September 2015

Court Maintains Laches Defense for Back Damages in Patent Cases

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by Dennis Crouch

SCA Hygiene Products v. First Baby Products (Fed. Cir. 2015) (en banc)

On en banc rehearing, the Federal Circuit has ruled that the Supreme Court’s Petrella decision (eliminating the doctrine of laches for back-damages for copyright infringement) does not directly apply in the patent context.

All eleven members of the court agreed that, in the patent context, laches continues to be available in the context blocking equitable relief such as an injunction or ongoing royalties – when warranted by the equities.  However, the court indicated (dicta here) that laches should only apply to ongoing royalties in “extraordinary circumstances.”

The 6-5 split was on whether laches can be used to eliminate back-damages for infringement that occurred within the six-year statutory limit.  Here, the majority found that laches continues to apply.

Although laches is considered a judge-made equitable doctrine, the court smartly looked to the statute in reaching its conclusion. In particular, Section 282(b)(1) of the Patent Act states that “unenforceability” is a defense to allegations of patent infringement and back when the law was passed (1952) was understood to encompass defenses such as “laches, estoppel and unclean hands.”  Taking this together, the court found that Congress meant for the laches defense to continue to work alongside the six-year limit on back-damages.

Congress remained silent on the content of the laches defense. Section 282 therefore retains the substance of the common law as it existed at the time Congress enacted the Patent Act. . . . Upon review, the case law demonstrates that, by 1952, courts consistently applied laches to preclude recovery of legal damages. Nearly every circuit recognized that laches could be a defense to legal relief prior to 1952. . . . Following a review of the relevant common law, that meaning is clear: in 1952, laches operated as a defense to legal relief. Therefore, in § 282, Congress codified a laches defense that barred recovery of legal remedies.

Challenging this point, the Dissent argued that the relevant “common law” for consideration should have come from the Supreme Court which, according to the dissent, indicated that laches was only a defense to equitable actions.

The legal history point of debate seems to be whether we should look at the general common law of laches or instead the common law of laches as applied to patent lawsuits?

Majority: If Congress looked to the common law, it likely looked to the common law of patents rather than to more general principles.”

Dissent: Patent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation.

With a one-judge majority, the law remains that laches is “a defense to legal relief in a patent infringement suit.”

= = = = =

The majority here argues correctly that we should look to the statute and see what it tells us. That approach makes sense in all patent cases, regardless of the issue.

What the majority finds is that the statute implicitly binds the court to implement the equitable defenses available in patent cases back in 1952 (when the relevant amendment was passed). At the same time, the majority appears perfectly comfortable with the notion that the scope of the equitable actions will continue to adjust over time and were in no way fixed by their incorporation into the 1952 Act.  Thus, when the court asks – what are the contours of the laches defense – it does not feel constrained to limit itself to 1952 precedent but instead looks directly to the recent Supreme Court decision in Petrella.

Intervening Rights 2015

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R+L Carriers v. Qualcomm (Fed. Cir. 2015)

Here’s the rough timeline:

  • R+L sued Qualcomm for infringement;
  • R+L then petitioned for ex parte reexamination of its asserted patent, and that filing resulted in the asserted claims being amended and then confirmed as patentable;
  • And, before the reexam was completed, Qualcomm stopped its allegedly infringing activity.

The in the case then is whether the amendment during reexamination allows Qualcomm to entirely avoid liability for pre-reexamination acts through a doctrine known as “intervening right.”

Substantially Identical: The Patent Act provides that back-damages for pre-reexamination infringement is only available if the reexamined claims are “substantially identical” to the original claims.  This rule stems from the reissue statute, 35 U.S.C. § 252 (a reissued patent shall have the same effect as the original patent “in so far as the claims of the original and reissued patents are substantially identical”) coupled with the reexamination provision, 35 U.S.C. § 307(b) (“a reexamination proceeding will have the same effect as that specified in section 252 for reissued patents”).

The Substantially Identical test is pretty tough standard. Although it does allow for some amendment, an amended claim will basically fail if the scope of covereage is not identical. As interpreted by the courts, the “substantially identical” standard is judged objectively and it is irrelevant as to whether the patentee thought the change was substantial or not.

The changes: The patent here is directed toward a method of “transferring shipping documentation data … from a transporting vehicle to a remote processing center.”  In the original patent, R+L had failed to include the word “comprising” and instead just put a colon following the method claim preamble. In addition, the original claims included a final step of preparing “a loading manifest . . . for further transport of the package on another transporting vehicle.”  During reexamination, the patentee added the limitations that it is an “advance” loading manifest “document” for “another transport vehicle.”  In issuing the reexamination certificate, the USPTO relied upon this last change because the prior art did not include preparing “an advance loading manifest document for another transporting vehicle.”

The Federal Circuit relied upon the examiner’s statements here to interpret the claims – finding that the amendment did change the claim scope:

The examiner expressly stated he was allowing amended claim 1 because “the manifest discussed by [the prior art] is a manifest for the current shipping vehicle and not an advance loading manifest document for another transporting vehicle.”  In other words, the examiner’s focus in allowing the claims was … on the additional limitation that the advance loading manifest be “for another transporting vehicle.”  … [T]he examiner’s commentary reveals a method that would be covered by original claim 1 but not amended claim 1: the process of preparing a loading manifest “for the current shipping vehicle.”

In its briefing, R+L acknowledges that the claims were allowed over the prior art because it agreed to add the “for another transporting vehicle” limitation. As R+L stated in its interview summary during reexamination, addition of “loading manifest document for another transportation vehicle” resulted in a tentative agreement that the amendment would overcome the rejections over the prior art. … R+L clearly understood that it was limiting the scope of its claims in another way to get around the prior art.

Thus, amended claim 1 is not “substantially identical” to original claim 1 because original claim 1 encompassed scope that amended claim 1 does not. Accordingly, we conclude that amended claim 1 is not “substantially identical” to original claim 1.

As I mentioned earlier, the reasons for the amendment do not directly impact whether the amendment is substantial or not. However, the above quotation from the opinion shows how those reasons do impact the claim construction which will then impact whether the amendment is substantial.

What’s Important about This Case: The intervening rights doctrine discussed here is not new and the results are not surprising once the claims were construed.  The real element of importance of this case seems to be claim construction – and particularly, the heavy reliance placed upon the examiner’s statements during prosecution regarding the claim coverage.

= = = =

Although reexaminations are on the decline, the PTAB trials are on the rise.  Under the AIA, intervening rights will also be generated whenever a patent claim is amended in an inter partes or post grant (including CBM) review. See 35 U.S.C. § 318(c) and 328(c).

 

Federal Circuit Pushes Court to Stop Samsung’s Infringing Sales

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Apple v. Samsung (Fed. Cir. 2015)

This portion of the saga focuses on Judge Koh’s refusal to award a permanent injunction against Samsung to prevent that company from continuing to infringe Apple’s slide-to-unlock patents. See U.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172.  Judge Koh reasoned that Apple had not shown that it would suffer irreparable harm without injunctive relief.

In a split decision, the Federal Circuit has rejected the lower court’s holding – vacated and remanded.

Apple was able to show lost sales and other market harms due to Samsung’s competing sales – but the core of the fight is whether those harms are being caused by infringement of the patents in question.  I.e., is there a “causal nexus” or proof of “some connection between the patented features and the demand for the infringing products.”  The district court’s error here (according to the panel) was that it required apple to prove that the infringing elements were the sole or primary drivers of the infringing sales.

Thus, in a case involving phones with hundreds of thousands of available features, it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. The district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decisions. Though the fact that the infringing features are not the only cause of the lost sales may well lessen the weight of any alleged irreparable harm, it does not eliminate it entirely. . . .

 

Walking through some of the evidence, the appellate panel found that Samsung’s copying of infringing features was evidence of a causal nexus as was willful infringement.  From the consumer viewpoint, the court identified evidence that consumers preferred infringing setup to non-infringing designs.  And finally, Apple’s internal evidence showed that it saw the infringing features as critical aspects of the iPhone.

Given the strength of the evidence of copying and Samsung’s professed belief in the importance of the patented features as a driver of sales, and the evidence that carriers or users also valued and preferred phones with these features, the district court erred by disregarding this evidence, which further establishes a causal nexus and Apple’s irreparable harm.

Bringing this together, the court writes:

In short, the record establishes that the features claimed in the ’721, ’647, and ’172 patents were important to product sales and that customers sought these features in the phones they purchased. While this evidence of irreparable harm is not as strong as proof that customers buy the infringing products only because of these particular features, it is still evidence of causal nexus for lost sales and thus irreparable harm. Apple loses sales because Samsung products contain Apple’s patented features. The district court therefore erred as a matter of law when it required Apple to show that the infringing features were the reason why consumers purchased the accused products. Apple does not need to establish that these features are the reason customers bought Samsung phones instead of Apple phones—it is enough that Apple has shown that these features were related to infringement and were important to customers when they were examining their phone choices. On this record, applying the correct legal standard for irreparable harm, Apple has established irreparable harm.

On remand, we can expect Judge Koh to issue an injunction to stop Samsung’s ongoing infringement.

The following are a few key excerpts from the three decisions:

Judge Moore (Opinion of the Court): 

The right to exclude competitors from using one’s property rights is important. And the right to maintain exclusivity—a hallmark and crucial guarantee of patent rights deriving from the Constitution itself—is likewise important. “Exclusivity is closely related to the fundamental nature of patents as property rights.” Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336 (Fed. Cir. 2013),. And the need to protect this exclusivity would certainly be at its highest when the infringer is one’s fiercest competitor. Essentially barring entire industries of patentees—like Apple and other innovators of many-featured products—from taking advantage of these fundamental rights is in direct contravention of the Supreme Court’s approach in eBay. (“[E]xpansive principles suggesting that injunctive relief could not issue in a broad swath of cases . . . cannot be squared with the principles of equity adopted by Congress.”). . . .

If an injunction were not to issue in this case, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology.

Judge Reyna (Concurring Opinion): Judge Reyna’s opinion is a strong push-back against eBay – arguing that infringement should create a presumption of irreparable harm:

I write to add that I believe Apple satisfied the irreparable injury factor based on Samsung’s infringement on Apple’s right to exclude and based on the injury that the infringement causes Apple’s reputation as an innovator. There is no dispute that Samsung has infringed Apple’s right to exclude and, absent an injunction, it will likely continue to do so. I believe that such a finding satisfies the irreparable harm requirement because the infringement is, in this case, “irreparable.” On reputational injury, the roles are reversed: it is undisputed that such an injury is irreparable; the question is whether this injury will likely occur. As I explain below, I believe that the record here—particularly the toe-to-toe competition between Apple and Samsung, Apple’s reputation as an innovator, and the importance of the patents-in-suit to that reputation—establishes that Apple will likely suffer irreparable harm to its reputation.

Chief Judge Prost in Dissent:

This is not a close case. One of the Apple patents at issue covers a spelling correction feature not used by Apple. Two other patents relate to minor features (two out of many thousands) in Apple’s iPhone—linking a phone number in a document to a dialer, and unlocking the screen. Apple alleged that it would suffer irreparable harm from lost sales because of Samsung’s patent infringement. For support, Apple relied on a consumer survey as direct evidence, and its allegations of “copying” as circumstantial evidence. The district court rejected both evidentiary bases. On the record of this case, showing clear error in the district court’s factual findings is daunting, if not impossible.

If I were you, I’d read this decision: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1802.Opinion.9-15-2015.1.PDF

 

 

Lemley & McKenna on IP Scope

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The following is the abstract from the new article by Professors Mark Lemley & Mark McKenna’s on (The Problem With) Intellectual Property Scope:

Intellectual property (IP) law doctrines fall into three basic categories: validity, infringement and defenses. Virtually every significant legal doctrine in IP is either about whether the plaintiff has a valid IP right that the law will recognize – validity – about whether what the defendant did violates that right – infringement – or about whether the defendant is somehow privileged to violate that right — defenses.

IP regimes tend to enforce a more or less strict separation between these three legal doctrines. They apply different burdens of proof and persuasion to infringement and validity. In many cases they ask different actors to decide one doctrine but not the other. The U.S. Patent and Trademark Office, for example, decides questions of patent and trademark validity but not questions of infringement. Even in court, resolution of one issue is often allocated to a judge while the jury decides a different issue. And even where none of that is true, the nature of IP law is to categorize an argument in order to apply the proper rules for that argument.

The result of this separation is that parties treat IP rights “like a nose of wax, which may be turned and twisted in any direction.” When infringement is at issue, IP owners tout the breadth of their rights, while accused infringers seek to cabin them within narrow bounds. When it comes to validity, however, the parties reverse their position, with IP owners emphasizing the narrowness of their rights in order to avoid having those rights held invalid and accused infringers arguing the reverse.

Because of the separation between validity, infringement, and defenses, it is often possible for a party to successfully argue that an IP right means one thing in one context and something very different in another. And courts won’t necessarily detect the problem because they are thinking of only the precise legal issue before them.

The result is a number of IP doctrines that simply make no sense to an outsider. In patent law, for instance, it is accepted law that there is no “practicing the prior art” defense. In other words, one can be held liable for doing precisely what others had legally done before, even though a patent isn’t supposed to cover things people have already done. In design patent law, one can be held liable for making a design that an “ordinary observer” would find too similar to a patented design, even though the things that make the two look similar – say, the roundness of the wheels on my car – are not things the patentee is entitled to own. In copyright, once a court has concluded that someone has actually copied from the plaintiff, a song will sometimes be deemed infringing because of its similarity to a prior song, even if the similarity is overwhelmingly attributable to unprotectable standard components of the genre. And in trademark, a party can be deemed infringing because its products look to similar to the plaintiffs’ mark and therefore make confusion likely, even if that confusion is likely caused by non-source-designating features of the design.

The culprit is simple, but fundamental: IP regimes largely lack an integrated procedure for deciding the proper extent of an IP right. The proper scope of an IP right is not a matter of natural right or immutable definition. Rather, it is a function of the purposes of the IP regime. But without some way of assessing how broad an IP right is that considers validity, infringement, and defenses together, courts will always be prone to make mistakes in applying any one of the doctrines.

In this article, we suggest that IP regimes need a process for determining the scope of an IP right. Scope is not merely validity, and it is not merely infringement. Rather, it is the range of things the IP right lawfully protects against competition. IP rights that claim too broad a scope tend to be invalid, either because they tread on the rights of those who came before or because they cover things that the law has made a decision not to allow anyone to own. IP rights with narrower scope are valid, but the narrowness of that scope should be reflected in the determination of what actions do and do not infringe that right. And whatever the doctrinal label, we should not allow an IP owner to capture something that is not within the legitimate scope of her right. Nor should it follow from the fact that some uses are outside the lawful scope of an IP owner’s right that the IP right itself is invalid and cannot be asserted against anyone. Only by evaluating scope in a single, integrated proceeding can courts avoid the nose of wax problem that has grown endemic in IP law. Scope is, quite simply, the fundamental question that underlies everything else in IP law, but which courts rarely think about expressly.

 

Recent Developments in Patent Law – 2015

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By Jason Rantanen

On October 24, 2015, I’ll be giving the “Patent Law Year in Review” talk at the American Intellectual Property Law Association’s annual meeting in Washington, D.C.  I hope to see many of you there!

In connection with that talk, I’ve put together an essay with my perspectives on developments in patent law over the past year.  Even if you’re not planning on attending the conference, you can read the essay here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658737

Question on Quarterly Patent Filings

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by Dennis Crouch

I find the chart below interesting. It reflects the reported number of non-provisional patent applications filed each month at the USPTO. (Here, an RCE does not count as a new filing, but a continuation, CIP, or divisional does).  The data comes directly from the USPTO’s patent dashboard.

I note the high-point in the chart represents March 2013 – a time when applicants were looking to get their applications on-file prior to the AIA-deadline.  The second high point is in March 2014 when the pre-AIA influx of provisionals were set to expire.

Quarterly Filings: What is most notable to me is the quarterly nature of the data.  Year-after-year we see a high number application filings in the end-of-quarter months of March, June, September, and December and lower filing numbers in the other months.  This pattern has held stead for every month of every quarter going back to the beginning of my data-set in 2009.  Is this really being driven by internal corporate pushes to meet quarterly goals? Is it the corporate clients driving this or are law firms also pushing for this outcome?

PatentFilingsByMonth

 

UPDATE: Professor Jeremy Bock (Memphis) sent along his chart showing the phenomenon from a slightly different perspective.

BlockOnTiming

 

In Suprema v. ITC remand, Panel Expands on Inducement

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Suprema v. ITC (Suprema III) (On remand from the en banc decision) (non-precedential)

In August, 2015, the Federal Circuit released an en banc decision in Suprema v. International Trade Commission holding that the USITC has power to stop infringing imports if those imports are being used to induce infringement of a patent method of use.  That holding is a shift from the traditional notion that the USITC only has power over goods that are infringing at the point of importation.  The holding is also interesting in that it was at least partially based upon deference given to the ITC’s interpretation of the scope of its statute – that type of deference is typically not given to the USPTO or district courts when making similar judgments.

The en banc opinion flipped Judge O’Malley’s original panel holding that the statutory “articles that infringe” limitation on ITC power did not extend to post-importation acts of infringement.

Following the en banc decision, original panel took-up the case again and has now affirmed the ITC’s findings of violation.  This time, the panel walked through the challenged findings of infringement and held that the Commission’s findings were supported by ‘substantial evidence.’

Although the decision is non-precedential, it does include a few gems. Notably, the patentee had evidence that the accused-infringer had studied two of the patents-in-suit but not the third.  In the appeal, the panel supported the notion that knowledge of the first two could be used to prove knowledge of the third:

Suprema also admitted to researching and identifying Cross Match’s patents, including the ’993 and ’562 patents. . . .  Following its extensive research, Suprema successfully developed its scanners into the autocapture, image quality checking, and automatic segmentation processes that are covered by claim 19 of the ’344 patent. The Commission noted that, because the ’562 and ’344 patents have overlapping inventors and share the same assignee, Cross Match, “a word search likely would have identified both patents.” . . .

Suprema asserts that during its extensive market research it failed to check to see if the related patent application referenced in the ’562 patent proceeded to mature into an issued patent. The Commission discounted this testimony. The Commission found it notable that the ’344 patent issued in April 2007, six months prior to the October 2007 issue date of the ’562 patent. Thus, had Suprema checked for the issuance of the ’344 patent at the time it was reviewing the ’562 patent, Suprema would have undoubtedly discovered that the ’344 patent had issued.

Suprema and amicus Google, Inc. (“Google”) argue that a requirement to seek out every reference referred to in a competitor’s patent would place too high a burden on manufacturers to avoid a finding of willful blindness. We do not hold that such an exhaustive patent search is required in every instance. Nor do we find that the Commission predicated its willful blindness finding only upon such an obligation. Rather, given the similarities in content, inventorship, and ownership between the ’344 and ’562 patents, and the facts that Suprema studied the ’562 patent during its extensive market analysis, was aware of Cross Match’s activities in the scanner field, and specifically targeted the market Cross Match serviced when developing its own products, we find, based on the totality of the circumstances, that the Commission had adequate evidence upon which to conclude that Suprema’s actions constituted willful blindness.

The Federal Circuit also allowed evidence that the accused did not seek opinion-of-counsel to be used to prove willfulness. In the process, the court noted that the AIA altered the law so that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” 35 U.S.C. § 298.  The AIA has a host of different effective dates. Because the advice-of-counsel section (AIA Sec. 17) did not include a particular effective date, it falls under the general effective date which states that the “Act shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued on or after that effective date.”  Here, because the patents-at-issue were issued prior to the 1-year date (Sept 2012), the court did not apply this new statute to the case at hand. [UPDATE] See comments for additional info on the statute of limitations.  

The court also added the following bone to Google who had filed an amicus brief:

In its amicus brief, Google argues that the Commission’s willful blindness ruling imposes too onerous a duty on innovators to ensure that its customers will not potentially infringe a patent. Google asserts that the Commission’s ruling upsets the balance struck in Global-Tech. It is nearly impossible, Google argues, for a technology company to identify “all patents that are potentially implicated” by customers’ potential infringement of patents. While we are not unmindful of these concerns, we do not find them sufficiently implicated in this present controversy to warrant a different outcome. We note, moreover, our deferential standard of review, which requires us to defer to the Commission’s factual findings if supported by substantial evidence. Our holding is limited to the facts in the case before us. None of the facts upon which the Commission relied, in isolation, would support a finding of willful blindness. Yet, while no single factor is dispositive here, we are satisfied that there is substantial evidence on this record to support the Commission’s findings.

Patentlyo Bits and Bytes by Anthony McCain

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Get a Job doing Patent Law

Property Law: Who owns the Graffiti?

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BanksyPicBy Dennis Crouch

Interesting property/copyright case from the High Court of England & Wales (chancery trial court).  Creative Foundation v. Dreamland Leisure, [2015] EWHC 2556 (Banksy judgment).

Banksy is a pseudonymous British street artist known for satirical and subversive graffiti. In 2014 one of his paintings appeared on the back wall of a game arcade in Folkestone(See image).  The building was owned by Stonefield Estates Ltd but the entire building is subject to a 20-year lease to Dreamland Leisure.  Seeking to capitalize on the work, Dreamland had the section of wall removed and put up for sale. (The Wall Now) Dreamland justified this move based upon the lease, which included a provision that would arguably require the tenant to remove or paint-over the artwork.

The Landlord (Lessor) transferred its rights to the work in quitclaim form to the Creative Foundation – a registered charity seeking to promote the art scene in Folkestone – who then sued Dreamland for possession.

Question: Who owns the artwork?

Holding: The Court (Justice Arnold) held that, although the tenant was justified in removing the graffiti, the landlord still owns the removed wall and image.

  1. [I]t is only necessary for me to reach a conclusion as to what term is to be implied into the Lease with respect to the ownership of a part of the demised premises which is justifiably removed by the Lessee from the premises, and becomes a chattel, in accordance with the Lessee’s obligation … to repair the premises, and which has substantial value. In my judgment the term which is to be implied is that the chattel becomes the property of the Lessor. My reasons are as follows.
  2. First, I consider that the default position is that every part of the property belongs to the Lessor. The Lessee only has a tenancy for a period of time. Thus it is for the Lessee show that it is proper to imply into the Lease a term which leads to a different result.
  3. Secondly, in my view the mere fact that the Lessee is discharging its repairing obligation does not lead to the implication that it acquires ownership of such a chattel. Dreamland’s argument is based upon the Lessee’s need to be able to remove items generated by the act of repair from the premises. But that would only justify the implication of a term dealing with permission to remove (and, where appropriate, dispose of) such items. It does not justify the implication of a term transferring ownership of the items: see Liverpool City Council v Irwin [1977] AC 239 at 245 (Lord Wilberforce) and compare Ray v Classic FM plc [1998] FSR 622 at 642-643 (Lightman J).
  4. Thirdly, even if a term may be implied with respect to the ownership of (i) waste or (ii) chattels with no more than scrap or salvage value, it does not follow that it should be implied with respect to the ownership of a chattel with substantial value. Such a term would not be necessary, would not go without saying and would not be one that would satisfy the officious bystander test.
  5. Fourthly, I do not consider that it makes any difference that the value is attributable to the spontaneous actions of a third party. It is fair to say that, whatever solution is adopted, one party gets a windfall. But who has the better right to that windfall? In my view it is the Lessor. Elwes v Brigg is at least consistent with this assessment.
  6. Accordingly, I conclude that the Foundation is correct that the defence advanced in paragraph 13 of the Defence is unsustainable as a matter of law.

This decision makes sense in general, although I don’t  understand why rights of possession should immediately go back to the Lessor – rather, the lease should seemingly provide possessory rights to the chattel for the next 20 years. (Of course, I have no precedent to cite for this conclusion. DC).

This case makes me think a little about Moore v. Univ. of California where a patient (Moore) sued his doctor who had properly removed Moore’s cancerous spleen but then then made $$$ from the cell line.  There, the court came to the opposite conclusion – that Moore had no right to his excised spleen.

But the Copyright: In dicta, the court also wrote that copyright to the work continues to belong to Banksy, which is somewhat interesting to me as well. Banksy owns the copyright even though his/her process of creating the work required commission of a crime and destruction of property.

 

 

Implementing the AIA: First to File Patents

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By Dennis Crouch

It is hard for me to believe that the America Invents Act of 2011 is now four-years old.  Some changes (Joinder, Fees, e.g.) had fairly immediate impact.  Although somewhat slower coming on-line, the new Inter Partes Review and Covered-Business-Method Review systems are now major fixtures in patent enforcement-defense strategies.

The final major element of the AIA is actual implementation of transformation of the prior art rules in 35 U.S.C. 102.  The new first-to-file law applies to patent applications having at least one claim whose earliest effective priority filing date is on or after March 16, 2013.  In the past 30 months since then, hundreds of thousands of AIA patent applications have been filed – and those are beginning to trickle out as issued patents.  I pulled-up the PAIR files for 800+ recently issued patents (from the first two weeks of Sept 2015) and looked at the reported AIA-Status of those patents. (Table 1 below)

 Table 1: All Patents Only Patents Filed Post-AIA
AIA Patents

147

147
Non-AIA Patents

721

262
Total

868

409
Percent AIA

17%

36%
95% CI (+/-)

3%

5%

Of the 868 patents, 147 are “AIA” patents – meaning that none of the claims of the patent (or application) could have effectively an effective filing date before March 16, 2013 (the “AIA-date”). This represents 17% of the total number of patents in my sample and 36% of the number of patents in my sample that were filed after the AIA-date. I also report the 95% confidence interval that is based upon the simple binomial calculation (p(1-p)/n). The chart below considers the same type of data, but uses a time-series stretching back to the beginning of 2015 showing a linear fit to the data.


Where the AIA Status is Defined: My understanding is that the AIA data field in PAIR has been populated as “no” for any application filed prior to the AIA date; populated as “yes” for any application filed after the AIA-date that has no pre-AIA claims for priority or benefit; and finally, for transitional applications filed post-AIA but with a pre-AIA priority claim, populated according to the AIA-question in the Application Data Sheet. [The AIA-status of an application is obviously information material to patentability and so we will likely see some inequitable conduct allegations down the line.]

Not Yet Litigated: Although there are now several thousand AIA patents issued, there have been no court cases yet involving an AIA patent or patent application.  Likewise, we have no Post Grant Review (PGR) final decisions and we have no PTAB decisions from ex parte cases involving AIA applications. Those will come, but meanwhile many patent attorneys will continue to operate with some ambiguity regarding how Section 102 will be interpreted going forward. Important big questions: Do non-enabling commercial uses; confidential sales; and confidential offers-to-sell still qualify as invalidating prior art? What activities will count as “otherwise available to the public?” How narrowly will the narrowed grace period of 102(b)(1) be interpreted? (e.g., does the grace period only apply to pre-filing disclosures of the claimed invention itself as suggested by the text or instead can any pre-filing disclosure by or from the inventor qualify?) What is the impact of elimination of Section 102(f)?

Guest Post: Why the (Previously) Improving Economy Likely (Also) Reduced Patent Litigation Rates

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Guest Post by Ted Sichelman, Professor of Law and Director of the Technology Entrepreneurship and Intellectual Property Clinic and Center for Intellectual Property Law & Markets at the University of San Diego School of Law, and Shawn Miller, Lecturer in Law and Teaching Fellow in Law, Science & Technology at Stanford Law School

As Patently-O has described in detail (e.g., here and here), patent litigation rates have been in flux over the last several years. First, in 2010, rates nominally went up because of false marking suits. Then, in 2011, following passage of the America Invents Act (AIA), patent litigation rates appeared to increase (and the media made much ado over this). Yet, the only thing that changed immediately after the AIA was how we counted patent litigation numbers because of new joinder rules. Indeed, the AIA’s joinder rules actually lowered total defendant counts a bit. Next came inter partes review (IPR) and covered business method (CBM) review, which appear to have substantially decreased litigation rates in 2013 and 2014. Then came Alice Corp. v. CLS Bank and its progeny, which some have claimed decreased litigation rates throughout 2014. And now rates seem to be back up in 2015—why, nobody is sure.

To further understand the drivers of patent litigation, Alan Marco (Chief Economist at the USPTO) and the two of us recently conducted the first rigorous study of the effects of the economy as a whole (the “macroeconomy”) on patent litigation rates over the period 1970-2009 (we stopped at 2009 to avoid the counting mess I just described). The study will be published this month in the Journal of Empirical Legal Studies (a draft is available here).

As background, we examined changes in the rates of total litigation, litigation per issued patent, and litigation per in-force patent. To do so, we used a new USPTO dataset that provides the most accurate numbers on total in-force patents by year gathered to date. Figure 1 below shows the number of in-force patents between 1971 and 2009 (the vertical bars represent periods of recession).

Figure 1

Figure 1. U.S. In-Force Patents (1971-2009) [from USPTO data].

Indeed, although many have noted that the litigation rates per issued patent have been fairly stable, Figure 2 below shows that the litigation rates per in-force patent have risen quite dramatically since the early- to mid-1990s (at least from 1970s rates—Ron Katznelson has argued that rates per in-force patent in the 1920s to the mid-1930s are fairly comparable to the recent rates, at least through the 2000s).

Figure 2

Figure 2. U.S. Patent Litigation Per In-Force Patent (1971-2009)

(Total Patent Litigation in Gold (with annual filings on left y-axis) and Litigation Per In-Force Patent in Blue (with annual values on right y-axis)).

We then performed numerous time-series regressions against important macroeconomic variables like GDP, R & D spending, interest rates, and related factors, controlling for in-force patents and other key variables. Our major findings (over the last 20-25 years) are as follows:

  • In economic upswings (i.e., increasing productivity, low interest rates, low economy-wide financial risk), patent litigation rates generally fall.
  • In recessions, whether rates rise or fall depends on the availability of credit.
    • When credit is freely available in a downturn, overall patent litigation rates generally rise.
    • However, when credit is scarce (like in the most recent recession), overall patent litigation rates generally fall.

We explain the first finding on a “substitution” theory—namely, when selling products and services is highly profitable, companies and investors are less concerned about earning revenue from patent litigation. We speculate that our second finding is driven by the increasing reliance by plaintiffs on external funding. Indeed, the availability of credit has only played a significant role in patent litigation rates since roughly the mid-1990s, when licensing-driven litigation began to rise—first by practicing entities such as IBM and Texas Instruments and, later, by non-practicing entities (NPEs).

Over the last five years, the mean U.S. real GDP growth rate has been about 2-3% per year. Ignoring other factors, and assuming our model applies on a going forward basis since 2009, this increase in productivity has very roughly amounted to a 6-9% decrease in annual patent litigation counts over the same period. In general, it is likely that a sizeable portion of the decrease in patent litigation rates over the last several years has been not merely due to the rise of IPRs and CBMs, and the issuance of Alice Corp. v. CLS Bank, but also to the economy as a whole. So the next time the economy worsens, if credit remains relatively available, all other factors equal, it is likely that patent litigation rates will rise significantly—not by a huge amount, but enough to notice. Whether the current increase in patent litigation is somehow related to a declining macroeconomy, only time will tell.

Please note that the views expressed herein solely express our personal views and do not express the views of the U.S. Patent & Trademark Office.

 

In Scotland a Juror who Misuses Technology Can Face Two Years in Prison!

Ethics

I’ve written an article or two on ethics and technology, and am in the middle of writing a chapter for an ABA book.  It is remarkable to me the number of jurors who do not listen to the judge’s admonitions not to do research about the case but, instead, to listen to the evidence.  Also, jurors sometimes text to friends, family, and each other about the case.  I know that a juror in one trial I was involved in a couple years ago was tweeting during a patent trial (mostly about how boring it was and, I have to say, I agreed!).  There’s even a blog about jurors misbehaving called jurorsbehavingbadly.com!

Over in the UK they’ve decided to take this fight one step further and criminalize some aspects of this.  Up to 2 years in prison! The article is here.

Not sure I’d lock someone up for two years for doing this, but I do know that, especially in the criminal arena, misconduct has caused mistrials, motion practice, and more.  Perhaps it would serve as a strong deterrent?

Anyone have any stories to share?

Media Rights Technologies v. Capital One: Williamson v. Citrix applied

Patent, ,

By Jason Rantanen

Media Rights Technologies, Inc. v. Capital One Financial Corporation (Fed. Cir. 2015) Download opinion
Panel: O’Malley (author), Plager and Taranto

Earlier this summer, the Federal Circuit issued a revised opinion in Williamson v. Citrix Online.  The centerpiece of the new opinion was Part II.C.1, joined by a majority of the entire court.  That section overruled past precedent holding that non-use of the words “means” or “step” in a claim created a “strong” presumption that § 112, para. 6 does not apply, one that is only overcome by “a showing that the limitation essentially is devoid of anything that can be construed as structure.”   Instead, the en banc court held, the presumption can be overcome “if the challenger demonstrates that the claim term fails to ‘recite sufficiently definite structure’ or else recites ‘function without reciting sufficient structure for performing that function'”  Williamson, 792 F.3d 1339, 1349 (Fed. Cir. 2015) (en banc in relevant part) (quoting Watts v. XL Sys., Inc., 232 F.3d 877, 880 (Fed. Cir. 2000).

On the surface, Media Rights Technologies v. Capital One involves a relatively straightforward application of Williamson.  But there are several aspects of the decision that make it stand out: the statement of the law of indefiniteness (Judge O’Malley’s first since Nautilus), the sharpness and depth of its analysis of the § 112, para. 6 issue, the holding that the specification must disclose structure for all claimed functions, and the use of factual evidence in the indefiniteness determination.

Claim 1 of Patent No. 7,316,033 is the illustrative claim.  At issue was the term “compliance mechanism.”

A method of preventing unauthorized recording of electronic media comprising:

Activating a compliance mechanism in response to receiving media content by a client system, said compliance mechanism coupled to said client system, said client system having a media content presentation application operable thereon and coupled to said compliance mechanism;

Controlling a data output pathway of said client system with said compliance mechanism by diverting a commonly used data pathway of said media player application to a controlled data pathway monitored by said compliance mechanism; and

Directing said media content to a custom media device coupled to said compliance mechanism via said data output path, for selectively restricting output of said media content.

Multiple claim meanings: The Federal Circuit’s discussion begins with what  appears to be a routine summary of the law of indefiniteness:

A claim fails to satisfy this statutory requirement [§ 112, para. 2] and is thus invalid for indefiniteness if its language, when read in light of the specification and the prosecution history, “fail[s] to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2124 (2014). Notably, a claim is indefinite if its language “might mean several different things and no informed and confident choice is available among the contending definitions.” Id. at 2130 n.8 (quotation omitted).

Slip Op. at 7. While the first part of this passage is well known, but the second part is interesting because it does not merely embrace the Court’s opinion in Nautilus, but goes beyond.  Footnote 8 is actually a quotation from a district court opinion, dropped in the context of pointing out that the Federal Circuit’s “insolubly ambiguous” standard “can breed lower court confusion.”  It reads:

8. See, e.g., Every Penny Counts, Inc. v. Wells Fargo Bank, N. A., ––– F.Supp.2d ––––, ––––, 2014 WL 869092, *4 (M.D.Fla., Mar. 5, 2014) (finding that “the account,” as used in claim, “lacks definiteness,” because it might mean several different things and “no informed and confident choice is available among the contending definitions,” but that “the extent of the indefiniteness … falls far short of the ‘insoluble ambiguity’ required to invalidate the claim”).

Put another way, Judge O’Malley is not merely quoting Nautilus; she is adopting a standard that is not directly mandated by the opinion.  (To be clear, I think the language adopted here is in line with Nautilus, and perhaps even indirectly mandated by the decision.  Also, it is not the first time this language has appeared in a post-Nautilus decision.  Judge Chen quoted it in Interval Licensing LLC v. AOL, Inc., 766 F.3d 1364, 1371 (Fed. Cir. 2014), but not as a firm statement of the law.)

The §112, para. 6 analysis: The appeal presented two issues related to “compliance mechanism”: whether it is a means-plus-function term and, if so, whether the specification discloses corresponding structure.  Under Williamson, the lack of the word “means” creates a rebuttable presumption that “compliance mechanism” is not a means-plus-function term.  Here, the patent holder neither contended that “compliance mechanism” had a commonly understood meaning nor that it is generally understood in the art to connote a particular structure.  Instead, Media Rights Technologies argued that “compliance mechanism” was like the term “modernizing device” found to be definite in Inventio AG v. Thyssenkrupp Elevator Ams. Corp., 649 F.3d 1350, 1357 (Fed. Cir. 2011).  Not so, said the court.

Here, unlike Inventio, the claims do not use the term “compliance mechanism” as a substitute for an electrical circuit, or anything else that might connote a definite structure. Rather, the claims simply state that the “compliance mechanism” can perform various functions. A review of the intrinsic record does not change this conclusion. The written description only depicts and describes how what is referred to as the “copyright compliance mechanism” is connected to various parts of the system, how the “copyright compliance mechanism” functions, and the potential—though not mandatory—functional components of the “copyright compliance mechanism.” See ’033 Patent col. 18:57–col. 19:5; col. 20:32–49; Fig. 3; Fig. 5B. None of these passages, however, define “compliance mechanism” in specific structural terms. And, the addition of the term “copyright compliance mechanism” in the specification only confuses the issue further. Media Rights does not contend that “copyright compliance mechanism” is the equivalent of the electrical circuit detailed in the written description at issue in Inventio. Indeed, Media Rights asserts that the “copyright compliance mechanism”—the only “compliance mechanism” referenced outside the claims and the summary of the invention, and the only one depicted in the figures to which it points—is narrower than the structure it claims as the “compliance mechanism.” Without more, we cannot find that the claims, when read in light of the specification, provide sufficient structure for the “compliance  mechanism” term.

Slip Op. at 10.  Furthermore, Inventio was a pre-Williamson decision, and was decided under now-superceded case law that imposed a “heavy presumption” against finding a claim term to be in means-plus-function format.  “Because we apply no such heavy presumption here, and the description of the structure to which Media Rights points is far less detailed than in Inventio, we do not believe Inventio carries the weight Media Rights attaches to it.”  Slip Op. at 11.

All functions must be disclosed  Since the claim was a means-plus-function term, the court turned to the question of whether the specification disclosed corresponding structure.  “Where there are multiple claimed functions, as there are in this case, the patentee must disclose adequate corresponding structure to perform all of the claimed functions.”  Slip Op. at 12 (emphasis in original).  Here, there were four claimed functions, so the specification needed to disclose adequate structure to achieve all four of the claimed functions.  And because these were computer-implemented functions, “the specification must disclose an algorithm for performing the claimed function.”  Id. at 13.  Claims that fail to disclose sufficient corresponding structure are invalid for indefiniteness.

Factual evidence in the indefiniteness determination:
Examining the question of whether such an algorithm was disclosed, the court considered the specification’s recitation of source code that Media Rights contended was sufficient.  Since the court could not read the code outright, it needed to look to “expert witness testimony to determine what that source code discloses at an algorithmic level.”  Slip Op. at 14. (Media Rights apparently conceded to this at oral argument.)  The unrebutted expert testimony was that the code returned only various error messages.  From this, the court concluded that “[t]he cited algorithm does not, accordingly, explain how to perform the diverting function, making the disclosure inadequate.”  Id.  In addition, the court held that there was no corresponding structure for another function because “the cited portion of the specification provides no detail about the rules themselves or how the ‘copyright compliance mechanism’ determines whether the rules are being enforced.”  Id.  The consequence was that all of the patent’s claims (all containing the term “compliance mechanism”) were invalid due to indefiniteness

Bits and Bytes on IP Law

Patent, ,
  • Video Contest: IPO is again hosting its IP Video Contest – for entertainment value I like the LOTR and Cavemen skits. [http://www.ipvideocontest.com/?page_id=410]
  • Lighting Ballast: The Federal Circuit has denied a motion for another en banc rehearing in the longstanding lighting ballast case. Thus, the latest panel decision should stand that affirms the district court holding that the claimed “voltage source means” is not a means-plus-function case.  That outcome is largely based upon the appellate court giving deference to the lower court’s factual findings that were derived from expert testimony discussing the level of skill in the art.
  • Patent Reform: Senator Grassley’s PATENT ACT of 2015 (S.1137) has been placed on the Senate Calendar queue after having been reported out of committee in June.  The bill also includes a number of substantive amendments.
  • ShowerThoughts: Our objective system of judging obviousness almost always gathers more prior art than was actually known to the inventor at the time of the invention.  This means that (for valid patents) the inventor’s actual inventive-step (based upon what the inventor knows) is typically greater than what is required by law – perhaps significantly so.

Obviousness: Despite KSR, Still Tough to Win in Court

Patent, , , , ,

Ivera Medical v. Hospira (Fed. Cir. 2015)

On summary judgment, the district court found Ivera’s asserted patent claims invalid as obvious under 35 U.S.C. § 103. On appeal, the Federal Circuit has reversed – finding that Ivera’s submitted expert testimony raised genuine issues of material fact.

Ivera’s patents are directed to a more reliable mechanism for disinfecting connectors (such as an IV port).  The idea is basically a screw-on cap full of disinfectant.  

The patented cap at issue here is an improvement on the original idea found in several prior art references. In particular, Ivera added a vent in the cap “to allow evaporation of the cleaning agent from the inner cavity and to inhibit a buildup of pressure in the cap when the cleaning material is compressed by the site of the medical implement.”

Although the primary prior art reference (Hoang) did not disclose the vent limitations, the district court found – as a matter of law on summary judgment – that a person of skill in the art would have recognized the need for a vent to relieve pressure.  I suspect that the district court was swayed by the fact that the patent is also under final-rejection in an inter partes reexamination based upon the same prior art reference.  On appeal, the Federal Circuit found that the facts were not so clear.

Law of Obviousness:

“A party seeking to invalidate a patent on obviousness grounds must demonstrate by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.” InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327 (Fed. Cir. 2014). Determining whether one of ordinary skill in the art would have been motivated to combine the teachings of different references is a flexible inquiry, and the motivation is not required to be found in any particular prior art reference. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Here, the evidence before the district court included declarations from Huang (the inventor of the prior art) and others explaining how the Ivera idea was a significant invention because it broke with the conventional wisdom of having a fluid tight seal.  The appellate court saw these submissions as sufficient to raise a genuine dispute of fact that cannot be resolved on summary judgment.

The panel also noted in passing that the examiner during the inter partes review had refused to consider the same declarations because they were filed late in the process — leading to the implication that – if filed earlier – the declarations might have changed the examiner’s viewpoint. The examiner’s reexamination decisions have been appealed to the PTAB and are awaiting judgment.

This case again highlights the power of expert evidence to explain the invention within the context of the prior art.

= = = = =

I should also note Ivera has a separate infringement case going against Hospira for another cap patent. In that case, the PTAB instituted an IPR (brought by another defendant) that case was settled before final judgment.  In a recent determination, the district court ruled on motion-in-limine to exclude evidence of the PTAB’s decision to institute the inter partes review – finding that it has “little probative value” and “would be confusing to the jury and prejudicial.” [OrderInLimine]

 

 

Federal Circuit Backtracks (A bit) on Prior Art Status of Provisional Applications and Gives us a Disturbing Result

Patent, ,

by Dennis Crouch

Dynamic Drinkware v. National Graphics (Fed. Cir. 2015)

The underlying issue in this IPR-appeal is the effective date of prior art: How do we treat prior art patents and published applications that claim priority to provisional applications?

The patent being reviewed – National’s Patent No. 6,635,196 – was applied for on November 22, 2000 but claims priority to a provisional application filed in June of 2000.  National was also able to show that by March 2000 the inventor had completed the invention and reduced-to-practice (RTP) the claimed lenticular lens insert.

The alleged prior art is U.S. Patent 7,153,555 (“Raymond”) was filed in May 2000 and but claims priority back to a February 2000 provisional application filing.  The Raymond provisional is somewhat different from the later-filed non-provisional and so the question is whether the effective prior-art date stretches back to the provisional filing.

On its own, a provisional patent application does not qualify as “prior art” under 25 USC 102 (old or new) and the tens-of-thousands of provisional applications abandoned each year without any further patenting-action are not prior art. However, the Federal Circuit has indicated that (under pre-AIA 35 USC 102(e)) a later-filed non-provisional application will be given the prior-art date of the provisional filing (once the non-provisional is published or patented).  Giacomini.

The somewhat convoluted 102(e) indicates that a US patent application becomes prior art once it is either published or issues as a patent. And, at that point, the reference is back-dated to the application’s filing date.  Section 119(e) describes how an application having a priority claim back to a provisional patent application “shall have the same effect, as to such invention, as though filed on the date of the provisional application” so long as the provisional application sufficiently discloses the claimed invention under Section 112(a).   Weaving these together in Giacomini, the court ruled that an issued patent will be considered prior art as of its provisional filing date – so long as the provisional provides written description support for the invention claimed in that issued patent. In considering the prior art status of Raymond, the PTAB examined the patent claims and compared them to the provisional disclosure — finding that the provisional did not provide adequate support for the claims.

Anyone who works with prior art knows that this setup is an oddball way to address the situation.  A patent’s disclosure for prior art purposes should not depend upon what was claimed or not claimed but instead should focus on what was disclosed.  My belief is that, once publicly available, all provisional applications should be considered prior art as of their filing dates.

The Federal Circuit merits discussion began by stepping through the process of challenging the prior art’s provenance:

  • First the patent challenger raises the prior art and explains its priority claim (here, done in the IPR petition).  Without further challenge, the patent would be deemed prior art as of its provisional filing date.
  • Then the patentee can raise the argument that the provisional priority claim does not satisfy the Written Description. By satisfying this burden of presentation, the burden shifts back to the challenger.
  • Finally, the patent challenger must prove that the provisional provides proper support.

Thus, once the issue is raised the court will (rebuttably) presume that the provisional does not provide adequate support. “[B]ecause the PTO does not examine priority claims unless necessary, the Board has no basis to presume that a reference patent is necessarily entitled to the filing date of its provisional application.”  In Giacomini, Federal Circuit seemed to have implicitly come out the other way – counting the provisional as prior art without proof of WD satisfaction.  Here, the court distinguished that situation by noting that Giacomini had waived that argument by failing to challenge the written description support.

As noted above, the rule here is that the prior art date of a patent (or patent application) stretches back to the provisional filing date if the provisional provides written description (and enabling?) support of the claims of that patent (or application).  Confusing that rule, the patent challenger here focused on the particular disclosure-of-concern for its invalidity argument and showed that the disclosure was found in the provisional.  Unfortunately, according to this odd rule, the challenger’s explanation is insufficient.

Nowhere, however, does Dynamic demonstrate support in the Raymond provisional application for the claims of the Raymond patent. That was Dynamic’s burden. A provisional application’s effectiveness as prior art depends on its written description support for the claims of the issued patent of which it was a provisional. Dynamic did not make that showing.

With the provisional filing date knocked-out for the Raymond prior art, the unpatentability case crumbled and thus, the Federal Circuit here confirmed patentability of the challenged claims.

= = = = =

  • The result here is silly – and somewhat disturbing – that under the first-to-invent rule the second inventor gets a patent.  Raymond came up with idea at issue first and disclosed it in a provisional patent application that eventually resulted in an issued patent.  But, since Raymond’s non-provisional application included additional subject matter, the provisional disclosure no longer counts as effective prior art.
  • The AIA rewrote Section 102 and re-codified the old 102(e) into 102(a)(2) and 102(d).  The new rule is also a bit unclear — indicating that the disclosure found in a patent or published application will be given a prior art date of a priority filing document if the patent or application is entitled to so claim priority and the priority filing “describes the subject matter” being relied upon as prior art.
  • One element that is unclear from this is whether being “entitled” to claim priority/benefit requires 112(a) support of the claims. The court explains in a footnote: “Because we refer to the pre-AIA version of § 102, we do not interpret here the AIA’s impact on Wertheim in newly designated § 102(d).”
  • Post-AIA: Of course, regardless of the Wertheim issue above,  the outcome of this case flips post-AIA because the prior art cannot be avoided simply by showing an earlier date of invention or reduction to practice. Thus, the patentee would lose here because its priority filing date is subsequent to the prior art’s effective date.
  • My take is that, once the provisional becomes public that the law should regard a provisional application’s prior-art status as of its filing date.  The PTO should also be creating a public database of provisional application filings that can be searched and relied upon as a prior art tool.  For American companies, the failure to make this change means that many of their provisional application disclosures often will not prevent third-parties (half of which are non-US companies) from obtaining patents on identical innovations.

 

Hughes on Obviousness: The Problem Motivates the Solution

Patent, , , ,

by Dennis Crouch

Dome Patent v. Michelle Lee in her capacity as Director of the USPTO (Fed. Cir. 2015)

Patent No 4,306,042 issued in 1981 and expired in 1998, but is still being litigated.  The patent covers a method of making oxygen-permeable material used for contact lenses. Back in December 1997, the patent owner (Dome) sued a set of defendants for infringement.  That lawsuit has been stayed since 1999 pending resolution of an ex parte reexamination requested by one of the defendants. In a 2006 final ruling, the USPTO confirmed patentability of claims 2-4, but cancelled claim 1 as obvious.  Dome then filed a civil action in DC challenging the PTO ruling. That case – filed in 2007 – concluded in July 2014 with the district court’s de novo determination that claim 1 was obvious over a combination of three prior art patents.  On appeal here, the Federal Circuit has affirmed that ruling – finding that “district court did not commit reversible error in its determination that the claimed subject matter would have been obvious to a person of ordinary skill during the relevant time period.”  Judge Hughes penned the opinion that was joined by the two other panel members, Judges Reyna and Schall.

In typical close cases, each of the major elements of a claimed invention are found in a collection of prior art — leaving the question of whether the combination as claimed would have been obvious to a person of ordinary skill in the art.   An important intermediary factual question is whether there is any evidence showing why a skilled artisan might or might not be inclined to combine the references.   In the Supreme Court’s KSR decision, the Supreme Court indicated that the motivation question involves an ‘expansive and flexible’ analysis and can consider the common sense of the skilled artisan.  Citing KSR, Judge Hughes writes:

If all elements of a claim are found in the prior art, as is the case here, the factfinder must further consider the factual questions of whether a person of ordinary skill in the art would be motivated to combine those references, and whether in making that combination, a person of ordinary skill would have had a reasonable expectation of success.

Evidence of a motivation to combine prior art references may flow from “the nature of the problem to be solved.”  Here, the district court found that the motivation came from the prior art evidence indicating a search for high oxygen permeability in contact-lens materials. That finding was then affirmed on appeal: “This understanding would have motivated a person of ordinary skill to combine the Tris monomer disclosed in Gaylord with the Tris-type cross-linking agent disclosed in Tanaka to increase the oxygen permeability of a contact lens.”  There was also some amount of teaching away (the non-Tris prior art outlined the problems of using Tris), but the appellate court affirmed the obviousness finding.

It was important for the appeal here that the ‘motivation’ found by the district court was seen as an issue of fact — a subset of some unnamed Graham factor — rather than a question of law.  Thus, although the appellate court may have disagreed with some aspects of the original decision, the district court’s findings were not “clearly erroneous.”

 

Review of Civil Action: As I mentioned above, the case began as a reexamination and, after losing, the patentee filed a civil action in district court who reviewed the case de novo.  Under i4i, a court patent may only invalidate a patent after being presented with clear and convincing evidence proving that result. See also 35 U.S.C. 282(a) (“In General. – A patent shall be presumed valid.”).  On the other hand, the USPTO operating in reexamination mode only requires a preponderance of the evidence to render the claims null and void.  These competing standards came to a head in the civil action challenging the reexamination finding.  On appeal here, the Federal Circuit affirmed that in this situation only a preponderance is necessary. 

“‘[A reexamination] is in essence a suit to set aside the final decision of the board.’ Fregeau v. Mossinghoff, 776 F.2d 1034 (Fed. Cir. 1985).

[I]f the Patent Office decides after an ex parte reexamination that a preponderance of the evidence establishes the claimed subject matter is not patentable, § 145 authorizes the district court to review whether that final decision is correct. The § 145 action in such a case does not concern the different question of whether, as part of a defense to an infringement action, clear and convincing evidence establishes that an issued and asserted patent should be held invalid.

Somewhat oddly, the court ruled that Section 282 does not apply here because that section only relates to defenses in patent infringement litigation. “The § 145 action before the district court did not involve a defense to a charge of infringement of an issued patent. Section 282 therefore does not apply in this instance.

Illinois: In-house counsel who limit practice to that before the USPTO do not need to register

Ethics

Some states permit in-house counsel to practice in the state so long as they only represent their corporate employer and register with the state.  Registration is not free or hassle-free.  However, in Opinion No. 15-01 (May 2015), the Illinois State Bar concluded that in-house counsel who limited his practice to patent practice did not need to register.

This issue comes up in many forms.  For example, what can a patent agent do?  The USPTO has defined what is, and is not, practice before the office and those definitions should be carefully consulted.  But this Illinois opinion is a bit of good news to in-house counsel in my law school’s state.