All posts by Jason Rantanen

About Jason Rantanen

Jason is a Law Professor at the University of Iowa College of Law.

Wrigley v. Cadbury: Pushing Back Against Impax

Patent,

By Jason Rantanen

WM. Wrigley Jr. Co. v. Cadbury Adams USA LLC (Fed. Cir. 2012) Download 11-1140-1150
Panel: Bryson (author), Newman (dissenting-in-part), Fogel

Chewing gum is a big business, with billions of dollars of sales each year.  Wrigley and Cadbury are the two dominant players and compete closely in the "cooling sensation" gum market.  This lawsuit involved patent assertions by each company: Cadbury contended that Wrigley infringed its Patent No. 5,009,893, which claims chewing gum containing a combination of menthol and a coolant known as WS-3, while Wrigley contended that Cadbury infringed its Patent No. 6,627,233, which claims chewing gum containing a combination of menthol and a coolant known as WS-23.

The district court proceedings were essentially a wash: Cadbury obtained summary judgment of anticipation and obviousness of the '233 patent, while Wrigley obtained summmary judgment of noninfringement of the '893 patent.  Both parties appealed. 

Anticipation: Anticipation of the '893 was based on a prior art patent referred to as "Shahidi."  Shahidi discloses a variety of oral compositions such as toothpaste and chewing gum, containing several categories of components, including those that are "essential," "optional," and "preferred."  Included in the preferred nonessential categories were WS-3 and WS-23, with menthol being listed as one of 23 flavoring agents that can be used in the claimed composition.

Relying on Impax Laboratories v. Aventis Pharmaceuticals, 545 F.3d 1312 (Fed. Cir. 2008), Wrigley argued that Shahidi could not anticipate because it would require a PHOSITA to pick items from two lists of components in order to assemble the invention, and thus did not disclose all of the limitations of the claim arranged or combined in the same way as in the claim.  Rejecting the extension of Impax to this case, the CAFC concluded that the disclosure in Shahidi was sufficient.  The ultimate question instead was "whether the number of categories and components in Shahidi was so large that the combination of WS-23 and menthol would not be immediately apparent to one of ordinary skill in the art."  Slip Op. at 8-9. The majority concluded that it was not.

Judge Newman disagreed with the holding of anticipation.  "The purported anticipatory reference does not show this combination, and does not present so short and selective a list of these ingredients as to warrant an inference that their combination was already known."  Slip Op. at 28.  Rather, the contents of Shahidi's lists "can be combined in over a million possible combinations."  Id. at 29. 

  • For those who are interested in looking at the disclosure, a copy of Shahidi is available here: Download US5688491

Obviousness: The CAFC also affirmed the district court's grant of summary judgment of obviousness, a determination that largely turned on whether combining menthol and WS-23 produced an unexpected effect.  The court concluded that there was not: the prior art had already revealed an "enhanced breath-freshening effect" between menthol and WS-3, and pointed to characteristics shared by the WS-3 and WS-23 that suggested that they would likely have similar effects when ingested.  Given these disclosures, the court concluded that effects above and beyond those of the combination of menthol and WS-3 needed to be shown:

to show that the cooling effect of the combination of WS-23 and menthol was unexpected, Wrigley needed to demonstrate that the results were unexpected to a significant degree beyond what was already known about the effect of combining WS-3 and menthol.

Slip Op. at 11 (emphasis added).  The court concluded that such evidence was not present.  The Cadbury study that Wrigley presented, while touting the superior cooling features of Wrigley's products, involved tested products that differed in ways other than just the coolant.  Likewise, the court concluded that no nexus was demonstrated between the commercial success of Wrigley's products containing menthol and WS-23 and the specific combination of menthol and WS-23.

Judge Newman again disagreed, concluding that "[t]he record is rife with" evidence of nexus between the success of Wrigley's chewing gums covered by the claim and the specific combination of menthol and WS-23.  Slip Op. at 24.  Judge Newman further criticized the majority and district court for concluding that Cadbury had established a prima facie case of obviousness, then shifting the burden to the patent holder.  

Infringement by Equivalents: The court unanimously affirmed the district court's ruling of noninfringement, concluding that the claims were narrowly drafted to WS-3 and the interchangeability with WS-23 was forseeable. 

Practice Convention: In the majority opinion, Judge Bryson consistently refers to the patents-in-suit by their abbreviated numbers and the prior art patents, such as Shahidi, by the first inventor's name.  Providing an easy way for the reader to distinguish between the two types of patents in this way adds clarity to his writing.  As far as I am aware this is not currently a generally accepted convention but it seems like a good stylistic practice for attorneys writing briefs. 

Addendum: One commentator pointed out that Judge Bryson is not the only Federal Circuit judge to apply this convention.  Judge Moore also consistently refers to prior art references by name rather than number, although in my small sample of three I noted that a third judge does not. 

Scholarship Roundup: A Guide to the Legislative History of the America Invents Act

Patent

By Jason Rantanen

One of the challenges of working with the Leahy-Smith America Invents Act stems from its legislative history, which is scattered through more than five years of Congressional materials.  To address this challenge, Joe Matal, Judiciary Committee Counsel to Senator Jon Kyl, recently published a comprehensive guide to the legislative history of the AIA in the Federal Circuit Bar Journal.  Matal's compendium provides both a history of the Congressional discussion leading up to the AIA as well as a roadmap to the relevant legislative materials, linking them to particular provisions of the AIA and explaining how to locate each source.  Part I addresses the portions of the AIA that relate to applications before a patent issues, while Part II deals with the portions that apply after a patent is granted.  I highly recommend both to anyone who is analyzing or providing legal advice on the AIA.

A copy of Matal's article is available via SSRN:

Thanks to Professor Colleen Chien for bringing Matal's article to my attention.

Predicting En Banc Issues

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By Jason Rantanen

Dissenting opinions are generally considered to be good predictors of en banc review.  On one level, this is largely indisputable: most appeals that the Federal Circuit takes en banc involve a divided panel decision, and appellate practitioners are well aware that the chances of getting en banc review of an opinion that contains a dissent are much better than persuading the full court to review a unanimous opinion.  Of course, knowing that dissenting opinions are the more likely candidates for en banc review isn't particularly helpful by itself, since Federal Circuit judges pen more than thirty patent-related dissents each year. 

There's an extension of this theory, however, based on the idea that a high number of dissents on a particular patent law issue is a signal that the court may take that issue en banc in the near future.  There are several reasons why this extended theory is plausible: dissents may indicate that the court is cognizant of the importance of a particular legal issue; they may demonstrate awareness by the court of an intra-circuit split that it needs to resolve; they may also represent a pre-en banc dialogue between the judges.  Dissents are not costless, after all – sometimes they can be as much work or more as writing the majority opinion, and most judges do not write them as a matter of course. 

Empirical observations support this theory, at least for some grants of en banc review.  In the two years prior to the Federal Circuit's grant of en banc review of inequitable conduct in Therasense v. Becton Dickinson, for example, there were four dissents on the issue of inequitable conduct.  On the other hand, in the two years prior to the grant of en banc review in In re Seagate there were no dissenting opinions on the issue of willful infringement.  Thus while there may be value in keeping an eye on areas where dissents are common, it's by no means a perfect predictor.

With that caveat, I read through the patent-related dissents for the past two years to assemble a picture of recent Federal Circuit dissents.  All together, there were 64 of these dissents in panel opinions.  The following chart depicts the authors of those dissents.

Dissents by Judge
The next chart depicts the issues addressed by those dissents that arose with a frequency of greater than 1.  Note that there were four dissents that involved two issues.  In order to prepare the chart below based on dissenting opinions, I included only the first issue, but the second issue would also be relevant.  Those second issues were joint infringement(1), infringement(3), inequitable conduct(2), and doctrine of equivalents(2) (totals dissents addressing this issue in parentheses).

Dissents by Subject Matter

One nuance that is not conveyed by this chart is the degree to which the judges dissent on specific issues.  Two are noteworthy: Judge Dyk wrote four of the dissents on claim construction, while four separate judges (Bryson, Moore, Plager and Mayer) wrote the dissents on the issue of subject matter patentability.  Judge Newman wrote on a variety of issues.

The final chart depicts the issues that the Federal Circuit declined to consider en banc with at least one judge dissenting from that decision.  Note that for several of the issues included in the previous chart (state law malpractice claims, assignment, claim construction, and preliminary injunctions), the court has also declined to consider those issues en banc over the views of at least one judge.

Petitions with Dissents
These statistics hardly tell the whole story, of course.  Both litigation and appeals – let alone en banc review – are rare events, and thus attempting to divine highly predictive information is difficult.  Furthermore, two judges (Judges Newman and Dyk) together wrote almost half of the dissents.  Nevertheless, when combined with other insights, the above data may be helpful.  Claim construction and obviousness are hot topics (although last fall the CAFC declined to take claim construction en banc).  There is also significant disagreement among the judges on subject matter patentability, although they may not be willing address that issue through an en banc court given the Supreme Court's substantial interest in the topic.  In addition, my own sense is that there is more disagreement among the judges on the issue of the standard for preliminary injunctions than is apparent from the statistics alone.  It would not surprise me if the court were to grant en banc review on this issue – although admittedly it declined to do so recently.

What are your views on the next issue that the Federal Circuit reviews en banc?

For more on predicting en banc review generally, see Tracey E. George, The Dynamics and Determinants of the Decision to Grant En Banc Review, 74 Wash. L. Rev. 213 (1999).  For a discussion of Federal Circuit en banc practice, see Christopher A. Cotropia, Determining Uniformity within the Federal Circuit by Measuring Dissent and En Banc Review, 73 Loyola Los Angeles L. Rev. 801 (2010) (available at http://digitalcommons.lmu.edu/cgi/viewcontent.cgi?article=2720&context=llr).

Edit: minor correction to charts. 

Toshiba v. Imation: Claim Construction Three Ways

Patent,

By Jason Rantanen

Toshiba Corporation v. Imation Corp. (Fed. Cir. 2012) Download 11-1204
Panel: Moore (author), Schall, and Dyk (concurring-in-part and dissenting-in-part)

Dissents in Federal Circuit opinions dealing with claim construction often reflect disagreements over the correct methodology or execution.  Judge Dyk's dissent in Toshiba goes a step further, proposing a claim construction different from those advanced by either side. 

The technology in Toshiba involves DVDs. Toshiba's patent No. 5,831,966 claims a recording medium containing a "management region" that contains information about the structure of the medium – specifically, "number-of-recording planes identifying information that represents the number of recording planes of the recording medium." The district court construed this as "information whose purpose is to identify the number of recording planes on the recording medium."  Slip Op. at 15 (emphasis in CAFC opinion).  This "purpose" construction mattered because the patent holder accused single-sided DVDs of infringing the '966 patent.  These single-sided DVDs contain information that identifies the number of planes on that side – effectively providing information on the disc as a whole.  Because the purpose of the information on the single-sided DVDs is only to identify the planes on one side of the disc, however, the district court concluded that the accused discs do not infringe.

On appeal the majority disagreed with the district court's construction, agreeing with Toshiba that the limitation should be given its plain and ordinary meaning as recited in the claim itself.  "The language of the claim only requires that the information "represents" the number of recording planes."  Slip op. at 17.  The majority declined to read the embodiments of the specification into the claims.  "Absent disclaimer or lexicography, the plain meaning of the claim controls."  Slip Op. at 19.

Judge Dyk, writing in dissent, saw the issue differently.  In his view, the "number of recording planes" limitation requires the identification of both the number of disc sides and the number of layers per side, a construction neither party advanced.  To support this construction, he took a stronger view of the effect of the specification and the prosecution history than the majority.  In his opinion, "the specification and the prosecution history of the ’966 patent make clear that the central objective of the patent was to identify whether an optical disc was a one-sided disc or a two-sided disc."  Slip Op. at 27.  Given this construction, he would have affirmed the district court's grant of summary judgment of non-infringement. 

Indirect Infringement: The district court granted summary judgment of no indirect infringement of a second patent, No. 5,892,751, based on the conclusion that recording a DVD without finalizing it (the step necessary to allow the DVD to be played on drives other than it was recorded) was a substantial noninfringing use.  On appeal, the Federal Circuit affirmed in the context of contributory infringement but reversed for inducement of infringement.  Here, Toshiba failed to present any evidence that the recording and playing of unfinalized DVDs – which does not infringe the '751 patent – is "unusual, far-etched, illusory, impractical, occasional, aberrant, or experimental." Slip Op. at 8 (quoting Vita-Mix, 581 F.3d 1317, 1327 (Fed. Cir. 2009).  Furthermore, merely recommending an infringing use (finalizing the DVD) is not evidence that a non-infringing use is not a substantial use.  The substantial noninfringing use thus supported the grant of summary judgment of no contributory infringement.   However, the district court erred in holding that the existence of a such a use precludes a finding of inducement of infringement.  Nor could summary judgment of no inducement be affirmed on the ground that the patentee did not provide evidence of specific acts of infringement: circumstantial evidence can suffice.  Here, the circumstantial evidence was stronger than the "capable of infringing" evidence involved in Fujitsu v. Netgear, 620 F.3d 1321 (Fed. Cir. 2010) and ACCO Brands v. ABA Locks, 501 F.3d 1307 (Fed. Cir. 2007).  

Proposed Rules for Micro Entities

Patent,

By Jason Rantanen

As part of the America Invents Act, Congress created the new "micro entity" category of patent applicants.  See Public Law 112-29, 125 Stat. 283, Section 10(g) (2011).  Similar to small entity status, micro entities are entitled to a reduction of patent application fees (75% for micro entities versus 50% for small entities).  "Micro entity" is a bit of a misnomer: an applicant can qualify as a micro entity either by having an income of less than three times the median household income (approximately $50,000 based on 2010 incomes) or by being under an obligation to assign or license the application to an institution of higher education.  The latter route might be particularly attractive to universities, as it enables micro entity status for most university-affiliated researchers.  

The USPTO recently published a set of proposed regulations for establishing micro entity status.  In large part, these regulations would implement the micro entity status requirements set out in the AIA, while providing some further clarification in a few areas, such as multi-inventor applications (all must meet the micro entity requirements).

The Federal Register publication also notes some complications arising due to the severance of "applicant" from "inventor."  Prior to the AIA, the two terms were synonymous.  After September 16, 2012, however, it is possible for an application to be made by someone other the inventor.  The micro entity section of the AIA uses the term "applicant;" however, as part of the proposed rulemaking the PTO is seeking comments on whether "inventor" should be used in place of "applicant" at any point in the rules for establishing micro entity status.

Finally, keep in mind that even once these proposed rules are finalized, the discount will not be available until the PTO sets or adjusts patent fees under the fee setting authority provision of the AIA, something that it indicates will not formally occur until around March 2013. 

The proposed rules are available here:  Download 2012-12971  The comment deadline date is July 30, 2012.

Endowed Chair in IP and Junior Faculty Workshop at the University of Indiana McKinney School of Law

Patent, ,

By Jason Rantanen

Two announcements today from the University of Indiana McKinney School of Law.  The first is about IU's candidate search to fill its new IP Chair; the second is for a Junior Faculty Workshop on Intellectual Property Issues in the Pharmaceutical Industry that IU will hold in December 2012.

Endowed Chair in Intellectual Property
Indiana University Robert H. McKinney School of Law is pleased to announce that it is launching a search for the first endowed chair created by the gift of Robert H. McKinney to the (aptly named) Indiana University Robert H. McKinney School of Law.  The chair will be in Intellectual Property and will also serve as the Director of our Intellectual Property and Innovation Center.  The law school is looking for a tenured scholar with a distinguished record of teaching, research, and service.  Please forward a cv or any questions to Gerard Magliocca (gmaglioc@iupui.edu).

Junior Faculty Workshop on Intellectual Property Issues in the Pharmaceutical Industry
The Indiana University McKinney School of Law is pleased to announce this year’s Junior Faculty Workshop, on Intellectual Property Issues in the Pharmaceutical Industry. Scheduled for December 7 and 8, 2012, this two-day Workshop offers a unique opportunity for untenured scholars to present their draft scholarship for in-depth critique and commentary by respected senior scholars in the field. The Workshop is perfectly timed for junior faculty participants to revise their articles in time for a spring submission for publication. Indiana University will cover both travel and lodging expenses for all participants.

Any untenured scholars interested in participating in this intensive workshop should submit a detailed abstract or the first several pages of their articles, along with a brief CV, to Nic Terry (npterry@iupui.edu) or Emily Michiko Morris (emmmorri@iupui.edu), by June 22, 2012. Works already in progress are ideal for this workshop and will be given preference. Topics for the workshop may focus on any of a range of intellectual property issues as they relate to the pharmaceutical industry, broadly defined. Acceptable topics may therefore include, but are not limited to, issues involving patent and regulatory exclusivity; patent linkage; the Hatch-Waxman Act; the BPCIA; TRIPs; the Bayh-Dole Act; the AIA; public-private collaborations; and more.

Applicants should also submit the names of established scholars in their area of scholarship who would be able to provide meaningful commentary on their drafts. Junior faculty applicants selected for the workshop must commit to producing complete drafts of their articles well ahead of the workshop (i.e., before Halloween), so that senior faculty participants may have time to review them. Selected participants will be notified by July 1, 2012.

 

Mintz v. Dietz & Watson: Hindsight and Common Sense

Patent,

By Jason Rantanen

Mintz v. Dietz & Watson, Inc. (Fed. Cir. 2012) Download 10-1341
Panel: Rader (author), Newman, Dyk

Although concerns about hindsight never disappeared from Federal Circuit opinions on obviousness following KSR, it did seem for a time that the court backed away from strong language about hindsight.  The court's opinion in this case exhibits no such timidity.

The Mintzes invented a casing structure for meat products that permits the meat to bulge between netting strands while avoiding the more complex stuffing process associated with prior knitted meat encasements (Patent No. 5,413,148). Package Concepts & Materials, Inc., a former distributor of Mintz products, filed a declaratory judgment action against Mintz and Mintz filed a patent infringement action against PCM.  During the consolidated infringement proceeding the district court granted summary judgment of obviousness as to the '148 patent.  On appeal, the Federal Circuit reversed. 

Hindsight as a major continuing concern: The most striking aspect about the Federal Circuit's opinion is the strong language it uses when discussing the need to avoid hindsight bias when analyzing obviousness.  The opinion uses the word "hindsight" repeatedly, warning against "the forbidden use of hindsight" and the "prohibited reliance on hindsight," as well as the need for "a court to walk a tightrope blindfolded (to avoid hindsight)."  Compare this with KSR: "A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning…Rigid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it."  KSR v. Teleflex, 550 U.S. 398, 421 (2007).  (Mintz does not cite KSR at any point).

Consistent with its view on hindsight, the opinion seeks to avoid such bias in three ways: by requiring that "common sense" be articulated, by avoiding the use of the patent itself in defining the problem the invention solves, and by emphasizing the need to analyze the objective indicia of nonobviousness. 

"Common sense" must be articulated: In its obviousness determination, the district court relied on a "common sense approach" to conclude that it would have been "obvious to try" an element of the claimed invention.  The CAFC held that more is required than simply saying the words "common sense": "With little more than an invocation of the words "common sense" (without any record showing that this knowledge would reside in the ordinarily skilled artisan), the district court overreached in its determination of obviousness."  Slip Op. at 9.

Nonobvious question/obvious solution: The CAFC also found that the district court erred by using the invention to define the problem that the invention solves.  This was problematic because it may be the problem itself that is nonobvious – once the problem is known the solution may be virtually certain.  "Often the inventive contribution lies in defining the problem in a new revelatory way."  Slip. Op. at 9. This is consistent with KSR – solutions to a problem cannot be "obvious to try" if the problem itself is not known or obvious. 

Objective indicia of nonobviousness: A classic tool for avoiding reliance on hindsight is use of the objective indicia of nonobviousness.  They "help inocolate the obviousness analysis against hindsight,"  Slip Op. at 10, and "turn back the clock and place the claims int he context that led to their invention."  Id. at 11.  Consideration of these indicia is not discretionary; it is mandatory.  By failing to give substantive consideration to the objective evidence of nonobviousness presented by Mintz, the district court erred.   

Summary judgment of noninfringement was also at issue on appeal; the CAFC affirmed the district court on that issue. 

Guest Post by Michael Risch: America’s First Patents

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Guest Post by Michael Risch, Associate Professor of Law, Villanova University School of Law

My forthcoming Florida Law Review article, America’s First Patents, examines every available patent issued during the first 50 years of patenting in the United States.  A full draft is accessible at this SSRN page. The article reaches three conclusions:

  1. Our patentable subject matter jurisprudence with respect to methods can, in part, blame its current unclarity on early decisions by a few important judges to import British law into the new patent system.
  2. Early patenting trends suggest that Congress has never intended new subject areas be limited until Congress explicitly allowed the new subject area.
  3. The machine-or-transformation test, which allows a method patent only if the process involves a machine or transforms matter, has no basis in historic patenting practices.

When the Federal Circuit first issued its en banc opinion in In re Bilski, I believed that its machine or transformation rule could not have been based on history. I wrote in my 2010 article Forward to the Past that:

in its effort to deal with high technology, the [Federal Circuit] abandoned low technology. There are many patented processes that have nothing to do with machines or transformations—methods for measuring fabric, methods for harvesting fruit, and methods for manufacturing products by hand (for example, forming wrought iron). At worst, these types of historically patentable inventions would now be unpatentable. At best, determining what is patentable and what is excluded became much more difficult.

However, I did not have any real proof to support this statement, so I thought I would test the assertion with some quasi-empirical evidence. I spent the summers of 2010 and 2011 working with several research assistants, and we read every available patent we could find, a total of about 2500 before 1836 (most of our pre-1836 patents were destroyed in an 1836 Patent Office fire), and 1200 between 1836 and 1839. The goal was, first, to categorize patents as methods and, second, to determine whether each method used a machine or transformed matter to a new thing.

This was no easy task. Many early patents were difficult to read, and not just because they were handwritten. At the time, inventors did not have to claim their subject matter. As a result, patents usually described how to make or do something, and nothing more. It was often difficult to tell whether the making or the thing made was purportedly inventive. Even after more inventors started using claims, patentees would claim the exclusive right to “manufacture product X by doing Y,” which still left matters unclear.

This difficulty leads to my first conclusion. While courts often talked about “principles” in early judicial opinions, quite often they were attempting to determine the “principle of the machine” to identify what was patented for infringement purposes. Even when courts mentioned that principles were not patentable, the statement was usually a side issue and “principles” meant very basic principles, like “motion.” Because principles were not patentable, courts attempted to construe the patent in a way that was not a principle. This, it seems, is contrary to how we do things under recent cases.

In reading this old history, I discovered something interesting (and I don’t claim to be the first person to discover it – merely the first to tie the content of old patents to support the conclusion). Specifically, early judges imported British law into interpretation of the American statute. This might seem reasonable, except that methods were not patentable in England until after 1840.  But methods were explicitly patentable (called “art” in the statute) in the U.S. Indeed, the very first patent covered a method of making pot and pearl ash. But Justice Story, who sat as a Circuit Justice in many patent cases, did not think methods should be patentable, and as such issued statements in many cases about what could not be patented – statements that have been repeated even until today. My article looks at these statements in detail, and shows how unclarity in early patents allowed the courts to perpetuate a (wrong) view that we must limit method patents in particular ways.

In the second part of the article, I discuss some general findings about the patents. Some were dangerous (lead paint and asbestos), some were ridiculous, and some were enduring. There were many business methods related to teaching , music, and exercise, and there was even a rudimentary software patent (on a Jacquard loom, though I know some think that this is not really software). This was an entertaining part of the article to write; it was interesting to see how industries developed through patents. However, there is one overriding theme: the patents started simple, grew more complex over time, and expanded to new subject matter over time. Further, very little of the subject matter that dominates today’s inventions—such as electronics, chemicals, and pharmaceuticals—was apparent in early patenting. My conclusion from this analysis is that the patent system was designed to handle new subject matter as it is invented, and that Congress never expected to step in and approve new subject matter over time.

The final part of the article examines the motivating issue: whether the machine or transformation test was historically used. Because patents from 1793-1836 were not examined by the Patent Office but those from 1836-1839 were, I could test whether inventors had a different view of this issue than patent examiners had. It turns out that the groups did not differ; the results are statistically the same before and after 1836.

And those results show that our first inventors did not limit methods to those that used machines or transformed matter. About 40% of the methods patents between 1790 and 1793 did not use a machine or transform matter.  These would all be invalid under the modern test. To be sure, the test was very good at identifying business methods—nearly all of the business methods fell into that 40%, so it is hard to fault the test for failing to identify early business methods.  Of course, today’s business methods do use machines, so I am not sure how accurate the test would be today.

However, there were many patents –many more than the business methods—that did not use a machine or transform matter.  This, to me, suggests that among the tests other failings, it has no real basis in past practice or understanding. While we can debate the merits of the recent Prometheus opinion, I applaud its rejection (again) of the machine or transformation test as a way to determine patentable subject matter.

This post presents the basic conclusions of my article. There is obviously much more in this 50 page paper than I can write here. I detail my methodology (and its limits), 19th century law, and the patents in the full paper.

Guest Post by Sarah Burstein: Apple v. Samsung

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Guest post by Sarah Burstein, who will joining the faculty of University of Oklahoma College of Law this August.  Her research focuses on design patents, an important piece in the smartphone wars. – Jason

Apple, Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. 2012) Download 12-1105

Panel:  Bryson (author), O’Malley (concurring in part and dissenting in part), Prost

On May 14th, the Federal Circuit issued its first opinion in the world-wide, multi-front patent war between Apple and Samsung.  In this opinion, the Federal Circuit considered the district court’s denial of Apple’s motion for a preliminary injunction based on infringement of three design patents and one utility patent, affirming in part and vacating in part.  The opinion provides notable holdings in the areas of irreparable harm and nonobviousness.

In the motion, Apple argued that Samsung’s Galaxy S 4G and Infuse 4G smartphones infringed U.S. Des. Patent No. 618,677 (“the D’677 patent”) and U.S. Des. Patent No. 593,087 (“the D’087 patent”) and that Samsung’s Galaxy Tab 10.1 tablet computer infringed U.S. Des. Patent No. 504,889 (“the D’889 patent”).  Apple also argued that all three of the devices—along with Samsung’s Droid Charge phones—infringed U.S. Patent No. 7,469,381 (“the ’381 patent”), which claims the iPad and iPhone “bounce” feature.  The district court denied the motion based on, among other things, its findings that:  (1) Samsung had raised substantial questions regarding the validity of the D’087 and D’889 patents; and (2) although the D’677 and ’381 patents were likely valid and infringed, Apple had failed to provide sufficient evidence on the issue of irreparable harm.

On appeal, the Federal Circuit affirmed the denial of preliminary injunctive relief with respect to the D’677, D’087, and ’381 patents based on a lack of irreparable harm.  The Federal Circuit concluded that the district court had not abused its discretion in finding no likelihood of irreparable harm with respect to the D’677 and ’381 patents.  And although the Federal Circuit rejected the district court’s conclusion that the D’087 was likely anticipated, it still found no abuse of discretion in the denial of the preliminary injunction “[b]ecause the irreparable harm analysis is identical for both smartphone design patents.”

On the issue of irreparable harm, the Federal Circuit rejected Apple’s argument that the district court erred in requiring Apple to demonstrate a nexus between the claimed infringement and the alleged harm.  According to the Federal Circuit:  “If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product.  Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.”  On appeal, Apple had argued that the district court had erred in rejecting Apple’s dilution theory of irreparable harm.  The Federal Circuit disagreed, noting that “[t]he district court's opinion thus makes clear that it did not categorically reject Apple's ‘design erosion’ and ‘brand dilution’ theories, but instead rejected those theories for lack of evidence.”  However, the Federal Circuit agreed with Apple that it “would have been improper” for the district court to completely reject “design dilution as a theory of irreparable harm.”  The Federal Circuit did not explain why it “would have been improper” or provide any further explanation.

The Federal Circuit did, however, vacate the denial of preliminary injunctive relief with respect to the D’889 patent.  The district court had found that the D’889 patent was likely obvious, using a 1994 tablet design (the “Fidler tablet”) as the primary reference.  In the design patent context, any finding of obviousness must be supported by a primary reference—i.e., there must be “something in existence” that has “basically the same” appearance as the claimed design.  If a primary reference is found, then the analysis proceeds.  But if there is no primary reference, the inquiry ends—the design cannot be obvious.  The Federal Circuit disagreed with the district court, holding that the Fidler tablet was not a proper primary reference.  The Federal Circuit stated that “[a] side-by-side comparison of the two designs shows substantial differences in the overall visual appearance between the patented design and the Fidler reference,” pointing to the following illustration: 

  References

Without a primary reference, the district court’s finding that Apple was unlikely to succeed on the merits could not stand.  And the district court had found that Apple had demonstrated a likelihood of irreparable injury with respect to the D’889 patent.  However, because the district court had not made any findings on two of the preliminary injunction factors—the balance of harms and the public interest—the Federal Circuit remanded this portion of the case for further proceedings. 

In her partial dissent, Judge O’Malley disagreed that the case should be remanded for further proceedings.  According to Judge O’Malley, the district court’s discussion of these factors with respect to the other smartphone patents supported the entry of an injunction against the Galaxy Tab 10.1.  Judge O’Malley also expressed concern that the remand would create undue delay, stating that “courts have an obligation to grant injunctive relief to protect against theft of property—including intellectual property—where the moving party has demonstrated that all of the predicates for that relief exist.”

Comment:  The Federal Circuit’s conclusion regarding the Fidler tablet was surprising.  Only a few years ago, a leading commentator observed that “[a]s a practical matter, [the requirement that the designs have ‘basically the same’ design characteristics] means that the primary . . . reference in a §103 design case needs to illustrate perhaps 75-80% of the patented design.”  Perry J. Saidman, What Is the Point of the Point of Novelty Test for Design Patent Infringement?, 90 J. Pat. & Trademark Off. Soc’y 401, 419 (2008).  Using that rule of thumb—or really, any ordinary meaning of the phrase “basically the same”—the Fidler tablet would easily qualify as a primary reference.  Of course, that would not mean that the D’889 patent was obvious; indeed, there does not seem to be (at least from the public portion of the record) any persuasive evidence that an ordinary designer would have been motivated to modify the Fidler tablet in the manner shown in the D’889 patent.  But this strict reading of the “basically the same” requirement may make it more difficult to prove obviousness in future design patent cases.  And while it’s too early to declare a trend, it is worth noting that the Federal Circuit affirmed a rather strict reading of this requirement last year in Vanguard Identification Systems, Inc. v. Kappos (a case I discussed in a recent article). 

The other especially striking portion of this opinion is the Federal Circuit’s unquestioning acceptance of Apple’s “design dilution” theory of irreparable harm.  This sort of express equation of the harm caused by design patent infringement with the harm caused by trademark dilution is unprecedented in design patent case law (although not in the academic literature) and Apple’s theory deserves more attention and consideration than the Federal Circuit appears to have given it in this case.

In Memoriam Best Mode

Patent

By Jason Rantanen

When Congress passed the America Invents Act and President Obama signed it into law, courts were stripped of the power to declare patents either invalid or unenforceable for failure to disclose a best mode.  While it is true that amended section 112 of Title 35 still technically "requires" patent applicants to disclose a best mode if they know of one, courts will no longer enforce the requirement. For all practical purposes, the requirement that a patent applicant disclose a best mode is effectively dead.

Yet, perhaps in moving to eliminate the best mode requirement Congress acted too hastily.  In a recent online essay published by the Stanford Law Review, Lee Petherbridge and I draw attention to a benefit the best mode requirement provides (or perhaps "provided" is more accurate) that directly challenges the conventional attitude toward best mode, arguing that best mode works closely with the nonobviousness requirement to establish the level of "inventiveness" that the U.S. patent system has long considered optimal.

You can read the complete essay here: http://www.stanfordlawreview.org/online/in-memoriam-best-mode

 

Judge Wallach and Claim Construction

Patent

By Jason Rantanen

Chicago Board Options Exchange, Inc. v. International Securities Exchange, LLC (Fed. Cir. 2012) Download 11-1267-1298
Panel: Rader, Wallach (author) and Fogel

If my own conversations are any indicator, many people who follow the Federal Circuit's claim construction jurisprudence have developed strong opinions about the longstanding members of the court.  More of an unsolved puzzle are the more recent appointees.  In Chicago Board Options Exchange, we get a glimpse into the newest member of the court's thoughts on claim construction in his debut patent law opinion.  That opinion suggests an approach closely tied to the patent itself, analyzing the text of the document without reference to extrinsic sources.

Means plus function: One of the claim terms at issue in this appeal was "system memory means for storing allocating parameters for allocating trades between the incoming order or quotation and the previously received orders and quotations."  Although the court noted that the parties expressly agreed during claim construction that this was a means-plus-function limitation, the court nonetheless dropped a footnote indicating that even had the argument not been waived, the presumption arising from the use of the word "means" was not overcome because the limitation "system memory means" articulates a function and nowhere includes a "specific and definite structure."  Given this statement, it is possible that Judge Wallach may take a broad approach to 112(f), interpreting a wide array of terms to fall within its scope.  Or I may be overreading the footnote, given that the claim element did include "means" after all.

In the end, however, the distinction did not matter, as the CAFC interpreted the corresponding structure of "system memory means" to be "system memory."  After examining the specification to determine which structure was linked to the means-plus-function element's function, and applying the canon of claim construction that different terms convey different meanings, the court concluded that the "[t]he clearly linked structure associated with this function is “system memory.” Slip Op. at 13-14.  It did not include the additional elements identified by the district court.

Looking at the Claims, then the Specification: The CAFC also construed several non-means-plus-function terms, taking a similar approach to each.  For each term, the court first looked to the claim language itself to divine any meaning the claims might offer, then turned to the specification to examine whether it provided further support or rebutted the meaning as indicated by the claim.  As in the preceding section, the court relied heavily on the different terms/different meanings canon of claim construction.

Specification disavowal: Although for most terms the court found that the specification either supported or did not rebut the meaning of the terms as established by the claims, the court found clear disavowal of claim scope for one term: "automated exchange."  "The specification goes well beyond expressing the patentee’s preference for a fully automated exchange over a manual or a partially automated one, and its repeated derogatory statements about the latter reasonably may be viewed as a disavowal of that subject matter from the scope of the Patent’s claims."  Slip Op. at 21.  Thus, the district court correctly interpreted this term to mean "fully computerized, such that it does not include matching or allocating through use of open out-cry."  Id.

Obviousness and Chemical Compounds

Patent,

By Jason Rantanen

Otsuka Pharmaceutical Co., Ltd. v. Sandoz, Inc. (Fed. Cir. 2012) Download 11-1126
Panel: Lourie (author), Moore, Reyna

This opinion addresses the appropriateness of using a "lead compound" analytical framework for evaluating the obviousness of chemical compounds, reaffirming and refining the approach taken in Takeda Chemical Industries, Ltd. v. Alphapharm Pty., Ltd., 492 F.3d 1350 (Fed. Cir. 2007). 

The defendants in Otsuka consist of a group of ANDA applicants who contended that the compound claimed in Patent No. 5,006,528, aripiprazole (marketed under the brand name Abilify®), was obvious in light of three prior art carbostyril derivative compounds.  Prior to aripiprazole (itself a carbostyril derivative), the only atypical antipsychotic compounds approved by the FDA for the treament of schizophrenia were those that possessed structures related to the antipsychotics clozapine and risperidone, neither of which were the basis for the obviousness challenge.  Following a bench trial, the district court concluded that the asserted claims were not obvious in light of the three "lead compounds" identified by defendants, nor was the patent invalid due to nonstatutory double patenting.

Obviousness: In rejecting defendants' appeal of the district court's determination of nonobviousness, the CAFC endorsed the two-step framework of Takeda (also authored by Judge Lourie). In Takeda, the CAFC addressed the defendant's argument that "the prior art would have led one of ordinary skill in the art to select compound b as a lead compound," with "lead compound" referring "to a compound in the prior art that would be most promising to modify in order to improve upon its antidiabetic activity and obtain a compound with better activity."  Takeda, 492 F.3d at 1357.  The court then analyzed whether a PHOSITA would have both selected and modified the prior art compounds identified by the defendant, an approach applied by the district court in Otsuka and challenged by the defendants on appeal as the type of rigid analysis precluded by KSR.

The CAFC disagreed, holding that the Takeda approach was permissible:

Our case law demonstrates that whether a new chemical compound would have been prima facie obvious over particular prior art compounds ordinarily follows a two-part inquiry. First, the court determines whether a chemist of ordinary skill would have selected the asserted prior art compounds as lead compounds, or starting points, for further development efforts….The second inquiry in the analysis is whether the prior art would have supplied one of ordinary skill in the art with a reason or motivation to modify a lead com-pound to make the claimed compound with a reasonable expectation of success. 

Slip Op. at 17, 19.

Of course, aspects of KSR do impact this conclusion.  For example, the reason or motivation for a PHOSITA to modify a lead compound may come from a variety of sources, or not even be explicit in the prior art. Slip Op. at 19-20.  And the CAFC's approval of the Takeda approach may have been guided in part by the parties' decision to focus their arguments on selecting and modifying particular prior art compounds, rather than approaching obviousness from another direction.  Id. at 17. 

Examining the two steps, the CAFC concluded that the district court did not err when it found that a PHOSITA would not have selected the prior art compounds for use as lead compounds for further antipsychotic research or made the modifications necessary to arrive at the claimed compound. 

Obviousness-type double patenting: The CAFC also rejected defendants' nonstatutory obviousness-type double patenting argument, using the opportunity to clear up an apparent ambiguity about the differences between obviousness and obviousness-type double patenting.  Although analogous, the two differ in several respects.  The patent principally underlying the double patenting rejection need not be prior art (which makes sense given that the purpose of the double patenting doctrine is to prevent one person from obtaining more than one valid patent for the same invention or an obvious modification of the same invention).  More notably, "when analyzing obviousness-type double patenting in cases involving claimed chemical compounds, the issue is not whether a skilled artisan would have selected the earlier compound as a lead compound."  Slip Op. at 28 (emphasis added).  Rather, selection of the earlier compound as a lead compound is presumably automatic under the court's language.  However, it is still necessary to identify some reason that would have led the PHOSITA "to modify the earlier compound to make the later compound with a reasonable expectation of success." Id. at 29.  This is mandatory: "There is no other way to consider the obviousness of compound B over compound A without considering whether one of ordinary skill would have had reason to modify A to make B. That is traditional obviousness analysis."  Id. at 30 (emphasis added). 

As with the obviousness inquiry generally, the CAFC declined to find clear error in the district court's determination that no such reason existed in this case.

WARNING: Appellate lawyers often feel compelled to make sub-arguments in footnotes, as Otsuka's counsel did here in contending that a PHOSITA would not have consulted an unindexed file history of a patent.  Although Otsuka ultimately prevailed, this practice is strongly discouraged by the court: "Arguments raised only in footnotes, however, are waived…Although we may exercise our discretion to consider improperly raised arguments, we decline to do so here."  Slip Op. at 22.

Guest Post by Dr. Shine Tu: Luck/Unluck of the Draw: An Emprical Study of Examiner Allowance Rates

Patent,

Dr. Shine Tu is an Associate Professor of Law at the West Virginia University College of law.  For the past year, Dr. Tu, a former patent attorney with Foley & Lardner, has conducted a massive empirical examination of patent prosecution.  Massive, in the sense that Dr. Tu and his assistants examined the prosecution behavior of every patent issued in the last ten years.  In Luck/Unluck of the Draw: An Empricial Study of Examiner Allowance Rates, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1939508 and forthcoming in the Stanford Technology Law Review, Dr. Tu discusses some of the findings from his study. – Jason

Luck/Unluck of the Draw: An Emprical Study of Examiner Allowance Rates

Dr. Shine Tu

One of the greatest banes of a patent applicant is the examiner who will not allow an application that should be allowable.  During a trip to the PTO for an Examiner interview, I passed by the office of Examiner X with a sign that stated “0% allowance rate ☺ [ed.: smiley face].”  Evidently, the smiley face was inserted to add insult to injury.  I asked the examiner that I was with if Examiner X really had a 0% allowance rate, and she said “yes.”  (I later verified that this was correct)  I asked why this was the case, and she stated, “some examiners believe an allowance is an affront to their being.”  Of course, our patent system would be a complete failure if the ability to get a patent was solely determined by which examiner you were lucky/unlucky enough to draw.

In an attempt to determine the extent of this behavior, I set out to comprehensively study allowance rates of specific examiners by art unit, technology center and the PTO as a whole.  To be as comprehensive as possible, I coded over 1.5 million patents in an attempt to code every patent ever issued in the last 10 years (from January 2001-July 2011).

The results of this study were surprising.  I found two interesting populations of examiners.  First, I found a significant population of examiners who on average, issue a disproportionately small number of patents per year (low allowance rate examiners).  Second, I found a small but significant population of examiners, who on average, issue a disproportionately large number of patents per year (high allowance rate examiners).

The first population of low allowance rate examiners consist mainly of secondary examiners (junior examiner usually with less than 5 years of experience and no signatory authority).  These examiners, on average, issue a very small number of patents per year (less than 5 patents per year).   For example, between 2002-2011 in technology center 3700, approximately 17% (306 examiners) of the examiners issued less than 0.35% (823 patents) of the patents in this art unit.  Accordingly, these low allowance rate examiners issued approximately 2.7 patents per examiner.

In contrast, I found a second population of high allowance rate examiners that consist mainly of primary examiners (senior examiners usually with more than 5 years of experience and full signatory authority).  These examiners, on average, issue a high number of patents per year (more than 50 patents per year).  For example, between 2002-2011 in technology center 3700, approximately 12% (215 examiners) of the examiners issued approximately 51% (120,822 patents) of the patents in this art unit.  Accordingly, these high allowance rate examiners issued approximately 561.9 patents per examiner.

There are many good reasons why an application should not be allowed.  However, one reason that should not play a role is an uneven / inconsistent application of patentability rules.  Examiners should be consistent in the way they apply patentability rules within their own docket.  Additionally, examiners should be consistent in the way they apply patentability rules compared to examiners within their art unit.  This study suggests that examiners even within the same art unit may be applying the rules of patentability in an inconsistent manner. 

There are many limitations with this study.  First, I note that there is no ideal allowance rate.  Second, I note that this is only descriptive data.  Finally, I note that I focus only on issued patents.  I could not obtain data related to the total number of filed applications for each art unit, thus I cannot calculate the percentage allowance rate per art unit (because I do not have a denominator of “filed applications”).  This is a significant limitation because all of these results are limited by the “denominator” problem.

Additionally, it is possible both populations of examiners are doing an outstanding job.  That is, it is possible that the low volume examiners are simply getting harder cases (but I am skeptical of this explanation).   Additionally, it is possible that the low volume examiners are “doing a more thorough job” since they are mainly secondary examiners and thus have more time to spend per application for review and detailed analysis.  Furthermore, it is possible that high volume examiners are doing an adequate job because they are simply more experienced and not only know the field better, but know how to quickly make “good” rejections.  In order to obtain some substantive answers to overcome these limitations, I am currently reviewing a sample of prosecution histories to determine if these two populations of examiners truly are applying the patentability rules in an inconsistent manner. 

A full draft of “Luck/Unluck of the Draw: An Empirical Study of Examiner Allowance Rates” is available on SSRN at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1939508 and is forthcoming in the Stanford Technology Law Review.  Comments are appreciated.

Advanced Fiber Technologies v. J&L Fiber Services

Patent

By Jason Rantanen

Advanced Fiber Technologies (AFT) Trust v. J&L Fiber Services, Inc. (Fed. Cir. 2012) Download 11-1243
Panel: Lourie (author), Dyk (dissenting in part), Prost

This opinion provides guidance on the process of construing claim constructions and illustrates the continuing disagreement among the Federal Circuit judges about claim interpretation.

The technology at issue in this case involves screening devices used in the pulp and paper industry. Advanced Fiber Technologies (AFT) patented a screening device that purports to offer substantially increased efficiency and flow capacity.  Two of the asserted independent claims include the term "screening medium"; the third contains the synonym "screening plate."  The district court construed "screening medium" as "a perforated barrier through which stock is passed to remove oversized, troublesome, and unwanted particles from good fiber."  Slip Op. at 8.  It further interpreted a term from its construction, "perforated," as meaning "pierced or punctured with holes."  Id.  Based on this meaning of "perforated," the district court granted summary judgment of noninfringement as against the accused device, which used a "wedgewire" screen (a screen made by assembling closely spaced parallel wires).  AFT appealed, challenging not the district court's construction of the term "perforated" but its construction of "screening medium."

Although not explicitly discussed by the opinion, construing claim constructions (which the majority refers to as "derivative construction" on page 14) raises some difficult issues above and beyond the challenges that come with construing the claim terms themselves – specifically, the degree of relationship between the claim term and the interpretation of the claim term's construction. 

The majority opinion in Advanced Fiber provides some guidance in this area.  First, the derivative construction "must follow the guiding principles set forth in Phillips." Slip Op. at 14.  Second, whether "construing a claim term or a disputed term within a claim construction, our ultimate goal is determining the meaning and scope of the patent claims asserted to be infringed.'" Id., quoting Markman, 52 F.3d at 976. 

Applying these two points, the majority agreed with AFT, concluding that the district court improperly relied on extrinsic evidence that contradicted the intrinsic evidence and that its own interpretation of "perforated" as simply "having holes or openings" was "fully consistent with the language of claim 1, "a screening medium having a plurality of openings therethrough," and claim 10.  Slip Op. at 17.

Comment: The majority's approach to derivative constructions looks to be fairly useful, in that it suggests that derivative constructions should relate back to the meaning of the claim itself rather than going down the rabbit hole of attempting to independantly interpret interpretations.  This approach thus adds to the methodology for construing constructions developed in Cordis Corporation v. Boston Scientific Corporation, 658 F.3d 1347 (Fed. Cir. 2011), another recent case dealing with an issue of derivative construction. 

Writing in dissent, Judge Dyk would have affirmed the district court's construction.  In Judge Dyk's view, the court should have read more into arguments the applicant made during prosecution and found that the applicant explicitly adopted the definition of "perforated plate" from a technical manual, the Handbook of Pulp & Paper Terminology, that the applicant cited during prosecution for the definition of "screen plate."

Note: Based on my reading of the opinion and the appellee's brief, neither the district court nor J&L appear to have relied on the Handbook's definition of "perforated plate." 

Unenforceable Patents

Patent,
By Jason Rantanen
Although the en banc Federal Circuit raised the bar for establishing inequitable conduct in Therasense v. Becton Dickinson, findings of inequitable conduct are still possible as illustrated by the district court's decision on remand in that case last week.  Given that the harsh consequence of a finding of inequitable conduct remain unchanged by Therasense, it remains a very real risk for patent holders asserting their patents in litigation.  What, then, are the characteristics of patents that historically have been the subject of an inequitable conduct finding? 

In a recently released draft paper, Lee Petherbridge, Polk Wagner, and I discuss the results of a study in which we empirically examined patents that were determined to be unenforceable due to inequitable conduct and compared them to litigated patents.  We report evidence that unenforceable patents are different from litigated patents.  Unenforceable patents have significantly longer pendency, more parent applications, and contain more claims.  Unenforceable patents also cite fewer U.S. patent references.  Surprisingly, we found no evidence that patents with foreign inventors are more likely to be unenforceable and no evidence that the subject matter of a patent associates with an inequitable conduct determination.  Using these observations, we hypothesize about why inequitable conduct happens, how inequitable conduct relates to patent policy, and what – if anything – practitioners who are concerned about an inequitable conduct determination might take as potential warning signs.

We are still grappling with what our results might teach about why inequitable conduct happens. As this is a working draft, we welcome any comments about that or any other aspects of the study.  The paper can be downloaded here: http://papers.ssrn.com/abstract=2031173.

3M v. Avery: Walking the Line of Declaratory Judgment Jurisdiction

Patent

By Jason Rantanen

3M Company v. Avery Dennison Corporation (Fed. Cir. 2012) Download 11-1339
Panel: Rader, Lourie (author), Linn

There's a fine (and perhaps rather fuzzy) line between engaging in patent licensing discussions that are sufficient to trigger declaratory judgment jurisdiction and those that are not.  In 3M v. Avery, the court perhaps made that line a bit clearer for those trying to stay on one side of it.

According to 3M's declaratory judgment complaint, in March 2009 Avery's Chief IP Counsel called 3M's Chief IP Counsel to tell him that a new 3M product "may infringe" two of Avery's patents and "licenses are available."  3M subsequently rejected Avery's licensing offer, and in the course of that discussion was told that Avery had performed an analysis of 3M's product in connection with the two patents and that Avery would send claim charts.  No claim charts were ever sent.

Over a year later, 3M filed an action seeking a declaratory judgment of noninfringement, invalidity, and intervening rights as to the two Avery patents.  The district court dismissed the action, concluding that "'even accepting the facts as set forth by 3M,' subject matter jurisdiction did not exist at the time 3M filed its declaratory judgment complaint."  Slip Op. at 5.  In response to 3M's appeal, the Federal Circuit vacated and remanded for factual determinations.

Defining the line: In general, establishing the existence of a case or controversy for purposes of declaratory judgment jurisdiction requires something more than just "a communication from a patent owner to another party, merely identifying its patent and the other party's product line."  Slip Op. at 11 (citing Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)).  How much more is determined "on a case-by-case basis,"  Slip Op. at 11, although 3M v. Avery provides an important data point for identifying behavior that goes too far. 

In vacating the district court's dismissal, the CAFC concluded that the facts alleged by 3M in this case amounted to Avery "effectively charg[ing] 3M with infringement of [the patents-in-suit]."  Id.  That Avery's counsel (who initiated the communication) said "may infringe" rather than "does infringe" was immaterial in light of the license offer, the representation that Avery had analyzed 3M's product, and the statement that claim charts would be forthcoming. Especially in light of the facets of the case that the court held to be immaterial discussed below, the opinion suggests that there is a narrow gap indeed between the non-case or controversy creating communication discussed in Hewlett Packard and communications sufficient to establish jurisdiction.

Immaterial Facts: The CAFC considered several other facts in reaching its ultimate decision to vacate, but concluded that all were immaterial or equivocal. Two related to time: Avery had not provided a deadline for responding to its licensing offer and 3M's declaratory judgment action was filed more than a year after the parties' discussions.  Neither fact significantly favored the conclusion that a case or controversy was lacking.  "[W]e note that, as part of a pre-filing investigation, it takes time to review a set of asserted patents, the record generated before the PTO, and the accused products before a potential infringer can make an informed decision to file a declaratory judgment complaint."  Slip Op. at 15. 

On the other side of the equation, neither the history of litigation between the parties nor the fact that Avery had initiated reissue proceedings for the patents weighed strongly in favor of a finding a case or controversy.  Here, while there was much prior litigation between the parties, it involved different products and patents, and thus was not the type of pattern of litigation leading to the reasonable assumption that the patentee will bring suit based on the patents in suit.  Similiarly, as to the reissue proceedings, the court commented that "[t]he purpose of reissue proceedings is to correct errors in an issued patent…and, in this case, even with the unrelated litigation between the parties, there is no evidence that an objective observer in 3M's position would conclude that Avery initiated reissue proceedings for the purpose of bringing a lawsuit against 3M accusing [its product] of infringement."  Slip Op. at 14. 

Remand for factfinding: Because the district court concluded that 3M failed to allege a justiciable controversy on the fact of its complaint, it had not resolved two key factual disputes: the actual content of the statements made by Avery's counsel and whether the parties' discussions were covered by a confidentiality agreement that precluded their use to establish jurisdiction.  Given the disputed nature of these facts, the CAFC remanded to the district court for resolution.

District Court Concludes Therasense Patent Unenforceable On Remand

Patent,

By Jason Rantanen

Therasense, Inc. v. Becton, Dickinson and Company (N.D. Cal. 2012) Download 2012-03-28 Therasense v Becton Dickinson

Following the Federal Circuit's remand in Therasense v. Becton Dickinson, the district court has concluded that Patent No. 5,820,551 is unenforceable due to inequitable conduct under the higher standards for intent and materiality articulated by the en banc court.  Specifically, the judge found that the withheld briefs were material under the "but for" test for materaliality, that the Abbot attorney and scientist knew of that but-for materiality, and that they possessed specific intent to deceive the patent office. 

While all of the district judge's intepretations of Therasense are worth discussing, I find the characterization of Therasense as a whole to be the most interesting:

"Under the new standard, therefore, an applicant or attorney may knowingly and deliberately withhold from the PTO any reference known to be inconsistent with a position takeny by him or her before the PTO so long as the withholder does not know that the reference itself would lead to a rejection.  It would not be enough to prove that the applicant or attorney expected that the concealment would help win an allowance or expected that, if revealed to the examiner, the reference would cause the examiner to merely question patentability.  Rather, the applicant or attorney must know – and it must be later proven that he or she knew, that the item, if revealed, would lead to a rejection."

Slip Op. at 3. 

 

Does Agency Funding Affect the PTO’s Decisionmaking?

Patent

By Jason Rantanen

Both practitioners and academics constantly debate the extent to which factors other than the "true" patentability of an invention affect the patent office's decision to grant or deny an applicant a patent.  A recent empirical study by professors Michael Frakes of Cornell and Melissa Wasserman of Illinois explores one such potential externality: the influence of the PTO's budgetary structure on the decision whether or not to grant a patent.

In Does Agency Funding Affect Decisionmaking?: An Empirical Assessment of the PTOs' Granting Patterns (available here), Frakes & Wasserman theorize that elements of the PTO's fee schedule that are collected only in the event that patents issue create incentives for the PTO to grant additional patents, and that these incentives have their greatest effect in times of agency underfunding.  If this hypothesis is correct, the current funding structure of the PTO may bias it in unintended directions, such as towards granting patents associated with large enterprises rather than individuals and small entities.

The authors then empirically test their predictions using a natural experiment approach revolving around the Omnibus Reconciliation Act of 1990, an Act that both greatly increased the fees assessed by the PTO and left the PTO essentially fully funded by user fees.  After applying sophisticated statistical techniques to address a variety of complications flowing from the nature of the problem examined, they present results suggesting that the PTO's fee structure induces the agency to grant at an incrementally higher rate to high renewal rate technologies and to applicants with large entity status, and that these effects are consistent with a PTO that seeks to maximize its funds during times in which it is in greater need of funds as opposed to a PTO that acts in all instances as a self-interested budget maximizing entity. 

A copy of the article can be downloaded here. 

Mettler-Toledo v. B-Tek: Limiting Claim Elements to the Preferred Embodiment

Patent, , ,

By Jason Rantanen

Mettler-Toledo, Inc. v. B-Tek Scales, LLC (Fed. Cir. 2012) Download 11-1173-1200
Panel: Bryson, Moore (author), Reyna

547 patentIn my Introduction to Intellectual Property class this week we discussed the classic tension between (1) reading the claims in light of the specification and (2) not importing limitations from the specification into the claims.  In most instances the court attempts to strike a balance between these two canons (exemplified by Phillips).  When means-plus-function claims are involved, however, different rules apply – as this case illustrates.

At issue in Mettler-Toledo was technology for weighing objects, such as large commercial trucks. The first of Mettler's asserted patents, No. 4,815,547, describes an individual load cell; the second, No. 4,804,052, describes a system and method for correcting weight measurements based on the location of objects on a scale.  Following jury findings that the patents were not infringed and that the '052 patent would have been obvious, the district court denied Mettler's JMOL.  Mettler appealed.

On appeal, Mettler challenged a key construction of the '547 patent claims: that several of the means-plus-function terms require a multiple slope integrating A/D converter, and equivalents thereof, rather than any generic A/D converter.  Mettler contended that by limiting the claims in this way the district court erred by importing the structure of only the preferred embodiment into the claims. 

The CAFC rejected this argument.  "Our case law is clear that a means-plus-function claim limitation is limited to the structures disclosed in the specification and equivalents."  Slip Op. at 7.  Here, the patentee chose to disclose only a single embodiment; thus, the means-plus-function claim was necessarily limited to that embodiment.  "If a patentee chooses to disclose a single embodiment, then any means-plus-function claim limitation will be limited to the single disclosed structure and equivalents thereof."  Id.  Nor was a single reference to an "A/D converter" in the Abstract sufficient to compel a broader structural disclosure because it was not linked to any claimed function.

Obviousness: The CAFC also affirmed the district court's denial of JMOL of nonobviousness of the '052 patent.  Mettler's challenge was based on the argument that a prior art reference did not teach correcting for load position, an element of each claim of the '052.  The CAFC rejected this argument, first noting that the issue of what is disclosed by a prior art reference is a question of fact, then concluding that substantial evidence supported the jury's finding as to the teaching of the 'prior art reference. 

B-Tek's Cross Appeal for Sanctions: During the litigation B-Tek requested documents relating to Mettler's manufacturing capacity in order to rebut Mettler's lost profits damages claim.  Although Mettler stated that it had no such documents, during trial a Mettler employee admitted that certain documents existed (a production schedule and plant diagram).  Mettler further admitted that it provided some of these documents to its damages expert.  The district court denied B-Tek's motion for sanctions on the grounds that the possible existence of these documents had been disclosed during a deposition, these documents were of marginal relevance, and that B-Tek could not show any harm or prejudice given that it prevailed on the issue of infringement. 

On appeal, the CAFC concluded that the district court did not abuse its discretion in declining to sanction Mettler, correctly considering the relevance of the documents and the any harm to B-Tek.

Edited to clarify the first sentence. 

Predicting Patent Litigation – A Response by Professor Chien

Patent

In the preceding post, I highlighted two recent critiques of Professor Colleen Chien's recent article on predicting patent litigation.  Below, Professor Chien responds to these critiques. – Jason

By Colleen V. Chien, Assistant Professor of Law, University of Santa Clara School of Law

In my article Predicting Patent Litigation, I describe the relationship between a number of intrinsic and previously unexplored acquired patent variables and the likelihood of the patent being litigated.  In the article, I state that “from the starting point presented here, there are a number of directions that follow-up research could take to improve the resolution of the ranking approach described here that, while promising, does not provide a ‘commercial grade’ solution to outstanding patent-clearance problems.” Along this vein, Petherbridge and Kesan et al provide thoughtful suggestions and questions about how the analysis could be verified, refined, and extended.  Their input is timely as efforts to do so are just getting underway, as part of adapting this exploratory project to commercial settings. Looking at more, and more recent patents, replicating the analysis, and adding additional variables, where it makes sense, will necessarily be part of this effort.

Since my paper was published I have been approached by a dozen or so parties interested in testing and applying the paper’s insights. The diversity of these interests addresses the two questions raised by the commentators. First, how precise must the model be? Though Petherbridge’s answer is “much more so,” the answer necessarily depends on the context of the application. On one hand, no level of precision in the algorithm can best a patent lawyer’s expert analysis of the claims and in very few cases would it make sense to proceed solely based on a mere calculation. On the other hand, if an insurance company is trying to use this as one of a variety of variables for calculating defense insurance rates, or for related applications where this filter is applied with others, this kind of algorithm can be useful. Likewise, the question, what variables should be considered? cannot be answered in a vacuum. Kesan et al suggest variables such as whether the particular patent is embodied in a product and the historical revenue of the patent owner. But even assuming these are better than other variables, the difficulty of getting them may make them impractical in many cases.

My article flags the difficulties with tracing what happens to a patent after issue as a potential problem but was not intended to definitively recommend that recordation rules be changed. Indeed, as I have explained in my recent comment “The Who Owns What Problem in Patent Law,” there are many reasons, the majority of which are economic and inadvertent rather than strategic, that it’s hard to determine who owns what patents. As part of the Kappos administration’s helpful efforts to improve access to patent data (examples here and here), the PTO has recently solicited input on this very question. While greater applicant disclosure is worth considering, I believe that the PTO could do much more with the information it already has. Currently, you cannot search among only in-force patents, or easily tell who the owner of record of patent is, how many times it has been cited, how much longer it may be in force, whether it has been reexamined, who requested the reexamination, or whether or not the current owner is a large or small entity. Yet making this information, which already exists, more accessible and supportive of business decision-making, could go a long way to enhancing the public’s ability to assess patent risks and opportunities.