December 2014

Lawyer Threatens to Post Negative Internet Reviews to Get Money from Former Firm: OED Steps in

Ethics

Lawyers often get in fights over fees when departures occur.  This common scenario caused the departing lawyer to threaten to post negative comments about his former firm on the Internet if they didn’t pay up.  That led to disciplinary proceedings being brought by the state bar, and in response he voluntarily resigned in lieu of discipline. The OED then held that this constituted disbarment and, thus, was grounds for imposing reciprocal discipline disbarring him from representing others before the Office.

The decision is not legally ground-breaking, but it does show how things snowball.  The opinion of the OED in In re Haley (OED 12/30/14) is here.

Guest Post by Prof. Chiang: A Response to Hrdy and Picozzi

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Professor Tun-Jen Chiang is an Associate Professor of Law at the George Mason University School of Law.  Below, he responds to Camilla Hrdy and Ben Picozzi’s commentary on The Interpretation-Construction Distinction in Patent Law.  As with the previous two posts in this series, the real name policy applies to comments on this post. 

Thanks to Jason and Dennis for inviting me to post, and to Jason for the extremely flattering introduction. I should make clear at the outset that I am only speaking for myself, not my coauthor, on this blog, though of course the article represents our joint views.

A brief recap for those who have not read (or only skimmed) the article. The article’s primary claim is conceptual. The claim is that in making decisions pursuant to text, courts necessarily engage in a two-step process: (1) they read the text and try to discern its linguistic meaning, i.e. the meaning of the language, qua language, to members of the intended audience, and (2) they determine the legal effect of the text by rendering a decision. We call the former “interpretation” and the latter “construction.” The key point is that linguistic meaning and legal effect are not always the same, and therefore uncertainty over the legal scope of patent claims does not necessarily arise because of linguistic ambiguity.

A couple of clarifications at the outset. The first is that our definition of “construction” is simply giving text a legal effect—it does not care whether that legal effect is consistent with statute, precedent, and text or not. Camilla’s articulation (where judges “‘construe’ the claims according to their normative beliefs about what the claims’ legal effect should be”) potentially gives the impression that we define construction as only when judges act as super-regulators who engage in free-floating first-order policy analysis. This is not correct. Even the most restrained judge who makes decisions strictly in accordance with statute, precedent, and/or claim text engages in construction, because his decisions necessarily give the claim text a legal effect.

Second, our claim is conceptual, not normative. Our claim is not that interpretation is good or that construction is bad; our claim is that both are intrinsic to the activity of claim analysis, so there is really no “good” or “bad” about the matter. And because our claim is conceptual, our doctrinal prescriptions are very limited. We do not opine, for example, whether courts should give more or less weight to dictionaries, or specifications, or anything else.

The sum is that we are not trying to push a textualist or plain meaning agenda, and we are not trying to suggest that judges who engage in construction are judicial activists who ought to be impeached. Our goal is to simply provide more clarity in analysis and a better diagnosis for what ails patent claims. Specifically, we argue that the uncertainty in patent claims is not caused by linguistic ambiguity, but by methodological disagreement among judges about whether to construe claims according to the patentee’s actual inventive contribution, or instead according to the linguistic meaning of claim text written by the patentee (which is likely to be broader than the real invention).

It is at this point that Hrdy and Picozzi’s response comes in. Hrdy and Picozzi agree with us that methodological disagreement, rather than linguistic ambiguity, underlies disagreements over claim construction. But, they argue, the root source of methodological disagreement in patent law is more narrow than in other areas of law. That is, according to Hrdy and Picozzi, in areas such as constitutional law, “judges are relatively free to interpret and construct the text based on their prior beliefs about which policy outcomes or which form of interpretive methodology (e.g., textualism or anti-textualism) is superior.” But in patent law, they argue, judges are constrained by the Patent Act, and so disagreements over claim construction do not stem from free-floating beliefs about desirable policy outcomes, but instead are tethered to more mundane and legalistic disagreements about the proper statutory construction of the disclosure requirements of 35 U.S.C. § 112. In particular, they argue that “judges’ approaches to claim construction closely followed—and were likely influenced by—their constructions of section 112(a)’s written description requirement and section 112(b)’s definiteness requirement.”

It might perhaps surprise Hrdy and Picozzi to discover that I agree that judges’ approaches to claim construction largely parallel, and are likely influenced by, their positions on § 112. Yet I do not think this defeats my argument. As an initial matter, I would note that, even if Hrdy and Picozzi are correct that disagreements over claim construction stem from narrow legalistic disagreements about the proper understanding of § 112, that would not contradict the core claims of the article—the basic point that disputes about claim analysis are mostly disputes about legal methodology rather than linguistic meaning would still stand. In that sense Hrdy and Picozzi’s argument is less a refutation and more in the nature of a follow-on contribution. But I also think there is a deeper disagreement: Implicit in Hrdy and Picozzi’s con-law-is-different argument seems to be the contention that disagreements about § 112 are not based on beliefs about desirable policy but instead are narrow, mundane, and legalistic debates unencumbered by ideological priors. I think this contention is flawed and that their evidence is more consistent with an alternative hypothesis, namely that judges show a consistent pattern across several doctrinally-distinct issues—claim construction, § 112(a), § 112(b)—because they are influenced by their underlying beliefs about desirable policy (specifically, beliefs about desirable patent scope) in all of them. Judges who favor broad patents tend to construe claims broadly and read § 112 narrowly; judges who favor narrow patents tend to do the opposite. Rather than proving that patent law is not like con law, I submit that the Hrdy and Picozzi’s evidence tends to show that it is.

 

Federal Circuit to Review Defense of Laches in Patent Law

Patent,

By Jason Rantanen

This morning, the Federal Circuit issued an Order granting en banc review in SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC.  (Dennis’s  commentary on SCA here: https://patentlyo.com/patent/2014/09/federal-supreme-holding.html.) The central issue involves the impact of the Supreme Court’s decision earlier this year in Petrella v. Metro-Goldwyn-Mayer (holding that laches does not apply to copyright infringement occurring within the window provided by the statute of limitations) on patent law.

The issues presented:

(a) In light of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014) (and considering any relevant differences between copyright and patent law), should this court’s en banc decision in A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), be overruled so that the defense of laches is not applicable to bar a claim for damages based on patent infringement occurring within the six-year damages limitations period established by 35 U.S.C. § 286?

(b) In light of the fact that there is no statute of limitations for claims of patent infringement and in view of Supreme Court precedent, should the defense of laches be available under some circumstances to bar an entire infringement suit for either damages or injunctive relief? See, e.g., Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893).

The order is not yet available on the Federal Circuit’s website, but can be read here: Download SCA en banc order. Thanks to Hal Wegner for bringing it to my attention.

Guest Post by Camilla Hrdy on The Interpretation-Construction Distinction in Patent Law

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Camilla Hrdy is the Center for Technology, Innovation & Competition Fellow at the University of Pennsylvania Law School and a Visiting Fellow at the Yale Law School Information Society Project.  Below, she comments on The Interpretation-Construction Distinction in Patent Law by Professors Chiang and Solum. The “real name” rule applies to comments on this post.

Uncertainty and unpredictability in claim construction outcomes is one of the most important problems in patent litigation today. But patent law isn’t the only context in which judges struggle to determine the meaning of legal texts. In a recent article in the Yale Law Journal, The Interpretation-Construction Distinction in Patent Law, T.J. Chiang and Lawrence Solum argue that construing a patent is no different from any other form of legal analysis performed by judges, whether in constitutional law, statutory law, or contract law. As in these contexts, judges proceed in two distinct stages when determining the legal meaning of a patent’s claims. First, they “interpret” the claims’ linguistic meaning. Second, they “construe” the claims according to their normative beliefs about what the claims’ legal effect should be. According to Chiang and Solum, uncertainty in claim construction outcomes is caused mainly by judges’ disagreements in the “construction” phase, not the “interpretation” phase. In other words, judges disagree over policy, not language.

In a response in the Yale Law Journal Forum, Ben Picozzi and I argue that the “interpretation-construction distinction” does not fully capture how judges construe patent claims because it does not take into account the difference between the statutory context in which claim construction occurs and the constitutional context in which the interpretation-construction distinction evolved. In constitutional analysis, judges are relatively free to interpret and construct the text based on their prior beliefs about which policy outcomes or which form of interpretive methodology (e.g., textualism or anti-textualism) is superior. In contrast, when judges construe the terms of a patent, they must do so in light of the requirements of the Patent Act – in particular, 35 U.S.C. § 112. Section 112 imposes several requirements for minimum disclosure and definiteness. If a patent does not meet these requirements, judges are obligated to find it invalid under one of several doctrines.

We agree with Chiang and Solum, as well as other commentators such as Thomas Krause and Heather Auyang, that significant policy disagreements underlie judges’ divergent views on the legal meaning of patent claims, and that one of the major debates is whether claims should be interpreted broadly, according to how a patentee wrote them, or narrowly, according to what the judge finds to be the “real invention.” But in our view, these debates are based on judges’ disagreements over the precise levels of disclosure and definiteness that section 112 requires. Simply put, what Chiang and Solum call “claim construction” versus “claim interpretation” is actually statutory construction. In our response, we analyze the major claim construction cases that Chiang and Solum use as examples of their theory and show that in each of these examples, the judges’ disagreement over the meaning of the claims at issue was motivated by their disagreement over the meaning of the statute. Specifically, judges’ approaches to claim construction closely followed—and were likely influenced by—their constructions of section 112(a)’s written description requirement and section 112(b)’s definiteness requirement.

Our disagreement with Chiang and Solum is not just theoretical. It is highly relevant for the Supreme Court’s upcoming decision in Teva v. Sandoz, where the Court will decide what standard the Federal Circuit must apply in reviewing district courts’ claim construction decisions. Is claim construction a purely legal question that must be reviewed de novo? Or should at least some aspects of claim construction be reviewed under the more deferential “clear error” standard ordinarily applied to district courts’ factual findings? Most commentators—and the Solicitor General—argue that many issues that arise in claim construction, such as expert testimony on the level of ordinary skill in the art, are factual issues that should be reviewed deferentially. Chiang and Solum disagree, arguing that claim construction should be treated as a question of law and reviewed without deference. The reason they give for their somewhat unusual stance is their view that many important disputes over claim meaning involve construction, not interpretation of claims. If district courts were free to engage in construction without significant oversight from courts of appeal, this would increase, not reduce, uncertainty in outcomes, with “hundreds of district court judges across the nation each following their own individually preferred methodologies in the individual cases that come before them.”

We agree with Chiang and Solum’s conclusion that some purely legal questions underlie judicial disagreements over the meaning of patent claims and that many of these questions are in need of appellate review. But this is because they are questions of statutory construction. Judges disagree over issues like the contours of section 112’s disclosure and claim definiteness requirements, and consequently disagree over the proper construction of claims.

On this view, granting deference to district courts with respect to questions that do not involve statutory construction would not necessarily increase uncertainty and disuniformity in claim construction outcomes. Moreover, even if the Federal Circuit must review many facets of district courts’ claim construction decisions under the more deferential clear error standard, the Federal Circuit could still do much to increase certainty by resolving a number of outstanding statutory debates. For instance, does section 112(a), which the Federal Circuit has held contains a separate written description requirement, also require claims to be construed according to what the inventor “actually invented,” as Judge Lourie and other members of the court have suggested in several claim construction decisions? Does section 112(b), as construed by the Supreme Court in Nautilus v. Biosig, require courts to review more expert evidence in order to determine whether a patent’s claims would inform those skilled in the art “with reasonable certainty” about the scope of the invention?

If the Federal Circuit or the Supreme Court cannot resolve such issues, then Congress should amend the statute to provide greater clarity. This is how patent law has historically progressed and, we believe, is how lawmaking should work within a well-functioning statutory framework. Chiang and Solum’s analysis is a good start, but it doesn’t take this framework into account. Doing so would lead to conclusions that are less pessimistic and more complete.

The Huge Assumption in 101 Jurisprudence

Ethics,

(Back to business soon. I’ve been grading and managed to do what many of you have done, I’m sure, and catch this nasty bug going around.)

I’ve posted elsewhere at length and exhaustively about why the statutory text after 1952 makes it clear that failure to “comply” with the permissive language in 101 is a not defense to infringement.  I’ve shown that the statutory text doesn’t make 101 a “condition of patentability” and it otherwise is not listed within section 282. I’m not going to repeat those earlier posts here.  As courts say, familiarity with my prior decisions is assumed.

In that context, I note the recent case, where the court wrote:

The Supreme Court, however, has long interpreted § 101 and its statutory predecessors to contain an implicit exception: “laws of nature, natural phenomena, and abstract ideas” are not patentable. Alice Corp. Pty Ltd. v. CLS Bank Int’l, 573 U.S. __, 134 S. Ct. 2347, 2354 (2014).

Content Extraction and Transmission LLC v. Wells Fargo Bank, NA (Fed. Cir. Dec. 23, 2914) (Chen-auth; Dyk; Taranto).

The problem, in my view, is that the Court has never analyzed whether its pre-1952 case law survived the changes to the Patent Act in 1952.  Perhaps “invalidity” based on section 101 was a “defense” before 1952. It no longer is, though the court marches onward.  Worse, now this “defense” can be raised under 12(b)(6), without evidence, and with no burdens.  Whatever limitations on courts’ power to invalidate patents Congress thought it had created in 1952, this “thing that makes patents go away but is not invalidity or enforceability but is just sort of floating out there” marches onward thanks complete lack of analysis and respect for separation of powers, the rules of civil procedure, and the presumption of administrative competence.

Sigh.

 

Comments on the “Real Name” Experiment

Patent

By Jason Rantanen

I’ve created this post so that folks can comment on the “real names only” rule that I’m applying in the Interpretation-Construction Distinction threads.  I’ll continue to delete posts under pseudonyms in that thread.

As a point of clarification: Your “real name” is the name that you would use when filling out documents that include the language “under penalty of perjury.”

And a second clarification: I’m only applying this rule to this series of posts.  It is *not* a general policy change.

 

The Interpretation-Construction Distinction in Patent Law

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By Jason Rantanen

Last week, I wrote about my view that patent rights are malleable; that is, their scope and strength can be altered by the parties who interact with them after their issuance.  Malleability is different from ideas that patent rights are simply uncertain; that the scope and strength of patents that revolve around chance or indeterminacy, as it involves changes to the patent right rather than resolution of an unknown variable.

In connection with that work, I’ve recently had several valuable exchanges with Professor Tun-Jen Chiang, whose ability to articulate theoretical concepts in patent law is possibly without equal.  This is not to say that I agree with Chiang’s perspectives; I frequently do not.  But his work bears strong traces of both Richard Epstein and Timothy Dyk in the rigor of its analysis and lucidity of its explanations.

One of Professor Chiang’s most recent works, The Interpretation-Construction Distinction in Patent Law, 123 Yale L. J. 530 (2013), co-authored with Professor Lawrence Solum, takes head-on the issue of indeterminacy in claim scope.  Chiang and Solum argue that this indeterminacy is not so much due to linguistic ambiguity as it is to “a conflict about the underlying goal of claim construction: is it to give effect to the linguistic meaning of text, or is it to tailor patent scope to the real invention?”  Id. at 536.  This conflict, they argue, involves two fundamentally different goals, and determining claim meaning is an incoherent inquiry when judges move between them.  The result is indeterminacy not due to linguistic ambiguity but due to an inability to resolve whether to apply linguistic analysis in the first place.

I’ve provided the abstract below; the full article is here: http://www.yalelawjournal.org/article/the-interpretation-construction-distinction-in-patent-law

The ambiguity of claim language is generally considered to be the most important problem in patent law today. Linguistic ambiguity is believed to cause tremendous uncertainty about patent rights. Scholars and judges have accordingly devoted enormous attention to developing better linguistic tools to help courts understand patent claims.

In this Article, we explain why this diagnosis is fundamentally wrong. Claims are not often ambiguous, and linguistic ambiguity is not a major cause of the uncertainty in patent law today. We shall explain what really causes the uncertainty in patent rights, how the erroneous diagnosis of linguistic ambiguity has led the literature off track, and what will get us back on track to solving the uncertainty problem.

Tomorrow, Camilla Hrdy will guest-blog about her response to The Interpretation-Construction Distinction in Patent Law.  For this series of posts, we’ll be doing something a bit different for comments.  Only comments with the author’s real name will be permitted; all others will be removed.

What Makes a Proper “Error” for a Reissue Application?

Patent

Hoyt Fleming v Escort (Fed. Cir. 2014)

The GPS patents in suit are Fleming’s Reissue Nos. RE39,038 and RE40,653.  Although several of the asserted claims were found invalid due to Escort’s prior invention, some of the claims were found both infringed and not invalid.

Part of the appeal involves the question of whether reissue was proper.  Under Section 251 of the Patent Act, a reissue must be based upon an “error” in the original.  Reissues granted where there was no “error” can be invalidated for improper reissue.  Thus, the dividing line between error and no-error is important.  Here, the court repeats is prior precedent that errors include both slips of the pen errors as well as those arising from a deficient understanding of law or fact.  However, a drafting choice is not an error simply because it is later regretted.

Fleming apparently drafted the original patent claims from his perspective as a computer programmer rather and that led to him not appreciating the full scope of his patentable invention.  In the appeal, the Federal Circuit agreed with the patentee that this is “a classic reason that qualifies as error” under the reissue statute.

It identifies a deficient understanding of some combination of fact and law bearing on the meaning of claim language, the inventions disclosed in the written description, and how particular language does or does not map onto products or processes that could be claimed under section 251 consistent with the written description.

One important factor in why Fleming wanted the reissue was to capture later developments in the marketplace that were disclosed in the application but not captured in the original claims. Although that appears akin to ‘regret’ rather than original error, the Federal Circuit ruled that the market reason for the change will not disqualify an otherwise proper reissue.

[T]he fact that it was marketplace developments that prompted Fleming to reassess his issued claims and to see their deficiencies, does not alter the qualifying character of the reason for reissue. Erroneous understandings of the written description or claims are just that, regardless of what triggered the recognition of error in those understandings.

Verdict Affirmed.

The Malleability of Patent Rights

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By Jason Rantanen

Folks who write about patents commonly explain the concept by drawing an analogy to real property rights, with the metes and bounds of a patent set out in the claims rather than a deed description.  Drawing upon this analogy, a common critique of by scholars such as Jim Bessan and Mike Meurer is that patent boundaries are much less clear than those of deeds.  Related to this uncertainty in scope is the fact that the very existence of the rights themselves is hardly certain.  While issued patents come with a presumption of validity, it is only that: a presumption.  Patent claims can be and are invalidated by courts.  Commentators have used various terms to describe these attributes, terms that when unpacked mean somewhat different things.  Indeterminacy and probabilistic rights are two of the most common.  Regardless of the terminology, the core idea is that that patent rights are characterized by a degree of uncertainty.

In my most recent long-form work, I describe another important characteristic of patent rights: their malleability.  By malleable, I mean that the scope and strength of the right can be changed after the patent is issued through an array of mechanisms, thus allowing actors operating within the patent system the ability to change the very contours of the right.  In other words, not only can patent rights involve something akin to a roll of the dice or an inability to definitively pin down their scope, but the outcome of that roll or the contours of the uncertainty can be changed by the actions of the parties involved.  An obvious example is the role that skilled counsel play in litigation, but that’s not the only way that patent rights can be altered after issuance.

Over the past few months, we’ve seen quite a few manifestations of this malleable nature of rights; most recently in the Federal Circuit’s decision this morning in Content Extraction v. Wells Fargo Bank invalidating an issued patent on section 101 grounds.  The rise in importance of Section 101 is in large part the result of individual actions pushing and pulling on patent rights using those tools at their disposal, as attorneys develop creative new ways to deploy the legal precedent and policy arguments.  The consequence in this case is that the patent rights are eliminated well after the patent issued.  There are, of course, better examples of malleability than invalidation: claim construction is the one that most quickly comes to mind.

Ultimately, it’s not clear to me that malleability is a desirable characteristic.  Although there are individual doctrines where malleability may be necessary, I have yet to come up with a good theoretical justification for it on a broad scale.

Read The Malleability of Patent Rights here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2540356.  The article is still a draft, so well thought out comments and responses are particularly welcome.

Transitions: Hal Wegner

Patent

by Dennis Crouch

I am one of the many followers of the prolific and outspoken patent guru and professor Harold C. Wegner.  Well before the Internet and blogs arrived, “Hal” Wegner was writing articles and distributing his views on patent cases and patent law policy.  Soon after I started Patently-O, Wegner stopped by my MBHB office for the first of our many visits together. Over the years, Wegner has helped me in myriad ways and I am glad to have him as a friend and mentor.  Even when it is painfully sharp, his insight is usually exactly on target.

This month marks two major milestones for Hal Wegner.  First, he is retiring from the Foley & Lardner law firm after two decades as a partner. He previously ran his own DC-based law firm for more than a decade and will once again open his own consultancy – this time out of his Naples Florida office.  Second – and perhaps more important for many of his readers – a the end of the month Hal is discontinuing his popular “Top Ten” patent cases and daily commentary on patent developments.  In his next iteration, Wegner is looking to focus more in depth in a set of patent practice monographs. Congratulations Hal!

Here at Patently-O, we are looking forward to continuing in Wegner’s tradition next year in at least one way – featuring our own authorized version of Wegner’s Top Ten list of pending cases.

Supreme Court: Problem of Divided Ownership

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by Dennis Crouch

The general rule is that all co-owners of a patent must join together as plaintiffs less the case be dismissed.  In STC.UNM v. Intel, the Federal Circuit ruled that, while co-owners are necessary parties, they may not be involuntarily joined.  That decision is in some tension with Fed. R. Civ. Pro. Rule 19 that empowers a court to order the joinder of a necessary party.  In the case, STC and Sandia National Labs co-own U.S. Patent No. 6,042,998, but Sandia refused to participate in the case.

In a new filing, STC has petitioned the Supreme Court for a writ of certiorari with the following question:

Rule 19 of the Federal Rules of Civil Procedure provides that where a necessary party to a lawsuit has not been joined, “the court must order that the person be made a party.” The Court of Appeals for the Federal Circuit ruled below that Rule 19 is “trumped” by a purported “substantive rule” that a co-owner of a patent can “impede an infringement suit brought by another co-owner.” The majority opinion below stands in stark contrast to this Court’s precedents. For over seventy years, this Court has rejected every statutory challenge to a Federal Rule that has come before it.

The petition particularly argues that the Federal Circuit decision is in conflict with Sibbach v. Wilson, 312 U.S. 1 (1941) and its progeny.

The original decision was authored by Judge Rader (joined by Dyk) with Judge Newman in dissent.  In its 6-4 en banc denial, Judge Dyk authored an opinion concurring with the denial (joined by Moore and Taranto) while both Judges Newman (joined by Lourie, O’Malley, and Wallach) and O’Malley (joined by Newman, Lourie and Wallach) dissented from the en banc denial.

I give the case a better-than-average odds for certiorari and, if granted, the court would likely reverse.

= = = = =

The ownership-tale of the case is a seeming malpractice nightmare.  Briefly, the invention stems out a joint research project between employees at UNM and Sandia.  Three of the named inventors were UNM employees while the fourth (Draper) worked at Sandia.  In 1996, Draper signed an assignment of his rights in the first patent to UNM but then a few months later assigned his rights to Sandia and the new assignment was filed as correction being “made in error” since it had erroneously identified Draper as an employee of UNM.  UNM did not challenge this new filing, but at times in the subsequent decade made several statements regarding its sole ownership of the first patent.

The patent in suit is is based upon the first patent but excludes Draper as an inventor.  (UNM later filed a certificate of correction to formalize the relationship as a continuation in part).  Because of the difference in inventor-employer rights, it would seem that UNM would have full rights to the continuation.  However, in order to overcome an obviousness-type-double-patenting rejection, UNM filed a terminal disclaimer in the second case, linking its term and ownership to that of the first patent. Of course, at the time, the two patents seemingly did not have the same ownership structure and UNM indicated to the USPTO that it was “the owner of record of a 100 percent interest” in the second patent.  In the present lawsuit, however, STC eventually admitted that the corrected Draper assignment was effective to give Sandia ownership rights in both the first patent and the second.  And that admission appears to be treated as an assignment of rights to Sandia if such is necessary.

= = = = =

Wegner recognized the case in his final top-ten:

Promega v. Life Tech: Enablement and Open Claim Elements

Patent,

By Jason Rantanen

Promega Corp. v. Life Tech. Corp. (Fed. Cir. 2014) Download Promega v Life Tech
Panel: Prost (dissenting-in-part), Mayer, Chen (author)

This decision is interesting for its enablement analysis, which revolves around the term “comprising,” and for its holding on 271(f) liability for international inducement (the portion of the opinion as to which Chief Judge Prost dissented).  I’ll write more about the 271(f) issue in a subsequent post.

A few core technical details are useful for understanding this opinion.  The patents at issue relate to DNA, and specifically to the amplification of particular “short tandem repeats” (STR) loci.  These loci are important because they can be used to create a DNA “fingerprint” unique to each individual.  These fingerprints are valuable in both criminal forensics and health sciences research.

To create these DNA fingerprints, the STR loci must first be “amplified,” which essentially means copying the DNA many times over.  While the technology for DNA amplification described in the patent (polymerase chain reaction) was well known at the time of the patent application (1994), amplifying multiple STR loci at the same time (called “multiplexing”) remained challenging.  A central problem with multiplexing was the extreme difficulty in predicting what would happen when a new locus was added to the multiplex.  The multiplex might work or it might not, depending on the interactions between the new locus, the existing loci, and primers used in the reaction.   The patents-in-suit do not purport to solve this problem generally; rather, they identify specific combinations of loci that will successfully co-amplify.

Enablement and The Use of “Comprising”: The set of claims for which enablement was an issue all contained the term “comprising” before the set of loci (not just after the preamble).  Claim 23 of one of the patents-in-suit  is representative:

23. A kit for simultaneously analyzing short tandem repeat sequences in a set of short tandem repeat loci from one or more DNA samples, comprising:

A single container containing oligonucleotide primers for each locus in a set of short tandem repeat loci which can be co-amplified, comprising HUMCSF1PO, HUMTPOX, and HUMTH01.

(The “HUM” terms refer to specific loci.)  It’s black letter patent law that “comprising” is an “open” term; in other words, the claims encompass both products that are limited to the specific elements recited in the claims as well as those that contain those elements.  Here, that meant that the claims encompassed both “products that use no loci other than those listed in the claims” as well as “any other loci combination containing those three recited loci–whether that combination includes 13, 1,1300 or 13,000 STR loci.”  Slip Op. at 7.  Life Tech moved for summary judgment, which the district court denied because “the asserted claims need not enable ‘unrecited elements.'”  Id. at 14.

Applying the concept of commensurability, the Federal Circuit reversed.  “The enablement requirement ensures that ‘the public knowledge is enriched by the patent specification to a degree at least commensurate with the scope of the claims.'”   Slip Op. at 14 (quoting Nat’l Recovery Techs v. Magnetic Separation Sys., 166 F.3d 1190 (Fed. Cir. 1999)).

Here, the scope of the claims was not “less than or equal to the scope of enablement.”  Id.  First, the unstated STR loci combinations are not merely “unrecited elements;” “they are part of the claim scope.”  And not only are they are part of the claim scope, they are an important part.  Promega itself repeatedly argued the unpredictability point to the patent office during prosecution of the claims-in-suit to support their patentability over the prior art and during the litigation itself in defense of their nonobviousness.  “Promega explained that without a preexisting publication or teaching, a skilled artisan ‘could not predict with any certainty whether a given set of loci would co-amplify successfully together.'”  Slip Op. at 17.

These arguments proved fatal given the broad scope of Promega’s claims.  This case was similar to MagSil v. Hitachi, and Wyeth v. Abbott,  and the Federal Circuit concluded that “the teachings of Promega’s patents would not have enabled a skilled artisan at the time of filing to identify significantly more complicated sets of STR loci combinations that would successfully co-amplify–such as those found in LifeTech’s STR kits–without undue experimentation.”  Slip Op. at 18.  Ultimately, “Promega’s ‘difficulty in enabling the asserted claims is a problem of its own making.'”  Id. at 18, quoting MagSil.

So does the court’s treatment of “comprising” mean that every claim using this transitional phrase is invalid.  In a word, No.  In more words:

It is true that when used in the preamble of a claim, the term “comprising” permits the inclusion of other steps, elements, or materials in addition to the elements or components specified in the claims. [] As we stated in Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367, 1371 (Fed. Cir. 2005), open claims “embrace technology that may add features to devices otherwise within the claim definition” (emphasis added). But the relevant usage of “comprising” here is not the one recited in the preamble. Rather, it is within the specific claim limitation that lists combinations of successfully co-amplifying STR loci, combinations whose identification and discovery Promega itself asserts is a complex and unpredictable endeavor. While the term “comprising” in a claim preamble may create a presumption that a list of claim elements is nonexclusive, it “does not reach into each [limitation] to render every word and phrase therein open-ended.” [] Promega’s claims differ from customary “open-ended” claims in that Promega’s usage of “comprising” in its “open loci set” limitation, as construed, expands the claims at a key limitation in order to cover what are indisputably advances in this unpredictable art. Under the circumstances here, the numerous embodiments covered by Promega’s claims cannot be merely regarded as “unrecited elements” in a standard “open-ended” claim.

Slip Op. at 20-21.

No Willful Infringement Since Infringer’s Litigation Arguments were “Not Without Reason”

Patent, ,

by Dennis Crouch

Sryker v. Zimmer (Fed. Cir. 2014)

In 2010, Stryker sued its competitor Zimmer for infringing three patents covering pulsed lavage devices used for wound cleaning.  U.S. Patent Nos. 6,022,329, 6,179,807, and 7,144,383. A jury sided with the patentee awarded $70 million in lost profits and also found that the infringement willful.  Taking that verdict, the district court then awarded treble damages for willfulness, attorney fees based upon the exceptional case, and a permanent injunction against Zimmer.   On appeal, the Federal Circuit has affirmed the underlying damage award, but reversed the district court’s judgment that the infringement was willful — finding that the noninfringement and invalidity defenses raised by Zimmer were “not unreasonable.”

Treble Clef

Treble Damages: The Patent Act sets up a two-step process for determining patent infringement damages.  First, the court must award “damages adequate to compensate for the infringement” that are at least “a reasonable royalty.” 35 U.S.C. 284.  Next, “the court may increase the damages up to three times the amount found or assessed.”  Id.  To add some mystique to the system, we term this ‘treble damages’ rather than ‘triple damages’ or – as the statute suggests – ‘three times.’

The statute itself offers no further limitations or guidance as to when triple damages are appropriate, only that a court “may increase the damages.”

Seagate vs the Statute: Despite the broad discretion seemingly offered by the statute, the Federal Circuit has held that increased damages are only available when a defendant is guilty of its complex willful infringement schema that requires clear and convincing evidence that (1) an adjudged infringer took its wrongful actions “despite an objectively high likelihood that its actions constituted infringement of a valid patent” and (2) that the objectively-defined risk was subjectively known (or should have been known) to the infringer.  In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).

Ex Post Reasonableness: Because willfuness includes the objective inquiry, it turns out that an infringer who made the intentional decision to infringe, believing fully that the act was infringement, and that was that later judged to be infringing can still avoid being stuck with enhanced damages with a later-concocted (but ultimately incorrect) argument that the patent is invalid or not infringed – so long as that argument is “susceptible to a reasonable conclusion.”   Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).

Although the jury decided the willfulness question in the Federal Circuit has held that insufficient under the Seagate test. Rather, a judge must determine at least the objective portion of the test (objectively reckless) and that determination is reviewed de novo on appeal. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1007 (Fed. Cir. 2012).

Here, reviewing the lower court’s decision de novo, the Federal Circuit found that the defendant had offered a construction that was “not unreasonable” or at least “not without reason.”

 

Iowa Innovation, Business & Law Center

Patent

By Jason Rantanen

As most of you know, I am an associate professor of law at the University of Iowa College of Law, in Iowa City, Iowa.  One of my initiatives this past semester was a relaunch of the Iowa Innovation, Business & Law Center’s website.

The IBLC is a joint faculty venture that focuses on intellectual property, antitrust and corporate law topics.  We host nationally renowned speakers, provide enrichment programming for our students, and support our innovative courses in these areas.  The latter includes our popular Iowa Medical Innovation Group seminar, in which teams of five to eight students from the business, law, medical and engineering schools design and develop a new medical technology.  (One of the advantages of being affiliated with a major research hospital is that we can offer interdisciplinary programs like this.)

The relaunched website contains additional details about our programs in innovation and business law, as well as occasional stories about our current students and alumni.  We also run new articles on a regular basis, so if you are an Iowa alum it may be worth a few moments’ time to stop in occasionally and see what’s happening in innovation & business law at Iowa.  Our alumni play a tremendous role in the law school and I’m always happy to hear from them.

Federal Circuit: Next Round of Myriad Patent Claims Are Also Invalid

Patent, , ,

by Dennis Crouch

In an important decision, the Federal Circuit has affirmed the invalidity of a number of additional genetic testing claims.  Based upon this decision, the USPTO may need to again reevaluate its subject matter eligibility procedures. 

In AMP v. Myriad (2013), the Supreme Court found that some of Myriad’s BRCA gene patent claims were valid – or at least that they did not violate the prohibition against patenting products of nature.  Following the decision, several companies – including Ambry – began marketing BRCA genetic testing, and Myriad sued.

The new lawsuit – captioned In re BRCA1- and BRCA2-Based Heredity Cancer Test Patent Litigation (Fed. Cir. 2014) – was brought by Myriad (the exclusive patent licensee) along with patent owners University of Utah and University of Pennsylvania. The plaintiffs here assert a set of patent claims that were not previously a part of the Supreme Court or lower court analysis.  Now asserted are U.S. Patent Nos. 5,753,441 (claims 7 & 8); 5,747,282 (claims 16 & 17); and 5,837,492 (claims 29 & 30).

The appeal here stems from the Utah District Court’s denial of Myriad’s motion for a preliminary injunction based upon its conclusion that the asserted claims are “likely drawn to ineligible subject matter.”  On appeal the Federal Circuit has now affirmed and taken a step further by holding on de novo review that none of the asserted claims are patent eligible.

DNA Primers: The asserted claims from the ‘282 and ‘492 patents are all directed to DNA primers used to bind the chromosomal section of the BRCA1 gene during PCR (the DNA-amplification process).  In reviewing these claims, the Federal Circuit found that the “primers before us are not distinguishable from the isolated DNA found patent-ineligible in Myriad and are not similar to the cDNA found to be patent-eligible.”

Now, although not particularly claimed, it appears that the primers are synthetically created through a lab process. In the appeal, the Federal Circuit rejected the importance of that distinction – holding that “it makes no difference that the identified gene sequences are synthetically replicated.”  Rather, the rule of law is that:

[N]either naturally occurring compositions of matter, nor synthetically created compositions that are structurally identical to the naturally occurring compositions, are patent eligible. . . .  A DNA structure with a function similar to that found in nature can only be patent eligible as a composition of matter if it has a unique structure, different from anything found in nature. . . . Primers do not have such a different structure and are patent ineligible.

The difference here from the cDNA patents that were allowed in Myriad is that(a) the cDNA is structurally different from naturally occurring DNA because the introns had been removed leaving exons only and (2) the cDNA is structurally different from naturally occurring exon-only mRNA because cDNA is a different substance. “To the extent that the exon-only sequence does not exist in nature, the lab technician “unquestionably creates something new when cDNA is made.”

Method of Screening: The asserted ‘441 patent claims are directed to a particular method of screening for BRCA1 mutation by comparing a patient’s gene sequence with a germline BRCA sequence. Both claims 7 and 8 depend from claim 1 that the Federal Circuit found invalid in its 2012 decision as “a patent-ineligible abstract idea of comparing BRCA sequences and determining the existence of alterations.”

Following the two-step analysis from Mayo and Alice, the Federal Circuit first determined that the asserted claims embody an abstract idea through the comparison steps.

Here, under our earlier decision, the comparisons described in the first paragraphs of claims 7 and 8 are directed to the patent-ineligible abstract idea of comparing BRCA sequences and determining the existence of alterations. The methods, directed to identification of alterations of the gene, require merely comparing the patient’s gene with the wild-type and identifying any differences that arise.

Going to the second part of the Alice/Mayo test, the court looked to the claims to find any “non-patent-ineligible elements” sufficient to “transform the nature of the claim into a patent-eligible application.”  Here, the claims require various physical transformations, including hybridizing the gene probe; amplification of the gene; and sequencing the gene.   However, according to the appellate panel, those transformations are insufficient – primarily because those steps “set forth well-understood, routine and conventional activity engaged in by scientists at the time of Myriad’s patent applications” and are the activities that a scientist would have relied upon to achieve the goals of the invention.

The second paragraphs of claims 7 and 8 do nothing more than spell out what practitioners already knew—how to compare gene sequences using routine, ordinary techniques. Nothing is added by identifying the techniques to be used in making the comparison because those comparison techniques were the well-understood, routine, and conventional techniques that a scientist would have thought of when instructed to compare two gene sequences.

With the claims invalid, Myriad has now lost the case.  In my view, an en banc reversal is highly unlikely.

IP as a Corporate Human Right

Patent, ,

by Dennis Crouch

I am enjoying Professor Osei-Tutu’s (FIU) new article on intellectual property as a human right.  Corporate ‘Human Rights’ to Intellectual Property Protection, ___ Santa Clara L. Rev. ___ (2015) (forthcoming).

The background of the article stems from movements in both Europe and the developing world to define aspects of intellectual property as a fundamental human right.  In one recent case, for instance, the European Court of Human Rights looked to balance the human right to freedom of expression against the human right of intellectual property ownership.  See Kolmisoppi v. Sweden (40397/12), [2013] E.C.H.R.

Osei-Tutu sees a real problem with identifying IP as a human right – especially in the U.S. context where non-human actors (e.g., corporations) are increasingly able to claim fundamental rights. See Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010) (concluding that a “prohibition on independent corporate expenditure is a ban on speech”) and Burwell et. al v. Hobby Lobby Inc. et. al, 573 U.S.__ (2014) (protecting corporate persons’ free exercise of religion).  For the author, this corporate co-opting would largely eliminate the distributive justice that has been a major purpose of the human right schema. Osei-Tutu is writing to an international audience where human rights have become a major part of the international legal framework, but the framing of this debate will also impact the US.  In the U.S., although we do not identify human rights, we do recognize fundamental rights to corporate property ownership. Thus, for the U.S., the boat may have already sailed on this idea.

IP5 Annual Report

Patent

by Dennis Crouch

From the perspective of the leading patenting countries, the World Intellectual Property Organization (WIPO) has become a non-productive and fairly toxic environment with regard to international cooperation and substantive harmonization.  Although the US continues to fully participate in WIPO, most progress and cooperation has come through bilateral and multilateral agreements between trading partners and regional patent offices.

The leading new organization is the IP5 that is a cooperative group including the USPTO, European Patent Office (EPO), Japanese Patent Office (JPO),  Korean Intellectual Property Organization (KIPO), and the Chinese Patent Office (SIPO).  The organization formerly operated as the tri-lateral cooperative, but in recent years added KIPO and SIPO to the ranks. (The EPO includes 37 European Nations.)

Over 90% of all utility patents originate from inventors residing within the jurisdiction of one of the five offices. The chart below shows how the trend has changed over the past few years.

IP5Tally

[Read the IP5 Report]

 

Trademarks: You Don’t Own the Word – Just the Right to Avoid Some Market Confusion

Patent

by Dennis Crouch

On Patently-O, our primary focus is patent law, but sometimes we remember that the “Patent Office” is actually the United States Patent and Trademark Office (USPTO). The USPTO has two primary administrative appellate bodies – the Patent Trial & Appeal Board (PTAB) deciding patent issues and the Trademark Trial & Appeal Board (TTAB).

In the recent decision captioned In re St. Helena Hospital (Fed. Cir. 2014), the Federal Circuit has reversed the TTAB’s refusal to register St. Helena’s mark TakeTen.

If you want a lifestyle shift, St. Helena Hospital offers a ten-day residential program that they have branded TakeTEN.  When the hospital attempted to register the term as a trademark, the USPTO refused — finding that St. Helena’s TakeTEN to be confusingly similar to the registered mark “Take 10!” owned by the ILSI Foundation.  “Take 10!” is used in conjunction with various programs encouraging kids to exercise at least ten minutes per day.

Although trademark prosecution is generally termed a ‘registration’ process rather than ‘examination’, trademark examiners do conduct an examination to determine whether the proposed mark is registrable.  One fundamental question asked is whether the proposed mark is to confusingly similar to an already registered mark.  For that point, trademark examiners must determine whether the proposed mark so resembles a registered mark “as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1052(d).

Importantly, trademarks are registered for particular market areas.  The owners of the “Take 10!” mark do not generally own the phrase or control all of its uses. Rather, the trademark rights are focused on the particular market where the registrant uses its mark and serves to protect against customer confusion in that market.

“TakeTen” and “Take 10!” are – in the abstract – quite similar.  And, that reasonable conclusion is certainly an important factor in determining a likelihood of confusion. However, even identical marks are not necessarily confusing if used in different market areas.  More generally, the USPTO considers what have become known as the DuPont Factors:

(1) the similarity or dissimilarity of the marks in terms of appearance, sound, meaning and commercial impression; (2) the similarity or dissimilarity and nature of the goods and services; (3) the similarity or dissimilarity of established, likely-to-continue channels of trade; and (4) the conditions under which and buyers to whom sales are made, i.e., degree of consumer care.

Application of E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973).

In the appeal, the Federal Circuit found that the three final DuPont factors had not been proven with substantial evidence.

Of notable interest, the TTAB had noted that both TakeTEN and Take 10! were advertised over the Internet. In the appeal, the Federal Circuit quoted McCarthy on Trademarks in holding that fact “proves little, if anything, about the likelihood that consumers will confuse similar marks used on such goods or services.” Kinbook, LLC v. Microsoft Corp., 866 F. Supp. 2d 453, 470–71 n.14 (E.D. Pa. 2012) (quoting J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24:53.50 (4th ed. Supp. 2011)).