Guest Post on Best Mode by Tun-Jen Chiang

Was Congress dumb, or was it lying?–A reply to Professor Sheppard

Guest Post by Tun-Jen Chiang, Assistant Professor of Law, George Mason University School of Law

Imagine a parent who gives his child a box of matches, and tells the child not to play with the matches. The parent then assures the child that, if he does play with the matches, there will be no punishment whatsoever, and nobody will be watching him for the next hour.

Unsurprisingly, the child plays with the matches and burns the house down. When the insurance company denies the claim because of intentional arson, the parent screams: “but I told him not to play with the matches!” In this circumstance, the charitable inference is that the parent had a charmingly naïve view about the obedience of his child. The uncharitable inference is that the parent knew the child would play with the matches, and the admonition not to play with them was insincere “cover.”

What does this have to do with best mode? In her post, Professor Sheppard assures us that Congress knew precisely the consequences that would occur. Although she protests that her post was only descriptive and not a defense of the law, one cannot help but sense from her “vehement” disagreement with the critics an implication that those who think Congress didn’t know what it was doing are being unfair in some way (When someone says "You can say X is wrong. I agree X is wrong. But don't say X is dumb.", there is an implication that saying X is dumb is unfair). But the critics are not being unfair; they are being charitable.

With Professor Sheppard's assurance that Congress knew the consequences, the unavoidable conclusion is that Congress intends the probable consequence that patentees would not disclose the best mode. The reason for maintaining a best mode requirement on paper now seems to be to provide political cover to scream “but we told them to disclose the best mode!” whenever the critics talk about lax disclosure requirements. This is much worse than either abolishing best mode outright or keeping best mode with no enforcement on the misguided faith that patentees would still comply — it is Congress abolishing best mode and then lying about it.

Guest Post: Because Inquiring Minds Want to Know – Best Mode – Why is it One-Sided?

(Today PatentlyO is starting a series of periodic guest posts by Professor Christal Sheppard on the underlying rationales for some of the sections of the America Invents Act.  Prior to joining the University of Nebraska Lincoln College of Law this year, Dr. Sheppard was Chief Counsel on Patents and Trademarks and Courts and Competition policy for the United States House of Representatives Commmittee on the Judiciary. – JAR)

By A. Christal Shepard

Since inquiring minds want to know, I will attempt to give, in a series of posts, insights into the underlying rationales for a few sections of the America Invents Act that are causing particular confusion among my friends and new colleagues who were fortunate to not have been as intimately involved in the machinations of the America Invents Act as I have been over the last three Congresses.  

***

I start this conversation with a blanket statement – these are my recollections of the rationales and do not represent the views of any particular member of Congress.  More importantly, do not shoot the messenger.  This blog is only intended to provide contemporaneous context, not a comprehensive analysis, before the march of time distorts memories.  I will not attempt to defend; I will merely explain.

There has been a great deal of consternation and confusion about the changes to the Best Mode requirement, Section 15 of the America Invents Act.  This section is plain on its face, and yes, it is, and was intended to be, bifurcated. The Best Mode requirement remains a requirement, unchanged, for obtaining a patent under 35 U.S.C. § 112 Paragraph 1; however, under the new law, Best Mode can no longer be used as a defense in any action involving the validity or infringement of a patent.  More specifically, a failure of an inventor to disclose their Best Mode is no longer a basis for invalidating, canceling or making a claim unenforceable even if it is later determined that the inventor unquestionably knew of a Best Mode and intentionally did not disclose it to the United States Patent and Trademark Office (USPTO) during examination.  

The bifurcated reform is a compromise that addresses the legitimate litigation concerns with the subjective nature of Best Mode without undermining the requirement for full disclosure that is the quid pro quo for the grant of a monopoly.  If Best Mode was removed completely, Congress could be seen as removing yet another obstacle to trade secret protections overlapping with monopoly rights.  

The impetus for removal of Best Mode from Section 112 of Title 35 of the U.S.C. came from several recommendations to Congress to limit the subjective portions of patent litigations.  I point to one such recommendation that was highly influential, the National Academies’ A Patent System for the 21st Century

Among the factors that increase the cost and decrease the predictability of patent infringement litigation are issues unique to U.S. patent jurisprudence that depend on the assessment of a partys state of mind at the time of the alleged infringement or the time of patent application… Because the [Best Mode] defense depends on historical facts and because the inventors state of mind usually can be established only by circumstantial evidence, litigation over [Best Mode] especially pretrial discovery can be extensive and time-consuming.[1]

Although the National Academies’ report also states that eliminating Best Mode completely could be accomplished without “substantially affecting the underlying principles that these aspects of the enforcement system were meant to promote.”[2] Their, and others’, primary objection to Best Mode was that it was an unnecessary burden for litigation, similar to inequitable conduct, often pled but rarely found.

While Best Mode may be unnecessarily burdensome for litigation, Best Mode is not a superfluous requirement.  It is intended to implement the constitutional directive of "promoting the progress of science and the useful arts"[3] by preventing an inventor from obtaining patent protection, “the embarrassment of a monopoly,”[4] while simultaneously concealing a trade secret for the preferred embodiments.  “The purpose of this requirement is to restrain inventors from applying for a patent while at the same time concealing from the public preferred embodiments which the inventor has, in fact, conceived.”[5]  There is nothing else in the patentability requirements that mandates an inventor’s disclosure of their Best Mode. 

The fault with Best Mode in litigation is not a fault of principle; it is a fault of execution – the difficulty of understanding the contents of an inventor’s mind.

If one believes in the quid pro quo of full disclosure to the public in exchange for a limited monopoly, then the disclosure of an inventor’s Best Mode is essential.  If monopoly is the carrot in exchange for divulging what otherwise would remain hidden as trade secrets then trade secrets SHOULD be divulged in order to patent.  Changing the Best Mode requirement for obtaining a patent would be a significant deviation from U.S. policy and practice that was unnecessary to correct the perceived problem. 

The law should and still does require disclosure of Best Mode, but has eliminated Best Mode from litigation.  The reform addresses the concerns without undermining the requirement for disclosure. 

Many scholars have questioned the fact that, under the new law, the day after a patent issues, the inventor could state that, yes there was a Best Mode known at the time of application that was not disclosed and yet the intentional nondisclosure would have no effect on the claims.  The claims could not be invalidated, canceled or made unenforceable.  

There has been a lot of criticism that Congress did not contemplate this result.  Nothing could be further from the truth. This result was absolutely contemplated by the decision makers.

Essentially the question was, how does one stop inventors from lying to the patent office, that the inventor has no Best Mode, when the inventor in fact has a preferred embodiment?  The more accurate question to ask is, when there are no obvious ramifications, why would an inventor divulge a Best Mode when they can keep it as a trade secret?  

Congress did take this into account but did not address it in the legislation for a variety of reasons. I present a few of the considerations that were discussed.

  1. Give the USPTO authority to undertake  investigations when it is presented clear evidence from a court or third party that a Best Mode was intentionally not disclosed.  Here, the counterargument is that the USPTO is even less well situated than the courts for such a subjective determination.  Furthermore, it is not practical to move this determination from the courts to the USPTO. 
  2. Present evidence of intentional concealment of Best Mode to the Office of Enrollment and Discipline (OED) at the USPTO with the deterrent being the possible loss of the ability to prosecute patents, removal from the patent bar.  This is arguably already possible under 35 U.S.C. § 32, Suspension or exclusion from practice.  The obvious flaw is the same as in the first example; the USPTO is not well situated for subjective inquiries.  Additionally, it may result in punishing the patent practitioner for situations where the inventor intentionally concealed but the patent practitioner was unaware.
  3. Institute a mechanism, identical to that which ultimately ended up in Section 12 of the America Invents Act – the new Section 257(e), where evidence of material fraud on the USPTO shall be referred to the Attorney General for possible prosecution under 18 U.S.C. § 1001, a criminal statute penalizing anyone who knowingly and willfully “makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry” on any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States. Again, arguably this deterrent, which is up to a five year prison term, is already possible under 18 U.S.C. § 1001 without any change in the law.

Note that all of these resolutions are arguably already possible under existing law.

One suggestion, not put forth, for the answer to the riddle of “when there are no obvious ramifications, why would an inventor divulge a Best Mode when they can keep it as a trade secret?” is make the ramifications more obvious. The USPTO could add a check box to application forms, stating “I (we), the inventor(s) have no preferred Best Mode and are aware that failure to disclose a Best Mode can result in up to a five year jail term.” But that is a matter for the USPTO and not Congress.

Would a “check box” solve the problem?  No.  But it is an affirmative act, as opposed to an intentional omission.  This affirmative act may be useful in the exercise of 35 U.S.C. § 32 and 18 U.S.C. § 1001 should there be abuses and allows Congress to preserve the U.S.'s emphasis on full disclosure in exchange for the government grant of monopoly.

In the end, I do not disagree with the criticisms of the effect of the new law on Best Mode.  But I do vehemently disagree that the consequences were neither considered nor understood by Congress.

[1] Stephen A. Merrill et al., A Patent System for the 21st Century, no. 7, 121 (2004).

[2] See id. at 7.

[3] U.S. Const. art. I, § 8, cl. 8.

[4] Thomas Jefferson to Isaac McPherson, 13 Aug. 1813.

[5] Young Dental Mfg. Co., Inc. v. Q3 Special Products, Inc., 112 F.3d 1137, 1144 (Fed. Cir. 1997).

 A. Christal Sheppard is an Assistant Professor of Law at the University of Nebraska Lincoln College of Law and former Chief Counsel on Patents and Trademarks and Courts and Competition policy for the United States House of Representatives Committee on the Judiciary.  Look for her next PatentlyO posting on Supplemental Examination.

Law Professors and their Initial Remarks on the Leahy-Smith Patent Reforms

Certainty + More Prior Art: While I'm concerned about the effect of first-to-file on small inventors, I am pleased that the rule will expand the universe of art that might invalidate obvious patents. Too often, art found within a year of filing is rendered uncertain because the defendant does not know the date of invention. By fixing the cutoff date at filing, the universe of prior art not only grows, but the administrative cost of asserting that art is also decreased. To be sure, some of the obviousness art may come after the invention date, but I'm not so worried about that; after all, simultaneous invention is a consideration for obviousness, so close in time inventions, even if after the patentee's, do not present a great harm to a system that is supposed to reward nonobvious advances. – Professor Michael Risch, Villanova University School of Law

Impact on NPEs: Early reports say that the new law will "do nothing" to impact NPEs. They are wrong. The law will forbid the NPE tactic of naming unrelated companies in a single lawsuit, and the economies of scale it produces. Innocent early infringement done in private, under certain circumstances, won't be penalized anymore. A follow-up study on prior user rights and the impact of NPE litigation are called for. The PTO has expanded fee-setting authority, and the public, a greater right to chime in on questionable patents. As the economics of litigation change, so, necessarily, will the business models based on them. – Professor Colleen Chien, Santa Clara University School of Law

Deceptive Intent: There has been little commentary on the new law's rather quiet removal of all seven occurrences of "without deceptive intention" from the statute. These are for: Inventorship changes (Secs. 116 and 256); reissue (Sec. 251); filing a disclaimer (Sec. 253); suing on a patent containing an invalid claim (Sec. 288); and foreign filing without a license (Secs. 184, 185). It was probably not done to encourage deceptive conduct, but to limit fights over mental state in these areas. – Professor Paul M. Janicke, University of Houston Law Center

Natural Experiment: As someone who practiced patent law for over 10 years before entering academics, I am ambivalent at best about the passage of the America Invents Act.  Unfortunately, we missed an opportunity to meaningfully address fee diversion from the Patent Office, one of the most important issues facing the patent system.  With a backlog of over 700,000 applications, the Patent Office needs to retain all the fees it collects.  As an outside academic observer of the patent system, however, there is a benefit to the America Invents Act.  Changing the patent laws provides me and others the chance to empirically evaluate the effects, if any, of legal changes on the patent system. – Professor David L. Schwartz, IIT Chicago-Kent College of Law

Date of Public Disclosure: The Congressional language about "first-to-file system" is somewhat misleading. The text of the bill, and floor remarks of Sen. Kyl, make clear that the key date is either an inventor's filing date or an inventor's earlier public disclosure date, provided the disclosing inventor follows up by filing within a year of the disclosure. In the latter event, the patent would not go to the first to file, but to the first to publicly disclose. – Professor Paul M. Janicke, University of Houston Law Center

Value of Secrecy: Information about new inventions is critical to technological progress.  By increasing the value of secrecy as an option for monetizing inventions, the Leahy-Smith America Invents Act represents a step backwards in terms of information dissemination.  The prior user defense created by the Act recalibrates inventors' decision between secrecy and patenting so as to favor the choice of secrecy.  This shift has the potential to reduce the number of patents that are filed on secret inventions (and the mandatory disclosures that accompany those patents), as well to encourage inventors to direct their investments in research towards secret inventions as opposed to those that require patents to monetize. – Professor Jason Rantanen, University of Iowa College of Law

Inequitable Conduct: The doctrine of inequitable conduct exists in part to encourage patent applicants to internalize some of the costs of the patent system and ensure applicant candor.  The Federal Circuit in Therasense recently took aggressive steps to relieve patent applicants of some of these obligations.  The Leahy-Smith America Invents Act pushes in the same direction.  With two limited exceptions, it provides that "A patent shall not be held unenforceable on the basis of conduct relating to information that has not been considered, was inadequately considered, or was incorrect in a prior examination of a patent if the information was considered…during a supplemental examination of a patent."  New 35 U.S.C. § 257(c)(1).   This provision appears to effectively empower patent owners with the ability to strategically manipulate disclosures to the PTO.  – Professors Lee Petherbridge, Loyola Law School Los Angeles and Jason Rantanen, University of Iowa College of Law

Whipped Cream: There is no mistake so bad that you cannot cover it up with parsley or whipped cream. - Julia Child via Professor Yvette Liebsman, St. Louis University School of Law

 

Best Mode: District Court Improperly Invalidated Patent that Mis-Identified Best Mode

Green Edge Ent. LLC v. Rubber Mulch Etc. LLC (Fed. Cir. 2010)

You might guess from the names of the parties that the subject matter of the dispute is rubber mulch. Green Edge's patent covers a synthetic rubber mulch that is shaped and colored to imitate a natural mulch. In its patent application, Green Edge indicated that a variety of systems could be used to add color to the rubber, but the application also spelled out one particular "VISICHROME" system by Futura Coatings as being the "most preferred" system. It turns out that Futura Coatings never made or sold system under the name of VISICHROME. Rather, the product Green Edge should have identified was "Product Code 24009." The name VISICHROME apparently came from a sales letter from a Futura Vice President who had referred to a VISICHROME system.

Best Mode: During the infringement litigation, the Eastern District of Missouri court held the patent invalid for failure to disclose the best mode under 35 USC § 112 – finding that VISICHROME did not exist and "that Green Edge had concealed the best mode by disclosing 'a misleading, non-existent name instead of the number' when no similar product was available on the market."

Section 112 of the patent act requires that the patent specification "set forth the best mode contemplated by the inventor of carrying out his invention." Federal Circuit precedent has held that such a "best mode" need only be described if the inventors subjectively possessed a best mode on the filing date of the application. Even then, the question is whether the inventor "concealed" the preferred mode from the public.

The second prong asks whether the inventor has disclosed the best mode and whether the disclosure is adequate to enable one of ordinary skill in the art to practice the best mode of the invention. The second inquiry is objective; it depends upon the scope of the claimed invention and the level of skill in the relevant art.

Although not suggested by the statute, the best mode requirement is generally examined on an element-by-element basis. Here, Green Edge clearly had a preferred approach for coloring the rubber pieces and thus was required to disclose that "best mode."

On appeal, the Federal Circuit reversed – holding that the best mode had not been objectively concealed. The court's reasoning was that a competitor looking for "VISICHROME" might have been able to find it around the time of the invention since at least one Futura Coatings executive had been using that name in sales letters.

The disclosure might have, at the time the application was filed, been specific enough to describe the colorant so as to enable a person of ordinary skill in the art to make the claimed product using Futura's 24009 product. The application for the '514 patent was filed in October 1997, and [the Futura VP's] letter describing Futura's "Visichrome" colorant system was written in July 1997. Thus, despite [the VP's] inability to remember why he used the term "Visichrome" in his letter, it is at least possible, even likely, that in October 1997, at the time of filing, someone contacting Futura to obtain the "Visichrome" colorant system would have received a response similar to Jarboe's letter of that July.

In the end, the court held that summary judgment was inappropriate. On remand, a jury could still find the patent invalid on best mode.

Microsoft Ordered to Stop Selling MS Word

i4i Ltd. v. Microsoft Corp. (E.D. Tex. 2009)

Texas style, the order from Judge Davis gets right to the point:

In accordance with the Court’s contemporaneously issued memorandum opinion and order in this case, Microsoft Corporation is hereby permanently enjoined from performing the following actions with Microsoft Word 2003, Microsoft Word 2007, and Microsoft Word products not more than colorably different from Microsoft Word 2003 or Microsoft Word 2007 (collectively “Infringing and Future Word Products”) during the term of U.S. Patent No. 5,787,449:

  1. selling, offering to sell, and/or importing in or into the United States any Infringing and Future Word Products that have the capability of opening a .XML, .DOCX, or .DOCM file (“an XML file”) containing custom XML;
  2. using any Infringing and Future Word Products to open an XML file containing custom XML;
  3. instructing or encouraging anyone to use any Infringing and Future Word Products to open an XML file containing custom XML;
  4. providing support or assistance to anyone that describes how to use any infringing and Future Word Products to open an XML file containing custom XML; and
  5. testing, demonstrating, or marketing the ability of the Infringing and Future Word Products to open an XML file containing custom XML.

This injunction does not apply to any of the above actions wherein the Infringing and Future Word Products open an XML file as plain text.

This injunction also does not apply to any of the above actions wherein any of the Infringing and Future Word Products, upon opening an XML file, applies a custom tranform that removes all custom XML elements.

This injunction further does not apply to Microsoft providing support or assistance to anyone that describes how to use any of the infringing products to open an XML file containing custom XML if that product was licensed or sold before the date this injunction takes effect.

This injunction becomes effective 60 days from the date of this order.

In addition to the injunction, i4i was awarded $200 million in compensatory and $40 million punitive damages based on Microsoft's adjudged willful infringement. 

Notes:

  • Read the Injunction Order: File Attachment: 20090811i4iinjunction.pdf (252 KB)
  • Read the Final Judgment: File Attachment: 20090811i4ijudgment.pdf (257 KB)
  • Doug Cawley and Mike McKool (McKool Smith) lead the i4i team; Matthew Powers (Weil) is lead counsel for Microsoft.
  • Microsoft can presumably fix its patent problem by eliminating the .docx format. According to court records, “i4i has presented evidence that it is possible to design a software patch that can remove a user’s ability to operate the infringing functionality.” Alternatively, Microsoft could buy the patent – although the price will now be substantially higher than it was in 2007.
  • Stays pending appeal: Under ther Federal Rules of Civil Procedure, Microsoft has a right obtain a stay of relief pending appeal after it posts an appropriate bond. However, that right only applies to monetary damages. There is no right to stay injunctive relief pending appeal. On occasions, both District Courts and the Federal Circuit will stay injunctive relief pending the outcome of an appeal.
  • Stays pending appeal: The district court has already denied Microsoft’s motion to stay injunctive relief. “The fact of Microsoft’s infringement causes i4i to suffer irreparable harm for every new XML customer that purchases an infringing Microsoft product. To stay any injunction would only prolong that harm without providing any remedy.”
  • Facing OpenOffice: OpenOffice may well be liable as well. If it comes to pass, i4i’s suits against those users may focus on users because no central entity controls its development and distribution (although Sun is a potential target).
  • Bilski?: i4i’s claim 14 may well fail the Federal Circuit’s Bilski machine-or-transformation test. The claim reads as follows:

A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising:

  • providing the mapped content to mapped content storage means;
  • providing a menu of metacodes;
  • compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and
  • providing the document as the content of the document and the metacode map of the document.

CAFC: Failing to Submit Invention Inspiration OK; Failing to Submit Product Code of Preferred Input Not OK.

PatentLawPic305TALtech v. Esquel Apparel (Fed. Cir. 2008) (nonprecedential)


Summary
: (1) An applicant need not disclose its own prior work or inspiration for invention if merely cumulative of other references cited; (2) Failing to identify the brand of adhesive tape used in the invention was a best mode violation — resulting in claim invalidation; (3) There is no presumptive order of the steps in a process claim – unless the claim language “requires an ordering of steps” either implicitly or explicitly.

One of TAL’s employees – John Wong – was inspired by TAL’s use of heat-fusible adhesive tape in manufacture raincoats. Over a long process of trial and error, Wong figured out how to use a particular variety of adhesive tape to create a dress shirt that does not pucker after washing. 

After receiving a US utility patent, TAL became embroiled an patent litigation with another Hong-Kong based manufacturer – Esquel Apparel. In that litigation, the district court found TAL’s patent unenforceable due to inequitable conduct during prosecution and invalid for failing to submit fulfill the “best mode” requirement of 35 U.S.C. 112 (inter alia).  Based on the inequitable conduct, the court also awarded attorney fees to Esquel.

Inequitable Conduct: “In this case, the district court found TAL liable for inequitable conduct because inventor John Wong had not disclosed the raincoat seam that inspired his invention to the PTO.” On appeal, the CAFC first dispelled any notion that a patent applicant is required to disclose the inspiration for the invention. Although not stated by the court, 35 U.S.C. 103(a) arguably indicates that the inspiration is not relevant to the patentability inquiry: “Patentability shall not be negatived by the manner in which the invention was made.”

Here, the CAFC noted that TAL’s raincoat may well have been “merely cumulative” to a German patent application that was submitted during prosecution. “If the undisclosed raincoat seam was merely cumulative to [the German application], then no inequitable conduct lies in its nondisclosure.”

Best Mode: At the time of filing, Wong had settled upon a particular type of adhesive tape – known as Vilene SL33 – as the best way to form the seams.  The patent application did not, however, disclose Vilene SL33.  A patent may be invalidated for failing to submit a “best mode” if (1) the inventor possessed a best mode at the time of filing; and (2) the written description fails to disclose the best mode in a way to allow one reasonably skilled in the art to practice that mode.


Possession of the Best Mode
: The evidence clearly showed that Wong “experimented with many adhesives but settled on a preference for one.” Thus, the court agreed that the first prong was met — the inventor did possess a best mode at the time of filing – i.e., Vilene SL33.

On the second prong the CAFC disregarded the applicant’s argument that the PTO “prefers the use of generic names of products” and that there is no evidence that the Vilene brand products are actually better quality than other brands.  Instead, the court honed-in on the result of the first prong – that Vilene SL33 was the best mode known to the inventor – and agreed that the best mode had not been disclosed. “TAL has not explained how the written description teaches one having reasonable skill in the art the way to practice the best mode as found in the analysis of the first prong – the use of Vilene SL33.”

Process Order: “Generally, there is no presumption of order, and so a claim with many steps can be infringed by an accused process performing the claimed steps in any order. However, we will find that the claim requires an ordering of steps when the claim language, as a matter of logic or grammar, requires that the steps be performed in the order written, or the specification directly or implicitly requires such a narrow construction.”

In this case, the claimed process implicitly requires a particular ordering. In particular, the bonding adhesive must be presented before a folding step because the folding step requires that the garment abut the bonding element.

Conclusion: The asserted claims were found invalid and not infringed. The remand appears only necessary to determine inequitable conduct and consequently potential attorney fees.