Search Results for: hyatt

Wrongly Affirmed Without Opinion: At the Supreme Court

Patent, , ,

Shore v. Lee (Supreme Court 2017)

In a new petition for writ of certiorari, patent attorney and inventor Michael Shore has challenged the propriety of the Federal Circuit’s continued approach of affirming patent office decisions without opinion. In a forthcoming article titled “Wrongly Affirmed Without Opinion” (Wake Forest Law Review), I raise the previously unnoticed requirement of 35 U.S.C. § 144 that the Federal Circuit issue an opinion in appeals from the Patent Office (PTO).  Although the Supreme Court generally permits its lower appellate courts to issue summary affirmances, I argue that the Patent and Trademark statutes take precedence in this particular situation.  The issue has come to a head with the large number of no-opinion judgments being issued by the court since the creation of the system of administrative patent trials (IPR/PGR/CBM).

Running with that argument, Shore raises the following three questions:

  1. Does the Federal Circuit’s affirmance without opinion of the PTO’s rejection of Petitioner’s patent application violate 35 U.S.C. § 144?
  2. Does the statute’s requirement that the Federal Circuit issue a “mandate and opinion” govern over Federal Rule of Appellate Procedure 36’s general permission for appellate courts to render judgment without opinion?
  3. Assuming that the Federal Circuit can issue an affirmance without opinion despite the language of § 144, does the Federal Circuit act within its discretion by issuing an affirmance without opinion that does not meet any of the criteria listed in Fed. Cir. R. 36(a)-(e)?

[Read the petition: 2017_WL_1406097]

Certainly, if the PTAB had issued its judgment without opinion, the Federal Circuit would have immediately vacated that decision. However, the appellate court suggests that the rules of opinion writing should not be self applied.

In the underlying case, Shore’s patent application (with co-inventor Charles Attal – founder of Austin City Limits Festival) covers a method for creating a custom video track of a live musical performance.  The claims were rejected as obvious – affirmed by the PTAB.  On appeal, Shore raised several challenges regarding both interpretation of the prior art and claim construction.  Rather than working through those arguments, the Federal Circuit simply affirmed without opinion.

PTAB Procedural Reform Initiative

Patent, , ,

VIA USPTO:

[T]he USPTO is launching an initiative to use nearly five years of historical data and user experiences to further shape and improve Patent Trial and Appeal Board (PTAB) trial proceedings, particularly inter partes review proceedings. The purpose of the initiative is to ensure that the proceedings are as effective and fair as possible within the USPTO’s congressional mandate to provide administrative review of the patentability of patent claims after they issue.

Since being created through the passage of the America Invents Act (AIA), PTAB proceedings have significantly changed the patent landscape by providing a faster, cost-efficient quality check on issued patents. . . .

This initiative will examine procedures including, but not limited to, procedures relating to multiple petitions, motions to amend, claim construction, and decisions to institute. It will evaluate the input already received from small and large businesses, startups and individual inventors, IP law associations, trade associations, and patent practitioners, and will seek to obtain more feedback regarding potential procedural enhancements.

Coke Morgan Stewart, Senior Advisor to the Director [and veteran patent litigator], will be coordinating this effort.

Members of the public may submit their ideas regarding PTAB procedural reform to: PTABProceduralReformInitiative@uspto.gov

One Up Two Down: Trump Orders on Regulation

Patent

trumpsigningPresident Donald Trump’s newest executive order is the simplistic “two-for-one rule” that simple states: every time an agency “publicly proposes … or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”  Trump did not yet indicate which two of his prior executive orders will go to allow for this one.  Thank you very much … [Read the order it: twoforoneorder]

The policy applies immediately at the agency level, including the USPTO.  (The military is excluded from the requirements).

An element that is unclear from the order is the granularity of the term “regulation” or “rule”  – the definition provides that the terms are defined as “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”  Presumably, this would apply to any new rule of practice, new fee, or new PTAB requirement.  It is less clear how to what extent this will apply to an amendment to an existing regulation or fee increase.

In addition to the 2-for-1 approach, agencies are also required to ensure that the total regulatory cost of new FY2017  regulations is zero “unless otherwise required by law” or given permission from the White House.

A note on agency regulatory cost.  In general, cost calculations are done separately from benefit calculations.  In its 2014 report, the Obama OMB “estimated the total cost of federal regulations to range between $68.5 and $101.8 billion and the total benefits to be between $261.7 billion and $1,042.1 billion.”  The Congressional Research Service also explains that “estimates of the cost of regulation should be viewed with a great deal of caution” because they are usually wrong.

Question for patent prosecutors: What PTO regulations should be eliminated? 

Has the Academy Led Patent Law Astray?

Patent, ,

Prof Jonathan Barnett (USC) has released his new article arguing that we’ve gone too-far — that those arguing for dramatic changes to the patent system did so with “little to no supporting evidence.” [READ IT HERE]. Barnett argues that

Depropertization of the patent system—yields three potential efficiency losses. First, depropertization impedes efficient resource allocation by shifting the pricing of technology assets from the relatively informed marketplace to relatively uninformed judges and regulators. Second, depropertization distorts markets’ organizational choices by inducing entities to undertake innovation and commercialization through vertically integrated structures, rather than contractual relationships now clouded by the prospect of judicial re-negotiation. Third, depropertization may facilitate oligopsonistic efforts to depress royalties on patent-protected inputs, resulting in wealth transfers to downstream entities and discouraging innovation by upstream R&D suppliers.

In the article, Barnett primarily focuses on the idea of a patent thicket and whether these patent thickets have inhibited downstream innovation.  Barnett concludes: “Without a secure expectation of injunctive relief and compensatory damages, false prophecies of too many patents may result in too little innovation.”  Of course this conclusion also rests upon weak empirical ground.

 

Patent Term Adjustment Statistics

Patent

Patent Term Adjustment (PTA) adds extra time onto the end of a patent’s 20-year-term to account for delays during patent prosecution.  As the PTO eliminates its backlog, PTA awards are also decreasing.  However, most newly issued patents are awarded at least some adjustment based upon the PTO’s failure to meet the prosecution timelines delineated by Congress.  For newly issued patents, the average PTA is now around 6-months. I expect this to continue to fall to around 3-months over the next couple of years.

PatentTermAdjustmentAveragePTA

You’ll note the discontinuous nature of the average-PTA chart.  The break-point in early 2010 shows the impact of the Federal Circuit’s Wyeth decision holding that the PTO had been under-calculating the adjustment.

USPTO Continues to Reduce Patent Term Adjustments

A Specification’s Focus on Particular Embodiment Not Limiting if Other Embodiments are also Expressly Contemplated

Patent

CollatingBottlesScriptPro v. Innovation Associates (Fed. Cir. 2016)

Very Slow Roller Coaster: This Kansas-based infringement lawsuit was filed back in 2006.  The case was stayed pending an inter partes reexamination.  Once re-opened, the district court held that ScriptPro’s asserted claims invalid for lack of written description under 35 U.S.C. § 112, ¶ 1.  In a 2014 appeal of that decision, the Federal Circuit reversed – finding genuine issues of material fact regarding whether a skilled artisan deem the patentee in possession of the invention upon reading the specification. On remand, the district court again held the claims invalid on written description grounds and citing the oft maligned ‘essential element’ cases of Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1988) and ICU Medical, Inc. v. Alaris Medical Systems, Inc., 558 F.3d 1368 (Fed. Cir. 2009).  On appeal, the Federal Circuit has now reversed again and remanded for trial.

The claim at issue is directed to a conveyor and “automatic” collating system for prescription containers. U.S. Patent No. 6,910,601, Claim 8.  The claim itself does not specify how the collation occurs, but throughout the specification the patentee indicates that the containers will be collated by patient name and storage space availability.  Seeing that distinction, the district court agreed with the challenger that the claims fail because they were not commensurate with the written description of the invention.

The District Court:

[O]ne of [the invention’s] central purposes is to collate and store prescriptions by patient. But the claims do not limit the ways in which the prescription containers are stored. They do not specify any type of collation or storage. . . .

These broad claims are not supported by the much-more-limited specification. They do not require that the control system organize containers based on patient name and space availability. During its appeal, ScriptPro repeatedly emphasized a central purpose of the ′601 patent: to “keep [ ] track of slot use by particular customers and slot availability.” [quoting Federal Circuit decision] This means that the use of any other method for automatic storage is outside this purpose. Based on the broad claim language that is outside a central purpose of the patent, the court determines that no reasonable jury could find the written-description requirement met. . . . ScriptPro argues, keeping track of slot use by particular customers and slot availability is only one of several goals. But ScriptPro does not identify any alternate goals.

The court finds ScriptPro’s argument unpersuasive. While every claim need not encompass every goal, here the claims do not address one of the invention’s central goals—one that ScriptPro repeatedly emphasized on appeal. It is disingenuous for ScriptPro to now downplay the significance of the goal. Without including a limitation to address the storage by patient name, the claims are simply too broad to be valid.

[District Court Decision]

On appeal, the Federal Circuit has reversed – holding that the patentee included a sufficient number of wobbly-words to avoid limiting the specification.

It is true, as Innovation argues, that much of the ’601 patent’s specification focuses on embodiments employing a sorting and storage scheme based on patient-identifying information. See, e.g., ’601 patent, 4:21–25 (“[t]he unit stores prescription containers according to a storage algorithm that is dependent on a patient name for whom a container is intended”), 5:40–47 (“a prescription for a patient is entered into the control system of the ADS along with identifying information for the prescription, such as the patient name . . . [t]he control system next determines in which holding area to store the container”), 6:36–37 (“[t]he collating unit is also operable to associate a stored container with a patient based on the patient’s name”). And it is also true that the specification explains that prior art automated control centers that store containers “based on a prescription number associated with the container, as opposed to storing the container based on a patient name” are “especially inconvenient for several reasons.” ’601 patent, 3:6–11. But a specification’s focus on one particular embodiment or purpose cannot limit the described invention where that specification expressly contemplates other embodiments or purposes.

[Appellate Decision]. (patent drafters consider the plural in of “other embodiments“)

An amazing aspect of this case is that the distinguishing feature for written description is the focus on whether a patient’s name is being used to sort bottles (vs some number).  On remand, the defendant’s next round involve Alice.

 

 

Dear USPTO: Nine-Month Delay is not Prompt Publication as Requied by Statute

Patent

by Dennis Crouch

In researching for my recent essay on Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. August 1, 2016), I looked into the family of the three invalidated patents.[1]  As I expected, the patentee has at child-applications still pending.

  • Application No. 14/954,886 filed on 11-30-2015 which is Pending; and
  • Application No. 15/080,578 filed on 03-24-2016 which is Pending.

Following the court’s decision, these likely will be (or perhaps already have been) amended in attempt to recapture coverage lost by the invalidations. Unfortunately, we don’t know what is happening with these cases.

Although both of these pending applications apparently claim priority back to a 2003 application and multiple issued patents, neither file-history is publicly available via PAIR since neither application has been published.  This, despite the statutory requirement that applications “shall be published . . . promptly after the expiration of a period of 18 months from the earliest filing date for which a [priority] benefit is sought.”[2]

The 9-month delay in publication here is inappropriate and problematic. When an application already qualifies for publication as of its filing date, then it should be immediately published and the file history automatically laid open for public inspection and consideration.  It is these late-family applications where applicant game playing is most likely.  And, although public access is not a cure, it can help address some of the potential issues.

It turns out that most continuation and divisional applications are published about 4-months after filing even though the 18-month date had already passed as of the filing date. That delay is already unduly long, it is unclear why the PTO has taken so much longer with these cases.

Moving forward, the USPTO Director is already empowered to make this change.  Technological feasibility can perhaps justify the historic delay.  However, a multi-month delay can no longer realistically square with the requirement that applications be published “promptly” following the 18-month date.

= = = =

[1] U.S. Patent Nos. 7,233,843; 8,060,259; and 8,401,710.

[2] 35 U.S.C. § 122(b).

Right Sized Patents

Patent

Dennis Crouch

Many progressive policies focus on reducing disparities (income, wealth, education, and opportunities) that reflect some social injustice between those at the top and those at the bottom of our social spectrum. Conservatives often recognize the gaps but disagree about whether the result qualifies as injustice as well as about government’s role in redistribution.

Patent policy is often easier to implement than social policy (especially compared with other property law changes) because a new generation of patents emerges every twenty years and the old generation does not hang-around protecting and directing wealth but instead melds into the Soylent of the public domain.

In some ways though, patents are bucking the social trend and becoming more standardized and less diverse – at least by some outward measurements such as document size, claims per patent, and prosecution pendency.

Standard deviation is the most common measure of spread or dispersion of a statistic across a population. A population with a wider spread and more outliers will have a greater standard deviation.  For patent claims, this measure of spread has been dropping steadily for the past decade.  The first chart below shows the standard deviation of patent claim count for issued US utility patents grouped by year of issuance.

StdevClaimCountPatentlyo

The reduction in variance has been accompanied by a drop in the average number of claims per utility patent as shown in the next chart (note the axis break).

AvgClaimsPerPatent

My working hypothesis is that there are three primary drivers for the drop in claims-per-patent and all three also serve to (partially) explain the drop in spread.  These drivers: (1) a substantial increase in fees for filing more than 20 claims-per-patent that was put into place in 2004 and has continued to rise; (2) a suggested (but not confirmed) rise in restriction requirements for patents with more than 20 claims; and (3) a decrease in patent valuation leaving patentees less willing to support the higher cost of a large number of claims.  (As an aside, reasons (1) and (2) may also helping to dive the continued rise in re-filing.)

At the same time, however, another interesting trend is reducing the spread: there are fewer “small” patents with only 1-5 claims. Thus, the trend is a reduction of both small and mega patents (as measured by claim count) with a proportional increase in the middle with ‘average sized patents’.   The final chart below provides some further context to these statements.

PatentClaimCounts

The time series chart groups each year’s patents into a set of bands according to the number of issued claims.  As a savvy chart reader could surmise, the percentage of patents with 1-5 claims has dropped since 2002 as has the percentage of patents with >30 claims.  Those reductions were accompanied by a proportional rise in patents with 16-20 claims.  Time will tell whether this shift also leads to a more just society.

New Old Patents

Patent

So far in 2016, the USPTO has issued three patents that claim priority pre-GATT.  These three are grandfathered in under the old 17-year-from-issuance patent term because they were filed before June 8, 1995.

  1. John Harvey’s Signal Process Patent No. 9,294,205 is one of dozens held by the company claiming priority back to a 1981 filing. The patents are owned by Personalized Media Communications.  PMC is an active plaintiff in the Eastern District of Texas.
  2. Dr. Robert Gallo and Flossie Wong-Staal received another patent relating to their discovery that HIV is the cause of AIDS. U.S. Patent No. 9,309,574 claims priority back to a 1985 filing and relates to the creation of an immortal cell line that reproduces HIV. At the time, Gallo worked at the National Cancer Institutes and the patent rights are held by the U.S. Government.
  3. Finally, U.S. Patent No. 9,294,184 has issued to Lockheed Martin covering covers a repeater that receives and transmits polarized RF signals. The application was originally filed in 1973 but was held under a secrecy order until 2010.  From 2010 until 2015 the case awaited examiner action that finally arrived with a notice of allowance.

 

Reissues

Patent

Reissue applications have resumed their somewhat steady-state following the pre-AIA rise associated that had been associated with a counter strategy against third-party reexamination filings.

For those issued thus far in 2016, the average reissue pendency is 28 months (median 22 months).

ReissueHistogram

ReissuePatents

Inter Partes Review: An Unconstitutional Delegation of Judical Power

Patent, ,

Carl Cooper has now filed his constitutional challenge to the Inter Partes Review (IPR) system — arguing that the system is an unconstitutional delegation of judicial power to an administrative agency. [Petition: Cooper v. Lee]

Question presented:

Whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.

The brief here is well-written because it focuses on the tight issue of parallel court/proceedings and the history:

No previous court has ever approved delegating validity-determination authority over common-law-adjudicated property rights to a non-Article III decisionmaker.

And, the petition suggests a way-out via an advisory opinion from the PTAB:

[T]his Court may make the process constitutionally sound by doing what it has always done under these circumstances: make the outcome of inter partes review advisory and subject to de novo treatment in an Article III trial court. So corrected, inter partes review may still identify and appropriately target “junk patents,” though an Article III trial court will need to perform the final act of invalidation.

 

Cooper also suggests that the court link this case to Cuozzo:

This Court may thus hear the two cases together, the one raising smaller issues (Cuozzo) alongside the one raising larger issues (this case). That would secure a more complete vetting of administrative agency authority.

Obviously, a favorable decision here could render Cuozzo completely moot, and wouldn’t that be quite interesting.

 

Director Michelle Lee: Moving toward Patent Clarity

Patent, , , , , , , ,

The following is a post from Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee and was published on the PTO Director’s blog. 

Patent quality is central to fulfilling a core mission of the USPTO, which as stated in the Constitution, is to “promote the Progress of Science and useful Arts.” It is critically important that the USPTO issue patents that are both correct and clear. Historically, our primary focus has been on correctness, but the evolving patent landscape has challenged us to increase our focus on clarity.

 Patents of the highest quality can help to stimulate and promote efficient licensing, research and development, and future innovation without resorting to needless high-cost court proceedings. Through correctness and clarity, such patents better enable potential users of patented technologies to make informed decisions on how to avoid infringement, whether to seek a license, and/or when to settle or litigate a patent dispute. Patent owners also benefit from having clear notice on the boundaries of their patent rights. After and after successfully reducing the backlog of unexamined patent applications, our agency is redoubling its focus on quality. 

 We asked for your help on how we can best improve quality—and you responded. Since announcing the Enhanced Patent Quality Initiative earlier this year, we received over 1,200 comments and extensive feedback during our first-ever Patent Quality Summit and roadshows, as well as invaluable direct feedback from our examining corps. This feedback has been tremendously helpful in shaping the direction of our efforts. And with this background, I’m pleased to highlight some of our initial programs under the Enhanced Patent Quality Initiative. 

 First, we are preparing to launch a Clarity of the Record Pilot, under which examiners will include as part of the prosecution record definitions of key terms, important claim constructions, and more detailed reasons for the allowance and rejection of claims. Based on the information we learn from this pilot, we plan to develop best examiner and applicant practices for enhancing the clarity of the record.

 We also will be launching a new wave of Clarity of the Record Training in the coming months emphasizing the benefits and importance of making the record clear and how to achieve greater clarity. Recently, we provided examiners with training on functional claiming and putting statements in the record when the examiner invokes 35 U.S.C. 112(f), which interprets claims under the broadest reasonable interpretation standard and secures a complete and enabled disclosure for a claimed invention. Training for the upcoming year includes an assessment of a fully described invention under 35 U.S.C. 112(a) and best practices for explaining indefiniteness rejections under 35 U.S.C. 112(b).

 Second, we are Transforming Our Review Data Capture Process to ensure that reviews of an examiner’s work product by someone in the USPTO will follow the same process and access the same facets of examination. Historically, we have had many different types of quality reviews including supervisory patent examiner reviews of junior examiners and quality assurance team reviews of randomly selected examiner work product. Sometimes the factors reviewed by each differed, and the degree to which the review results were recorded. With only a portion of these review results recorded and different criteria captured in those recordings, the data gathered was not as complete, useful, or voluminous as it could have been. As a result, the USPTO has been able to identify statistically significant trends only on a corps-wide basis, but not at the technology center, art unit, or examiner levels. We are working to unify the review process for all reviewers and systematically record the same and all review results through an online form, called the “master review form,” which we intend to share with the public. 

 What are the implications of this new process and new form? This new process will give us the ability to collect and analyze a much greater volume of data from reviews that we were already doing, but that were not previously captured in a centralized, unified way. As we roll out this new review process the amount of data we collect will significantly increase anywhere from three to five times. This will allow us to use big data analytic techniques to identify more detailed trends across the agency based upon statistically significant data including at the technology center, art unit, and even examiner levels. Also, this new process will give us better insight into not just whether the law was applied correctly, but whether the reasons for an examiner’s actions were spelled out in the record clearly and whether there is an omission of a certain type of rejection. For example, for an obvious rejection we are considering not only whether a proper obvious rejection was made, but whether the elements identified in the prior art were mapped onto the claims, whether there are statements in the record explaining the rejection, and whether those statements are clear.

 The end result will be the (1) ability to provide more targeted and relevant training to our examiners with much greater precision, (2) increased consistency in work product across the entire examination corps, and (3) greater transparency in how the USPTO evaluates examiners’ work product. You can read more about these and our many other initiatives, such as our Automated Pre-examination Search pilot and Post Grant Outcomes, which incorporates insight from our Patent Trial and Appeal Board and other proceedings back into the examination process on our new Enhanced Patent Quality Initiative page on our website.

 Finally, let me close by emphasizing that our Enhanced Patent Quality Initiative is not a “one-and-done” effort. Coming from the private sector, I know that any company that produces a truly top quality product has focused on quality for years, if not decades. The USPTO is committed to no less. The programs presented here are just a start. My goal in establishing a brand new department within the USPTO was to focus exclusively on patent quality and the newly created executive level position of Deputy Commissioner for Patent Quality will ensure enhanced quality now, and into the future. With your input we intend to identify additional ways we can enhance patent quality as defined by our patent quality pillars of excellence in work products, excellence in measuring patent quality, and excellence in customer service.

 To that end, we will continue our stakeholder outreach and feedback collection efforts in various ways, such as our monthly Patent Quality Chat webinars. The next Patent Quality Chat webinar on November 10 will focus on the programs presented in this blog and our other quality initiatives. I encourage you to join in regularly to our Patent Quality Chats and visit the Enhanced Patent Quality Initiative page on our website for more information.  The website provides recordings of previous Quality Chats as well as upcoming topics for discussion. We are eager to hear from you about our Enhanced Patent Quality Initiative, so please continue to provide your feedback to WorldClassPatentQuality@uspto.gov(link sends e-mail).  Thank you for collaborating with us on this exciting and important initiative!

 

Federal Circuit: Attorney Reputational Harm Does Not Raise Case-or-Controversy Following Settlement.

Patent

Tesco Corp (Plaintiff) v. National Oilwell Varco (Defendant-Appellee) v. Glen Ballard & John Luman (Interested Party – Appellant) (Fed. Cir. 2015)

Interesting case here – Jury verdict for the patentee, but in post-verdict motions S.D. Texas Judge Ellison dismissed the case with prejudice as a sanction against the patentee plaintiff for litigation misconduct. The Judge found that Ballard and Luman had directly lied to the court about the origin of a critical element of prior art. The Judge wrote:

Not every lawyer who lies to a court will be caught, so when such deliberate and advantage-seeking untruthful conduct is uncovered, the penalty must be severe enough to act as a deterrent.

While an appeal of the dismissal was pending, the parties settled “all outstanding issues.” That settlement agreement was signed both by representatives of the parties and the attorneys. However, Ballard and Luman decided to pursue the appeal further – arguing that the reputational harm from the district court opinion justified continued jurisdiction. The Federal Circuit disagreed – finding “no remaining case or controversy.”

Although Ballard and Luman have not been able to defend themselves in court, they will likely get their chance to do so before the Texas Bar. Apparently, they cannot do so publicly because the records are privileged and their former client Tesco will not allow their disclosure.

The majority opinion here was written by Judge O’Malley and joined by Judge Chen.

Writing in dissent, Judge Newman argued that the lawyers should be able to defend their reputation since it is their “most valuable asset.” The basic argument from Ballard and Luman is that the “sole evidentiary basis” for their bad faith is post-trial testimony from the creator of the asserted prior art and, according to the Attorney’s, that post-trial testimony was different from what he had said years earlier. The district court had disagreed with that characterization.

===

Brief on Point: TescoAttorneyArg

Filing a Civil Action and Paying Fees

Patent

A few months ago I wrote about the Fourth Circuit decision in Shammas v. USPTO under the headline “USPTO Can Demand Attorney Fee Awards, Even When it Loses the Case.” The Shammas case surrounds the question of when, and to what extent, the PTO may request reimbursement of its costs associated with a civil action filed by a petitioner trying to force the USPTO to grant the applied-for rights.  The particular case here is focused on a trademark civil action, but the statute is virtually parallel for patent cases. In particular, both provisions include cost-shifting would seemingly force the applicant to pay the PTO’s expenses of the proceedings, win-or-lose.

Patent Cases: “All the expenses of the proceedings shall be paid by the applicant.”

Trademark Cases: “unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.”

Here, the district court sided with the USPTO – agreeing that the term “PROBIOTIC” was generic for its proposed use and therefore not registrable.

The district court then awarded attorney fees to the USPTO, which the 4th Circuit affirmed — holding that the “all the expenses” provision of the statute includes attorney fees.

The losing mark-seeker has now filed a petition for writ of cert asking:

Whether the Fourth Circuit’s holding – that “the expenses of the proceeding” that “shall be paid” by a trademark applicant bringing an action under Section 21(b) include the salaries of attorneys and paralegals employed by the United States Patent and Trademark Office – violates the American Rule.

Although the PTO seems to have the upper hand with regard to the statutory language, the right to fee shifting is hard for petitioners to accept — especially considering the rarity of strict fee-shifting mechanisms within our court systems (especially where one-side always pays).

A surprising aspect of the case is that the statute has been around for a while (170 years) and during that time, the USPTO has apparently never before sought (or been awarded) attorney fees under the statute. Without a grant of certiorari, that trend will have come full-stop and about-course.

[Shammas v Focarino certiorari pet and pet app]

 

 

Is it Appropriate Prosecute Patents for Direct Competitors on Inventions on Similar Technology without Disclosure and Waivers?

Ethics, Patent,

by Dennis Crouch

[Prof  Hricik may have more to say on this conflict-of-interest case, but I believe it is an interesting one and important for discussion.]

Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, SJC-11800.

A patent law malpractice case is pending before the Massachusetts Supreme Court that has major implications for patent prosecution practice.  Many patent patent attorneys and law firms develop technology-specific specialties as a marketing strategy.  The professional responsibility problem arises when the strategy is successful enough to attract multiple clients with substantial technological crossover.  Of course, this likelihood is intensified in larger law firms where more lawyers means more clients and more (potentially overlapping) invention disclosures.

Back in 2003, Maling hired Finnegan Henderson to prosecute a set of patent applications relating to screwless eyeglass hinges.  According to the allegations, it turns out that Finnegan was also representing a competitor (Masunaga) with a similar invention in the same screwless eyeglass hinge field.  Finnegan says that these were “attorneys in different offices.”  Neither client was informed or gave consent to this alleged conflict of interest and Maling argues that Finnegan’s “independent professional judgement” was impaired by the conflicting representation in violation of the Massachusetts Rules of Professional Conduct.  Among the various harms Maling alleges a delay in filing his application and wasted efforts on technology not sufficiently protected by patent.

ScreenShot163

The state trial court dismissed on failure-to-state-a-claim for the civil action with the court finding no direct adversity of interests and no nexus between the conflicting representation and the claimed harm.  The Supreme Judicial Court of Massachusetts (MA’s highest court), is now focused on the question of whether an actionable conflict arises when a single law firm files and prosecutes patent applications for similar inventions on behalf of two existing clients.

Massachusetts law:

  1. 1.7(a): “A lawyer shall not represent a client if the representation of that client will be directly adverse to another client.”
  2. 1.7(b) “[A] lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests.”

 

Finnegan here argues that the allegations of filing and prosecuting a competitor’s “similar” invention is “insufficient” to even suggest a conflict of interest.   Rather, Finnegan argues an ethical conflict only arises if one of the client’s inventions are blocked by patent disclosures made by another client.

The distinction between “similar” and “novel and non-obvious” is well-illustrated by the Maling and Masunaga inventions described in the patents at issue in this case. Both inventions attempt to solve the problem of how to construct an eyeglass frame without utilizing screws. As the PTO concluded, however, each patent claims a novel solution to this problem. . . .
Here, there is no allegation that Maling and Masunaga ever were “directly adverse” to one another, in patent proceedings or otherwise. Maling cites to no case law, nor is Finnegan aware of any, in which a court has held that parties are directly adverse to one another simply because each seeks to patent technology in the same field. Such a standard, moreover, would be inconsistent with the statutory-framework discussed above, which recognizes that multiple patents may be granted in the same field so long as each claims a “new and useful” invention, or a “new and useful improvement thereof.”

Finnegan also explains that conflicting-out large law firms would make it difficult for inventors to find representation — quoting Hricik as saying that “a rule that limits a firm to representing only one client in a particular technical field ‘imposes unnecessary costs on lawyers, clients, and the system.'” Hricik & Meyer, Patent Ethics: Prosecution (2015).

In his brief, the plaintiff-appellant argues that its allegations of violation and harm are sufficient to overcome a motion to dismiss. Their brief does not detail an explanation of how similarity should be treated.

In an amicus filing, a group of major law firms, including Knobbe Martins; Honigman Miller; Nixon Vanderhye, and others arguing that direct conflict issues only arise if the inventions are so close as to lead to an interference (pre-AIA).

The amicus brief suggests that the rules may be different post-AIA because the new law sets up more of a race to the PTO (first-to-file vs first-to-invent).  This, of course, is disingenuous as the pre-AIA system included a large number of adverse impacts caused by delays in filing.

One interesting issue that arises here is that Maling had Finnegan conduct a pre-filing prior art search in 2003.  At that point, the Masunaga patent was on file, but not yet published and so did not turn-up in the search results – even though Finnegan attorneys knew of the reference and knew that it was prior art.

Michael McCabe has more of a discussion of the case on his IP Ethics and Insights Blog.

= = = = =

Most civil-action malpractice claims fail because of the difficulties of proving harm. At the USPTO and State Bars, mere violation – even without client harm – is actionable as a violation of the rules of professional responsibility. It will be interesting to see how the USPTO treats this case.

= = = = =

Read the Briefs:

 

Maintenance Fees 2015

Patent

By Dennis Crouch

A substantial percentage of the USPTO budget arrives in the form of maintenance fee payments. This is “easy money” for the USPTO because the Office has already done the work of examination. A patent’s term runs 20-years from the effective filing date, not counting provisional or foreign national priority filing and with the addition of any patent term adjustment. They typical result is a term of 17 years post-issuance, give or take. During that time, a patent applicant must continue to pay maintenance fees at regular intervals: due 3 ½, 7 ½, and 11 ½ years from issuance (with an additional six-month grace-period added on).

The chart below shows the percentage of patents whose maintenance fees have been paid at each of the three stages. You’ll see that the vast majority of applicants pay the first maintenance fee (currently set at $1,600 for large entities); More patents drop out as the second maintenance fee is due ($3,600), and fewer than half of the cases see the third maintenance fee paid ($7,400). I expect that a number of factors drive the apparent trends in maintenance fee payments, including the ever-rising cost, the perceived value of future patent right, patent term remaining, general economic outlook, and current access to funds, for example.

The current fees were put into place in March 2013. It is not surprising that the increased price resulted in the diminished number demanded as shown in the chart. Importantly, however, the drop in maintenance fee payments was slight in comparison to the size of fee increase (3rd Fee increased by 50%).

In addition to the revenue generated, a number of folks (often non-patent-holders) see maintenance fees as a costly-screen configured to weed-out relatively worthless patents so as to ease any freedom-to-operate search.

Prosecution Pendency Thoughts

Patent

The first chart below shows one view of how patent prosecution pendency is generally improving.  In particular, the chart shows the percentage of patents that took more than three years from filing to issuance.  As is apparent, that percentage has plummeted in President Obama’s patent office (Kappos-Rea-Lee).  Unlike a few years ago, most US patents now issue within three years of filing (not counting priority claims).

The second chart tells a different story by looking at the oldest prosecution files and seeing that those have grown substantially over this same time period.  In particular, the second chart shows the percentage of patents that took more than seven years to issue (filing date to issue date).  For the most part, these long-pendency prosecutions involved PTAB appeals.

PendencyThreeYearsPendencySevenYears

Constitutional Challenges to IPR Continue

Patent, ,

by Dennis Crouch

Respect for property rights has always been a core American principle.  That respect generally means that a government grant of a property rights cannot be cancelled or annulled outside of judicial action.  In a set of 19th Century cases, that principle was repeatedly upheld, including in the patent law context (both patents for land and patents for inventions).

See, e.g.:

  • McCormick Harvesting Mach. v. Aultman, 169 U.S. 606 (1898) (“[W]hen a patent [issues], it has passed beyond the control and jurisdiction of [the patent] office, and is not subject to be revoked or cancelled by the President, or any other officer of the Government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.)
  • Iron Silver Mining v. Campbell, 135 U.S. 286 (1890) (“[Patent validity] is always and ultimately a question of judicial cognizance.”)
  • US v. Stone, 69 U.S. 525 (1864).

In his 4th Circuit appeal, Carl Cooper now argues that inter partes review proceedings under the AIA violate these principles and are therefore unconstitutional. (Cooper v. Lee) In addition, Cooper argues that IPRs violate patentees Seventh Amendment right to a jury trial on questions of patent invalidity.

Cooper v. Lee began as a lawsuit after Cooper’s patents were challenged in a set of inter partes review proceedings.  Rather than awaiting the outcome of the IPR, Cooper quickly filed a civil action in district court arguing that the regime is unconstitutional. However, the district court dismissed the case – finding that it lacked jurisdiction. In particular, the district court held that the AIA provides for particular appellate review and that Cooper must first exhaust the administrative process before raising an external constitutional challenge.

As it did at the lower court, the USPTO largely avoids the merits but instead argues that the appellate court has no jurisdiction over the case – both for the reasons given by the district court and because the case should have been heard by the Federal Circuit rather than the 4th Circuit.  [PTO Brief in Cooper v. Lee]. Meanwhile, in May 2015, the USPTO PTAB issued a final order cancelling the challenged patent claims and setting-up a direct Federal Circuit appeal to be filed this month. See IPR2014-00156 (May 14, 2015); IPR2014-00157 (May 14, 2015); IPR2014-00158 (May 8, 2015).

= = = = =

Incredibly important and difficult Constitutional issues here.

= = = = =

Briefing appears now complete in the parallel case of MCM v. HP that I previously discussed:

 

 

 

USPTO Can Demand Attorney Fee Awards, Even When it Loses the Case

Patent

Shammas v. Focarion (Lee) (4th Cir. 2015) [SHAMMAS v FOCARINO]

The Patent and Lanham (TM) acts each include a mechanism for filing a civil action when the USPTO refuses to grant/register the applied-for rights.  See 35 U.S.C. 145 and 15 U.S.C. 1071(b) respectively.

Both provisions include cost-shifting that forces the applicant to pay the PTO’s expenses of the proceedings, win-or-lose.

Patent Cases: “All the expenses of the proceedings shall be paid by the applicant.”

Trademark Cases: “unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.”

The 4th Circuit case of Shammas v. Focarino involves a civil action to force the PTO to register the mark “PROBIOTIC.”  The district court sided with the PTO that the mark was not registrable (it is generic) and then awarded attorney fees to the USPTO under the statute quoted above.  On appeal, the 4th Circuit has affirmed – finding that the “all the expenses” provision of the statute includes attorney fees.

[I]n ordinary parlance, “expenses” is sufficiently broad to include attorneys fees and paralegals fees. Moreover, in this statute, Congress modified the term “expenses” with the term “all,” clearly indicating that the common meaning of the term “expenses” should not be limited.  (internal citations omitted)

The appellate panel rejected the notion that “expenses” should be read as parallel to “taxable costs” that do not include attorney fees — suggesting that Congress wold have used the costs term it it meant costs.  In reaching this decision, the court looked back to the statutory language origin found in the 1836 patent act and noted that – even there – the statute distinguished between expenses and costs.

The court also rejected the notion we would need a clearer statement from Congress in order to overcome the presumption against attorney fee shifting in American courts (the “American rule”).  Here, the panel came to the odd conclusion that the American-rule presumption here does not apply because that presumption is about whether the loser pay’s the winner’s fees.  This situation is different (according to the court) because one side always pays win-or-lose.

Thus, a statute that mandates the payment of attorneys fees without regard to a party’s success is not a fee-shifting statute that operates against the backdrop of the American Rule.

This appears to me an odd conclusion whose conclusion does not logically flow from the premise.

For litigators, the outcome is unsightly because of the rarity of such strict fee-shifting mechanisms within our court systems. For patent and trademark prosecutors, the statute appears more akin to a fee-for-service, which is entirely common within the system.  One major difference between other PTO fees is uncertainty since the litigation costs will not be known until the litigation complete.

Whatever its justification, the outcome here obviously adversely impacts patent and trademark applicants considering the filing of a civil action to pursue their claims.  (Within the PTO, direct appeal to the Federal Circuit under Section 144 does not directly result in a fee award).

My understanding is that Shammas will be filing a petition for writ of certiorari in the upcoming weeks now that his petition for rehearing was denied.  INTA filed a brief in support during the appeal.