January 2014

Square Pegs, Round Holes: Guest Post by Mark Janis and Jason Du Mont

Guest Post by Jason J. Du Mont, Microsoft IP Fellow at the Indiana University Maurer School of Law and Mark D. Janis, Robert A. Lucas Chair of Law at the Indiana University Maurer School of Law.

In Pacific Coast Marine Windshields Ltd. v. Malibu Boats, the Federal Circuit addressed a question of first impression: whether an applicant’s actions taken during prosecution of a design patent should be available for use when determining the design patent’s scope in subsequent litigation.  The court’s answer was yes.  While the answer may be unremarkable, the court’s unusual journey from question to answer raises broader questions about the wisdom of absorbing utility patent law’s judicially-derived doctrines into design patent law.

The applicant had filed a design patent application claiming “an ornamental design of a marine windshield with a frame, a tapered corner post with vent holes and without said vent holes, and with a hatch and without said hatch, as shown and described.”  The application included eleven drawings showing windshields with various numbers of vent holes, with and without hatches. During prosecution, the examiner imposed a restriction requirement and identified five patentably distinct groups in the application: windshields having “(1) four circular holes and a hatch; (2) four circular or square holes and no hatch; (3) no holes and a hatch; (4) no holes and no hatch; and (5) two oval or rectangular holes and a hatch” (internal citation omitted):

Image 1

The applicant elected group one without traverse (which showed four circular holes and a hatch), deleted the figures not associated with this embodiment, and eventually rewrote the claim in a more conventional form, claiming “[t]he ornamental design for a marine windshield, as shown and described.”  The application issued as D555,070.  The applicant later filed a divisional directed to group three, which issued as D569,782, but there were apparently no further divisionals.

Pacific Coast subsequently asserted the ‘070 patent against Malibu Boats, which was producing a windshield having three square vent holes, as depicted below:  

Image 2

Malibu Boats moved for summary judgment of non-infringement based on prosecution history estoppel.  The district court granted the motion and Pacific Coast appealed. 

No Distinct Doctrine of Equivalents for Design Patents

Prosecution history estoppel is a limitation on the doctrine of equivalents, so before it reached the district court’s prosecution history estoppel analysis, the Federal Circuit first had to determine whether the design patent law should recognize a doctrine of equivalents.  The court concluded that for design patents, literal infringement and infringement under the doctrine of equivalents are “intertwined,” pointing to the statute (35 U.S.C. § 289, which provides a remedy when another party “applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale” (emphasis added)), and the Gorham v. White case (which holds that infringement is based on substantial similarity). 

The court could have been more forthcoming as to what it means for the two infringement standards to be intertwined, but the key takeaway is clear: the design patent infringement analysis isn’t bifurcated into a literal infringement prong requiring identicality and an equivalency prong.  It relies on a test of substantial similarity based on the design’s overall impression. The court’s analysis signals that there’s no longer a need to speak of a distinct “equivalents” concept in design patent law; concepts of equivalency are built into the substantial similarity test.

 So Why Incorporate Prosecution History Estoppel?

Having recognized that design patent law includes no distinct doctrine of equivalents, the Federal Circuit could have declared that design patent law need not incorporate the utility patent law’s prosecution history estoppel jurisprudence.   The court could have formulated a prosecution history-based limiting doctrine that was customized to connect to design patent law’s “intertwined” infringement standard.  Or, the court could have even analogized to prosecution disclaimer, a simpler concept which limits literal claim scope and avoids entanglement with the presumptions and rebuttal routes of a post-Festo prosecution history estoppel doctrine.  See, e.g., Trading Techs. Intern., Inc. v. Open E Cry, LLC,  728 F.3d 1309 (Fed. Cir. 2013) (discussing the distinction).

Instead, the court stated that the “principles” of prosecution history estoppel applied to design patents, and resolved those principles into a three-step test: “(1) whether there was a surrender; (2) whether it was for reasons of patentability; and (3) whether the accused design is within the scope of the surrender.” It then relied on Festo and other utility patent cases in applying its test, concluding that “no presumption of prosecution history estoppel could arise” because there wasn’t any showing that the third part of the test was met.

Whatever this presumption is, it surely isn’t the Festo presumption.  Festo holds that a narrowing amendment that is substantially related to patentability triggers a presumption that the applicant surrendered all territory between the original and amended claim scope with regards to the claim limitation in question.  See, e.g., Duramed Pharma. v. Paddock Labs., Inc., 644 F.3d 1376 (Fed. Cir. 2011). There isn’t any third step calling for scrutiny of the accused device.   That inquiry would only be relevant to determining the scope of the estoppel—and that only comes into issue once it’s determined that the presumption of estoppel applies, and that the presumption hasn’t been rebutted. 

The court’s approach is likely to lead to confusion in design patent cases about how much utility patent doctrine really has been borrowed.  (It may also create some confusion in utility patent cases if it’s invoked there.  Doing so would be erroneous, in our view.)  This illustrates why it’s not always so easy, or desirable, to fling utility patent doctrine into design patent law.  The court could have avoided all of these doctrinal convolutions by steering clear of prosecution history estoppel jurisprudence and either drawing on simpler analogies or developing a test specific to design patents.

Applying the Court’s Three-Step Test

The Federal Circuit’s application of its three-step test further illustrates why borrowing from prosecution history estoppel doctrine may have been a bad idea.  In addition to diverging from the Festo presumption, the court’s rhetoric slips towards the element-by-element conceptions of equivalency and estoppel that govern in utility patent law, and away from conceptions of the design’s overall impression that design patent law mandates.

The court concluded that steps one and two of its test were met.  As for step (1), the applicant had deleted drawings directed to the patently distinct two-hole and no-hole embodiments, resulting in a surrender of scope, according to the court; and, as for step (2), deletions made in response to a restriction requirement were made for purposes of patentability and thus could trigger estoppel.  As the court pointed out, however, this latter point hasn’t been resolved in utility patent law.

Nevertheless, the court decided that step (3) (whether the accused design was within the scope of the surrender) wasn’t met, and that was enough for a reversal.  The defendant had chosen not to argue that the accused three-hole design was within the scope of the patentee’s non-elected designs.  Instead, the defendant asserted that because the patentee had elected designs having four holes (in the ‘070 patent-in-suit) and zero holes (in the ‘782 divisional), the patentee had surrendered any designs having a number of holes between zero and four.  The court was not persuaded, reasoning that the notion of surrendering an entire range “does not work in the context of design patents where ranges are not claimed, but rather individual designs.  Claiming different designs does not necessarily suggest that the territory between those designs is also claimed.”  These are crucial observations for limiting the impact of prosecution history estoppel, especially since the court didn’t address any other way of rebutting this presumption.

But the court left unaddressed the key question about applying step (3): what is the standard for determining whether an accused design falls within the scope of the surrender?  Some raw notion of “colorable imitation”?  A fully elaborated substantial similarity analysis in view of the prior art as per Egyptian Goddess?  Something else?

Moreover, by framing its analysis of the designs at issue by reference to the number of holes, the court encourages a mode of analysis that rests on individual design features, rather than the design’s overall impression.   There’s a deep disconnect here between utility and design patent law.  Equivalency (and, correspondingly, prosecution history estoppel) in utility patent law is to be applied on an element-by-element basis, but that doesn’t translate neatly to design patent law.   Here, where the embodiments differed by discrete, readily-identifiable features (such as the number of holes or hatches), perhaps the presence or absence of the features dictate one’s conclusions about the design’s overall impression.  We think this will not be so easy in most cases involving visually-complex designs.

More to Come …

The prospect that restriction and election practice will give rise to estoppel in design matters has significant practical consequences.  First, the implementation of the Hague will unquestionably lead to an influx of international applications that often contain plural embodiments—either explicitly allowed or because they are filtered from registration systems.  When coupled with distinctions in the determination of scope, between offices, the USPTO can expect to receive higher volumes of applications that may necessitate restrictions.  Second, the Federal Circuit’s In re Owens decision, and the USPTO’s apparent turn towards a more aggressive application of the written description requirement in design cases, may force design patent applicants to submit applications including large sets of drawings that depict numerous implementations of a design concept.  To the extent that these implementations are deemed patentably distinct embodiments, many applicants will find themselves facing restriction requirements.

That leads to the case’s key practical point:  if courts choose to apply Pacific Marine’s estoppel rule aggressively, practitioners may need to advise their clients to expect to file more divisionals—and, consequently, face higher prosecution costs.

Lawyer fails to correct Rule 131 Dec; Patent held unenforceable; lawyer agrees to discipline

Thanks to a reader..

This OED decision from January 8, 2014 disciplinary order is interesting.  Briefly, a very senior patent attorney (with a low reg number) was suspended for filing a Rule 131 declaration antedating a prior art reference, and then failing to correct the prosecution record after the declarant admitted to the patent attorney, during prosecution, that the Rule 131 declaration was false.  The patent that issued from that application was subsequently litigated and held to be unenforceable due to inequitable conduct predicated in part on a finding that the Rule 131 declaration was false.  

 Two thoughts:  one, why would a reasonable practitioner continue to prosecute?  For the fees?  (If the client had given the practitioner an interest in the application, I can see the financial interest, but otherwise…?).  Second, think of the costs that, I bet, are coming downstream:  the accused infringer ought to move for fees under 285, and, if so, those fees ought (in my view under these allegations) be paid by the lawyer.  So, back to the first thought: why?

Supreme Court on Intellectual Property

The Supreme Court agreed today to hear four new intellectual property cases this session: Two patent cases, a copyright case, and a trademark case:

  • Nautilus v. Biosig Instruments (13-369): what is the proper standard for indefiniteness.
  • Limelight Networks v. Akamai Technologies (12-786): Does inducement require underlying direct patent infringement infringement by another as a prerequisite to liability.
  • ABC, Inc., v. Aereo, Inc. (13-461): when does an internet transmission count as a “public performance” under the copyright laws?
  • POM Wonderful v. Coca-Cola (12-761): Who has standing to challenge a food or beverage label as misleading or false under the Lanham Act.

The cases should all be decided by the end of June 2014.

 

Quiet: Introverts and Patent Rights

by Dennis Crouch

Susan Cain's book Quiet walks through an historic societal transformation toward an "Extrovert Ideal" that "dramatically undervalues introverts" and incorrectly equates introversion with shy and antisocial behavior. This transformation parallels the shift from a culture that values character to one that values personality. See, Susan Cain, Quiet: The Power of Introverts in a World That Can't Stop Talking (2013).

The movement toward extroversion is present within the patent system as well with a push toward "teamwork" in inventing. Team-developed inventions appear to be more likely to receive corporate backing and to be patented. What is unclear, however is whether the shift moves us toward better innovation. Arguably, the rise in collaborative inventing is driven by the complex nature of modern inventions and facilitated by our improved communications tools. However, I suspect that Cain's social thesis in Quiet provides a more compelling explanation: that social pressure and top business school training shift our attention toward the committee work (and hiring workers who do well in committee).

The great Steve Wozniak provides some opposite advice:

The inventors and engineers I've met are like me—they're shy and they live in their heads. They're almost like artists. In fact, the very best of them are artists. And artists work best alone where they can control an invention's design without a lot of other periople designing it for marketing or some other committee. I don't believe anything really revolutionary has been invented by committee. If you're that rare engineer who'se an inventor and also an artist, I'm going to give you some advice that might be hard to take. That advice is: Work alone. You're going to be best able to design revolutionary products and features if your're working on your own. Not on a committee. Not on a team.

Of course, Wozniak did his most revolutionary work in the 1970's when two-thirds of patents listed a single person as "the inventor," today that figure has dropped to less than one-third. Over the past four decades, the number of inventors per patent has steadily crept upward as the lone inventors have gradually been crowded out.

The chart below shows the number of inventors per patent over the past eight years. What you can see is a continued increase in the percentage of patents with teams of inventors. In particular, the percentage of patents with only one inventor continues to fall while the percentage of patents with three or more inventors continues to rise.

InventorsPerPatent

Although inventing can still be a solo endeavor, patenting data indicates that paradigm no longer predominates.

See Dennis Crouch, The Changing Nature of Inventing: Collaborative Inventing at https://patentlyo.com/patent/2009/07/the-changing-nature-inventing-collaborative-inventing.html; Dennis Crouch, Inventor Count at https://patentlyo.com/patent/2013/01/inventors.html.

Patent Term Adjustment 2013

By Dennis Crouch

In 2011, I discussed an emerging downward trend in the percent of patents awarded at least some patent term adjustment (PTA). PTA extends the life-span of patent rights beyond the ordinary 20-year term and is intended to compensate a patentee for USPTO delays in issuing the patent.

The downward trend first reported in 2011 is continuing and is a further indication that the PTO is beginning to seriously tackle the rampant backlog and prosecution delays that have been an ever-present part of the system for so long. Still, over 70% of recently issued patents have lengthened patent terms due to patent office delays that go beyond the statutory bounds outlined in 35 U.S.C. 154. The time-series chart below breaks-down the numbers even further, showing impressive drops in the percentage of patents that receive more than one- and two-years of term adjustment.

The break-point of the charts in early 2010 shows the impact of the Federal Circuit’s Wyeth decision holding that the PTO had been under-calculating patent term. The second chart shows the average PTA award (for those receiving PTA).

Federal Circuit Claims Jurisdiction over Regulatory Decision but Denies Nationwide Injunction for State Law Infraction

By Dennis Crouch

For many innovative new products, regulatory approval is a much greater hurdle than patent protection. And, unlike patent rights, regulatory approval is often a necessity. The present case is interesting in that the mascara product straddles the border between a lightly regulated beauty aide and a medical drug treatment.

Allergan, Duke University, and Dr. Murray Johnstone v. Athena Cosmetics (Fed. Cir. 2013) (CaseText)

Duke & Dr. Johnstone each hold several patents that are apparently embodied by Allergan's eyelash growth medicine Latisse and exclusively licensed by Allergan. In 2009, these partners collectively sued Athena Cosmetics for selling RevitaLash mascara in a way that infringes the patents. In addition, Allergan alleged violation of state (California) unfair competition law by selling drugs (i.e., medicated mascara) without regulatory approval.

Following some amount of pretrial litigation (including a claim construction and summary judgment of non-infringement), the district court dismissed all of the patent claims without prejudice (stipulated dismissal). A dismissal without prejudice means that the patentee to can re-file those claims at a later date. The district court then found summary judgment for the plaintiffs — holding that Athena violated California's unfair competition law (UCL) by marketing, distributing and selling the mascara without regulatory approval. The district court then ordered a nationwide injunction against the sales.

Federal Circuit Jurisdiction. On appeal, the Federal Circuit first focused on the question of appellate jurisdiction. Under the law, the Federal Circuit has appellate jurisdiction over "any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents."

Although the original complaint clearly raised substantial issues of patent law, Allergan argued that the stipulated dismissal without prejudice removed the arising under jurisdiction. See Gronholz v. Sears, Roebuck & Co., 836 F.2d 515 (Fed. Cir. 1987) (dismissal of patent claims without prejudice operated as an amendment of the complaint and thus eliminated arising under jurisdiction); Rothe Dev. Corp. v. Dep't of Def., 545 F.3d 1023 (Fed. Cir. 2008) ("the basis of a district court's jurisdiction—and thus the path of appeal—may change over time in a case, for example, if certain claims are dismissed without prejudice").

On appeal, the Federal Circuit determined that the non-prejudicial dismissal did not eliminate the court's arising-under appellate jurisdiction. The court agreed that a non-prejudicial dismissal can eliminate its appellate jurisdiction, but distinguished this case because the prior patent rulings in the case indelibly altered the parties legal rights. In particular, the district court's prior claim construction ruling and summary judgment of non-infringement.

In the decision, the Federal Circuit did not discuss either the importance of amendments to the jurisdictional law found in the AIA or the recent Minton v. Gunn decision. By ignoring Minton, the Federal Circuit skipped over the more holistic interests-based approach to arising-under jurisdiction required there in favor of a more bright-line analysis that has been previously rejected by the Supreme Court.

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No Nationwide Injunction for Violating California Law: The Federal Circuit agreed that the district court correctly found Athena liable for violating California law, but the Appellate Panel rejected that court's nationwide injunction order as an abuse-of-discretion. The Federal Circuit wrote:

The injunction impermissibly imposes the UCL on entirely extraterritorial conduct regardless of whether the conduct in other states causes harm to California. This injunction is so broad that it would bar Athena from making its product in Idaho, distributing it from a facility in Nevada, and selling it to Connecticut consumers.

Interestingly, because the cause of action here was based on California law, the Federal Circuit looked to see whether California courts would have imposed a nationwide injunction and found that the "[t]he conduct enjoined here is exactly the sort of purely extraterritorial conduct that the California Court of Appeals expressly held could not be regulated by the UCL."

In addition, the Federal Circuit held that such extraterritorial application of California would be a violation of the U.S. Constitution's dormant Commerce Clause.

In short, California may, as it has in this case, conclude that its own unfair competition law has been violated, and it may prohibit any future conduct within its borders that would cause continued violation of its law. California is not permitted, however, to extend its unfair competition law to other states.

The upshot then is that RevitaLash is back on the market, but not in California (as shown in the image above).

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Professor Shubha Ghosh has written a number of important and interesting academic works. One is his recent book titled Identity, Invention, and the Culture of Personalized Medicine Patenting (2012 Cambridge Press). That book relates here because Ghosh identifies the '105 patent as a "race specific patent." The patent made Ghosh's book because identifies the race and gender of study subjects: e.g., "[study included] 38 Caucasian, 3 African-American, 1 Asian, 1 Hispanic; 13 male, 30 female." Ghosh argues that race-specific categories should not be allowed to be particularly claimed (they were not in this particular patent).

USPTO Approves of And/Or Claim Limitation

By Dennis Crouch

Ex Parte Gross (PTAB 2014)

Patent attorney J. Nicholas Gross has a number of his own patents pending. Application No. 11/565,411 is directed to a computerized business method of serving content appropriate advertisement.

Claim 1 requires a “plurality of different websites characterized by a common parameter including at least one of a common content topic and/or a common contractual arrangement.”

The examiner rejected claim 1 as indefinite based upon the “and/or” term. On appeal, however, the PTAB reversed – finding that “A and/or B” does have a meaning and that meaning is A alone, B alone, or A and B together. However, the Board noted the “preferred verbiage” should be more simply “at least one of A and B.”

The biggest problem with the Board’s decision is that it was four-years in the making – reversing an examiner rejection mailed February 2, 2010.

USPTO Fees

In early 2013, the USPTO raised many of its fees and lowered a few. One accounting trick, however, is that some of the fee reductions were delayed until January 1, 2014. The two key areas of newly reduced fees are the publication fee and the issue fee.

  1. Publication Fee was $300 and is now $0, even for early-publication requests. This takes away one incentive to file a non-publication request.
  2. Issue fee was $1,780 and is now $960. That fee is reduced by 50% for small entities and 75% for micro entities and universities.
  3. PCT Fees are now subject to the small and micro entity status discounts.
  4. Assignment recordation is now free if done electronically.

Utility Patents Granted in 2013: A New Record (For the Fourth Consecutive Year)

By Dennis Crouch

Despite being held-back by the Federal spending sequester and a focus on implementing the first-to-invent and post-issuance review procedures of the America Invents Act, the US Patent Office has also awarded more patents than ever. The preliminary figure for 2013 is 277,861 patents issued, which represents a 10% jump over last-year’s record. See USPTO Patent Grants: Another Record Year (3rd in a Row). The average pendency of utility applications (application filing to issuance or abandonment) has been slowly decreasing over the past several years, but has hovered around 37-months for the past six months.

One more Click: Settlement Agreement Revives Disney’s Business Method Patent

by Dennis Crouch

Disney v. Rea (Fed. Cir. 2013)

Disney's Patent No. 5,963,915 covers an internet purchase method. The patent was filed by Steve Kirsch and originally owned by his company InfoSeek that was purchased by Disney as part of what Wikipedia calls the "expensive failure" of Go.com.

The patent issued on October 5, 1999.  On October 4, 2001 (less than two years later), the patentee filed a broadening re-issue application that claimed a one-click purchase method to rival that of Jeff Bezos. Over the next eleven yars, the patentee argued back-and-forth with the PTO examiners over a variety of patentability issues. In due course, the patentee kept the application alive by filing three requests for continued examination (RCEs) and one administrative Appeal along with more than 100 different patent claims.  After losing at the BPAI, Disney then filed a civil action under 35 U.S.C. 145, asking the district court to order the USPTO to issue the patent. However, Federal Judge Brinkema sided with the USPTO and found that the claims as presented were invalid. Disney then appealed to the Federal Circuit.

Now, Disney and the USPTO have settled the appeal with the agreement that Disney will drop its appeal of pending claims so long as the USPTO (1) allows Disney to file another RCE in the case and (2) considers amended claims presented by Disney in a manner "consistent with the district court's decision" and considering the evidence presented at trial.  As part of the settlement, Disney also agrees that it is not entitled to a patent on the claims that were currently on appeal and agreed to pay the ~ $100,000 in appellate costs spent by the US Government.

In a joint brief, the parties suggest that Disney could still file a broadening continuation reissue application (while the civil action and related appeals are still pending) but could not file an RCE unless the case was remanded to the PTO.  It is unclear to me what actual benefit Disney receives here from the remand/RCE instead of filing of a continuation.

The settlement document is not yet publicly available.