Search Results for: "sas institute"

Supreme Court denies Certiorari in Obviousness Case

Patent,

The Supreme Court has denied certiorari in Cubist Pharma v. Hospira.  In the case, the patentee had challenged the Federal Circuit’s increasingly strong limits on the use of secondary indicia of non-obviousness.  Bill Lee’s well written petition argued that the Federal Circuit’s approach conflicted with the flexible doctrine outlined in 35 U.S.C. 103 and explained by Deere and KSR.  [CubistPetition].

Question Presented:

In Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), this Court recognized the relevance of “objective indicia” of nonobviousness (also known as “secondary considerations”) – including the long-felt need for the patented invention, the failure of others to arrive at the invention, and the invention’s subsequent commercial success – in determining whether a patent’s claims were obvious to a person of ordinary skill in the art. In this case, the district court created, and the Federal Circuit affirmed, two categorical limitations on the consideration of objective indicia of nonobviousness that exist nowhere in the Patent Act or this Court’s jurisprudence. The questions presented are:

1. Whether a court may categorically disregard objective indicia of a patent’s nonobviousness merely because the considerations apply to one commercial embodiment of a patented invention, rather than all embodiments.

2. Whether a court may categorically disregard objective evidence of a long-felt need for a patented invention merely because the need is not expressly recited in the patent claims.

In its successful opposition, Hospira explained that both the district court weighed the secondary indicia of non-obviousness and found them “not sufficiently strong to overcome the showing of obviousness arising from an analysis of the prior art.”  To Hospira, the petition was basically a request that the Supreme Court conduct its own factual analysis.

I had previously written that “[a]part from the AIA Trial challenges, the most potential life changing case on the docket for patent attorneys is Cubist v. Hospira that focuses on the role of secondary indicia of non-obviousness. As with most Supreme Court patent cases over the past decade, Cubist argues that the Federal Circuit’s rules are too restrictive and should instead follow a looser factor-based analysis when considering the issue.”

In today’s action, the court also denied certiorari in the subject matter eligibility case of Vehicle Intelligence v. Mercedes-Benz.  Although scheduled for conference, the court took no action in the Cuozzo follow-on case of Stephenson v. Game Show Network, LLC, et al. — GVR is likely following release of the Cuozzo decision.

 

Cuozzo Amicus Briefs from IPO, AIPLA, BIO, et al., all arguing against Broadest Reasonable Interpretation of Claims During IPR proceedings

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By Dennis Crouch

Following a 6-5 split by the Federal Circuit, Cuozzo filed a petition for writ of certiorari – asking two important questions (as paraphrased by me):

  1. During a post-issuance inter partes review (IPR) proceeding, is it proper for the Patent Trial & Appeal Board (PTAB) to construe claims according to their “broadest reasonable interpretation” rather than their proper construction being applied in court?
  2. Is the PTAB’s decision whether to institute an IPR proceeding judicially unreviewable even if the PTAB exceeds its statutory authority in instituting the IPR?

See Cuozzo Takes IPR Challenge to the Supreme Court.

Eight different friend-of-the-court briefs have now been filed and the U.S. Government’s responsive brief is due December 9, 2015.

The majority of the briefs focus solely on the claim construction issue and make three basic arguments:

  1. Policy: IPRs are designed as validity judgments rather than a new examination of the patent; and claim amendments are almost always prohibited. Because IPRs are acting in parallel with court proceedings, the different standards create instability and uncertainty while using the same claim construction as an infringement-court would promote efficiency. All this undermines the PTO’s reasons justifying application of BRI construction rather than standard construction.
  2. Deference: Congress did not give the PTO rulemaking authority to decide to implement BRI in these Inter Partes Review proceedings and as a result, the agency’s interpretation should not be given administrative law deference.
  3. Conflict: The broad standard effectively negates the presumption of validity associated with each and every patent right. The broad standard subtly justifies the PTO to avoid the preclusive effect of prior court decisions.

One amicus brief (NYIPLA) also argued that the Federal Circuit should be able to review whether the PTO exceeded its authority in instituting an IPR, despite statutory language stating that the decision is not appealable. NYIPLA argues that the statute simply bars interlocutory appeals, but that the statute does not “narrow the issues that can be raised in an appeal” of a final written decision under §319.

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I’ll note here that none of the briefs at the petition stage raise the MCM/Cooper/Affinity arguments that the whole IPR proceedings are unlawful because “a patent, upon issuance, is not subject to revocation or cancellation by any executive agent, including by any part of the USPTO.” Citing McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606 (1898). In McCormick, the Supreme Court wrote:

[W]hen a patent has … had affixed to it the seal of the Patent Office, it has passed beyond the control and jurisdiction of that 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. . . . The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever [without the patentee’s consent], is vested in the courts of the United States, and not in the department which issued the patent.

I would expect that, if the petition here is successful, some parties will file briefs that collaterally attach the IPR framework and to soften the Supreme Court for the eventual petitions.

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Briefs

Cuozzo Takes IPR Challenge to the Supreme Court

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Cuozzo Speed Tech v. Lee (Supreme Court 2015)

Cuozzo lost its petition for en banc rehearing in a 6-5 split of Federal Circuit judges.  Now, the patentee has raised is challenge to the IPR process to the Supreme Court – asking two questions:

  1. Whether the [Federal Circuit] erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.
  2. Whether the [Federal Circuit] erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

Answers to these questions will fundamentally alter the inter partes review system. The petition does a good job of walking through the importance of the case and then separately explaining their legal argument.

I’m sure that we’ll cover this case more as the briefing moves forward – amici have 30 days to file.  Meanwhile, read the petition here: Cuozzo Speed Technologies LLC v Michelle K Lee Petition for a Writ of Certiorari

The Cuozzo petition was filed by a rising star in Supreme Court practice – Jeffrey Wall, who is partner at Sullivan & Cromwell.  Wall was a clerk for Justice Thomas and was an Assistant to the Solicitor General for five years. He also has the distinguishing mark of being my law school classmate (as well as Prof. Rantanen).

 

Seeking the AntiCommons

Patent

Interesting historical look at patent-pools and ‘transaction entrepreneurs’ by USC law professor Jonathan Barnet leads him to the conclusion that the “anti-commons” concerns in the patent context don’t hold weight in practice.

IP scholars and policymakers often maintain that [anti-commons] effects are endemic in IP-governed markets and therefore tend to endorse the view that IP rights should be reduced to mitigate those effects. The descriptive component of that proposition cannot be reconciled with the clear weight of contemporary and historical evidence—covering more than a century’s worth of experience—that AC effects are repeatedly mitigated through independent market action by affected constituencies or transactional entrepreneurs. This is true both in concentrated markets, in which repeat-players have incentives and capacities to converge on a knowledge-sharing arrangement, and dispersed markets, in which intermediaries commonly enter to supply transactional solutions that ameliorate AC frictions. Remarkably, recent historical research shows that this proposition holds true even in “easy” cases that have long been assumed to provide clear illustrations of AC effects. Recognizing the shortcomings of the AC thesis as a descriptive proposition rebuts normative intuitions that intensive levels of IP acquisition and enforcement trap markets in a transaction-cost web that depresses innovation. This sophisticated view of AC effects as a potential but rarely realized outcome provides the basis for a more nuanced appreciation of the role of IP rights in creative and technology markets.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2633695

 

 

Sharply Divided Federal Circuit Confirms that PTO Can Broadly Construe Claims During Inter Partes Reviews

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by Dennis Crouch

In re Cuozzo Speed Tech (Fed. Cir. 2015)

The Federal Circuit simultaneously released two decisions in this appeal of the first inter partes review proceeding before the Patent Trial and Appeal Board (PTAB).  The first decision is a revised panel opinion holding:

  1. that the court lacks “jurisdiction to review the PTO’s decision to institute IPR;”
  2. that the PTO acted within its statutory rulemaking authority in determining that patent claims subject to an IPR should be given their “broadest reasonable interpretation” and thus that the PTAB’s broad claim construction and subsequent obviousness determination were proper; and
  3. that the Board properly denied Cuozzo’s motion to narrow its claims in order to avoid the prior art.

Judge Dyk wrote the majority opinion joined by Judge Clevenger; and Judge Newman dissented on almost all points.  [I have not fully reviewed the revised opinion, but the holding does not appear to differ significantly from the original that I discussed here. DC]

In the second decision, the en banc court rejected Cuozzo’s petition for en banc rehearing on the Broadest-Reasonable-Interpretation (BRI) standard for administrative review claim construction.  The vote was at the slimmest of margins: Six-to-Five with Chief Judge Prost, and Judges Newman, Moore, O’Malley, and Reyna voting for en banc review and Judges Lourie, Dyk, Wallach, Taranto, Chen, and Hughes voting no.  Oddly, four of the six judges voting “no” to the en banc review request still felt the need to write an opinion explaining the law.

The BRI supporters write:

Congress conveyed rulemaking authority to the PTO to prescribe regulations, inter alia, “establishing and governing inter partes review,” 35 U.S.C. § 316(a)(4), and the PTO has adopted the broadest reasonable interpretation standard for IPR proceedings, 37 C.F.R. § 42.100(b). In the absence of evidence of congressional intent to abrogate the [historically grounded] broadest reasonable interpretation standard, we should not act to adopt a different standard based on our own notions of appropriate public policy. If the standard is to be changed, that is a matter for Congress. There are pending bills which would do just that.

Dissenting from the en banc denial, Chief Judge Prost (joined by four colleagues) writes:

In adjudicatory proceedings, claims [must be] given their actual meaning, not their broadest reasonable interpretation.

Challenging the grant-of-authority argument, the minority suggests that the rulemaking authority was procedural authority, not substantive authority — and that the standard for claim construction is extremely substantive.  “In our view, these subsections are consistent with Congress’s previous grants of authority to prescribe procedural regulations.”

[Read the En Banc Denial Opinions]

This decision is obviously important since many of the obviousness arguments in the pending IPRs depend upon the PTO broadly construing the claim scope.  The immediate take-home is the message that Patentees had better win their case at the PTAB rather than looking to the Federal Circuit for reversal.  In the background, the judicial split and administrative-law aspects of the decision suggest that it is ripe for Supreme Court review.

 

Federal Circuit Cases to Watch on Software Patentability – Planet Blue

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 Guest Commentary by Robert Stoll

In the wake of the Supreme Court’s decision in Alice Corp v. CLS Bank (2014), there have been dozens of decisions in federal district courts and at the Federal Circuit that have applied Alice and Section 101 to a wide variety of business method and software related patents. And in the vast majority of these cases, the courts have invalidated the patents.

This trend line has led to rampant speculation about the end of software patents. But a review of the patents in those cases indicates that the claims at issue in most of the district court cases (and arguably all the Federal Circuit decisions) were directed to business methods that would have likely been held invalid under Bilski and other pre-Alice decisions. What we have seen far less is how courts will apply Alice to patent claims directed to software technology (as opposed to business methods).

Arguably the first of those cases is on its way through the Federal Circuit. The McRO (Planet Blue) v. Activision Blizzard, et al. (C.D. Cal. 2014) (“Planet Blue”) appeal pending at the Federal Circuit may be an important indicator of how software patents will be evaluated by the courts going forward.

Unlike many of the other Section 101 cases that have largely involved simple financial/business practices or similar non-technical “inventions,” the patents in Planet Blue are directed to what appear to be actual technological challenges. The patents utilize complex and seemingly specific computer-implemented techniques.

And yet the Planet Blue patents were found invalid under Section 101 in the district court. In deciding the case, Judge Wu did a thorough analysis of the patent claims, starting with the observation that “[f]acially, these claims do not seem directed to an abstract idea” and appear to be directed to a “specific technological process.”  However, interpreting Mayo to require him to disregard any aspect of the claims found in the prior art, he conducted a further analysis to determine what feature of the claims were novel. Wu found that the only aspect of the claims that added to the prior art was an abstract idea:  “the use of rules, rather than artists, to set the morph weights and transitions between phonemes.”

Planet Blue has now appealed to the Federal Circuit, and opening merits briefs were recently filed. These and the subsequent briefs, arguments and decision in this case will be important for practitioners and patent holders for several reasons:

The Federal Circuit will evaluate a patent claim that is technology-based.

An initial read of the claims in the Planet Blue patents seem to be a far cry from basic method claims. The Planet Blue patents are used in animation; the technology helps automate the process of adapting an animated image to mouth words without having to draw or manually program the animated character’s movements. Its’ claims are drawn to the use of three-dimensional synchronization for certain applications in animation.

The district court initially acknowledged that the claims, in isolation, appeared tangible and specific and did not seem directed to an abstract idea: “considered standing alone, the asserted claims do not seem to cover any and all use of rules for three-dimensional synchronization.” In deciding this case, the Federal Circuit will be making an important decision on how to evaluate technology and software claims in a post-Alice environment.

The decision should provide additional guidance on how to apply the ‘significantly more’ test.

In the Alice decision, the Court recognized that patents – even those that are directed to an abstract idea or other ineligible concept – can be made patent eligible if the patent ‘transforms’ the abstract idea, or  does ‘something’ or ‘significantly more’ than a patent on the concept itself. This is the second step of the Alice/Mayo test, which the Court refers to as the search for an inventive concept.  Unfortunately, both the Supreme Court and Federal Circuit have provided scant guidance on what is necessary to satisfy this “significantly more” test.

In this case, the district court found that the claims covered a well-known concept of lip synchronization and weren’t sufficient to meet the ‘significantly more’ test. The Federal Circuit will review the claims, and assess whether the district court’s analysis and conclusion were correct.  The Federal Circuit’s decision should provide some insight as to how ‘significantly more’ test should be performed and how claims should be read moving forward.

Lower courts will be paying close attention to the Federal Circuit’s ruling in this case in their 101 assessments.

Just six weeks after the Planet Blue decision, another Section 101 decision came out from the Central District of California, this one authored by Judge Pfaelzer, in California Institute of Technology v. Hughes Communications, Inc. (C.D. Cal. 2014).  In that case, the court denied Hughes’ motion for summary judgment on Section 101 ineligibility. Judge Pfaelzer also undertook a lengthy analysis of Section 101 case law.  In applying the Mayo/Alice framework, the court found that the Caltech claims were directed to abstract ideas, but that the claims were patentable since they contain inventive concepts.

Interestingly, Judge Pfaelzer also made a point of discussing the Planet Blue decision.  While respectfully acknowledging that Planet Blue offers valuable contributions to the Section 101 discussion, Judge Pfaelzer noted that Planet Blue ultimately reached the wrong conclusion since courts should not, in her view, apply the point-of-novelty approach in the Section 101 inquiry, citing the Supreme Court’s Diamond v. Diehr decision.

This is the first step in the journey, not the destination. Planet Blue may turn out to be a bellwether case on software patentability, as these patents seem quite similar to so many of the software patents held by companies across the IT industry and beyond.  But the outcome is likely to be highly panel dependent, and it would not be surprising to see a request for en banc consideration at some point down the line. The case is sure to be closely watched, and it will be fascinating to see whether the Federal Circuit follows the lead of Ultramercial (and upholds the lower court decision on patent ineligibility), or whether the reasoning of DDR Holdings will prevail (and the Section 101 decision reversed).

Bob Stoll is a partner at Drinker Biddle and Reath and Co-Chair of the IP Group and a previous Commissioner for Patents at the USPTO.  The views expressed above are his own and do not necessarily represent the views of his firm or its clients.

 

Does Obviousness Type Double Patenting Survive the AIA?

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by Dennis Crouch

In Abbvie Inc. v. Kennedy Institute, the Federal Circuit confirmed that the judicially created doctrine of obviousness-type double patenting (OTDP) continues to be a viable defense following the Uruguay Round Agreements Act (URAA) even though the change to a priority-date-based patent term greatly reduced the potential for abuse. Looking forward, the decision begs the question as to whether the OTDB doctrine has been eliminated as to patents examined under new the America Invents Act of 2011 (AIA). For the first time the rewritten patent statute particularly defines what evidence counts as prior art — now leaving little room for the judiciary to create further categories.  

Obviousness-type double patenting (OTDB) has long been an element of patent law that operates to prevent a patent applicant from chaining-together a time-series of multiple patents in order to extend the exclusive rights beyond the expected 20-year term.  Historically, the potential term expansion was made possible by filing a second or subsequent patent application (often a continuation application) that issues several years after the original patent.  Because the patent term was 17-years from the issue date, later-issued patents would have additional patent term beyond the expiry date of the first-issued patent. The OTDP doctrine operates to block this outcome of extended patent term whenever the invention claimed in the extended-term-patent would be obvious (not patentably distinct) in light of the invention claimed in the first-expiring patent.  In that situation, the extended-term patent is held invalid or unenforceable unless the patentee had submitted a “terminal disclaimer” that disclaims the potential extra term and also links the two patents together as if they were one big patent. Writing on this topic in a 1963 CCPA decision, Judge Rich noted:

The public should also be able to act on the assumption that upon expiration of the patent [the public] will be free to use not only the invention claimed in the patent but also any modifications or variants thereof which would have been obvious to those of ordinary skill in the art at the time the invention was made, taking into account the skill of the art and prior art other than the invention claimed in the issued patent.

See MPEP 804.

Declining Policy Concerns: Much of the need for the OTDB doctrine evaporated with the 1995 patent term transformation enacted with the URAA. Under the new law, US patent term is now calculated from the application priority date rather than the issue date with the result being that the a divided application no longer necessarily extends the patent term.

Of course, there are some caveats to the notion that OTDB is now an unnecessary relic: First, the term of a patent may be adjusted or extended due to a variety of factors with the result that family member applications may have differing expiry dates. The second source of potential term-separation comes from the statutory definitions of prior art that excludes certain prior applicant disclosures from the scope of prior art. These prior-art exclusions include certain pre-filing disclosures by the applicant as well as prior applications on file with the PTO that are not yet published as of the application latter filing date. The first situation (PTA) was a focus of Gilead Sciences v. Natco Pharma (Fed. Cir. 2014) and the second situation was the focus of AbbVie.

In AbbVie, the patentee held two separate patents both covering aspects of a rheumatoid arthritis treatment. Although both patents were part of the same patent family, only one claimed priority to a certain earlier application. It turns out that the early priority date was not needed because no intervening prior art had been identified. Under the 20-year term rules, the two patents were scheduled to have two different expiry dates.  In the appeal, however, the Federal Circuit affirmed that the second patent was invalid for obviousness type double patenting because it was not patentably distinct from the claims of the first patent.

An interesting aspect of the decision involves the court’s attempt to ground the doctrine in statute rather than the judicial creation heritage that Judge Rich had accepted and recognized.  Judge Dyk writes:

While often described as a court-created doctrine, obviousness-type double patenting is grounded in the text of the Patent Act. . . .  § 101 forbids an individual from obtaining more than one patent on the same invention, i.e., double patenting. As this court has explained, “a rejection based upon double patenting of the
obviousness type” is “grounded in public policy (a policy reflected in the patent statute).”

Although the policy notion may be grounded in Section 101, the court explains that the practical application of the doctrine “looks to the law of obviousness generally” and is “analogous to an obviousness analysis under 35 U.S.C. § 103.”  (quoting Amgen).

While unimportant for the AbbVie decision, the particular grounding of the doctrine may be important going forward because the law of obviousness has been rewritten as part of the America Invents Act of 2011.

The AIA redefines prior art in a number of particular ways. Notably for this discussion, the law spells out the scope of prior art along with certain “exceptions.” These exceptions include disclosures originating from the inventors (Section 102(b)); as well as prior patent applications from the same patent-owned and that were still unpublished by the latter filing date (Section 102(b)(2)(c)). Section 102 has also been rewritten to expressly state that it is defining “prior art” — presumably the entire scope of potential prior art.  When the obviousness provision in Section 103 refers to “prior art” it is now clear that we are talking about prior art as defined in Section 102 with the exceptions as noted.

Although a seeming small change in the statute, these alterations repeatedly make clear that certain prior disclosures by an inventor/owner simply don’t count as prior art either for novelty or obviousness purposes. At the margins there continues to be potential for applicants to “play games” with the filing system in order to extend their effective patent term. However, that potential is so reduced from ages past and the statute now defines prior art at such an explicit level of detail that we leave little room for a judicially created doctrine that further eliminates patents.

Creating versus Eliminating Prior Art: At this point, it would be rather odd for the court to create additional forms of prior art that extend beyond the statute.  What is unclear is whether the courts will be willing to apply the rewritten statute in a way that eliminates old forms of prior art that are no longer part of the statute.  Like OTDP ‘prior art,’ the court will be faced with a similar situation involving prior secret sales or non-public commercial uses by the patentee that previously served as prior art but that do not seem to fit within the re-written definition of Section 102.

One problem with the doctrine is that it is slowly developing. The first challenges may come from a patent applicant who refuses to file a terminal disclaimer in order to get its patent allowed.

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I should say that Congress potentially recognizes that double patenting doctrine is potentially problematic and Rep. Goodlatte has proposed an amendment that would codify double patenting.

Claiming Clones

Patent

 In re Roslin Institute (Edinburgh) (Fed. Cir. 2014) In re Roslin
Panel: Dyk (author), Moore, Wallach

Dolly cloneThis case relates to Dolly, probably the most famous baby sheep ever.1  As most folks know, Dolly was the first successful mammalian clone from an adult somatic cell.  This means that her nucleic genetic material is a copy of the adult from which she was cloned.  The basic process used to create Dolly is illustrated to the right.

In addition to claims on the cloning process (which were not at issue in this appeal), the University of Edinburgh also sought product claims.  Claims 155 and 164 are representative:

155. A live-born clone of a pre-existing, nonembryonic, donor mammal, wherein the mammal is selected from cattle, sheep, pigs, and goats.
164. The clone of any of claims 155-159, wherein the donor mammal is non-foetal.

The Patent Office rejected these claims on Section 101, 102, and 103 grounds and the University appealed.

The Federal Circuit agreed that the claims were not patent eligible under Section 101.  The court began by distinguishing Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948) (which it treated as a subject matter eligibility case) from Diamond v.
Chakrabarty, 447 U.S. 303, 309 (1980), with the latter involving a patent eligible organism because “it was ‘new’ with “markedly different characteristics from any found in nature and one having the potential for significant utility.”  Slip Op. at 6, quoting Chakrabarty at 310 (emphasis added by court).  On the other hand, “any existing organism or newly discovered plant found in the wild is not patentable.”  Id. at 6-7.  Association for Molecular Pathology v. Myriad Genetics, Inc., reinforced this distinction. 133 S. Ct. 2107 (2013)

Here, the claims covered organisms (such as Dolly) that do not “possess ‘markedly different characteristics from any [farm animals] found in nature.'”  Slip Op. at 7, quoting Chakrabarty.    The emphasis of the court’s analysis was on genetic identity: “Dolly’s genetic identity to her donor parent renders her unpatentable.”  Id. The claims thus fell into the product of nature exception to the broad scope of patent eligible subject matter.

Underlying the court’s opinion was a policy thread relating to copying generally: that the copying of unpatentable articles is permitted so long as it does not infringe a patented method of copying.  In Sears Roebuck & Co. v. Stiffel Co., for example, the Supreme Court wrote that “[a]n unpatentable article, like an article on which the patent has expired, is in the public domain and may be made and sold by whoever chooses to do so.” 376 U.S. 225, 231 (1964).  Because the claimed clones are exact genetic copies of the of patent ineligible subject matter, they, too, are not eligible for patent protection.

What about the argument that these clones may be genetic copies of the donor organism, but they aren’t exactly the same?  For example, environmental factors will produce differences between the phenotypes of the donor and clones and their mitochondrial DNA will differ, since the mitochondrial DNA comes from a different source than the nucleic DNA.  The court rejected these arguments because such differences were not claimed: the claims are written in terms of genetic identity, not phenotypic or mitochondrial differences.

What the court appears to be implicitly doing here is to interpret the claims in a manner that is least favorable to the applicant.  There is at least a plausible argument that the claims do implicate genetic identity but phenotypic diversity by their reference to a “live-born clone of a … mammal.”  To be sure, the word “clone”  contemplate genetic identity.  But at the same time the very idea of a live-born mammalian clone suggests that the product will not be an exact duplicate of the donor.  In other words, while the claims don’t contain the words “phenotypic difference,” those differences are inherent in what a clone is: a clone will necessarily exhibit phenotypic differences because it will develop in different environmental circumstances than its donor.

However, even were the claims to expressly include such limitations, the court reasoned that it would not change the outcome.  As to phenotypic differences, they “do not confer eligibility on their claimed subject matter. Any phenotypic differences between Roslin’s donor mammals and its claimed clones are the result of ‘environmental factors,’ Appellant’s Br. 21, uninfluenced by Roslin’s efforts.”  Slip Op. at 10.  (I guess the fact that the whole process was set in motion by human activity doesn’t count).  As to mitochondrial differences, “There is nothing in the claims, or even in the specification, that suggests that the clones are distinct in any relevant way from the donor animals of which they are copies.”  Id. at 11.  As a result, the claims fail the “markedly different characteristics” language of Chakrabarty.

1. Except for possibly Mary’s little lamb.

Transfer on Mandamus

Patent,

By Dennis Crouch

Since its 2008 TS Tech decision, the Federal Circuit has repeatedly received Mandamus requests to force transfer of patent infringement lawsuits – usually out of the Eastern District of Texas and – into other, more convenient, districts. The statute, 28 U.S.C. § 1404(a), provides district court with discretion to transfer a lawsuit to another district “for the convenience of parties and witnesses [and] in the interest of justice.” Although the transfer decision is within the district court’s discretion, TS Tech and its progeny have indicated that a court abuses that discretion by unreasonably refusing to transfer a case. Because transfer of venue is not a question of patent law, the Federal Circuit purports to follow regional circuit law – primarily that of the 5th Circuit. See In re Microsoft Corp., 630 F.3d 1361 (Fed. Cir. 2011); In re Nintendo, Co. Ltd., 589 F.3d 1194 (Fed. Cir. 2009); In re Genentech Inc., 566 F.3d 1338 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008); accord In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) (en banc). A key element for successful motions to transfer is that the movant needs to show both that the current venue is poor that the proposed venue is much better.

The Federal Circuit just released three additional mandamus decisions, denying two and granting one. In re Altair Engineering (Fed. Cir. 2014) (mandamus motion to transfer denied); In re Groupon (Fed. Cir. 2014) (mandamus motion to transfer denied); In re WMS Gaming (Fed. Cir. 2014) (mandamus motion to transfer granted). In the past, venue transfer motions have seemed quite formalistic without really reaching the issues of justice and convenience. These opinions suggest to me that the court has improved its jurisprudence on this point:

In Altair, the petitioner asked the court to move the case against Uniloc from Texas to Michigan. In denying the petition, the Federal Circuit found it relevant that the Texas court had seen the same patent in two other cases – creating significant judicial economies. In addition, some of the relevant witnesses were also located near the Texas court. Thus, although more relevant evidence was sited in Michigan, the district court did not abuse its discretion in denying the transfer motion.

In Groupon, the court also refused to order transfer out of the Eastern District of Texas. In this case, the patentee – Blue Calypso is located in Texas and that was the site of the invention and the home of the key inventor along with all of its documents. The fact that Groupon is based in Illinois does not mean that the case should be transferred to Illinois.

Finally, in WMS Gaming, the Federal Circuit ordered the case moved from the Southern District of Mississippi to Northern District of Illinois. In the case, the patentee (MTG Gaming) sued WMS and another gambling-machine manufacturer as well as several casinos that operate in Mississippi, including MGM Resorts and Caesar’s Entertainment. The district court stayed the casino lawsuits and severed the suit involving the other manufacturer. With WMS standing alone, the Illinois venue appeared much better since it was the base of operations of the accused infringer and the patentee has no connections on its own to the Southern District of Mississippi. In addition, the Federal Circuit found that no relevant evidence or witnesses were located in Mississippi.

Software Patent Eligibility: Alice Corp v. CLS Bank on the Briefs

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By Dennis Crouch

Alice Corporation Pty. Ltd. v. CLS Bank International, Supreme Court Docket No 13-298 (2014)

Later this term, the US Supreme Court will shift its focus toward the fundamental question of whether software and business methods are patentable. More particularly, because an outright ban is unlikely, the court’s more narrow focus will be on providing a further explanation of its non-statutory “abstract idea” test. The Supreme Court addressed this exclusionary test in its 2010 Bilski decision, although in unsatisfactory form. As Mark Lemley, et al., wrote in 2011: “the problem is that no one understands what makes an idea ‘abstract,’ and hence ineligible for patent protection.” Lemley, Risch, Sichelman, and Wagner, Life After Bilski, 63 Stan. L. Rev. 1315 (2011).

In this case, a fractured Federal Circuit found Alice Corp’s computer-related invention to be unpatentable as effectively claiming an abstract idea. See, U.S. Patent No. 7,725,375. In its petition for writ of certiorari, Alice presented the following question:

Whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

Oral arguments are set for Mar 31, 2014 and a decision is expected by the end of June 2014. In addition to the parties, a host of amici has filed briefs in the case, including 11 briefs at the petition stage and 41 briefs on the merits. Although not a party to the lawsuit, the Solicitor General has filed a motion to participate in oral arguments and steal some of the accused-infringer’s time.

The invention: There are several patents at issue, but the ‘375 patent is an important starting point. Claim 1 is directed to a “data processing system” that includes a number of elements, including “a computer” configured to generate certain instructions, “electronically adjust” stored values, and send/receive data between both a “data storage unit” a “first party device.” The claims also include “computer program products” and computer implemented methods. The underlying purpose of the invention is to provide certain settlement risks during a time-extended transaction by creating a set of shadow credit and debit records that are monitored for sufficient potential funds and that – at a certain point in the transaction the shadow records are automatically and irrevocably shifted to the “real world.”

It is unclear to me what makes this invention novel or nonobvious and many believe that it would fail on those grounds. However, the sole legal hook for the appeal at this stage is subject matter eligibility. One thing that we do know is that CLS Bank is alleged to be using the patented invention to ensure settlement for more than a trillion dollars daily.

Important case: The claim structure here is quite similar to that seen in hundreds-of-thousands of already issued patents and pending patent applications where the advance in software engineering is a fairly straightforward, but is done in a way that has an important impact on the marketplace. One difference from many software patents is that the underlying functionality is to solve a business transaction problem. However, there is a likelihood that the decision will not turn (one way or the other) on that field-of-use limitation.  In his brief, Tony Dutra argues that the key here is utility, and that an advance in contract-settlement is not useful in the patent law context.

[Brief of the US Government] The most important brief in a pile such as this is often that filed by the U.S. Government. Here, Solicitor General Donald Verrilli and USPTO Solicitor Nathan Kelley joined forces in filing their brief in support of CLS Bank and a broad reading of the abstract idea test. In particular, the U.S. Government argues that none of the claims discussed are subject matter eligible. The brief begins with an importance argument – that “the abstract idea exception is patent law’s sole mechanism for excluding claims directed to manipulation of non-technological concepts and relationships.” This notion – that the abstract idea is the final and ultimate bulwark – places a tremendous pressure on the Court to create a highly flexible test. In my view, the Government largely loses its credibility with that argument – somehow forgetting about the host of other overlapping patent law doctrines that each address this issue in their own way, including requirements that any patented invention be useful, enabled, described in definite claims, and nonobvious. The ultimate backstop is likely the US Constitutional statement regarding “Inventors” and their “Discoveries.”

The government brief goes on to endorse the approach of first identifying whether the claim would be abstract if the computer technology were removed from the method claims and, if so, move on to consider whether the computer technology limitations are sufficient to transform a non-patentable abstract idea into a sufficiently concrete innovation in technology, science, or the industrial arts. “The ultimate inquiry is whether the claims are directed to an innovation in computing or other technical fields.” The brief then reviews the precedent on this topic from Bilski, Mayo and Flook.

Addressing the computer system and software claims, the U.S. Government agrees that they are certainly directed toward “machines” and “manufactures.” However, according to the government, those claims to physical products are properly termed abstract ideas because the physical elements “do not add anything of substance.”

One interesting element from the brief is that the US Government notes that, although a question of law, invalidity for lack of subject matter eligibility requires clear and convincing evidence in order to overcome the presumption of validity. In its brief, CLS Bank argues otherwise as does Google, who actually takes time to cogently spell out the argument with citation to leading authorities.

[Brief of CLS Bank] In its merits brief, CLS Bank somewhat rewrote the question presented – focusing attention on the Supreme Court’s decisions in Mayo.

Question Re-framed: An abstract idea, including a fundamental economic concept, is not eligible for patenting under 35 U.S.C. §101. Bilski v. Kappos, 130 S. Ct. 3218 (2010). Adding conventional elements to an abstract idea does not render it patent-eligible. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). The asserted claim of the patents-in-suit recite the fundamental economic concept of intermediated settlement, implemented using conventional computer functions. The question presented is:

Whether the courts below correctly concluded that all of the asserted claims are not patent-eligible.

The basic setup of the CLS Bank is the argument that a newly discovered abstract idea coupled with conventional technology is not patent eligible. CLS Bank’s point is well taken that an outright win for Alice Corp. here would involve something of a disavowal rewriting of Mayo.

[Brief of Alice Corp.] Alice Corp’s brief obviously takes a different stance – and argues first that the non-statutory exceptions to patentability should be narrowly construed and focused on the purpose of granting patents on creations of human ingenuity and that the idea behind Alice’s invention is not the type of “preexisting, fundamental truth” that should be the subject of an abstract idea test. Alice also reiterated its position that the claimed invention should be examined as a whole rather than divided up as suggested by the Government brief.

[Brief of Trading Technologies, et al.] TT’s brief (joined by a group of 40 patent-holding software companies as well as Prof. Richard Epstein) argues that the “abstract idea” test is focused on scientific truths and scientific principles. In that construct, Alice Corp’s ideas regarding the settlement system would not be seen as ineligible. TT also challenges the court to think beyond the computer as “merely a calculator and that programming merely instructs the computer to perform basic mathematical calculations. “While this may have been true of many of the applications programmed on the earliest computers over 40 years ago, it is simply not the case today. . . . Viewing computers as merely calculators is completely disconnected from the reality of where innovation is occurring today and where most innovation will occur in the future.” In his brief, Dale Cook agrees and further makes the argument that a distinction between hardware and software is illusory – citing Aristotle to make his point. [Brief of Dale Cook]. Supporting that notion is the Microsoft brief that sees “software-enabled inventions” as the “modern-day heirs to mechanical inventions. [Brief of Microsoft HP]. Pushing back on this argument, Public Knowledge seemingly shows that the entire claimed method can be implemented in seven lines of software code. Thus, while some software is complex. PK makes the argument that the software at issue here is exceedingly simple.

TT also warns against the Government’s position that a strong eligibility guideline is needed in cases such as this. In particular, explains “inventions that do nothing more than use a computer to implement time-worn concepts in obvious and traditional ways will not receive patent protection notwithstanding the fact that they concern eligible subject matter. On that note, TT asks for clarification from the Supreme Court that “Mayo does not support importation of novelty, nonobviousness, and other patentability criteria into the ‘abstract idea’ analysis.”

[Brief of ABL] The final brief in support of petitioner was filed on behalf of Advanced Biological Labs by Robert Sachs. ABL argues that a claim should only be seen as problematic under the abstract idea test when there are no practical alternative non-infringing ways of practicing the abstract idea. On that point, ABL further pushes for the notion that the test should be considered from the framework of one skilled in the art rather than simply the-mind-of-the-judge and based upon clear and convincing evidence. Pushing back against this notion is the brief of the American Antitrust Institute (AAI) drafted by Professor Shubha Ghosh. The AAI argues that the purpose of the Abstract Idea exclusion is to prevent undue harm to competition and innovation. Seemingly, the AAI contends that a claim directed an abstract idea is per se anticompetitive and that even when coupled with technology it may still be unduly preemptive. Oddly however, later in the brief AAI argues for a test that is not based upon market competition or preemption.

[Shultz Love Brief] A leading brief on the side of ineligibility is that filed by Professors Jason Shultz and Bryan Love on behalf of about 22 other professors. The professors make the argument that the world would be a better place without software patents. For its conclusions, the brief largely relies on the work of Brian Love, Christina Mulligan, Colleen Chien, James Bessen, & Michael Meurer. The EFF brief from Professor Pamela Samuelson, Julie Samuels, and Michael Barclay make a parallel argument: “If anything, evidence shows that the U.S. software industry is harmed by the exponential growth of vague software patents.” Without denying the problems created by software patents, Professors Peter Menell and Jeff Lefstin argue that the solution is not to rely upon the “abstract idea” test to solve that problem. IBM offers the starkest contrast to the Shultz-Love brief – arguing that the failure to clearly offer patent rights for software inventions “endangers a critical part of our nation’s economy and threatens innovation.”

The ACLU has been more frequently involved with patent law issues and was a backer of the Myriad case. In its brief, the ACLU argues that the abstract idea exception is the patent law proxy for free speech and that monopolization of abstract ideas would be a violation of the First Amendment. That conclusion is supported by the Software Freedom Law Center & Eben Moglen. The First Amendment argument has the potential of twisting on the ACLU: if the justices fail to see that patents create any First Amendment concern then they may be more likely to support a narrowing of the abstract idea exception. Notably, in the most recent patent law oral arguments on fee-shifting, Justice Roberts arguably suggested that patents did not create any first amendment concerns.

I mentioned Microsoft’s brief earlier. Microsoft argues that software should be patentable – but not the software in this case. In particular, Microsoft agrees with the notion that simply adding “a computer” to an otherwise abstract idea does not fix the problem. Microsoft’s solution is to consider “whether the claim as a whole recites a specific, practical application of the idea rather than merely reciting steps inherent in the idea itself.” Microsoft goes on to admit that its test adds little predictability.

The Intellectual Property Owners Association and AIPLA similarly argue that software “if properly claimed” is patent eligible. On its face, that argument may not sit well with the Court who may see the “as claimed” notion designed to create loopholes for sly patent drafters whose noses are made of wax. A collective brief from Google, Facebook, Amazon, and others support this notion that patent eligibility should not turn on “clever drafting.” On an ancillary (but important) point Google argues that Section 101 defenses should be considered at the outset of most cases. cf. Crouch & Merges, Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making.

Micro Entity Early Stats

Patent

For many years, the US Patent Office has provided a 50% fee discount to qualified “small entities.” That option was expanded as part of the AIA to now also include “micro entities” who receive a 75% fee discount. The result is a potential savings of thousands of dollars during the life of a patent. Small entities can be fairly large – business concerns having up to 500 employees. Universities and 501(c)(3) nonprofit organizations also qualify. However, a patent that is licensed (or obligated to license or assign) to a larger entity does not qualify for the fee reduction. For micro entity status, the applicant must qualify as a small entity and then either meet the income/experience limitation (~<$150,000 in household income) or else be assigned (or obligated to be assigned) to a university or qualifying institute of higher learning. Although this fee reduction is important for small business interests, attorney fees still tend to constitute the majority of patenting costs (especially prior to issuance).

The chart below shows the percentage of recent patent applications filed by each entity type.

Interpreting the IPR Deadline; Conflicting PTAB Decisions; and Appealing Nonappealable Decisions

Patent, ,

By Dennis Crouch

St. Jude Medical v. Volcano Corp. (PTAB 2013)

This PTAB decision is important for a number of reasons. First, as a rule of substantive law, the decision announces a new interpretation of the statute-of-limitations for filing an IPR under 35 U.S.C. § 315(b). Second, the decision highlights (without directly addressing) the need for a better understanding of the role of precedent within PTAB decisions for cases such as this where a second PTAB panel rejects the legal analysis of a first PTAB panel. Finally, the case is important because it highlights problems with the statutory rule that the PTAB's determination "whether to institute an inter partes review [is] final and nonappealable." 35 U.S.C. § 314(d).

The Patent Trial and Appeal Board (PTAB) continues to see a growing docket of inter partes reviews (IPR) and post-grant reviews of covered-business-method patents (PGR-CBM). Of importance, the PTAB appears to be scrutinizing review requests and has denied several – finding that the requester had failed to meet the "reasonable likelihood" standard of 35 U.S.C. § 315 or the "more likely than not" standard of 35 U.S.C. § 324.

Here, however, an expanded panel of five administrative patent judges has denied St. Jude's IPR petition based upon the one-year statute of limitations triggered by service of "a complaint alleging infringement" under 35 U.S.C. § 315(b). That statute provides:

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

This is seemingly a pretty straightforward and easy to adjudicate rule. However, St. Jude raised an interesting question of law because it was never served with a complaint per se.  Rather, St. Jude sued Volcano for infringement and Volcano served an answer and counterclaim of infringement. The counterclaim was served more than one-year before the IPR request. Leaving the legal question of whether the filing of an answer with a counterclaim alleging infringement counts under the statute as a "complaint alleging infringement." There does not appear to be any direct legislative history from the AIA on point other than the general conception that the deadline is intended to prevent repeated "repeated litigation and administrative attacks." H.R. Rep. No. 112-98 at 48 (2011). As is often true of the Congressional record, that statement is general enough to be read in support of either side. And, certainly a counterclaim is often thought of as more of a defensive tact rather than being offensive harassment.

St. Jude's legal argument stems from Rule 7 of the Federal Rules of Civil Procedure that define pleadings in civil cases as follows:

Only these pleadings are allowed:

(1) a complaint;

(2) an answer to a complaint;

(3) an answer to a counterclaim designated as a counterclaim;

(4) an answer to a crossclaim;

(5) a third-party complaint;

(6) an answer to a third-party complaint; and

(7) if the court orders one, a reply to an answer.

You'll notice from the allowed pleadings that a counterclaim (No. 3) is separately defined from a complaint (No. 1). That listing coupled with the statement indicating that these are the "only" pleadings allowed suggests that the differentiation in the list is also important. Similarly, St. Jude points to FRCP R. 3 that states "A civil action is commenced by filing a complaint with the court." Finally, St. Jude highlights that the statute in question (§315) particularly mentions counterclaims in a different section of the provision and that linguistic distinction suggests that Congress thought that a counterclaim was different from a complaint.

The Board rejected St. Jude's argument – finding instead that a counterclaim is the functional and legal equivalent of a complaint and consequently that the request for IPR was untimely. The Board writes:

The Federal Rules of Civil Procedure neither define the term "complaint" in Rule 3 nor use it to refer only to the filing that commences a civil action. Rule 3 states, as amended in 2007: "A civil action is commenced by filing a complaint with the court." The rule specifies merely which filing commences a civil action—a complaint—but does not limit a "complaint" to be that filing and nothing else. Moreover, the term is used elsewhere in the Rules to refer to a pleading that does not commence a civil action. For example, Rule 14(a)(1) states, in pertinent part: "A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." A complaint against a third party does not commence a civil action; rather, it joins the third party to an existing civil action. The Rules, therefore, do not define or use the term "complaint" in the exclusive manner St. Jude argues.

We disagree also with St. Jude's contention that Rule 7 distinguishes a counterclaim from a complaint in a way that is meaningful for our determination. Rule 7 lists pleadings allowed in a civil action. The mere listing of items separately, however, does not, by itself, draw distinctions among the items in the list insofar as their legal equivalence. We discern in Rule 7 no such comparison or distinction between a complaint and a counterclaim.

A complaint and a counterclaim instead bear marked similarities. A counterclaim imposes the same burdens on the parties as does a complaint. A counterclaim alleges a cause of action, just like a complaint; confirming that equivalence, Wright and Miller explains that a counterclaim "basically is a defendant's complaint." 5 FED. PRAC. & PROC. CIV. § 1184 (3d ed.). …

St. Jude argues next that a counterclaim should be distinguished from a complaint in § 315(b) because that distinction is made in § 315(a). Pet. 3. St. Jude observes that 35 U.S.C. § 315(a)(3) excludes a counterclaim challenging validity from constituting a complaint challenging validity in § 315(a)(1). This argument is unpersuasive. Section 315(a)(3) states specifically that the exclusion applies to, and is made for purposes of, subsection § 315(a) only. The inapplicability of such an exclusion to § 315(b) indicates, to the contrary of St. Jude's position, that no similar exclusion exists, or was intended, with regard to a complaint and a counterclaim for infringement in respect of § 315(b). . . .

One interesting element of the decision here is that it differs with a prior decision made by the PTAB in Macauto USA v. Bos GmbH, IPR2012-00004. There, a three-member PTAB board found that the statute-of-limitations was tolled in cases where the complainant then voluntarily dismissed its case with prejudice. Citing Wright, Miller, Kane, and Marcus, 9 Federal Prac. & Proc. Civ. § 2367 (3d. ed.) ("[A]s numerous federal courts have made clear, a voluntary dismissal without prejudice under Rule 41(a) leaves the situation as if the action never had been filed.") It is not surprising that there are no overlapping judges between the St. Jude decision and Macauto.

The general standard operating procedure at the PTAB is that a Board decision is binding precedent "only if the opinion has been made Precedential" under the PTAB's operating procedure. See http://www.uspto.gov/ip/boards/bpai/procedures/sop2.pdf. Thus, at this point, neither opinion is precedential and so the next panel is also open to re-decide the case as it sees fit according to the law.

Certainly, the Federal Circuit would ordinarily be ready-willing-and-able to quickly resolve the split of opinion on the meaning of the law here. However, the statute indicates that this particular decision is both final and nonappealable. 35 U.S.C. § 314(d). Of course, the statute does not indicate that the decision cannot be attacked through a mandamus action or through a separate collateral attack on the final judgment, neither of which are ordinarily considered an appeal.

Guest Post: Monopoly Without Apology

Patent, , ,

By Shubha Ghosh

Without any surprise, even to those who wrote amici in support of the farmer in Bowman v. Monsanto, the Supreme Court ruled in favor of Monsanto last week. During oral arguments in February, the Court made it clear that it would find against Bowman because he had made an unauthorized copy of Monsanto’s patented seed. Since oral argument, the focus has been on how the Court would rule in favor of Monsanto. The final ruling, while narrow in its language, is a potentially confusing one. In this post, I write about the implications of Bowman for the future.

Towards the end of her opinion for a unanimous court, Justice Kagan states that the ruling applies only to the facts at hand. The Court leaves open how the exhaustion doctrine applies to other self-replicating technologies. As a co-author of an amicus for the American Antitrust Institute on behalf of Bowman, I was relieved to read Justice Kagan’s rejection of the broad exception to the exhaustion doctrine for self-replicating technologies adopted by the Federal Circuit. Such a broad holding would mean that first sale and other applications of exhaustion would have no place in biotechnology or digital technologies. Contrary to the Federal Circuit, and citing treatment of software under copyright, the Court acknowledges that patent rights may not extend to necessary, but incidental copying, or to situations where copying occurs outside the control of the purchaser. Similar limitations may exist for making under patent law in the exhaustion doctrine.

What is more troubling, and somewhat confusing, is the Court’s treatment of making under the patent act. Bowman’s act of infringement was simply the act of planting the seed for another generation. This broad construal of infringement expands the scope of patent infringement to include the sort of incidental infringement that the Court acknowledges as possibly protected by exhaustion. During oral argument, the Court asked Monsanto’s counsel about inadvertent infringement, but there was no engagement. Whether inadvertent or not, it appears from the Court’s decision is that planting by itself is infringement. That conclusion is inconsistent with precedent and with previous cases.

The Court cites its 1962 decision, Wilbur-Ellis Co. v. Kuther, for the proposition that a purchaser cannot make another version of the patented item under the exhaustion doctrine. However, the Court did not mention that Kuther involved a situation in which the purchaser was not found liable for patent infringement. Specifically, the purchaser retrofitted a patented sardine-canning machine so that it could handle larger sizes of cans. Although the patent owner claimed this retrofitting to be an unauthorized reconstruction of the patented machine, the Court held that in adjusting and putting together the unpatented parts the purchaser was engaging in authorized repair.

Bowman argued that by planting the seed, he was harnessing the unpatented reproductive capacity of the seed. The Court dismissed this argument as the “blame the bean defense.” Admittedly, the argument might mean a broad exhaustion doctrine for self-replicating technologies, a conclusion that is equally troubling as the Federal Circuit’s broad exemption from exhaustion for such technologies. But the Court dismissed this argument too quickly. By concluding that planting is by its very nature reconstruction, the Court ignores the unpatented natural processes that are embodied in the act of planting. The use of the unpatented natural processes is discounted completely. In ruling against Bowman, the Court relied on a precedent that in some of its elements favored the purchaser.

The Court also relied on its 1882 decision, Cotton-Tie Company v. Simmons. In this case, the patentee distributed its patented tie for bundles for free with the cotton bales it sold under the express licensing term that the ties be used only once. The defendant collected the used ties and reconstructed them. The Court held that the defendant infringed the patent. The facts of Bowman are similar to that of Simmons. Both bought used versions of the patented product and reused them. But there are key differences. The Court’s finding of infringement in Simmons rested on a clear application of the claims of the patent which covered precisely the reconstruction of the patented ties. In Bowman, however, the Court relies on a dictionary definition of the work make to conclude that since the patented gene was part of the next generation of seeds grown by Bowman, the farmer had made the patented invention. The Court does not consult the language of the claims. Instead the Court concludes that planting is making and, under the Patent Act, any making is an infringement.

But the Bowman Court seems to be confused on when exactly making is infringement. In footnote 3, the Court considers the hypothetical of a farmer buying the patented seeds from Monsanto without an express licensing term that allowed the farmer to plant the seeds. The Court says that in such a scenario, the farmer would have an implied license to plant the seed once. But if planting is infringement, from where does this implied license arise? The Court seems to be saying that the implied license is inherent to the transaction. Why else would a sane farmer buy the seed from Monsanto except to plant?, the Court implicitly asks. The Court, of course, gives an answer to this question when it acknowledges that there are uses of the seed that would be protected from infringement under patent exhaustion: as feed for livestock or even for personal consumption. The Court’s hypothetical raises the question of when the license to plant is implied and when it is not. This confusion raises the question of the legal basis for determining when a planting of a seed is a making of the patented gene.

The Court’s legal basis ultimately rests in policy. It states that its concern is with the unlimited reproduction of the patented gene which would prevent Monsanto from developing a meaningful business model for the distribution of its seed after the first sale. But exhaustion does not remove all remedies for patent owners. Breach of contractual restrictions can give rise to contract remedies, ones that may be less draconian than a patent injunction or treble damages. During oral arguments, the Court characterized this argument as having contract substitute for patent. That is a mischaracterization. Contract remedies can supplement patent remedies, particularly in cases of exhaustion. Contract remedies do not eviscerate a patent, and they do not serve as a poor substitute for a patent. Instead, contract remedies in the case of exhaustion serve to balance the rights of patent owners with those of consumers, business people, and inventors that make use of patented articles. The Court affirmed this notion in footnote 7 of its 2008 Quanta decision, which remains good law after Bowman.

What is the most revealing about the Court’s opinion is its frequent reference to the “patent monopoly.” When I first read that phrase, which appears four times in a ten page opinion, I kept thinking of the bad old days of Justice Douglas, who viewed patents as inherently anti-competitive. The Court in Bowman, however, uses the term of patent monopoly to refer to the patentee’s exclusive rights in the specific patented article that is sold. According to the Court, the monopoly in that particular article is broad and is compromised if unauthorized making is allowed. The Court sees that threat in Bowman. Unfortunately, in reaching its decision the Court based its decision almost exclusively on the interests of the patent monopolist without thorough consideration of its own precedent, the analysis of the underlying unpatented natural processes, and the relationship among planting, making, and implied license. With the patent at issue about to expire, perhaps the impact of the decision is minimal. However, with the next generation of Round Up Ready and genetically modified seed currently under review in the USPTO, the impact of the decision will undoubtedly be felt by the next generation of inventions and users.

Shubha Ghosh is The Vilas Research Fellow & Professor of Law at the University of Wisconsin Law School.

Patently-O Bits and Bytes

Patent

By Dennis Crouch

  • Germany’s Max Planck Institute for Intellectual Property and Competition Law has released a paper detailing “Twelve Reasons for Concern” with the proposed European Unitary Patent Court. Their concerns are categorized within the themes of (1) complexity of the regime, (2) imbalances in the system, and (3) lack of legal certainty for investments in innovation. /media/docs/2012/10/MPI-IP_Twelve-Reasons_2012-10-17_final3.pdf. The tone here is more of constructive criticism of the approach rather than an outright rejection of the idea. The photo of Max Planck (shown to the right) was taken just after he learned of the unitary patent system. Annsley Merelle Ward has more about the UK perspective on Unitary Patent Enforcement as part of her regular excellent IPKat coverage.
  • Malibu Media v. John Doe 16, 2:12-cv-02078 (E.D. Pa. 2012). There is a tremendous amount of unauthorized distribution of pornographic videos through various internet channels such as BitTorrent. In recent years, porn copyright holders have been fairly successful in convincing many file-sharers to settle cases. Unauthorized file sharing is much more likely to be seen as deviant behavior if the files being shared are pornographic. And so the settlements are largely for the purpose of keeping that activity hidden from public view. In this case, various anonymous Johns in Eastern Pennsylvania were sued for using BitTorrent to share the motion picture known as “Anneli Leila Menage a Trois.” It is a fairly easy process these days to identify the IP addresses of BitTorrent users. Malibu has opted to pursue its case against just one defendant who is still labeled John Doe 16 in what the court is calling a “Bellweather trial.” Trial is scheduled for early next spring.
  • “Copyright troll” stories are being chronicled by dietrolldie
  • Missouri is known for many things, including the South Butt parody apparel. In 2010 the company seemingly won the trademark lawsuit brought by the North Face. However, as part of the settlement, South Butt agreed to get permission for further parodies of North Face. Thus, when they started a new Butt Face line of clothing, the North Face filed and has won a contempt motion. In the consented court order, South But has agreed to stop its further attempts to bully the classy apparel company. Yes, you can sign away your fair use rights.

Copyright Lawsuit against Patent Firms Continue: Firms Claim Fair Use and Copyright Misuse

Patent,

John Wiley & Sons v. McDonnell Boehnen Hulbert & Berghoff (MBHB) (N.D. Ill.) (Complaint)

Earlier this year, Wiley sued the MBHB law firm for copyright infringement. The basis of the lawsuit stems from the firm’s compliance with its duty to inform the USPTO of information materially related to the cases that it is handling. See 37 C.F.R. 1.56. The complaint identifies two short scientific articles that the firm submitted to the USPTO:

  • Raznikov, V., et al., “A new approach to data reduction and evaluation in high resolution time-of-flight mass spectrometry using a time-to-digital convertor data recording system,” Rapid Communications in Mass Spectrometry, vol. 15, No. 8, pp. 570-578 (2001); and
  • Erchak, A., et al., “Enhanced coupling to vertical radiation using a two dimensional photonic crystal in a semiconductor light-emitting diode,” Applied Physics Letters, vol. 78, No. 5, pp. 563-565 (2001).

The crux of Wiley’s argument is that the firm infringed Wiley’s exclusive rights by submitting these documents to the USPTO as well as by allegedly sharing the articles with the inventors and storing a copy in the firm’s files. I contacted one of the authors – Nobel Laureate, Dr. Alan Heeger – from the parallel Schwegman case. Dr Heeger had not previously heard of the lawsuits. He had only two comments: (1) that the lawsuits seem “somewhat strange” and (2) that he is not receiving any royalties from the article.

More Background on the Case

The MBHB law firm has now filed its answer to the complaint – arguing that Wiley’s lawsuit is both troubling and disruptive to the operation of the US patent system.

Plaintiffs seek in this case to create unprecedented liability for law firms filing patent applications that would change long established practices in fulfilling legal obligations under the Patent Law and Regulations requiring patent practitioners to disclose prior art to the United States Patent and Trademark Office (“USPTO”). Such a result would undermine the Patent Office’s ability to get full disclosure of relevant prior art to the detriment of our patent system and, thus, to innovation in general. Fortunately, Plaintiffs’ claims are without merit.

The process of securing U.S. patents is dictated by complicated USPTO Rules and Federal regulations. Failure to comply with those Rules and Regulations could lead, among other things, to fraud on the USPTO and could jeopardize a patent’s scope, validity and enforceability. . . .

Now, Plaintiffs John Wiley & Sons, Ltd. and American Institute of Physics (“Plaintiffs”) attempt to introduce a costly new requirement into this long-standing practice. They seek to impose a requirement on those practicing patent prosecution to negotiate a license with the holder of the copyright in the journals before complying with the Patent Office’s prior art submission requirements. Plaintiffs’ misguided attempt to change established practice will only serve to undermine the full disclosure requirements of the USPTO and interfere with access to the constitutionally mandated patent system.

Because of the negative impact of claims such as the Plaintiffs’ on the patent system, and thus on its goal of encouraging innovation, the Patent Office has taken the unusual step of posting on its website a position paper from Bernard J. Knight, Jr., General Counsel of the USPTO, stating the USPTO’s position that copying and submitting non-patent literature (“NPL”) by patent applicants in order to satisfy the USPTO’s disclosure requirements is fair use. The official position paper addressed all four fair use factors and concluded that “we believe that it is a fair use for an applicant to make copies of NPL and submit those copies to the USPTO during examination in an [Information Disclosure Statement].” The General Counsel’s position was based in part on the fact that “the applicants here are not ‘exploiting’ the copyrighted work, and are instead merely submitting it, pursuant to a legal requirement, based on its factual, rather than its expressive, content [and] the use could be considered transformative.” The General Counsel also concluded that “there is no basis for concluding that the applicants submission of NPL to the USPTO has any significant negative impact on the market for the submitted NPL.”

Plaintiffs’ attempt to characterize MBHB’s alleged use of the scientific journal articles as anything but a legal, customary practice by attorneys to comply with their legal obligations during patent prosecution is unavailing. MBHB is being sued simply for following the requirements of the patent regulations. An adverse judgment against MBHB would harm not just MBHB, but all firms who practice in this area, and interfere with the federal government’s interest in promoting an inexpensive and efficient patent system whereby prior art is appropriately disclosed. Plaintiffs’ allegations, thus, fit squarely within the parameters of what the Copyright Act deems as a fair use. Accordingly, as a matter of law, Plaintiffs lack meritorious grounds for their copyright infringement suit.

The answer claims includes a number of defenses including fair use; copyright misuse; immunity under the Noerr-Pennington doctrine; and implied license.

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Apple and the Slide to Unlock Patents!

  • On October 25, 2011 the USPTO granted Apple a patent (8,046,721) for "Unlocking a device by performing gestures on an unlock image". Almost every touchscreen smartphone manufactured, uses slide to unlock technology. It seems like the Apple patent, could potentially be a problem for smartphone manufactures. However, many individuals propose that this patent should not have been issued because of the prior art that was available, such as the Neonode N1m which has been discontinued. It seems like many people forgot that Apple already has patented the slide to unlock feature, (Patent 7,657,849—which is cited in the "721" patent) so unless the Neonode has related prior art before December 23, 2005, the Neonode is not prior art. The "721" patent is a continuation of the "849" patent, therefore the "849" patent is not counted as prior art. As a result, the "849" patent is not invalid in light of the "721" patent, and most likely if the prior "721" patent has not been found invalid, nor will the "849" patent. [Patent] [Neonode] [Link]

Sony Buys Ericsson Patents and Holdings for $1.5 Billion

  • Sony Ericsson has ended its joint venture and the 2 companies will go their separate ways. Sony paid Ericsson nearly $1.5 billion for the mobile phone joint venture, which will give Sony rights to smartphone patents held by Ericsson. Sony now expects to try to increase their market share. Sony held a market share of 11 percent (by value) in the Android phone market in the last quarter, representing 80 percent of the company's third quarter sales. 2011 has been the year of billion dollar patent deals, and it can be expected that many more patent deals relating to smartphones will be made in the future. [Link] [Link]

Call for Papers!

  • The Third Annual Special Issue and Symposium for the Review of IP law (RIPL) will take place on April 19, 2012 in Chicago. The general theme will be "IP Law of China and the US" and subthemes cover the implementation of the new Chinese patent, copyright and trademark laws and theoretical or practical aspects of the cooperation of the IP laws of the US and China.

     

    The Special Issue and Symposium aims to gather professional and scholars from many disciplines including IP, international law, international business, ethics, and economic theory. The Symposium will bring an inspiring group of individuals to publish their writings and present their works at the symposium. [Link]

     

Patent Jobs:

  • Apple is seeking a patent portfolio manager, with a minimum 5 years of patent preparation experience. [Link]
  • Klarquist Sparkman, LLP is searching for litigation associates with 1-2 years of experience in IP litigation. [Link]
  • Klarquist Sparkman, LLP is looking for a biotechnology patent associate or patent agent with 3+ years of experience. [Link]
  • Bacon & Thomas is seeking a patent attorney with 1-4 years of experience and a mechanical or electrical background. [Link]
  • Global Patent Group is searching for a patent attorney or patent agent with a background in plant biology and a Ph.D. [Link]

Upcoming Events:

  • On October 28, the Annual Utah Cyber Symposium will take place. The Symposium will provide business and legal decision-makers in attendance from the business, academic, and legal communities a forum to learn more about legal and business challenges and opportunities facing the high tech industry today. Key business and legal leaders will instruct on how to improve your professional performance and bottom line, including the DOJ, Venture Capitalists, Professors, Business Leaders and Leading Attorneys. [Link]
  • The Chicago-Kent Intellectual Property Law Society is hosting the "Patent Wars Round Table" on November 2, 2011 at 5:30 PM. The event will include a panel discussion on current trends in IP law, namely, the recent paradigm shift in patent strategy and valuation in mobile device companies. Panelists include David Ruder of RPX, Ragnar Olson of Global IP, John Paniaguas of Katten Muchin, and Pat Burns of Greer, Burns & Crain, and will be moderated by Professor Christopher Seaman of Chicago-Kent. Cost is $20 and includes open bar and appetizers. [Link]
  • K&L Gates is holding a free webinar on Nov. 3 entitled "How the Patent Reform Act will Impact Your Business." The Act includes many changes, large and small, affecting subjects as far-reaching as the available appeals from reexaminations to the subject matter eligibility of tax planning methods and human organisms. The webinar will include a presentation and question and answer session. [Link]
  • Whittier Law School's Center for IP Law and Law Review will host the 29th Annual Law Review Symposium: The Law of the Smart Phone on November 4th. The symposium will feature presentations and panel discussions devoted to the privacy, regulation, economics, and intellectual property issues surrounding smart phone technology. Guest speakers include, Gerald Faulhaber, Mark Roark, Alan Friel, Susan Freiwald and many others. [Link]
  • World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
  • IBC will hold a Standards and Patents Conference in London on November 16th & 17th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
  • IBC will hold a US Patent Reform Congress Conference on November 18th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
  • The American Conference Institute's 2nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
  • IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7th-8th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
  • The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

 

US News Top IP Programs

Patent

[Updated 5/12/09 at 2:00 pm]

The US News & World Report ranking of Intellectual Property focused law schools was released in late April. The ranking is created by polling professors who teach at least one IP course. The professors then list up to fifteen programs with good IP programs. Those "votes" are then used to create a ranking. Of course, most IP professors are not patent professors. All of the programs on the list have excellent IP faculty. However, only a few have a patent focus.

The US News list:

Rank

Law School

1.

Stanford University

2.

University of California–Berkeley

3.

George Washington University

4.

Columbia University; Illinois Institute of Technology (Chicago-Kent) (tie)

6.

Franklin Pierce Law Center

7.

University of Houston

8.

Santa Clara University; Yeshiva University (Cardozo) (tie)

10.

Duke University

Link

Patently-O Rankings: I have redone my list of "the top thirty law school patent programs" based solely on the number of Patently-O visits received from the associated university in the past year. There are many issues with problems with this study – although it is probably at least as good as the US News IP Specialty ranking. Some of the problems: Many schools may not use their name in their IP address — making them lose their ranking. This appears to be largely true of Franklin Pierce Law Center. Schools where students (and professors) primarily study away from campus building may also rank relatively lower.  Finally, many of the visits to Patently-O may come from other departments – such as the Technology Transfer office – rather than the law school.

Rank

School

Relative Score

1

GWU

100%

2

Stanford

65%

3

Harvard; Columbia

50%

5

Texas; Missouri; Washington U; George Mason; Santa Clara

45%

10

Richmond; NYU

40%

12

BU; Berkeley; Georgetown; Virginia

35%

16

Duke; Minnesota; Northwestern; U Washington

30%

20

SUNY Buffalo; Loyola (LA); Cornell

25%

23

Illinois; BC; Houston; Denver; Arkansas; Ohio State; Depaul

20%

30

Iowa; Fordham; William & Mary; Suffolk; Wisconsin; Colorado; Penn State; Utah; Florida; Yale; Chicago; Syracuse; UPenn

15%

 

To add an additional layer of confusion, remember that many folks access Patently-O through the free daily e-mail. The following list ranks law school's according to the number of Patently-O e-mail subscribers. Here, we may have bias if some subscribers use their personal e-mail account (such as gmail) instead of the university account.

Rank

Law School

Relative Score

1

Pierce Law (Franklin Pierce)

100%

2

University of Michigan

75%

3

Stanford

55%

4

GWU

40%

5

NY Law School; Columbia; Colorado; Case Western, U Washington, Elon

35%

11

Michigan State; Chicago-Kent; Denver

30%

14

George Mason; Cornell; BU; Berkeley; Albany; Washington U; SMU

25%

 

Lieter Ranking: One part of the 'reputational' ranking of an IP program is based on the scholarship of the faculty. In 2007, Professor Lieter compiled a list of the top-ten intellectual property / cyberlaw faculty and ranked them according to the number of times their work had been cited in law review articles. The Lieter ranking is listed below:

  • Mark Lemley (Stanford University):  2110 citations, age 41.
  • Robert Merges (University of California, Berkeley):  1280 citations, age 48.
  • Thomas McCarthy (University of San Francisco), 1100 citations, age 70.
  • Pamela Samuelson (University of California, Berkeley):  970 citations, age 59.
  • Jessica Litman (University of Michigan):  870 citations, age 54.
  • Dan Burk (University of Minnesota [Now IRVINE]):  840 citations, age 45.
  • Jane Ginsburg (Columbia University):  840 citations, age 52.
  • Rochelle Dreyfuss (New York University):  790 citations, age 60.
  • Paul Goldstein (Stanford University):  790 citations, age 64.
  • Julie Cohen (Georgetown University):  740 citations, age 43.

Runners-up for the top ten:  Yochai Benkler (Harvard University):  730 citations; Rebecca Eisenberg (University of Michigan), 690 citations; Neil Netanel (University of California, Los Angeles), 640 citations; Wendy Gordon (Boston University), 610 citations; A. Michael Froomkin (University of Miami), 600 citations. 

Other highly-cited scholars who don't work exclusively in this area::  Lawrence Lessig (Stanford University [Now Harvard]), 2500 citations; William Landes (University of Chicago), 1550 citations; Margaret Jane Radin (University of Michigan), 1210 citations; William W. Fisher (Harvard University), 1020 citations; James Boyle (Duke University), 710 citations.

 

Remembering Mark Banner

Patent

With regret, I report the passing of leading patent attorney Mark T. Banner. Mark was generous and helpful to me in my first few years of practice in Chicago. He was also an occasional Patently-O contributor.

Mark T. Banner, a Partner in the law firm of Banner & Witcoff, Ltd., died in Tucson, Arizona, Sunday, December 30, at age 57. At the time of his death he was with his wife of thirty two years, Kathie German, and surrounded by those he loved and who loved him.

Mark was a leader in the field of intellectual property law, specializing in jury trials of technologically complex cases for both plaintiffs and defendants across the country. He was an avid user of the latest technology in an effort to improve cost-effective trial presentations. Mark lectured frequently on patent law, trade secrets, and other intellectual property matters, as well as how to conduct patent trials. He served as a faculty member of the first National Institute of Trial Advocacy program specifically geared to patent litigation trial skills. He was also an adjunct professor at the John Marshall Law School and the Georgetown Law Center, teaching courses on patent law advocacy and enhanced use of technology in the trial of complex cases. Mark served as Chair of the American Bar Section of Intellectual Property Law, and was a bar course administrator for the Master Class on Appellate Advocacy, taught by the Hon. Paul R. Michel, Chief Judge, United States Court of Appeals for the Federal Circuit. For his work in intellectual property law, Mark was listed in Euromoney’s “Guide to the World’s Leading Patent Law Experts” and featured in The Best Lawyers in America, the Leading American Attorneys, The International Who’s Who of Patent Lawyers and the Illinois Super Lawyers.

Mark received a B.A. degree from Purdue University and went on to receive his law degree from the John Marshall Law School, where he was a member of the Law Review and graduated with high honors.

Those in the intellectual property law field know well Mark’s rich legacy of accomplishments and recognitions for those accomplishments. He spoke and published widely on the patent law and its importance to encouraging creativity and promoting the general welfare of our country. Those who knew him loved him for his wit, his integrity, his determination, his passion for life and his commitment to teaching.

In addition to his wife, Mark is survived by his two sisters – Peggy (Mrs. James) Dau of Bartlesville, and Pamela (Mrs. Robert) Banner Krupka of Los Angeles, two brothers Donald J. (Helen) of Pueblo  (Colo.),Brian E. (Cathleen) of Washington, DC., his step-mother Jean Banner of Tucson,  and his step sisters Nancy (Mrs. Robert) Phipps of Nashville, Helen (Mrs. George) Smith of Atlanta, and Louise ( Mrs. Robert) Whitaker of Franklin  (Tenn.).

A memorial service will be held in Chicago in January 2008.

The family requests that memorials be made to the Donald W. Banner and Mark T. Banner Scholarship Fund at the John Marshall Law School (315 South Plymouth Court, Chicago IL 60604).