By Jason Rantanen
I'm continuing to blog the presentations at PatCon 3.
Mark Lemley (Stanford)
James Malackowski (Ocean Tomo, LLC)
David Abrams (Penn)
All posts by Jason Rantanen
Liveblogging PatCon 3: A Conversation with Industry
By Jason Rantanen
Today I'll be liveblogging from PatCon 3. For those who are interested, the substance will be after the break. I'm told that video recordings will be available for the plenary presentations.
A conversation with industry
Jim Trusell – Chief IP counsel at BP
Karen Nelson – attorney at AbbVie
Jon Wood – Chief IP Counsel at Bridgestone
Paul Rodriguez – Chief IP Counsel at RR Donnelly
Stephen Auten – Cozen O'Conner (moderator)
Loyola Law Journal – Panel #2: Shortcomings in the Patent System
By Jason Rantanen
Timothy Holbrook, Michael Meurer and Ted Sichelman, and Oscar Liivak, moderated by Atanu Das.
Loyola Law Journal – Chief Judge Holderman on innovations in jury trials
By Jason Rantanen
Chief Judge Holderman: Innovations to Improve Juror Understanding in Patent Jury Trials. (My notes from the first panel are too much of a mess to be worth posting).
Talking about how can we get rights enforced in a way that will work effectively for both the owner of the rights and the people who believe that there are other rights that the owners don't own.
Liveblogging from the Loyola Law Journal Conference on Patents, Innovation & Freedom to Use Ideas
By Jason Rantanen
Today I'll be liveblogging from the Loyola Law Journal Conference on Patents, Innovation & Freedom to Use Ideas. I'll be posting the full text of my entries below the break for those who are interested. Note that I don't necessarily agree with the views of all the speakers (some of whom are close to diametrically opposite). Also, keep in mind that this is very rough blogging. Don't expect elegant writing.
Keynote speaker: Dr. Richard Stallman. Speaking about patents and software.
En Banc Review in Checkpoint v. All-Tag?
By Jason Rantanen
In December, the Federal Circuit denied a request for rehearing en banc in Highmark v. Allcare Health Management Systems. The request focused on the de novo standard of review that the panel in Highmark applied in reviewing the objectively baseless element of the district court's exceptional case determination. The denial was narrow, however, with five of the eleven judges dissenting from the decision to deny en banc review. I previously wrote about the denial here.
Since the Federal Circuit denied rehearing en banc in Highmark, however, its composition has changed significantly. Two of the six panel members who did not vote in favor of en banc review have since assumed senior status and Judge Taranto has joined the court. Consequently, there are five judges who have expressed a view that the de novo standard applied in Highmark was erroneous (Chief Judge Rader and Judges Moore, O'Malley, Reyna and Wallach) and four judges who either definitely or likely believe that the de novo standard is correct (Judges Newman, Lourie, Dyk and Prost). As a result, the court's decision whether to grant en banc review on this issue probably depends on the views of the newest member of the court, Judge Taranto. If Judge Taranto joins with the dissenters in Highmark, there would be a 6-4 majority in favor of en banc review; if he joins with the decision not to grant en banc review, there would be a 5-5 tie, which would be insufficient to trigger en banc review.
This is significant because the Checkpoint decision that I wrote about earlier this week provides an opportunity for the court to review this issue en banc. Notably, the three judges on the panel in Checkpoint were not among the dissent in the denial to rehear Highmark en banc. As several of the comments to Thursday's post pointed out, however, it doesn't seem likely this case would have come out differently even under a more deferential standard of review.
In re Owens (Guest Post by Prof. Sarah Burstein)
Guest post by Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law. Professor Burstein will be speaking at Stanford's conference on Design Patents in the Modern World next week. – Jason
In re Owens (Fed. Cir. Mar. 26, 2013) Download 12-1261
Panel: Prost (author), Moore, Wallach
Earlier this week, the Federal Circuit issued its opinion in In re Owens. (For prior Patently-O coverage of this case, see here.)
In this case, the Federal Circuit affirmed the PTO’s rejection of U.S. Design Patent Application No. 29/253,172. The ’172 application claimed the following design:
The ’172 application was a continuation of—and claimed priority based on—U.S. Design Patent Application No. 29/219,709 (which issued as U.S. Des. Patent No. 531,515). The ’709 application claimed the following design:
In design patents, broken lines can be used to show: (1) unclaimed “environmental” matter (often, though not always, shown with dotted lines); or (2) unclaimed boundaries (often shown using dot-dashed lines). According to the MPEP, an “[a]pplicant may choose to define the bounds of a claimed design with broken lines when the boundary does not exist in reality in the article embodying the design. It would be understood that the claimed design extends to the boundary but does not include the boundary.”
So, essentially, the ’172 application broadened the original claim by changing a number of solid lines to dotted lines. Importantly, though, this was not the problem in Owens. (Indeed, the Federal Circuit went so far as to say in dicta that these types of dotted disclaimer lines “do not implicate § 120.” Whether that blanket statement really fits with the logic of the rest of the opinion is an issue for another day.)
The problem was the addition of the dot-dashed boundary line on the front panel. The examiner found no evidence that Owens possessed that “trapezoidal region” (as the Federal Circuit called it) at the time of the original application. Therefore, the application was rejected for failure to comply with 35 U.S.C. § 112, ¶ 1 and as “obvious in view of the earlier-sold bottles.” The Board affirmed.
On appeal, Owens argued, among other things, that the continuation application did not add new matter because all of the portions of the claimed partial design (including the trapezoidal area on the front panel) were “clearly visible” in the parent application. In support of this argument, Owens relied on In re Daniels.
In Daniels, the Federal Circuit held that a continuation application that claimed the design shown below on the right was entitled to the priority date of its parent application, which claimed the design shown below on the left:
But the Federal Circuit distinguished Daniels, stating that:
The patentee in Daniels did not introduce any new unclaimed lines, he removed an entire design element. It does not follow from Daniels that an applicant, having been granted a claim to a particular design element, may proceed to subdivide that element in subsequent continuations however he pleases.
According to the court, “the question for written description purposes [in this case] is whether a skilled artisan would recognize upon reading the parent’s disclosure that the trapezoidal top portion of the front panel might be claimed separately from the remainder of that area.” The Federal Circuit concluded that the Board’s finding on that factual issue was “supported by substantial evidence because the parent disclosure does not distinguish the now-claimed top trapezoidal portion of the panel from the rest of the pentagon in any way.”
The court did not stop there, though. It went on to answer “a question raised implicitly in Owens’s appeal and explicitly in amicus briefing—whether, and under what circumstances, Owens could introduce an unclaimed boundary line on his center-front panel” without running afoul of the written description requirement. Section § 1503.02 of the MPEP currently provides that:
Where no boundary line is shown in a design application as originally filed, but it is clear from the design specification that the boundary of the claimed design is a straight broken line connecting the ends of existing full lines defining the claimed design, applicant may amend the drawing(s) to add a straight broken line connecting the ends of existing full lines defining the claimed subject matter. Any broken line boundary other than a straight broken line may constitute new matter . . . .
The Federal Circuit rejected this rule, noting that if Owens had simply placed the boundary line at the widest point of the front panel, “the resulting claim would suffer from the same written description problems as the ’172 application.”
So what are applicants supposed to do going forward? According to the Federal Circuit, “the best advice for future applicants was presented in the PTO’s brief, which argued that unclaimed boundary lines typically should satisfy the written description requirement only if they make explicit a boundary that already exists, but was unclaimed, in the original disclosure.”
Notably, this rule is—as the PTO admitted at oral argument—a break from (at least some) past PTO practice. For example, as Method Products, Inc. pointed out in its amicus brief, the PTO allowed all of the following claims for a humidifier design:
If nothing else, this case makes it clear that the PTO needs to provide greater guidance on the written description requirement and, in particular, on the use of unclaimed boundary lines. Hopefully, the PTO will do so soon.
Checkpoint Systems v. All-Tag Security: Failing the Objectively Baseless Standard
By Jason Rantanen
Checkpoint Systems, Inc. v. All-Tag Security S.A. (Fed. Cir. 2013) Download 12-1085.Opinion.3-21-2013.1
Panel: Newman (author), Lourie, Schall
It's a general rule of commercial litigation in the United States that parties must bear their own legal costs. One exception to this general rule arises when litigation is baseless. Under 35 U.S.C. § 285, courts may award the prevailing party its legal costs "based on the baseless of the suit." (There are other grounds for awarding legal fees, but those weren't at issue in this case). Over the past few years, the Federal Circuit has made clear that there are two criteria that must be met for sanctions to be imposed based on the baselessness of the suit: "(1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1309-10 n.1 (Fed. Cir. 2012). In Highmark, the Federal Circuit also held that it reviews the "objectively baseless" component de novo. This mechanism effectively results in the Federal Circuit becoming the final arbiter of whether sanctions may be imposed under the baselessness approach.
Checkpoint v. Alltag illustrates how this mechanism works in practice and offers some notable holdings when it comes to attempts to wriggle out of an admission. Checkpoint is the owner of Patent No. 4,876,555, which relates to an anti-shoplifting device consisting of three layers. Checkpoint's advance was to place a hole in the middle layer, which allowed the tag to be deactivated "at a lower current and with greater reliability." It sued All-Tag Security S.A. for infringing its patent, and at trial relied on two relevant pieces of evidence to demonstrate that All-Tag's accused tags infringed the '555 patent. First, it offered testimony from its expert, who found holes in All-Tag tags made by All-Tag Security A.G. (a predecessor company) and whose manufacturing equipment was subsequently moved from Switzerland to Belgium to make the accused tags. Second, it relied on two of All-Tag's patents and All-Tag's admission that the process it used in Belgium to produce the accused tags was "generally in accordance" with its patents. Both of All-Tag's patents describe products having a hole in the middle layer and Checkpoint's expert testified that those products would infringe the '555 patent.
At trial, the court denied All-Tag's motion for judgment as a matter of law on infringement but the jury returned a verdict in favor of All-Tag on infringement (and invalidity and unenforceability). The district court subsequently granted All-Tag's motion for attorney's fees under Section 285, explaining that the case was exceptional "because Checkpoint through its expert witness did not inspect the tags it accused of infringement, despite having ample opportunity to do so." Slip Op. at 7.
On appeal, the Federal Circuit reversed on the ground that the suit was not objectively baseless. In reaching this conclusion, the CAFC discussed the Switzerland-to-Belgium transition (including the fact that production was restarted in Belgium within a week using the same equipment), but the interesting part of the court's opinion is its analysis of the reasonableness of Checkpoint's reliance on All-Tech's patents. The CAFC first rejected the argument that Checkpont's reliance on its expert's testimony was unreasonable because All-Tag had used the qualifier "generally" in its pre-trial admission that its manufacturing process generally practiced the All-Tag patents. "[A] party may rely on an admission as “conclusively established” unless the admission is recanted….All-Tag provided no evidence and presented no argument that its pre-trial admission was incorrect." Slip Op. at 11. In other words, All-Tag could not escape its admission simply because it had tried to be ambiguous in its wording.
The Federal Circuit also rejected All-Tag's argument that the admission as to its patents was insufficient for purposes of relying on those patents as evidence of infringement:
All-Tag cites L & W, Inc. v. Shertech, Inc., 471 F.3d 1311 (Fed. Cir. 2006), where this court rejected the assessment of liability based solely on the alleged infringer’s statements that the accused products are “covered” by its own patent, because the patent included multiple embodiments and it was unclear whether the patent disclosed the critical infringing feature. In contrast, All-Tag’s ’466 and ’343 patents are specific to resonance tags having a hole in the dielectric; the All-Tag patents describe no embodiments without the hole, which is the critical feature of Checkpoint’s ’555 patent.
Slip Op. at 12. The result was that "All-Tag’s admission that its products are made “generally in accordance” with its patents could reasonably have been relied on by Checkpoint and its expert Dr. Zahn," id., and this reliance was not "objectively baseless."
Guest Post by Prof. Sean Tu: Uneven Distribution in the RCE Backlog
Dr. Tu is an Associate Professor of Law at the West Virginia University College of Law and a shareholder in Patent Advisor. His research focuses on the patent examination system. – Jason
Previous posts (https://patentlyo.com/patent/2012/11/guest-post-the-rce-cliff.html and https://patentlyo.com/patent/2012/11/patent-stats-for-fy-2012.html) have reviewed the increase in RCE filings with a concurrent increase in the RCE backlog. On average, there is a 5.9 month pendency from RCE filing to the next Office Action. However, this number may be deceptive since it is an average across all art units. Anecdotally, some art units experience much longer pendency periods.
To determine which art units experience the longest / shortest RCE response time, we turned to the Reed Tech Patent Advisor™ information system (www.patentadvisor.com). This online information system includes patent office statistics derived from a collection of file histories encompassing most every published application since 2002. Our method was to count every RCE with no corresponding next significant action (i.e., with no corresponding next Office Action, Notice of Allowance or Notice of Abandonment). We then segmented the data by art unit. Thus, for each art unit, we determined the number of RCEs pending response as of December 31, 2012.
The figure below displays the results of our analysis. Each pie piece represents a specific technology center. Within each pie piece are circles that represent individual art units within the technology center. The top number in each circle identifies the art unit, while the bottom number represents the art unit’s count of RCEs pending as of December 31, 2012. The individual art unit circles are also color coded to help visualize the relative significance of the backlog within each tech center. Dark blue represents a large backlog, while light green represents a shorter backlog. Additionally, the size of each circle is directly proportional to the size of the art unit’s RCE backlog.
Accordingly, one can clearly see a greater number of RCEs present in technology center 1600 (Biotechnology and Organic Chemistry) when compared to technology center 2800 (Semiconductors, Electrical and Optical Systems and Components). This may be unsurprising since biotechnology applications may require significantly more review time, or specialized knowledge compared to electrical applications. Similarly, one can see that certain art units have a greater backlog, even within the same technology center. For example, 2617 (Cellular Telephony) and 2629 (Display Systems) have a much greater backlog when compared to other art units within technology center 2600 (Communications). Again, this may be unsurprising since many more applications are filed dealing with cellular telephone technology (4,757 pending applications in art unit 2617) compared to fax technology (903 pending applications in art unit 2627). Accordingly, examiners in fax technology may be more willing and/or able to pick up more RCEs from their special docket compared to those examiners in cellular telephone technology. Mitigating this issue, may be a higher number of examiners in art units with a higher number of pending applications. As discussed below, we did not calculate the number of active examiners present in each art unit.
In the center of the figure is a bar graph that shows the overall number of RCEs in the entire patent office that are awaiting examination broken down by year. This figure shows that there is a significant number of RCEs filed in 2012 that are still awaiting examination. This number is unsurprising since RCEs should be taken in turn, and there is a selection bias against later filed RCEs. Accordingly, one would expect the number of RCEs in 2012 to be greater in number since they will be taken up by the examiner later than an RCE that was filed in 2010.
There are two key limitations with this dataset. First, we have intentionally excluded data regarding average response time for responding to an RCE for each art unit. This is because the RCE pendency data is skewed because we do not count an RCE until it has been acted on. Thus, all of the unexamined RCEs could not counted when calculating an average response time. Accordingly, the average response time would be misleading. Second, we did not determine the number of active examiners in each art unit. Thus, although the backlog may look high in absolute numbers, the response time may be reasonable simply because it is spread over a large number of active examiners.
The RCE backlog cannot be solved simply by adding new examiners. This is due to the count system which gives incentives for examiners to pick up new cases rather than take up an old RCE. Additionally, new examiners cannot help pick up RCEs that are already on another examiner’s “special new” docket. These data suggest that the PTO should address art unit-specific pendency data when thinking of solutions to the RCE-backlog problem. Specifically, the PTO may consider requiring examiners from specific art units to pick up more than one item per month from his/her “special new” docket. Alternatively, the PTO may consider readjusting the count system to incentivize examiners to pick up RCEs. Finally, the PTO may consider placing RCEs back on the “amended” docket instead of the “special new” docket, which would require examiners to act on an RCE within two month of its appearance on the examiner’s docket.
These data suggest that practitioners should use this type of art unit-specific pendency data provided by services such as Reed Tech Patent Advisor™ when counseling their clients. This online service enables its users to easily access a comprehensive break down of the RCE docket for each individual examiner and each individual art unit. Understanding the possible consequences of filing an RCE should help clients make rational decisions about: (1) challenging the propriety of a “final” designation in an office action, (2) filing a continuation application instead of an RCE (Both RCEs and CONs are placed on the examiner’s “special new” docket, but RCEs can be given less counts. However, PTA considerations may justify filing an RCE instead of a CON), (3) making amendments to the claims prior to issuance of a first office action, and (4) drafting the strongest first response as practical, which may include adding dependent claims and/or conducting interviews before issuance of a final office action. Each of these actions may be more costly for clients in the short run, but save months if not years of time in the long run.
Download a PDF of the above chart here: Download 130324 Poster Graphic Only
Patent Conferences in Chicago
By Jason Rantanen
There are two terrific-looking conferences coming up in Chicago in early April. On Thursday, April 11, Loyola University Chicago's Law Journal will be hosting "Patents, Innovation & Freedom to Use Ideas," and on Friday, April 12, the Illinois Institute of Technology Chicago-Kent College of Law will be hosting PatCon 3. Headlining this year's PatCon is a debate about the patent system between Judge Posner and Richard Epstein. Details on both conferences below.
Loyola University Chicago Law Journal's "Patents, Innovation, and Freedom to Use Ideas"
Thursday, April 11, 2013
PHILIP H. CORBOY LAW CENTER, POWER ROGERS & SMITH CEREMONIAL COURTROOM • 10th Floor
25 E. Pearson Street · Chicago, IL 60611
Under the Constitution, the justification for a patent system—if there is one—is to advance the public welfare by promoting the progress of science. The Constitution authorizes a possible means to accomplish this goal by providing Congress the power to grant limited exclusive rights to those who sufficiently advance the public welfare through innovation. Our Conference will provide a forum for nationally recognized scholars and judges to discuss the trade-off between two interests of the public: the interest in development of new ideas and the interest in freedom to use ideas. The patent system is intended to serve the former, but imposes a cost on the latter. More specifically, the Conference will explore whether the added innovation achieved by the patent system justifies its cost to society, whether it operates within the Constitution’s requirements, and whether improvements can be made or if instead a different system, or no system at all, might be a better option.
More details here: www.luc.edu/law/lawjournalconference or download the brochure here: Download Loyola Brochure. To register, email Jimmy Kritsas at lawjournalconference@luc.edu. 7.25 hours of CLE credit will be offered.
PatCon 3
April 12
IIT Chicago-Kent College of Law
565 West Adams Street
Chicago, Illinois 60661
Highlights include:
- An address by Federal Circuit Judge Richard Linn;
- A debate on the patent system between Seventh Circuit Judge Richard Posner and Prof. Richard Epstein (NYU and Chicago);
- A plenary session featuring USPTO Chief Economist Alan Marco, Prof. Mark Lemley (Stanford), and Prof. David Abrams (Penn); and
- An industry panel with senior IP representatives from BP, AbbVie, Bridgestone, and RR Donnelley.
For more details, download the flyer (here: Download PatCon3 Flyer) or visit the conference website at: http://www.kentlaw.iit.edu/academics/jd-program/certificate-programs/intellectual-property-law/patcon-3.
CLE credit for attendance is expected. You can register at: https://www.kentlaw.edu/patcon/
Hope to see you at both!
The Sedona Conference’s new regional patent litigation programs
By Jason Rantanen
For those who aren't familiar with The Sedona Conference, it's a law and policy think tank that organizes programs that bring together judges, lawyers, experts and academics to discuss issues in antitrust law, intellectual property, and other forms of complex litigation. The organization offers a variety of programs from regional CLE programs to national conferences to small working groups that develop practical guidelines and reports on particular areas of the law. Past working groups have discussed and developed reports on subjects such as claim construction, eDiscovery, and the intersection of patent and antitrust laws. One unique aspect of The Sedona Conference is that its conferences use a dialogue-based, as opposed to debate-based, approach to understanding important issues in the law.
The folks at The Sedona Conference recently asked me to share the announcement that they are expanding their programing on patent litigation to include regional conferences. The first regional conferences on patent litigation will take place in New York, NY on Thursday, May 2 and in Washington, D.C. on Thursday, May 9. Both programs are entitled “In Search of Best Practices for Patent Litigation Case Management Post-AIA” and will be part of The Sedona Conference's development of a working group on case management issues post-AIA.
The faculty for the New York program on May 2 includes:
- Hon. Loretta Preska, Chief Judge for the Southern District of New York
- Hon. John Koeltl, US District Judge for the Southern District of New York
- Hon. Faith Hochberg, US District Judge for the District of New Jersey
- David Kappos, former director of the USPTO, now of Cravath
The New York program will be held on Thursday, May 2, 2013, at the Cardozo School of Law. For additional details, faculty bios, and to register for the NY program, visit the program page.
The faculty for the DC program on May 9 includes:
- Hon. Paul R. Michel (ret.), formerly Chief Judge of the Federal Circuit
- Robert G. Sterne, founding director of Sterne, Kessler, Goldstein & Fox, P.L.L.C.
- Hon. Joy Flowers Conti, US District Judge for the Western District of Pennsylvania
- Hon. Marvin Garbis, US District Judge for the District of Maryland
- Teresa Stanek Rea, acting director of the USPTO
The Washington, DC program will be held on Thursday, May 9, 2013, at the offices of Sterne, Kessler, Goldstein & Fox, P.L.L.C. For additional details, faculty bios, and to register for the DC program, please visit the program page.
PatentlyO readers will receive a $100 discount: You will need to enter a coupon code to receive the discount. Contact The Sedona Conference at info@sedonaconference.org and let them know you are a PatentlyO reader to obtain the coupon code.
Federal Circuit to Reconsider De Novo Review of Claim Construction
By Jason Rantanen
In a per curium order issued a short time ago, the current sitting judges of the Federal Circuit (Chief Judge Rader and Judges Newman, Lourie, Dyk, Prost, Moore, O'Malley, Reyna, and Wallach) have granted Lighting Ballast Control's petition for rehearing en banc. As Hal Wegner has pointed out, this comes just hours before Judge Taranto's swearing in.
The parties have been instructed to address of deference in reviewing district court claim constructions:
a. Should this court overrule Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998)?
b. Should this court afford deference to any aspect of a district court’s claim construction?
c. If so, which aspects should be afforded deference?
It goes without saying that these questions have tremendous significance for patent law. One peripheral thought – will the court hold all appeals involving issues of claim construction in abeyance until it issues its en banc opinion?
The order: Download Lighting ballast 2012-1014 3 15 13 final en banc grant order
Previous PatentlyO coverage of the petition:
Aristocrat Technologies v. Int’l Game Technology
By Jason Rantanen
Aristocrat Technologies Australia PTY Limited v. International Game Technology (Fed. Cir. 2012) Download 10-1426.Opinion.3-11-2013.1
Panel: O'Malley (author), Bryson and Linn
Aristocrat and IGT compete in the casino gaming machine industry; Aristocrat was the patent holder here. After construing the claims, the district court granted summary judgment of noninfringement under Muniauction v. Thomson, 532 F.3d 1318 (Fed. Cir. 2008), because no single actor performed all of the claimed steps. On appeal, the Federal Circuit affirmed the district court's claim construction and summary judgment of no direct infringement but remanded for further proceedings on inducement of infringement in light of its intervening en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012). This is the second case this month to address the issue of joint/divided infringement.
The patents-in-suit relate to a gaming system in which an additional prize is awarded to a player through a secondary feature game appearing after the main game is completed. Most of the claim limitations relate to steps that would performed by the casino itself, such as "initiating a first main game at said particular gaming machine" and "awarding said one progressive prize from said plurality of progressive prizes that has been won."
One limitation, however, requires "making a wager at a particular gaming machine in the network of gaming machines." The district court interpreted this limitation to mean "betting, which is an act performed by the player." Aristocrat challenged this construction on appeal, contending that "making a wager" is merely "carrying out a bet" (and thus could be performed by the same actor that carried out the other steps). The Federal Circuit disagreed, noting the overwhelming support for the district court's construction. It rejected Aristocrat's other claim construction challenge based on similarly overwhelming amounts of contrary evidence. This opinion is a great example of what happens when a party tries to twist the meaning of a claim term far beyond what is reasonable or supportable.
Divided infringement (direct): Turning to the divided infringement problem the construed claims raised, the Federal Circuit began by affirming summary judgment of no direct infringement. The court first noted that Akamai expressly did not revisit the law of divided infringement as it applies to 271(a); to be liable for direct infringement of a method claim, a party must perform "all the steps of the claimed method, either personally or through another acting under his direction or control." Slip op. at 25, quoting Akamai. Under Muniauction, “the control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.” Here, no single actor performed all the claimed steps and the Federal Circuit declined to conclude that the alleged conduct satisfied the "direction or control requirement. In doing so, it expressly rejected Aristocrat's argument that this requirement was satisfied due to the player's actions being "the 'natural, ordinary, and reasonable consequences of' IGT's conduct." Slip op. at 27.
Divided infringement (indirect): Applying Akamai, the Federal Circuit vacated the district court's summary judgment with regard to indirect infringement, an issue that neither the parties nor the district court expended significant time on. The Federal Circuit's opinion provides no substantive discussion on this issue but does highlight two key parts of Akamai that nicely sum it up:
As we stated in Akamai, “[r]equiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.” Akamai, 692 F.3d at 1308-09 (emphasis in original). Thus, “[a] party who knowingly induces others to engage in acts that collectively practice the steps of the patented method—and those others perform those acts—has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer; there is no reason, either in the text of the statute or in the policy underlying it, to treat the two inducers differently.” Id. at 1309.
Slip op. at 28. Here, Aristocrat deserved the opportunity to argue its indirect infringement theory with the benefit of the Federal Circuit's clarification regarding inducement.
Update on petitions for certiorari in Akamai and Epic v. McKesson: As noted by Dennis earlier this month, petitions for certiorari were filed in both Akamai and Epic v. McKesson. However, Epic and McKesson recently settled and Epic has withdrawn its cert petition. (Thanks to Tim Holbrook for pointing this out). Clarification: Both Limelight's petition and Akamai's conditional cross-petition remain pending.
Guest Post by Dr. Jeffrey Lefstin on What’s Really at Stake in Myriad
Guest Post by Jeffrey Lefstin, Ph.D., Professor of Law at the University of California Hastings College of the Law. In his previous life Dr. Lefstin was a molecular biologist, studying mammalian gene regulatory mechanisms and DNA-protein interactions. Below, he provides his thoughts on the true stakes in Association for Molecular Pathology v. Myriad Genetics.
Playing with Fire: What's Really at Stake in Myriad
In a previous post I noted that the Supreme Court’s Mayo v. Prometheus decision, while acknowledging that “all inventions can be reduced to underlying principles of nature which, once known, make their implementation obvious,” appears to have revived the analytical framework of Funk Brothers. Funk denied patentability to a mixture of nitrogen-fixing bacteria because, even if the patentee’s discovery about the bacteria was “ingenious,” it was a phenomenon of nature and not patentable. Once that discovery was made, the state of the art made production of the claimed mixture obvious; the patentee therefore had not claimed a patentable application of the law of nature. In Mayo the Court likewise demanded that a claim embody an inventive application of a natural law, denying patentability to a process claim where the steps beyond the natural law consisted of nothing more than “well-understood, routine, conventional activity.”
Mayo’s grounding in Funk means that the Mayo analysis governs the patent-eligibility of a claim to a composition of matter, such as the isolated and purified DNA molecules at issue in Myriad. But the stakes in Myriad are actually far higher. For twenty years after Funk, the lower courts employed the “something else beyond a law of nature” analysis to invalidate a variety of claims that we would probably regard as innocuous today. If the Court reaffirms the analysis of Funk, Parker v. Flook, and Mayo in Myriad, this line of authority presents a disturbing vision for the future.
The line began with Davison Chemical Corp. v. Joliet Chemicals, Inc., 179 F.2d 793 (7th Cir. 1950). Davison Chemical dealt with a process for producing silica gel. While the process of making silica gel was long known in the art, the patentee had discovered that the temperature of the wash step determined the density of the gel. He therefore claimed an improved process wherein the temperature of the wash step was adjusted to control the density of the final product. But the Seventh Circuit regarded the relationship between wash temperature and gel density as “a newly discovered scientific fact.” Under Funk Brothers, it was necessary that the patentee’s application of that fact be inventive. According to the court, once the relationship between temperature and density was discovered, it required “nothing more than the ordinary skill of the scientist” to determine that maintaining the temperature of the wash step would control the density of the silica gel.
The Court of Customs and Patent Appeals followed Davison Chemical in In re Arnold, 185 F.2d 686 (CCPA 1950), involving a claim to a process of electrostatic welding. In Arnold, the applicant had discovered that molecules near the surface of a material responded more readily than interior molecules to alternating electrostatic fields. By selecting a particular frequency, the applicant could selectively weld the surface of the material, or selectively weld a plasticizer applied to the surface. But according to the CCPA, the differential response of surface molecules was a “phenomenon of nature” discovered by the applicant. The claimed process merely selected a particular frequency based on that discovery, and therefore lacked “invention.” (While the Federal Circuit has never cited Arnold, the case, being precedent of the CCPA, is technically binding on the court.)
National Lead Co. v. Western Lead Products Co., 324 F.2d 359 (9th Cir. 1963), was similar to Davison Chemical. In a process for making a lead / lead oxide suspension (useful for storage batteries), the patentee had supposedly discovered that two different crystalline forms of lead oxide were present; by controlling the temperature of the reaction, the patentee could control the proportion of these two forms and thereby the uniformity of the final product. But following Davison Chemical, the patentee’s discovery of the relationship between temperature and product uniformity was not patentable. The question was whether the claimed method would have been obvious to an artisan – an artisan assumed to already know the relationship between temperature and product uniformity. Since the patentee used only conventional methods to regulate temperature of the reaction, the method was unpatentable.
The pinnacle – or perhaps the nadir – of the Davison line was the Third’s Circuit’s decision in Armour Pharmaceutical Co. v. Richardson-Merrel, Inc., 396 F.2d 70 (3d Cir. 1968). The patentee made the surprising discovery that trypsin – a proteolytic enzyme with anti-inflammatory properties – could be absorbed by the small intestine, and thereafter transported into the bloodstream. Whereas the prior art relied on administering trypsin to patients via injection, the patentee determined that oral administration would be possible if the trypsin was given a coating permitting it to resist digestion in the stomach and reach the small intestine. But the Third Circuit concluded that a claim to the enteric-coated trypsin formulation was not patentable under Funk. Once “nature’s secret” was discovered – the ability of the small intestine to absorb trypsin – any artisan would have employed known coatings to enable the trypsin to reach the small intestine. And even if the patentee’s discovery was the anti-inflammatory effect of trypsin administered to the small intestine, not merely the ability of the small intestine to absorb trypsin, the application of that newly discovered principle still lacked inventiveness under Funk.
Despite being framed as “lack of invention,” these are not obviousness cases. In each case the information that might render the invention obvious was the patentee’s own discovery. That is the point of Mayo: despite Diehr’s admonition to the contrary, the Court appears to have resurrected Funk’s rule that a claim must embody a non-obvious application of a law of nature or natural phenomenon to be patent-eligible. And the district courts have already begun applying that analysis to question the patent-eligibility of claims.[1] The Davison line suggests that a wide variety of claims to improvements or optimizations of known processes and compositions are vulnerable under the Mayo analysis. Unless we can distinguish the “natural laws” in these cases from the “natural law” in Mayo, a reaffirmance of Funk and Mayo in Myriad could presage a dramatic contraction in the scope of patent-eligible subject matter in the future.
[1] See, e.g., Aria Diagnostics, Inc. v. Sequenom, Inc., 2012 WL 2599340, at *11-12 (N.D. Cal. July 5, 2012); Tessenderlo Kerley, Inc. v. Or-Cal, Inc., 2012 WL 2054994 at *5-6 (N.D. Cal. June 5, 2012).
Guest Post on Patent Pools and Competition
Editorial by David A. Balto and Brendan Coffman. Mr. Balto and Mr. Coffman are antitrust attorneys in Washington D.C. whose representations include high technology firms. In addition to his practice, Mr. Balto was formerly a policy director of the Federal Trade Commission, attorney-adviser to Chairman Robert Pitofsky, and an antitrust lawyer at the U.S. Department of Justice.
When Patent Pools Attack: Competitive Concerns from the Devolution of MPEG LA
By David A. Balto and Brendan Coffman
Patent pools pose a unique challenge to antitrust enforcement. On the one hand they solve collective action problems and allow participants to achieve economies of scale that would otherwise be impossible. Patent pools enable market participants to join complementary intellectual property to better manage those IP rights. As the Department of Justice noted, patent pools may “provide competitive benefits by integrating complementary technologies, reducing transaction costs, clearing blocking positions, and avoiding costly infringement litigation.”
On the other hand, patent pools can create competitive problems by conferring market power on a group (in the case of member-owned patent pools) or entity (in the case of stand-alone patent pools). Thus, the antitrust enforcement agencies have always been concerned if the pools are over-inclusive and include competing technologies. Where this is the case patent pools may leverage their position to interfere with competition in at least two ways. First, a pool may interfere with the relationships and convergent intellectual property rights of pool members. This result may be particularly pernicious if one of the patent pool participants seeks to introduce a new business model that may compete head-to-head with the pool’s customers. Second, pools may leverage their market power within the supply chain to extract higher or duplicative royalties on downstream purchasers of the pool’s licensed technology. These concerns are typical in the high-tech/intellectual property field, and come up very often in discussions of patent assertion entities, or PAEs.
The key for regulators and policy-makers alike is to ensure that patent pools remain committed to the procompetitive collaborative efforts that justify their creation, and do not change their business model to exploit or create market power. In theory this sounds simple. In practice, it is anything but.
History of MPEG LA
MPEG LA is an interesting case study in the trade-off between the efficiencies of pooling arrangements and the potential competitive risks. MPEG LA has been a personification of the debate since the group’s incipiency. Formed in 1996 to administer the pooling of 27 digital video patents deemed essential to the MPEG 2 video compression technology into a single portfolio, MPEG LA aggregated and offered a collective license to 27 patents from eight companies and Columbia University. MPEG LA presented its idea to the Department of Justice, seeking ex ante approval through the DOJ’s Business Review Procedure [pdf].
The DOJ responded in an oft-cited 14-page letter containing 49 footnotes. The DOJ concluded that the joint licensing of the MPEG 2 essential patents is likely to provide significant cost savings to licensors and licensees alike because “the licensing arrangement have features designed to enhance the usual procompetitive effects and mitigate potential anticompetitive dangers.” The DOJ also emphasized that the structure of the patent pool appeared well-suited to ensure that only truly essential patents become included in the pool, and that the patents in the pool remain complements, not substitutes. Finally, the DOJ opined “there does not appear to be any potential for use of the Portfolio license to disadvantage particular licensees” because the pool’s most-favored-nations clause ensures equivalent rates to all takers on non-discriminatory terms. In approving the arrangement, the DOJ laid forth the following four guidelines for when a patent pool may gain approval:
1. The patents must be valid and enforceable;
2. The pool must not aggregate competitive technologies and set a single price for them;
3. An independent expert should determine whether the patents are essential; and
4. The pool must not disadvantage competitors or facilitate collusion
The DOJ’s approval of MPEG LA’s turned in large part on one fundamental and pivotal fact: MPEG LA’s operating procedure called for the participation of an independent expert at every turn. In fact, the Business Review Letter mentions the independent expert sixteen times.
There was significant concern raise about the MPEG LA pool. As one antitrust scholar exclaimed “the anticompetitive potential of the MPEG LA patent pool is enormous. The DOJ’s approval of the pool validates a collectively enforced monopoly over a fundamental communications standard.”1 Despite this and public criticism, the DOJ approved the behavior. MPEG LA stated publically that the company’s mission was to “provide a service that brings all parties together so that technical innovations can be made widely available at a reasonable price.” As history shows, it is not long before a company with this model succumbs to the pressure of exercising and extending its monopoly power.
Emerging Competitive Concerns
In recent years, MPEG LA has been accused of inhibiting the innovation that it was designed to foster. Notably, the company’s practice of charging high licensing fees for patents that are near or past expiration has led critics to assert that the firm has placed profit above its core mission of cheap and accessible licensing of digital video patents. Technology market players have also alleged that MPEG LA has violated the terms of its original agreement with DOJ by failing to invite oversight of its licensing practices by independent experts, and neglecting to adhere to FRAND guidelines. A firm that was once a model (at least in theory) of the potential benefits from collaboration has morphed into one of the industry’s most notorious and most harmful players.
Interestingly MPEG LA embodies both of the concerns with patent pools outlined above and by the DOJ in its approval of the patent pool’s licensing structure. First, MPEG LA may overtly inhibit the ability of its members to develop any technology that may compete with customers of the MPEG LA pool. Most notably, MPEG LA was involved in a dispute with pool-participant Google. In 2010 Google introduced WebM, an open-source solution to uploading videos to the web. Google designed WebM to serve as an alternative to H.264, the primary video compression technology in Microsoft and Apple devices that is covered by the MPEG LA patent pool. All three are members of the MPEG LA patent pool, and pay royalties to the company (although Apple contributed only one patent to the pool). MPEG LA asserted that Google’s WebM product practices on or infringes patents in the pool, and demanded that users of the WebM product pay royalties to the pool. A license from Google would not be enough. In fact, in early 2011 MPEG LA instructed patent owners to inform the pool of patents they believe the WebM product uses. The DOJ initiated an investigation into whether MPEG LA is acting anticompetitively by trying to quash the Google WebM product through assertion of patents as a patent pool. The investigation appears to be on-going.
It is not only Google that MPEG LA has targeted – German software company Nero also filed complaints with the DOJ alleging that MPEG LA is illegally maintaining and enhancing its monopoly power by failing to adhere to the conditions of the DOJ Business Review Letter. Nero points out that MPEG LA does not rely on independent experts as it said it would, but instead allows its membership to drive patent inclusion decisions. Nero also argues that MPEG LA did not offer the patents in question on fair, reasonable, and non-discriminatory terms as required.
MPEG LA has also devolved into a PAE. A PAE may accumulate and leverage patents as a business model by taking advantage of economies of scale and the high cost of patent litigation. A common business model of PAEs is to divide patents among shell companies, thereby making it difficult for defendants to identify the original patent owner and impossible to assert a counterclaim. MPEG LA’s President, Larry Horn, is also the president of MobileMedia Ideas, a known PAE jointly owned by MPEG LA, Sony, and Nokia. The firm controls patents for technologies used in mobile phones, computers, tablets, cameras, and videogame consoles, among other devices. MobileMedia Ideas has engaged in a significant amount of successful litigation, and continues a business model of leveraging these patents against numerous operating companies, including those that have business relationships with MPEG LA.
What is the Lesson?
The lesson cannot be that patent pools are inherently bad. Pooling complementary products displaces litigation in favor of innovation, and is absolutely a win-win for consumers and manufacturers alike. Instead, the lesson must be that continued oversight is necessary in the case of patent pools, especially when there is so much incentive for a pool to step outside the confines of approved activity, and to begin leveraging its unique market position anticompetitively.
With that in mind, there are some basic steps that can be taken to prevent the problems identified above from replicating. First, the antitrust agencies should disapprove of patent pools that place a restriction on how a participant may deploy its own technology. It is appropriate to require a patent owner to make technology available on certain terms and to as large an audience as possible, but it is inappropriate to restrict the patent owner from actually competing. Second, the agencies should condition approval of a patent pool on the continued use of independent experts. A neutral voice is essential to prevent a pool from devolving into a firm seeking to include as many substitute patents as possible. Third, the agencies should condition approval of a patent pool on a commitment to maintain autonomy and to refrain from engaging in any other business activities outside of the pooling arrangement. It is too easy for a patent pool to learn the business of its members and position itself in the market as another barrier to entry.
1Steven C. Carlson, Patent Pools and Antitrust Dilemma, 16 Yale J. on Reg. 359, 372 (1999).
SMU 10th Annual Symposium on Emerging Intellectual Property Issues
By Jason Rantanen
SMU Dedman School of Law 10th Annual Symposium on Emerging Intellectual Property Issues
On Friday, March 22, the SMU Dedman School of Law will be hosting its 10th Annual Symposium on Emerging Intellectual Property Issues in Dallas, Texas. This year’s Symposium focuses on the U.S. Court of Appeals for the Federal Circuit and its unique role in the development of the nation's patent law. The folks at SMU have assembled a terrific program with a great lineup of speakers.
Speakers at this year's Symposium include:
- Federal Circuit Judges Raymond C. Clevenger, III, Timothy B. Dyk, and Sharon Prost
- General Counsel of the U.S. Patent and Trademark Office, Bernard J. Knight, Jr.
- Distinguished professors and practitioners from around the United States
For more information on the Symposium or to register, click here: http://www.law.smu.edu/Events/Dean-Suite/Symposium-on-Emerging-Intellectual-Property-Issues.aspx?c=hpEvent_Symposium-on-Emerging-Intellectual-Property-Issues.
Symposium Location:
SMU Dedman School of Law
Hillcrest Classroom
3315 Daniel Avenue
Dallas, Texas
Download the symposium brochure: http://www.law.smu.edu/getmedia/250a6fee-b9f2-4095-b44d-d30a5173490f/IP-Symposium3.
For more information, e-mail SMU Dedman School of Law Professor David Taylor at dotaylor@smu.edu.
MCLE Credit
This course is pending approval by the State Bar of Texas for 5.5 CLE hours. Sign-in sheets and/or certificate of attendance will be available for ALL states
The Use of Legal Scholarship in Intellectual Property Decisions
By Jason Rantanen
One of the ongoing debates involving the Federal Circuit revolves around its performance as a circuit court. Professors Craig Nard and John Duffy, for example, have critiqued the court's basic jurisdictional structure, arguing that court's exclusive jurisdiction fosters an insularity that produces "an isolated and sterile jurisprudence that is increasingly disconnected from the technological communities affected by patent law," and that the solution is to rewrite the court's jurisdiction. These and other arguments criticizing the Federal Circuit's performance are supported by the epithet that the Federal Circuit cites scholarship in its patent opinions at a far lower rate than other circuits do in their intellectual property opinions.
In The End of an Epithet? An Exploration of the Use of Legal Scholarship in Intellectual Property Decisions, recently published in the Houston Law Review, Professors Lee Petherbridge and David L. Schwartz examine this empirical claim about the Federal Circuit's use of scholarship by exploring the U.S. Supreme Court's use of legal scholarship in its patent, trademark, and copyright jurisprudence. They find a substantial difference in the use of scholarship across these areas, with the Court's use of legal scholarship in copyright and trademark decisions being among the highest observed and its use in patent decisions among the lowest. It thus appears that the Supreme Court behaves similar to the Federal Circuit with respect to the use of legal scholarship in patent cases, undercutting the empirical support for the claim that the Federal Circuit is insular. This finding adds to an earlier study by Schwartz and Petherbridge revealing that the Federal Circuit's overall rate of citation to scholarship is within the range of the regional circuits.
In addition to their empirical findings, Petherbridge and Schwartz address the question of why the use of legal scholarship in trademark and copyright jurisprudence is so high, and its use in patent jurisprudence so low. Their answers range from the doctrinal (patent law is more developed, so less need to reference scholarship) to this historical (until recently, perhaps there has just been a lot less patent law scholarship and beyond).
Read the article here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2214025
This issue of the Houston Law Review is worth checking out generally. It includes terrific articles by R. Anthony Reese, Greg Vetter, Colleen Chien, Kevin Collins, Paul Janicke, Mark Patterson, and Katherine Strandburg.
Guest Post by Dr. Jeffrey Lefstin on Myriad’s Pre-History
Guest Post by Jeffrey Lefstin, Ph.D., Professor of Law at the University of California Hastings College of the Law
After the Supreme Court decided Mayo v. Prometheus, the Court vacated and remanded the Federal Circuit’s initial AMP v. Myriad opinion for reconsideration in light of Mayo. Despite the Supreme Court’s hint, the Federal Circuit’s opinion on remand begins by dismissing Mayo as irrelevant – at least to those claims drawn to isolated and purified BRCA DNA. Composition of matter claims, according to Judge Lourie, are governed not by Mayo, but primarily by Chakrabarty, which suggests that a composition of matter is patent eligible if it is “markedly different” than a natural product, or if the transformation of the natural product yields “a distinctive name, character, and use.”
There are a number of problems with Judge Lourie’s premise. The subject matter eligibility question in Myriad turns on whether the DNA claims are drawn to “products of nature.” But Chakrabarty is about the patentability of living things, not products of nature. In fact, Chakrabarty’s discussion of the “product of nature” doctrine is entirely dictum. Although Chakrabarty’s claims to genetically engineered bacteria were originally rejected as “products of nature,” that rejection was not sustained by the Board of Appeals. And while the CCPA considered the issue in connection with the related Bergy appeal, in Chakrabarty the Solicitor expressly disowned the “product of nature” rejection in his argument before the Court.
So why did the Chakrabarty court discuss the “product of nature” doctrine at all? The “product of nature” discussion seems to have arisen because Chakrabarty’s brief mentioned Funk Brothers, the Court’s 1948 case denying patentability to a mixture of nitrogen-fixing bacteria. Chakrabarty suggested that if living things were not patent-eligible, the Court would have said so in Funk. The Solicitor’s reply denied that the claims in Funk were drawn to living things, but neither Chakrabarty nor the government argued the “product of nature” issue in their briefs.
Even if the Court’s discussion were more than dictum, Chakrabarty hardly establishes “markedly different” or “distinctive name, character, and use” as definitive standards. “Markedly different” is an offhand comment by the Court, and “distinctive name, character, and use” derives from the Court’s 1931 opinion in American Fruit Growers – which looked to Customs law for the meaning of “manufacture” in the patent statute. (The acquisition of a distinctive name, character, and use is now known as the “substantial transformation” test, and is used to establish the country of origin for imported products).
But most significantly, while the Federal Circuit’s opinion makes passing reference to Funk Brothers, it overlooks the point that Mayo’s analytical framework – asking whether the patentee’s application of a law of nature goes beyond the conventional and obvious – is nothing more than Funk Brothers redux. In Mayo, the Court’s requirement that a claim must embody an “inventive concept” beyond the natural law was drawn from Parker v. Flook. In turn, Flook’s approach was expressly grounded in Funk. And a reading of Funk makes clear that Mayo’s requirement of “natural law plus more than conventional activity” is simply the analysis employed in Funk:
Discovery of the fact that certain strains of each species of these bacteria can be mixed without harmful effect to the properties of either is a discovery of their qualities of non-inhibition. It is no more than the discovery of some of the handiwork of nature and hence is not patentable. The aggregation of select strains of the several species into one product is an application of that newly-discovered natural principle. But however ingenious the discovery of that natural principle may have been, the application of it is hardly more than an advance in the packaging of the inoculants.
If the Mayo Court truly revived the Funk analysis, the implications for Myriad (and subsequent cases) are substantial. Funk dealt with a composition of matter: bacteria. So if Mayo’s framework draws from Funk, that framework is clearly applicable to a composition of matter such as DNA. And under the reasoning of Funk, it seems not to matter whether the process of arriving at the claimed subject matter is inventive; the Funk court conceded that the discovery leading to the claimed invention might have been “ingenious.” What matters is whether there is “something else” in the claims, other than conventional or obvious activity routine in the art.
Even more so than in Mayo, of the Myriad composition claims seem to lack “something else” beyond the natural phenomenon: the natural sequence of the BRCA genes. For the Federal Circuit, the structural differences between the natural genes and the isolated products were the key to patent-eligibility. But under Mayo and Funk, the question is whether those transformations of the natural sequence represent something more than conventional or obvious activity.
Taking the identification of the natural sequence as a given – as Mayo and Funk appear to demand – the patent-eligibility of Myriad’s composition claims is in serious doubt. The “something else” in Myriad’s claims is the separation of that natural sequence from the genomic context, or the embodiment of that sequence in a cDNA. However ingenious the discovery of the BRCA loci may have been, the embodiment of the BRCA sequences in isolated DNA molecules was either conventional in the art, or, in the case of the removal of non-coding information from the mRNA transcripts that gave rise to the cDNAs, performed automatically by the cell.
Gunn v. Minton: issue of patent law does not deprive state court of jurisdiction over malpractice claim
By Jason Rantanen
Read the opinion here: Gunn v. Minton
This morning the Supreme Court released its opinion in Gunn v. Minton The Court held that the presence of a substantive issue of patent law did not deprive the state court of jurisdiction over the malpractice claim. Notably, the Court did not feel that allowing these claims to proceed in state court would substantially affect federal patent law.
From the syllabus:
(3) Minton’s argument founders, however, on Grable’s substantiality requirement. The substantiality inquiry looks to the importance of the issue to the federal system as a whole. Here, the federal issue does not carry the necessary significance. No matter how the state courts resolve the hypothetical “case within a case,” the real-world result of the prior federal patent litigation will not change. Nor will allowing state courts to resolve these cases undermine “the develop- ment of a uniform body of [patent] law.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 162. The federal courts have exclusive jurisdiction over actual patent cases, and in resolving the nonhypothetical patent questions those cases present they are of course not bound by state precedents. Minton suggests that state courts’ answers to hypothetical patent questions can sometimes have real-world effect on other patents through issue preclusion, but even assuming that is true, such “fact-bound and situation-specific” effects are not sufficient to establish arising under jurisdiction, Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U. S. 677, 701. Finally, the federal courts’ greater familiarity with patent law is not enough, by itself, to trigger the federal courts’ exclusive patent jurisdiction.
FM v. Google: Means-plus-Function Indefiniteness and O2 Micro Challenges
By Jason Rantanen
Function Media, L.L.C. v. Google Inc. (Fed. Cir. 2013) Download FM v Google
Panel: Rader, Newman, Reyna (author)
Function Media sued Google for infringement of three related patents: 6,446,045; 7,240,025; and 7,249,059. The patents involve a system for facilitating advertising on multiple advertising outlets (such as different websites) with different formatting requirements. The district court granted summary judgment that the sole independent claim of the '045 patent was indefinite and a jury subsequently found that the asserted claims of the '025 and '059 patents invalid and not infringed. The district court granted JMOL of validity of four claims but the noninfringement verdict stood. FM appealed several issues including the indefiniteness ruling and raised a challenge based on O2 Micro.
Indefiniteness: Claim 1 of the '045 patent reads as follows:
1. A method of using a network of computers to contract for, facilitate and control the creating and publishing of presentations, by a seller, to a plurality of media venues owned or controlled by other than the seller, comprising:
a) providing a media database having a list of available media venues;
b) providing means for applying corresponding guidelines of the media venues;
c) providing means for transmitting said presentations to a selected media venue of the media venues;
d) providing means for a seller to select the media venues; and
e) providing means for the seller to input information;
whereby the seller may select one or more of the media venues, create a presentation that complies with said guidelines of the media venues selected, and transmit the presentation to the selected media venues for publication.
At issue was the italicized "means for transmitting" claim element, which the district court held to be indefinite because the specification did not disclose a structure for carrying out the claimed function, as required by 35 U.S.C. § 112(f) [previously referred to as 112[6]).
On appeal, the Federal Circuit affirmed the district court's ruling, emphasizing the requirement that an algorithm must be disclosed when using a means-plus-function claim involving software. "When dealing with a “special purpose computer-implemented means-plus-function limitation,” we require the specification to disclose the algorithm for performing the function." Slip Op. at 9. For this claim element, at least, no algorithm was disclosed: "Here, there is no specific algorithm disclosed in prose, as a mathematical formula, in flow charts, or otherwise. FM cites to several places in the specification that it contends describe the software. These citations all explain that the software automatically transmits, but they contain no explanation of how the [Presentation Generating Program] software performs the transmission function." Id. at 10. "At most, the ’045 Patent specification discloses that the structure
behind the function of transmitting is a computer program that transmits. Beyond the program’s function, however, no algorithm is disclosed. As in Blackboard, the PGP is “simply an abstraction that describes the function” to be performed. 574 F.3d at 1383." Id.
Nor could FM rely on the knowledge of a PHOSITA: "Having failed to provide any disclosure of the structure for the “transmitting” function, FM cannot rely on the knowledge of one skilled in the art to fill in the gaps." Id. at 11. It was irrelevant that a person of ordinary skill could devise some method to perform the function: that goes to enablement, not to definiteness.
Comment: Ironically here, it was probably the use of the narrowing "means" language that ultimately resulted in the holding of indefiniteness. If the patentee had instead just referenced "a computer controller transmitting said presentation" (similar to what it did in Claim 1 of the '025 patent), it almost certainly would have survived an indefiniteness challenge. See Mark A. Lemley, Software Patents and the Return of Functional Claiming (forthcoming in Wisconsin Law Review) at 41-42 (arguing that the Federal Circuit imposes no limit on the functional nature of software claim elements unless they use "means," thus negating the compromise established by 112(f)).
O2 Micro: In addition to challenging several of the district court's claim constructions (which the CAFC affirmed), FM argued that the court improperly sent issues of claim construction to the jury in contravention of O2 Micro v. Beyond Innovation, 521 F.3d 1351 (Fed. Cir. 2008). The Federal Circuit rejected FM's arguments, limiting O2 Micro to the rare circumstance when arguments about different claim scopes are actually presented to the jury. "We disagree with FM that claim construction was decided by the jury because the district court’s construction was correct, and the district court never refused to construe any disputed terms. Moreover, as with the other terms, FM never objected to any supposed improper argument or testimony." Slip Op. at 26. Absent this situation, the issue was whether Google made improper arguments to the jury, an issue on which FM bore an extremely high burden that it could not carry.