Patently-O America's leading patent law blog Tue, 27 Jun 2017 22:49:41 +0000 en-US hourly 1 Celgard: Important Challenge to the Federal Circuit’s Pervasive No-Opinion Judgments Mon, 26 Jun 2017 09:00:05 +0000 IMG_20170623_221253_112By Dennis Crouch

In re Celgard (Supreme Court 2017) [2017-6-19 Celgard Cert Petition]

In what looks like a well-postured case, Celgard LLC has asked the Supreme Court to consider several questions stemming from the Patent Trial & Appeal Board (PTAB) decision that the claims of the company’s U.S. Patent No. 6,432,586 are invalid as obvious.  The patent claims a particular microporous membrane separator that adds a ceramic layer to effectively limit the growth of lithium dendrites – the major cause of lithium battery failures and overheating.  The approach created by Celgard has been widely copied (and further adapted) in the industry.

In order to avoid royalty payments and supply agreements with Celgard, a host of competitors filed at least six inter partes review (IPR) petitions against the ‘586 patent.[1] Although the bulk of the challenges have been rejected or found without merit by the PTO, the PTAB ultimately agreed with one of the several grounds presented by LG and ruled claims 1-6 and 11 obvious over a combination of two Japanese published patent applications in a parts-and-pieces analysis.[2] As it does with most appeals from the PTO, the Federal Circuit affirmed the PTO judgment without opinion. The petition explains:

The [Federal Circuit] decision was labeled as a “Notice of Entry of Judgment Without Opinion” and stated that “[t]he judgment of the court in your case was entered today pursuant to Rule 36. This Court affirmed the judgment or decision that was appealed. None of the relief sought in the appeal was granted. No opinion accompanied the judgment.”

The Federal Circuit also denied Celgard’s subsequent petition for rehearing and rehearing en banc.

With this basic setup, Celgard has petitioned the Supreme Court for writ of certiorari – asking four questions.

First, following identically from the pending case of Oil States, petitioner asks:

Whether inter partes review—an adversarial process used by the Patent and Trademark Office (“Patent Office”) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury?

This question should at least serve as a place-holder pending outcome of Oil States.

The second question stems from my recent article on the Federal Circuit continued issuance of judgments without opinion in appeals of PTO decisions.  Petitioner asks:

Whether the Federal Circuit’s issuance of Rule 36 judgments without opinions for the disposition of appeals from the Patent Office violates 35 U.S.C. § 144’s requirement that the Federal Circuit “shall issue” its “mandate and opinion” for such appeals?

In addition, petitioner argues that the Federal Circuit’s continued and pervasive use of Rule 36 judgments without opinion is a violation of the principles of justice and should be rebuked by the Supreme Court:

Whether the Federal Circuit’s pervasive practice of issuing Rule 36 judgments without opinions to affirm more than 50% of appeals from the Patent Office has exceeded the bounds of reasonableness and is inconsistent with “principles of right and justice”?

Something that makes this a helpful case is the fact that Celgard also has a very strong argument on the substantive patent law merits (nonobviousness) and there are no serious troll or eligibility undertones.  In its final petition question, Celgard focuses on the obviousness question asking:

Whether the Patent Office’s consistent practice of failing to consider the claimed invention “as a whole” and failing to consider whether the combination of elements would lead to “anticipated success” in an obviousness determination conflicts with 35 U.S.C. § 103 and this Court’s precedent in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007)?

The obviousness analysis by the PTO is what I see as a somewhat typical pieces-and-parts analysis – finding that most of the elements of the claims were taught by one of the prior art references and then finding another reference that taught the remaining limitations.  Of course, this approach of using the invention as a blueprint for framing the prior art has the problem of likely hindsight bias – and is particularly troublesome where the invention is not simply a combination elements but instead is a new structure. Here, for instance, the claim requires, inter alia, “a ceramic composite layer . . . adapted to at least block dendrite growth. . .”  One reference purported to teach a non-ceramic layer used to block dendrite growth (Tobishima) and the second taught a ceramic layer – albeit one that that would not block dendrite growth because of large open holes (Tojo).  The PTO determined that it would be appropriate to combine the two references in a way that form a ceramic layer that blocks dendrite growth. In response, the petition argues:

Given the different problems addressed by Tobishima and Tojo (and their respective, different solutions), a threshold question for obviousness should have been whether it would have been obvious to combine the references to achieve a two-layer separator that blocks dendrite growth. Had this question been considered, which would have considered the claimed invention as a whole, the Patent Office would have found that the combination would destroy the very purpose of the references and would result in a separator with “open holes” that cannot block dendrite growth. Instead of considering the claimed invention “as a whole” and its unique ability to block dendrite growth through a ceramic composite layer, the Patent Office instead looked to whether the references contained all the elements of the claims. This analysis is not proper.

Although not the primary focus of the obviousness argument, the secondary factors of nonobviousness are interesting here.  The PTO gave them no weight even though LG apparently copied the invention and then touted the safety benefits of the ceramic layer in its advertising.

As in the Cuozzo case, the original IPR petitioner has dropped out of the case after a settlement, but the PTO is defending its own judgment.

= = = = =

[1] See IPR2015-01511 (Ube Maxell); IPR2014-00679 (SK Innovation); IPR2014-00680 (SK Innovation); IPR2014-00692 (LG Chem); IPR2014-00524 (Mitsubishi Plastics); IPR2013-00637 (Sumimoto Chemical).  See also, Celgard, LLC v. LG Chem, Ltd. et al 3:14-cv-00043 (W.D.N.C.); Celgard, LLC v. SK Innovation Co., Ltd. 3:13-cv-00254 (W.D.N.C.); and Celgard, LLC v. Sumitomo Chemical Co., Ltd. 3:13-cv-00122 (W.D.N.C).

[2] References: Unexamined Japanese Patent Application No. H5-190208 (hereinafter, “Tobishima”) and unexamined Japanese Patent Application No. H11-80395 (hereinafter, “Tojo”).

= = = =

I’m writing this from the mountain village of Montefegatesi, shown in the picture above.  No internet here, but it will be posted soon.

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Licensing matchmaking: the allure of reputation and organizational capital Tue, 20 Jun 2017 20:34:03 +0000 Guest post by Ian McCarthy and Karen Ruckman, both from the Beedie School of Business, Simon Fraser University. This is based on the research article: Why do some patents get licensed while others do not?

If the deluge of reality television shows about the subject is any indicator, the public has an ongoing fascination with both inventors and their innovations. Entrepreneurship programs like Shark Tank or Dragons’ Den offer some entertaining glimpses into how venture capitalists decide upon the kind of people and ideas they want to invest it.

But do these insights extend to the licensing of patents? Not exactly. But for those wondering why some innovations and patents get licensed while others do not, a less intuitive reality television genre might provide more compelling insights. I’m referring here to the reality dating show. If there is a truism from programs like The Bachelor or The Bachelorette, it is that match-making is a complex affair that goes well beyond choices that can be made from reviewing what we know to be true on paper. Fans of these shows—you might secretly be one yourself—note that a much richer set of variables guide the decision-making process on the part of the relationship-seeking protagonists– which often creates a greater degree of unpredictability within the plotlines and consequently a more compelling reason for viewers to watch week after week.

So how does this all relate to the licensing of technology patents? We’ll get there in a minute. But first, it’s worth restating what readers of Patently-O already know: The global licensing of patents is serious business these days. Within just the U.S., it is estimated that the annual value of licensed technologies has increased from $50 billion in 1997 to $200 billion in 2017. As a result, the financial and economic stakes for this form of matchmaking are quite high. Such technology licensing involves the transfer of intellectual property rights between two parties: the owner of the patent (i.e., the licensor), and a potential buyer (i.e., the licensee). It’s a growing opportunity for companies, and an increasingly integral business activity for companies who buy and sell patents in order to develop new innovations and products. When companies aren’t in a position to develop their own patent, perhaps due to their size or a lack of financing or expertise, they are at least able to license it out. Such a proposition offers much for both sides of such a transaction. Yet much remains unknown about the interplay between buyers and sellers in the patent licensing market.

Our study in the journal Industry and Corporate Change sought to address this gap, and answer the question: Why do some patents get licensed while others do not? By focusing on patents that are technologically similar, our analysis has provided new insights into why some patents are more likely to be licensed out. We looked at U.S. biotechnology patents that had been licensed over a period spanning 1993 to 2007, and those equivalent technology patents that were not. Historically, patent licensing has been studied by looking at primary measures of the patent itself—using measures such as patent cites and patent claims that reflect potential patent quality and value. Through a quasi-experiment methodological approach, our study looked at not only these characteristics of the patent, but also the characteristics of the licensor.

And that brings us back to those dating programs. When the Bachelorette whittles down a field of serious relationship prospects from 30 eligible bachelors down to 1, she is making choices beyond the immediate appearance-based qualities of her suitors, such as intelligence and physical attractiveness. She also observes her suitors in a multitude of social, cultural, and athletic environments; and in some cases she visits their hometowns and meets their parents and old acquaintances. In short, the choices made by the Bachelorette (or Bachelor) hinge not just on the intrinsic qualities of the suitors, but also their connections, standing and reputation. So we shouldn’t be surprised when the brother of a famous NFL quarterback is selected in the season finale over other equally-qualified but ultimately frustrated candidates (this actually happened). This shows that perceptions of quality can be garnered by association.

The academic equivalent of this might be found in a PhD student applying for faculty jobs. Two top candidates for a professor posting might hold the same qualifications—number of journal publications, quality of journals where published, research awards, and teaching prizes. With other measures equal, however, the prestige of their institutions will play a major role in the final decision. Rightly or not, organizational reputation matters—candidate qualities are insufficient to explain who gets chosen.

The same phenomenon holds true in the licensing of patents. Some licences happen to be more desirable than others—and they appeal to their prospective licensees through a combination of patent attributes and their organization’s attributes: prestige, experience, brand, and reputation (See Figure 1). When a patent is associated with a licensor of high repute or prestige, it benefits from a halo effect. A patent may be deemed to be more appealing than it really is, if it comes from a company with a strong reputation for producing outstanding technology. Conversely, a groundbreaking patent might be ignored or undervalued if it is from a lesser known licensor.

Specific variables help dictate the outcomes of a patent. Technological prestige reflects the licensor’s reputation for high-quality technologies. Technological depth indicates the extent of a licensor’s existing knowledge in a particular technological area. Technological breadth is the knowledge scope of a licensor’s past patenting efforts. Other key variables include experience, size, and the licensor’s past relationships with the licensee.

Figure 1: The allure of patent and licensor characteristicsFigure1

In many ways this boils down to organizational capital, or the status of the licensor. When the qualities of a patent or technology are equal, licensees will seek out other information to make a decision, such as the status of the organization selling the licence. The owners are deemed to have more experience, alongside deeper and broader knowledge capabilities. We are looking at the characteristics of the licensor in terms of what makes them attractive beyond the technology itself. It’s not just the functional quality of the patent that takes priority—the appearance and prestige of the owner also matters. Bluntly put, it’s important to look good at producing good technology.

Granted, this doesn’t always produce reasonable outcomes. A PhD graduate from second-tier university might be just as qualified as a PhD grad from an Ivey League school, after all—but we can predict who stands the best chance of getting the faculty position. Similarly, a worthy patent from a lesser-known licensor might be overlooked in favor of technological similar inventions from licensors of higher repute or standing.

Our findings provide a reminder for licensors of all patents that halo effects are important—they play a major role in framing and licensing technologies. Technological brand and reputation directly influences one’s ability to licence a patent out. Licensees look not only to the qualities of patents, but also to the profile and prestige of their owners. Licensors can’t change these variables overnight, but they should be strategically aware of them. On the flipside, some high-value patents might be ignored or undervalued because they do not have this kind of halo effect working for them.

Ultimately, the matchmaking analogy holds true across different outcomes for patents. Licensors emit reputational signals to licensees, which in turn influence a firm’s success in licensing out patents. Impressions not only matter—they are the driving force in the licensing process for otherwise equal patents.

= = =

Acknowledgements: We are grateful to Derek Moscato for his ideas and work on this posting.


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Matal v Tam: Only I Can Disparage You! Mon, 19 Jun 2017 15:09:15 +0000 The Supreme Court has affirmed that Trademark law’s restriction on registration of disparaging marks violates the free speech provision of the US Constitution.

Read it: 15-1293_1o13

Although the court’s logic is largely incomprehensible, the result is simple: the PTO will begin allowing registration of disparaging marks and will not cancel Registered marks because they are disparaging.

Although not at issue here, disparaging marks will likely be somewhat more difficult to enforce based upon the greater expressive content of the speech.


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Texas Supreme Court to Hear Arguments on Patent Agent Privilege Sat, 17 Jun 2017 13:27:05 +0000 The Federal Circuit last year in In re Queen’s University held that its law controlled and there was a patent agent-client privilege. That brought some clarity, since there had been a split on even the existence of the privilege.

Enter Texas, where one of its court of appeals held that, because the claim in that case was not patent infringement, but a state law claim, Texas law applied, and under it, there was no patent agent privilege.  My earlier post about it is here.  That post also links to the amicus brief I filed, arguing a point not raised by the parties: that under Texas choice of law principles, Federal Circuit law applied and there was good reason to defer to its approach.

The Texas Supreme Court just announced that it will hold oral argument on the pending petition for mandamus relief.  My instincts tell me that this means the court is likely going to reverse, which would be a good thing because clarity will reduce costs.  No date is set, yet.

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Where Does Infringement Occur?  Lessons from Extraterritoriality Cases Fri, 16 Jun 2017 08:00:33 +0000 Guest post by Josh Landau, Patent Counsel for CCIA

It seems like a truly simple question to answer: where is an act of infringement committed?  And it’s one that became more important after TC Heartland’s decision that venue is proper “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  There’s been a lot of discussion, here and elsewhere, of what “regular and established place of business” means, but less focus on where acts of infringement occur.

Fortunately, there is one place where the issue of where infringement happens has come up: extraterritorial infringement cases.

Methods Abroad in NTP

The Federal Circuit defined the location of infringement tautologically in NTP v. RIM, saying “[t]he situs of the infringement ‘is wherever an offending act [of infringement] is committed.’”  And for simple machines or processes that operate entirely in one place, this provides a simple and workable definition.  But what about more complex systems that have components or perform steps in disparate geographic locations, like the claims in NTP?

For system claims, NTP says that use occurs in “the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.”

But for method claims, we have to answer a different question.  The NTP court said that a process cannot be used “within” the United States unless each and every one of the steps is performed in the United States.  For a method claim, the place where infringement occurs is the place where each and every step is performed.

TC Heartland

While NTP was decided in reference to 35 U.S.C. § 271(a) and TC Heartland dealt with 28 U.S.C. § 1400(b), both sections include the notion of the location where the act of infringement occurs.  If the test for where use of a method claim occurs is a consistent test for both determining whether it’s within the United States and for whether it’s within a judicial district, then the NTP test would apply.

That would mean that the only place where venue may be proper for method claims with steps performed in multiple locations (e.g., cloud computing claims with both user and server limitations, or networking claims with client and server relationships) could be the district where the alleged infringer is incorporated.  If there’s a server in the Northern District of California and a user’s smartphone is in the Eastern District of Texas, then the method isn’t performed in either place under the NTP test.  That leaves a patent holder with the option of suing where the server is (assuming they can show a user within the same district as the server) or else suing where the company resides.

Indirect infringement

This is only for direct infringement, of course.  I’m unaware of comparable cases to NTP v. RIM that provide a definition for where indirect infringement takes place.  The limited set of extraterritoriality cases handling the issue don’t specifically address the location of the infringing act of indirect infringement; they focus more on whether a direct infringement has occurred within the United States in order to avoid raising concerns about extraterritorial applications of U.S. law.

So the question becomes: if I induce infringement by acts taken in the Northern District of California, but the direct infringement occurs elsewhere (or across multiple districts), did the act of inducing infringement occur in the place where I took the action that induced the infringement?  Or did it occur somewhere else?

The extraterritoriality cases with respect to inducement suggest that as long as there’s a directly infringing act in the district, actions taken outside the district to induce infringement would be subject to venue in the district.  However, as we saw above, there might not be a directly infringing act in the district, so inducement might not be available at all.  Contributory infringement might prove a stronger avenue, as it explicitly conceives of sale or importation of an article practicing the patent as the infringing act.

But all of this has to be taken in view of the existing difficulties for a plaintiff trying to assert induced or contributory infringement, such as the requirement to show specific intent to infringe or to show a lack of any substantial non-infringing use.  While a plaintiff might be able to use indirect infringement to manufacture venue for a method claim in order to choose a forum, it might not be a strong claim.

How much does this really matter?

It might not matter much.  While patents that only have method claims could have a limited set of venues in which they can be asserted, most patents include both method and apparatus claims and both sets are asserted together.  That could be enough to manufacture a “supplemental venue” over the method claims, even if there are method steps performed elsewhere.

The Federal Circuit doesn’t seem to have addressed this question, but other courts have.  Prior to the creation of the Federal Circuit, the 7th Circuit determined that when a patent has both method and apparatus claims, venue is proper for both the method and apparatus claims even if only the apparatus claim is infringed within the judicial district.  See General Foods Corporation v. Carnation Company, 411 F. 2d 528 (7th Cir. 1969).  The Carnation court’s concern was that, otherwise, “an action for patent infringement in a situation such as we have here would be tried piecemeal, some claims in one jurisdiction and others in another.”

But the Carnation court didn’t address the fact that the statute allows using the district “where the defendant resides” as an alternative to the district where acts of infringement occur.  In other words, the case wouldn’t have to be tried piecemeal at all, but could always be heard in one location—the place of incorporation of the defendant.  If the only interest weighing against severing the venue-less method claims into their own case and transferring that case is the interest in hearing claims with similar scopes in the same court, then the proper remedy is a requirement to transfer all of the claims to a location where venue is proper, not to create a “supplemental venue” provision.


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PTAB Grants Permission to File Motion to Disqualify Expert Thu, 15 Jun 2017 13:15:25 +0000 The PTAB in Fujifilm Corp.  v. Sony Corp. (IPR 2017-01267 & 2017-01268) granted permission to the patentee to file a motion to disqualify an expert for the petitioner.   APJ Kokoski, after a teleconference, granted permission to file the motion.

Expert witnesses are not subject to the more familiar rules that govern loyalty and attorneys.  To disqualify an expert, the decision explained:

Disqualification of an expert is a drastic measure we hesitate to impose except when absolutely necessary. See LaCroix v. BIC Corp., 339 F. Supp. 2d 196, 199 (D. Mass 2004) (noting that “courts are generally reluctant to disqualify expert witnesses”). To resolve a motion to disqualify an expert, district courts generally apply a two-prong test to determine (1) whether it is objectively reasonable for the moving party to believe that it had a confidential relationship with the expert; and (2) whether the moving party disclosed confidential information to the expert that is relevant to the current proceeding. Id. at 199–200. A court is compelled to disqualify an expert only when the answers to both inquiries is affirmative. Wang Labs., Inc. v. Toshiba Corp., 762 F. Supp. 1246, 1248 (E.D. Va. 1991); see Agila Specialties Inc. v. Cephalon, Inc., Case IPR2015-00503, slip. op. at 4 (PTAB Aug. 19, 2015) (Paper 13).

It will be interesting to see if the patentee can meet this standard, but a takeaway is to monitor for conflicts (and to check to see, for example, if a prosecution bar in a prior case might prohibit conduct that the ‘common law’ of expert disqualification might not reach.

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Guest Post: Secret Software Sales Thu, 15 Jun 2017 10:50:19 +0000 Guest post by Matthew Fagan, Principal at KDP where he handles patent matters.  Much of the post-Helsinn analysis has focused on its impact on pharma where substantial strategic pre-filing activity is the norm. I asked Mr. Fagan to come at the problem from the computer and software perspective.  – DC

= = = = 

When the Federal Circuit decided Helsinn v. Teva last month, the patent world expected to the Court to resolve an issue simmering since 2011: namely, do purely private, secret sales toll the on-sale bar of post-AIA §102?  The court declined to provide an answer, instead reframing Helsinn’s activity as a public sale in which the details of the invention were not publicly disclosed.

Practitioners may be inclined to dismiss Helsinn as a judicial dodge in which the Court avoided the more interesting “secret sales” question.  But the issue the case turned on may ultimately be of more significance.  Cases of purely private sales are relatively rare as compared to public sales in which the details of an underlying technology are not fully disclosed or are actively hidden – especially in the software industry.

When combined with the Federal Circuit’s 2010 decision in Finjan v. Secure Computing and its 2006 decision in Plumtree Software v. Datamize, the Helsinn case raises interesting questions about how developers release software products.  There are several techniques available for distributing software to customers; after these cases, the date on which patented software is “sold” to the public may vary depending on the distribution method.  In fact, a patent directed to a single algorithm might have two different on-sale dates arising from the same transaction.

Most software patent claims are constructed as method claims or medium/apparatus claims.  In a computer-implemented method, a computing device performs a series of steps in an algorithm.  Plumtree offered two scenarios under which a computer-implemented method would be placed on sale: first, if the patentee “made a commercial offer to perform the patented method (even if the performance itself occurred after the critical date);” second, if the patentee “in fact performed the patented method for a promise of future compensation.

In medium claims, computer code is embedded in a computer-readable medium or implemented in an apparatus.  Finjan stands for the proposition that, because medium claims are directed to the device storing code rather than the actions embodied in the code, they do not necessarily require performance of a patented algorithm for infringement.  Any medium storing the instructions can infringe (or anticipate) a medium claim regardless of whether the claimed steps are actually performed.

What Helsinn adds to this line of cases is the concept that a sale of a medium holding an algorithm, or a performance of a method embodying the algorithm, will trigger the on-sale bar even if the invention is not discernible to the end-user.

Helsinn could be problematic for software developers using typical software development methods.  For example, one common software engineering strategy is the “continuous release” technique, whereby a publisher releases software and then rolls out updates repeatedly over short intervals (e.g., every two weeks).

Because the cycle is so rapid, oftentimes new features are partially developed but not ready for release by the time that the next update is due.  Accordingly, some developers use feature toggles or feature flags, like the following:

if(version == “test”)

              <implement new feature>

if(version == “release”)

              <implement old feature>

This allows the developer to control which version of the code is available to the public by changing the “version” variable: if set to “test,” the new features are enabled for use by programmers; if set to “release,” the old feature becomes active to avoid exposing undeveloped features to the end user.  When the new feature is tested and ready, the programmer can copy the code to the release section and the next version of the code can be implemented in the test section.  This technique is currently used by Netflix, Gmail, Reddit, Flickr, and Etsy, among others.

The critical observation is that, although the new feature will not be performed in the version of the software released to the public, the released software may include both the old version of the feature and an inaccessible copy of the code for the new version.  Even though users may not be able to invoke the test code, Helsinn does not require “that members of the public be aware that the product sold actually embodies the claimed invention.”  Consequently, under Finjan the on-sale bar may be triggered for a medium claim.

In contrast, under Plumtree this scenario may not implicate a corresponding method claim.  Assuming the public was not informed of the new features, there was likely no promise to perform the method in the future.  The method may not be considered sold until the code for the new feature is moved to the “release” section and performed by the user base.

Therefore, although the release might not immediately trigger the on-sale bar for a patented method arising out of the test code, it might trigger the on-sale bar for a patented medium.

Other software distribution methods raise similar risks.  One recent trend in software engineering is to leave software in an open- or limited-beta test for an extended period.  The beta may be offered at a reduced cost as compared to the full-release version (a similar trend has more recently been labeled as “early access”).  For example, Gmail remained in limited beta for five years before being identified as “released;” the popular simulation game Kerbal Space Program was in beta for nearly four.  The beta software might include under-development code callable only by developers, which is interspersed with active code invokable by end users.  If the developer-only portion of the code includes patentable technology, then beta users may unwittingly receive a medium embodying a patentable invention even though the corresponding method is not publicly performed.

Similarly, a normal software update cycle may incorporate “code freezes,” after which programmers are instructed not to modify certain portions of the source code.   When a code freeze is called, unfinished patentable features may become stranded in the source code; these unfinished features may be flagged for inclusion in a future patch or update.  Although not used in the released version, inactive features embodied in the source code could trigger the on-sale bar for the medium holding the code.

To some extent, this problem can be alleviated with optimizing compilers that remove dead or unreachable code.  However, such optimizations take time that developers of large, complex programs may not wish to spend.  Moreover, dead code elimination is primarily used to reduce the size of a deployed program and hence might not be prioritized by developers of code deployed on servers where storage space is readily available.

These release techniques could hurt a patentee’s chances to secure a medium claim, while still possibly rendering method claims patentable.  Another release scenario called “pre-patching” implicates the opposite combination: method claims may be placed on sale while medium claims might remain protectable.

Pre-patching is typically used when software developers provide client software that works with a back-end server.  On the software’s release date, the back-end server is activated and the client can access the server’s services.  Sometimes, if the client software is particularly large, developers may allow the end-users to purchase and download the client before the release date, even though the client will not be able to immediately access features on the server.  This technique is employed for complex online games such as World of Warcraft to avoid swamping download servers on release day.

In this case, patentable activities may be performed on the server, or through a combination of actions by the client and server.  Whether the server’s software was “sold” remains ambiguous in light of the Federal Circuit’s analysis in Minton v. National Association of Securities Dealers.  Consequently, there remains a chance that the on-sale bar is not triggered for medium claims directed to software partially or entirely stored on the server.

On the other hand, it seems clear that a sale of pre-patched software in which a patentable method is performed on the server constitutes a promise to perform the patentable method when the server code is unlocked, falling under the first “on-sale” scenario of Plumtree.  Consequently, the on-sale bar is likely triggered with respect to method claims even though the user base may not be aware that the method will be performed by the server.

In each of these release scenarios, the technology remains locked in unused or inaccessible software code prior to an official release.  Helsinn makes it clear that hiding away patentable features will not prevent the on-sale bar from being triggered in these situations.  Avoiding the on-sale bar may require that programmers be aware of these issues and take special care to remove test features from the release version of the software.

Although the situations described above specifically relate to software development, there are myriad examples from other industries in which an invention is sold without disclosing implementation details.  Thus, although Helsinn does not tell us whether purely secret sales will be patent invalidating, the case may ultimately have a greater impact than whichever dispute ultimately decides the private sales issue.



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Patentlyo Bits and Bytes by Anthony McCain Thu, 15 Jun 2017 00:46:25 +0000
  • John Duffy: The Supreme Court Reverses Another Federal Circuit Patent Case
  • Gene Quinn: Industry Reaction To SCOTUS Decision In Sandoz v. Amgen
  • Richard Lloyd: The Oil States IPR Case Could Be One Of Those Rare Instances Where SCOTUS Sides With The CAFC
  • Scott Graham: Lawmakers Plot Next Steps On Patent Reform
  • Joseph Herndon: Credit Acceptance v. Westlake Services
  •  Get a Job doing Patent Law                  

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    Issue Preclusion and Disqualification Tue, 13 Jun 2017 14:37:16 +0000 As a general rule, unless the former client consent, a lawyer cannot represent a client in a matter that is materially adverse to a former client if it is the same matter he had represented the former client in, or if the adverse matter is “substantially related” to his prior work.  So, for example, ordinarily, if I represent Client A in a suit asserting the ‘123 Patent, I can’t later represent a defendant against whom Client A asserts the ‘123 Patent; that would be the “same” matter, and obviously representing a defendant against a plaintiff is materially adverse.

    Figuring out what is “substantially related” to the ‘123 Patent, however, is a complicated problem.  The starting point obviously is the ‘123 Patent and what it discloses.  But how broad technologically speaking do we go?  Does it include patents issued off of continuations?  Probably.  Issued off of CIPs?  Maybe.  What about information I learned in litigation by reason of representing Client A that wasn’t really technologically related?  For example, what if I learned of its financial situation? While the vast majority of courts recognize that the fact that I might have learned how Client A litigated patent cases doesn’t “count” in this context, a few do.  So where do I draw the line(s)?

    That uncertainty is underneath a decision from the divided Colorado Supreme Court, in a non-patent case but one worth noting because patents are often asserted serially, or concurrently, against multiple parties.  (There are several cases where Law Firm 1 represents a “Client A” against non-clients, while other firms assert the same patent for Client A against a client of Law Firm 1, which creates related issues.)

    Because of the nature of patent litigation, whether a representation against a former client is ethical, or not, could come up more than once. Suppose it’s fully litigated the first time.  Does the fact that in the first motion to disqualify, a court holds there is no “substantial relationship” mean that, in a subsequent very similar later case, there also won’t be one?

    In Villas of Highland Park Homeowners Ass’n. v. Villas at Highland Park, LLC, (Yolo. May 22, 2017), a law firm defeated a motion to disqualify brought by its former client.  It showed up again in another suit, very similar. The former client again moved to disqualify.  The trial court in the second case, at least in the 4-judge majority’s view, reasoned that because the first suit was not substantially related to the lawyer’s work for his former client, neither was the very similar second suit.

    The majority held that the trial court abused its discretion and emphasized that determining whether there is a substantial relationship is fact-intensive.  Three judges dissented, and bemoaned the fact that this could lead to seriatim disqualification motions.

    So, for patent lawyers, this case means to always carefully assess a potential representation.  Perhaps you avoided disqualification earlier: that doesn’t mean you are free and clear this time.

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    Tech Transfer Reports on AIA Drafting Flaw Affecting Thousands of Patents Mon, 12 Jun 2017 21:49:14 +0000 No idea if this is correct, but figured it deserved a post.  The article asserts that if a provisional was filed in the name of the assignee (applicant), it cannot serve as the basis for a priority claim because the statute says only that a provisional filed by “an inventor” can serve that purpose.  Anyone have insight? Further, the article portrays this as affecting only universities, but one would think a broader impact more likely?

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