3M’s adverb argument, seem to me a tenuous foundation for an entire claim construction on which substantial liabilities may rest. See United States v. Palmer, 16 U.S. 610, 638, 4 L. Ed. 471 (1818) (noting that “the use of the comma is exceedingly arbitrary and indefinite”); United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 249, 109 S. Ct. 1026, 1035, 103 L. Ed. 2d 290 (1989) (characterizing a comma as a “capricious bit of punctuation”) (internal quotation marks omitted).

Much like the claim’s grammar, the written description provides little help deciphering the meaning of the disputed term. Certainly, the ‘034 patent has a lot of disclosure: nearly 30 columns of it. The patent has 33 different examples, 16 tables, and 24 figures. The patent’s problem does not lie in the quantity of its disclosure; it lies in the disclosure’s relevance to the language used in the claims.

The applicant knew or should have known that the claim term “continuous microtextured skin layer” was highly relevant to the patented technology. The applicant wrote the term nine times in the first eight claims. Strangely, however, the disclosure does not reflect this relevance. “Continuous microtextured skin layer” does not appear one single time in the written description. The written description provides no discussion of “continuous microtextured skin layer,” no definition. Language resembling the claim term appears here and there, but mutated versions of claim terms often confuse more than they elucidate.

While ultimately I have voted to join Judge Reyna for the reasons I explain shortly, Judge O’Malley in her dissent-in-part makes an argument for the opposite construction based on the prosecution history. The argument is not without merit, although again, I do not find the prosecution history a shining example of clarity.

Cases like this—claim construction issues such as this one—may well deserve application of a principle analogous to the contract doctrine of contra proferentem. See Williston on Contracts § 32:12 (4th ed.). When a term is ambiguous, a crystal ball matter, the ambiguity should be construed against the draftsman. (Or better yet, the claim should simply be invalidated as indefinite, though our court has not seen fit to go there as yet.)

Without labeling it as such, we have already used this principle to construe claims for compliance with 35 U.S.C. § 112. See Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1581 (Fed. Cir. 1996) (“Where there is an equal choice between a broader and a narrower meaning of a claim, and there is an enabling disclosure that indicates that the applicant is at least entitled to a claim having the narrower meaning, we consider the notice function of the claim to be best served by adopting the narrower meaning.”); see also A Theory of Claim Interpretation, 14 Harv. J.L. & Tech. 1, 81 (2000).

The contra proferentem principle would require the applicant to draft clear claims, using simple, direct sentences, proper grammar, and definitions in the written description where appropriate. It harmonizes with the notice function of patent law. It would result in applicants—and prospective patentees—investing more resources on the front end, during drafting, and less resources on the remedial end, during litigation. Better drafting of patent applications can only improve the efficiency of the patent system by clearly delineating a patentee’s property rights, thereby reducing wasteful and unnecessary litigation.

Specifically in this case, when I gaze in my crystal ball, I see, in addition to the verbal jousting, a district judge who struggled at length to make sense of the claims, and I see a patentee (more correctly a patent applicant) who had the last clear chance—infringement is after all a tort—to avoid this kind of unnecessary claim construction game. My crystal ball tells me to vote against the patentee’s construction of “continuous microtextured skin layer” and in favor of a competitor who should not have the risk of guessing wrong about what a claim term could possibly mean.

Judge Plager’s solution is gets to the heart of the matter – claim construction is problematic because patents and patent claims are so often drafted in ways that hide the invention rather elucidate the inventor’s contribution.

Is it Time to End the USITC’s Jurisdiction over Patent Cases?

Patent

Presidential review of USITC exclusion orders is designed to directly inject politics into the ultimate legal determination between the parties. In his recent letter of disapproval, US Trade Representative Michael Froman recognized that the review is based upon a number of policy goals, including considerations of how the decision impacts the US economy, US consumers, US competitive manufacture, and US-Foreign relations. Although Froman’s letter of disapproval focused on FRAND issues, an undercurrent of the decision is that the American company (Apple) is avoiding its penalty after being judged as an infringer of a patent held by a foreign company (Samsung). Supporting the undercurrent of US-company favoritism is the fact that the USITC is designed as to protect US industry.

In an email, Hal Wegner draws a parallel analogy:

Imagine an American movie studio, book publisher, high tech electronics manufacturer or other intellectual property rights holder going to a Shanghai Court and successfully winning an infringement suit. Then, imagine that President Xi Jinping blocks enforcement “[a]fter extensive consultations with … interested … persons … based on … review of … considerations … as they relate to … the effect on [domestic] consumers.

The question then is how can the US expect for China, India, South Korea and Brazil to strongly enforce foreign-owned intellectual property rights when the US is unwilling to do so itself.

Of course, as I wrote earlier, Samsung is still able to enforce its patent rights in Federal Court and, in that process will be able to seek both injunctive relief (to block imports of the iPhone) and monetary damages for past and ongoing infringement.

In addition to the US/Foreign divide, the USTR involvement brings politics into the dispute at a level orders-of-magnitude beyond what is seen in Federal Courts. Apple is able to get the ear of the US Administration and other influential politicians, and that influence almost certainly impacted the outcome. If adjudged infringer had been a smaller company or perhaps Koch Ind., the outcome may well have been different. The best outcome here is probably to take-away the USITC’s jurisdiction over patent cases and simply allow those cases to be heard in Federal Courts.

= = = = =     

A different perspective on the administrative disapproval here is that it is designed as a signal to the USITC to stop issuing injunctive relief without full consideration of the public interest at stake. If the USITC takes that message to heart then we may observe some interesting development of the law and theory of public-interest in enforcing patent rights. Public interest is also one of the four factors used by Federal Courts when determining whether to issue injunctive relief in patent cases under eBay. In the eBay line of cases, the public interest is typically the least-explored factor. However, it is the only factor available for consideration by the USITC under the Tariff-Act. As the USITC develops its law of public-interest, the next step in the law’s evolution will be for the Federal Courts to begin picking-up that analysis and applying it under eBay.

Obama Administration Rejects USITC Decision Blocking Apple Imports

Patent,

Patentees tend to fare well in proceedings before the US International Trade Commission (USITC). Under Section 337 of the 1930 Tariff Act (as amended), patentees can file a complaint with the agency that alleges importation of infringing products. Unlike ordinary courts, the USITC is not authorized to award monetary damages. However, the agency can (and regularly does) issue injunctive relief in the form of exclusion orders enforced by US Customs and Border Control agents. A second hitch with USITC proceedings is that the US President is given the opportunity to reject any exclusion order issued by the USITC.

As part of the mobile patent wars, Samsung filed a Section 337 complaint against Apple alleging patent infringement. Although Apple is a US company, it still imports its products from China and is thus susceptible to USITC action. And, although the USITC’s stated mission is to protect US domestic industry, foreign-based companies (such as Samsung) are still permitted to file complaints with the agency to protect their US intellectual property rights.

After a full process, the USITC determined that Apple’s iPhone 4 infringes Samsung’s US Patent No. 7,706,348 (claims 75, 76, 82, 83, 84). The USITC consequently issued an exclusion order. Now, however, the US Trade Representative (as official representative of the Obama Administration) has issued a letter of disapproval based upon the conclusion that Samsung’s commitment to FRAND licensing of its patents. http://www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF. The denial effectively ends Samsung’s case at the USITC. However, Samsung has also asserted the patent in a parallel lawsuit in Federal Court (Delaware). That Delaware case has been stayed (with consent of both parties) pending outcome of the USITC case.

Welcome Judge Chen!

Patent

This morning the Senate unanimously confirmed Raymond T. Chen for a seat on the United States Court of Appeals for the Federal Circuit.  Soon-to-be Judge Chen comes to court with extensive experience in patent law including both private practice and governmental service (most recently as the Deputy General Counsel for Intellectual Property Law and Solicitor for the United States Patent and Trademark Office). 

Congratulations Judge Chen!

A brief bio from a February 2013 White House press release:

Raymond T. Chen currently serves as the Deputy General Counsel for Intellectual Property Law and Solicitor for the United States Patent and Trademark Office (USPTO), a position he has held since 2008.

Chen received his B.S. in electrical engineering in 1990 from the University of California, Los Angeles, and his J.D. in 1994 from the New York University School of Law.  After graduating from law school, he joined Knobbe, Martens, Olson & Bear, a boutique intellectual property law firm in Irvine, California, where he prosecuted patents and represented clients in intellectual property litigation.  From 1996 to 1998, Chen served as a Technical Assistant at the United States Court of Appeals for the Federal Circuit, performing the functions of a staff attorney.  At the end of his two-year term, he joined the USPTO as Associate Solicitor and remained in that role until his promotion to Solicitor in 2008.   Since joining the USPTO, Chen has represented the agency in numerous appeals before the Federal Circuit and personally argued over 20 cases, issued guidance to patent examiners to ensure consistency with developing law, advised the agency on legal and policy issues, and helped promulgate regulations.  He has co-chaired the Patent and Trademark Office Committee of the Federal Circuit Bar Association and is a member of the Advisory Council for the United States Court of Appeals for the Federal Circuit.

 

 

Whether Prior Art Should be Presumed Enabled

Patent,

Finjan v. Rea (Supreme Court 2013)

In its recently filed petition for certiorari, Finjan asks the court to determine whether "prior art should be presumed enabled" when being applied during prosecution before the United States Patent and Trademark Office. The Government's response in opposition alters the question somewhat by asking "Whether, in proceedings to determine whether a patent application should be granted, the [USPTO] bears the burden of demonstrating that a prior art printed publication that anticipates the invention for which the patent is sought enables a person of skill in the art to practice the invention."

The PTO Argues:

The presumption of enablement is consistent with the general rule that the examiner need not raise and explain every possible issue surrounding each ground of rejection. Because the primary purpose of the prima facie showing is to provide notice, an examiner "is not required to anticipate every possible response to a rejection, including showing that a cited reference is enabling." Antor. When an examiner identifies anticipation as a ground of rejection, that notification informs the applicant that he may raise lack of enablement in his response.

The presumption of enablement also reflects the Federal Circuit's recognition that requiring the examiner preemptively to make the detailed findings necessary to verify enablement would be "manifestly inefficient," "burdensome," and "entirely unnecessary." Jung. Because the enablement inquiry requires an analysis of the degree of experimentation necessary to implement an invention, "an examiner, who has no access to experts or laboratories, is not in a position to test each piece of prior art for enablement in citing it, and requiring him to do so would be onerous, if not impossible." Antor. … The applicant is better positioned than the PTO to gather evidence supporting his contention that the prior art is not enabling.