Tax Patent Legislation: Excusing Infringement of Patented Tax Planning Methods

Method Claims, Patent, Patent Legislation

Rep. Rick Boucher’s Bill to excuse infringement of patents covering tax planning methods now has 40 co-sponsors. However, its prospects for becoming law are still slim – only one of the co-sponsors is a member of the House IP Subcommittee which must approve the bill.

The proposal copies the language of the “medical practitioner’s performance of a medical activity” exclusion found under 35 USC 287(c). (Known as the Ganske compromise).  Under the proposed bill, unauthorized use of a patented tax planning method by a taxpayer or tax practitioner would not be considered infringement.

“With respect to the use by a taxpayer or a tax practitioner of a tax planning method that constitutes an infringement under subsection (a) or (b) of section 271, the provisions of sections 281, 283, 284, and 285 shall not apply against the taxpayer, the tax practitioner, or any related professional organization with respect to such tax planning method.”

A tax planning method is defined as any “plan, strategy, technique, or structure that is designed to reduce, minimize, or defer, or has, when implemented, the effect of reducing, minimizing or deferring, a taxpayer’s tax liability.” The proposal is careful to exclude “tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns.”  This language is potentially too loose — as most tax software does much more than perform math and prepare the return.

H. R. 2365

Patently-O Bits and Bytes No. 45 – Confidential Court Documents

Bits and Bytes, Patent
  • Prior Art Blog updates us on Orion IP’s battle against online automobile retailers. [Spangenberg must pay $3.8 million in legal fees]
  • Mullin – operator of the Prior Art Blog – may agree with the outcome of the case, but faults W.D.Wisc. Judge Crabb for keeping nearly every filed document under seal. “For three months now [Judge] Crabb has operated a secret, closed court; I’ve read through hundreds of patent dockets and I’ve never seen anything like it.” [Updated June 20]
  • A recent study by Federal Judicial Center researcher Robert Reagan found that settlements of patent litigation are five-times more likely to be kept sealed than are settlements in other civil cases. Robert Reagan, The Hunt for Sealed Settlement Agreements, 81 Chi.-Kent L. Rev. 439 (2006).
  • Stanford v. Motorola (Fed. Cir. 2008)(Non-Precedential) (“we conclude that we cannot review the district court’s order without an explanation of the basis of the court’s decision.”).

Inequitable Conduct Based on Petition to Make Special

Accelerated Examination, Inequitable Conduct, Patent, Patent Cases 2008,

Scanner Technologies Corp. v. ICOS Vision Systems (Fed. Cir. 2008)

There are many companies that value quick prosecution and issuance. Yet, few have taken the PTO’s offer of accelerated examination (AE). Potential applicants avoid the accelerated examination program for several reasons – most of which are associated with the AE requirements to (i) search for prior art; (ii) identify all claimed elements found in each relevant reference; and additionally (iii) prepare an explanation of why the claims are patentable over the references. These AE requirements are costly and potentially open the applicant to charges of inequitable conduct (as well as narrow claim scope).

In this case, Scanner saw ICOS products at a trade show and subsequently filed a petition to make special in the hopes that its patent would issue more quickly. The petition argued that the petition should be granted based on ICOS products. The petition was granted and the patent issued within the year.

After Scanner sued for infringement, the district court found the patent unenforceable due to inequitable conduct in filing the petition to make special. On appeal, the CAFC reversed – but in the process revived aspects of the inequitable conduct inquiry. The particular conduct at issue included statements in the petition that infringement was clear even though the accused product had not been fully inspected.

Broad Concept of Materiality: Although inequitable conduct issues often focus on whether the misconduct was “material to patentability.” The CAFC began by quoting its own 1994 GE v. Samick opinions holding that a false statement in a petition to make special should be considered “material” if “it succeeds in prompting expedited consideration of the application.” This broad consideration of materiality follows the Nilssen decision holding that misrepresenting an applicant’s status as a small entity (in the payment of post issuance maintenance fees) may also be considered material.

“[W]e must reject Scanner’s view that inequitable conduct cannot be shown absent a misrepresentation that bears on the patentability of the claims in the application. When the setting involves a petition to make special, as is the case here, we reaffirm that a false statement that succeeds in expediting the application is, as a matter of law, material for purposes of assessing the issue of inequitable conduct.”

Reasonable Inferences Favor Patentee: Although the CAFC agreed that the type of conduct here could be inequitable conduct, this case did not present sufficient evidence. Because materiality and intent must both be proven with clear and convincing evidence, the appellate panel requires that all reasonable inferences be given weight:

“Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.”

Because the CAFC found potential reasonable explanations for the claims of infringement, it held that those statements could not be considered false or misleading, and thus not material.

By clearing the inequitable conduct charges, Scanner avoids paying ICOS attorney fees. However, the CAFC affirmed that all claims of the patents were invalid and not infringed.

Notes:

  • Interesting statement: “We also affirm the district court’s judgment invalidating all claims of the patents in suit given the stipulation between the parties that the case would be tried on a representative claim.”
Tags: ,

Prison: The last stand for land line phones.

Claim Construction, Doctrine of Equivalents, Patent, Patent Cases 2008, Vitiation, ,

TIP Systems v. Phillips & Brooks (PBG) (Fed. Cir. 2008)

“This is a patent infringement case pertaining to wall-mounted telephones designed for use by prison inmates.”  Both the accused device and the patents focus on a telephone system that operates without the dangers of a phone cord. However, the TIP patents require a “handset” mounted in the wall of the phone box with a mouthpiece that “extends through” the wall.  These claims are exemplified in the figures.

The accused devices do not use a traditional handset, but rather use a separate ear-piece and mouthpiece. In addition, the accused device wall is flush – and the mouthpiece does not break through the wall.

Questionable claims of infringement are naturally resolved by a Markman hearing and subsequent summary judgment of noninfringement. Here, the district court found (i) that the claimed handset must include a handle with both an ear-piece and mouthpiece and (ii) that the mouthpiece must pass through an aperture in the front wall of the phone box.  It was clear that the accused device did not exhibit either of these features and thus could not infringe.

The definition of the handset was made easy because the claims stated that: “a telephone handset being a handle with an ear-piece at one end and a mouthpiece at an opposite end.” The exact definition is support from the figures is also provided in the specification.

The CAFC affirmed on claim construction then went on to consider whether the elements may still be covered under the doctrine of equivalents (DOE). 

If an element is not literally covered by a claim, the device may still be considered infringing if the accused element is equivalent to the claimed element. Thus, to infringe a patent, each claim element or its equivalent must be found in an accused device.

Whether equivalency exists may be determined based on the “insubstantial differences” test or based on the “triple identity” test, namely, whether the element of the accused device “performs substantially the same function in substantially the same way to obtain the same result.” 

The game in the doctrine of equivalents is defining an ‘element.’  The patentee wants a broad definition (the telephones as a whole are very similar) while the defendant argues for a narrow definition. Here, the defendants won when the courts found that a “handle” is an element of the claim.  Since the accused devices have no structure that is similar to a handle, they cannot infringe even as an equivalent.

  

Deciding Infringement During Claim Construction

Claim Construction, Patent, ,

PatentLawPic369ADC Telecommunications v. Switchcraft (Fed. Cir. 2008)(nonprecedential)

Patent law precedent requires a judge to interpret any disputed claims of a patent prior to sending the case to a jury to determine factual issues of infringement. 

“First, the court determines the scope and meaning of the patent claims asserted. . . . [Second,] the properly construed claims are compared to the allegedly infringing device.” Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998) (en banc) (citations omitted).

There is a strong tendency, however, to push the judge toward deciding the infringement issue within a Markman hearing — leading to a potentially quick summary judgment conclusion. Thus, parties often ask the judge to determine whether or not claimed element “X” should be interpreted to cover “Y” – where Y is an element of the accused product.

This infringement litigation involves a patent covering a coaxial switch that includes a mechanism for impedance matching.  Dueling experts used different testing mechanisms to prove (non)infringement of the accused device. Hoping to short-circuit the infringement determination, the defendant argued that that proper construction of the claims require a its method for testing for infringement. The CAFC disagreed because the claims lacked any textual hook for requiring a particular testing method and because the specification lacked “any clear indication” of a particular test. Relying upon its 2005 Union Carbide decision, the court found that “[b]ecause the claim language does not require a particular form of testing, this inquiry is not a claim construction question, which this court reviews de novo. Rather, this court reviews this inquiry as a question of fact.”

Thus, the CAFC affirmed the lower court’s decision and ruling that the “dispute over the proper testing method is … a factual question that the district court properly submitted to the jury.”

CAFC Reverses After Lower Court Denies Patentee the Opportunity to Present a New Infringement Argument on Remand

Certificate of Correction, Patent, Patent Cases 2008, Procedure

CertificateofcorrectionCentral Admixture Pharmacy Services v. Advanced Cardiac Solutions (Fed. Cir. 2008) (Non-precedential)

Most non-precedential opinions affirm the lower court. In fact, this decision is the first non-precedential reversal of 2008 (according to a Lexis search). In the prior decision, the CAFC voided a certificate of correction that had attempted to change a claim limitation from osmolarity to osmolality.

The final line of the original opinion reads as follows: “On remand, CAPS [the patentee] may pursue its allegations of infringement of the uncorrected ‘osmolarity’ version of the ’515 patent claims.” However, after the remand the district court refused to allow CAPS to prove infringement based on the uncorrected version of the patent.  Its reasoning was that CAPS had previously stated that it would not pursue that theory of infringement.

On appeal the second time, the CAFC reversed and remanded — holding that its prior order was “clear: on remand, the district court was to decide the merits of CAPS’s infringement claim under the pre-[Certificate of Correction] claims.  The district court was not at liberty to ‘determine’ the issue on procedural grounds, as it did.”

Reversed and remanded for consideration of the patentee’s infringement arguments.

Notes:

  • This panel included Judges Schall, Clevenger, and Gajarsa. 
  • The original panel included Judges Schall, Gajarsa, and Prost. Opinion by Gajarsa [LINK]
  • The patent at issue (No. 4,988,515) covers a solution of glucose and amino acids used to nourish heart tissue during open heart surgery when blood flow is stopped.
  • This decision appears quite limited. The patentee is able to present its new infringement argument because the original CAFC opinion specifically ordered the court to allow the new argument. This decision does not require a reversed lower court to allow a party to present arguments that had previously been dropped.

CAFC Affirms Exceptional Case Attorney Fees Based on Multiplicity of Minor Acts of Misconduct

Attorney Fees, Dissent, Inequitable Conduct, Patent, Patent Cases 2008, , ,

PatentLawPic365Nilssen v. Osram Sylvania (Fed. Cir. 2008)

In 2007, a unanimous CAFC panel affirmed a district court’s finding that Ole Nilssen’s light bulb patents were unenforceable due to inequitable conduct.  The improper prosecution conduct included failing to disclose a close relationship with a 132 declarant; misleading priority claims; and improper payment of a small entity fee.

Now on appeal is whether Nilssen owes attorney fees under 35 U.S.C. § 285.  As with most civil cases in the US, the general rule in patent cases is that each party pays their own attorney fees.  Section 285 of the patent act provides a limited exception — providing that a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.”  Here, the district court found the case exceptional based on the aforementioned inequitable conduct as well as “litigation misconduct” and the filing of a “frivolous lawsuit.” 

Benign Inequitable Conduct: Nilssen argued that his alleged inequitable conduct had very little real impact — i.e., that it was benign.  The CAFC rejected that argument — finding that inequitable conduct is never benign. “In fact, it is a contradiction to call inequitable conduct benign.”

Building a Mountain from Pebbles: Nilssen makes a good argument that none his individual acts of misconduct appear bad enough to call the case ‘exceptional.’ 

These acts of misconduct include late production of documents, disavowal of a prior interrogatory response (and never filing a formal correction), attempting to exclude interrogatories that were never signed; informally withdrawing patents from suit, but waiting until only a few months before trial to formally withdraw the patents; and waiving attorney client privilege without providing formal notice to Osram.

Each of these actions can rather easily be explained as “either harmless oversight or permissibly rough litigation tactics.”  This is perhaps especially true when you consider that the K&E firm – well known for its relentless bull dog litigation style — represented Osram.

To the CAFC panel, however, the “multiplicity” of these individual elements were sufficient to warrant the exceptional case finding — even without an individual smoking gun.

In dissent, Judge Newman did not see an exceptional case:

The statutory authority to award attorney fees was intended to “prevent gross injustice,” not to shift the economic balance against the unsuccessful plaintiff.

Notes:

  • The first line of the case reads: “Nilssen is the owner and principal inventor of over 200 patents…”  What does the court mean by “principal inventor” and is there any legal significance associated with that designation?

 

 

Patently-O Bits and Bytes No. 44: Deferred Examination

Accelerated Examination, Bits and Bytes, Patent, , ,
  • Deferred Examination I: For the current state of PTO backlog, I am a strong believer in providing a mechanism to either (i) allowing the inventor pay to move to the front of the examination line if the patent needs to be obtained quickly or (ii) allowing the inventor to delay prosecution if it is unclear whether the invented technology will have any market value. There are some potential negative issues of allowing deferred prosecution — particularly the potential for submarining and shifting claim scope to encompass market changes. These problems would largely be limited through early publication of deferred applications as well as continued enforcement of the written description and enablement requirements.  In addition, the patent term should continue to run during deferment.
  • Deferred Examination II: In its response to congressional queries, PTO Director Jon Dudas has come-out in favor of a system that allows for deferred examination. The PTO’s tentatively proposed implementation scheme would move along a three-step process:
    • Allow a 14–month extendible period for responding to a notice to file missing parts.
    • Use a tiered payment structure that allows for delayed payment of the examination fee.
    • Empower Provisional Applications: Allow applicant to claim priority to a provisional application for up to five years.
  • Deferred Examination III: For many, including the PTO, the hope with deferred examination is that “many inventions … would be recognized as obsolete [or otherwise worthless] before expiration of the five year period and therefore would not require examination resources.”
  • Rocket Docket Examination: In the past, the AIPLA and others have argued against having a rocket-docket examination based simply on the payment of a fee. Their argument is that it is somehow inequitable and un-American to line-jump based on the availability of funds. That argument is largely hog-wash.  Many of the richest companies in the US maintain tight controls over patent prosecution costs. I suspect those companies would only rarely pay an additional $5,000 in PTO fees for rapid examination. (If a rocket docket for patent prosecution is created, the fee should be high enough to ensure that it does not simply create an additional bottleneck.)
  • Clear Channel Communications now owes $90 million to Grantley Patent Holdings. The Eastern District of Texas jury found the patent willfully infringed with damages of $66 million. Last week, the Judge awarded an additional $16 million in enhanced damages in addition to prejudgment interest and interim royalties due.

Two Hong Kong companies have been fighting over a coffee maker design patent.  Simatelex (who manufacturers for Sunbeam) has signed a consent decree admitting contributory infringement. The patentee’s case against Sunbeam is still pending in the Southern District of New York. Wing Shing v. Simatelex.

District Court Must Provide Underlying Reasoning For “Exceptional Case” Determination

Attorney Fees, Patent, Patent Cases 2008

PatentLawPic363Innovation Technologies v. Splash! Medical Devices (Fed. Cir. 2008)

Innovation holds a patent for washing flesh wounds (U.S. Pat. No. 5,830,197) and sued Splash for infringement. In the midst of discovery (but before a Markman hearing) Innovation decided to end the litigation and executed a covenant not to sue Splash. Before dismissing the case, the district court awarded $140k in attorney fees to the accused infringer — finding the case “exceptional” because Innovation knew or should have known “that its infringement claims were baseless.”  Innovation left the district court with the impression that “the lawsuit was filed solely for the purpose of harassing a small competitor.”

In its decision, the district court provided only three sentences of legal conclusion without listing the factual basis for finding the case exceptional. [District Court Decision]

On appeal, the CAFC vacated in an opinion that reads like a reprimand. Quoting extensively from earlier opinions, the appellate panel demanded that lower court spell out the particular reasons why a case should be found exceptional:

‘“A district court must provide reasoning for its determination that a case is exceptional for us to provide meaningful review. Further, an exceptional case finding is not to be based on speculation or conjecture but upon clear and convincing evidence.” Stephens v. Tech Int’l, Inc., 393 F.3d 1269, 1276 (Fed. Cir. 2004) (citations omitted). . . .

This court could itself comb the record and answer those questions. That is not the normal appellate function, however, and we conclude that the proper practice here is for the district court initially to make the necessary findings on these issues. “[W]hen findings are required on the exceptional case issue such finding must initially be the province of the district court.” Consol. Aluminum Corp., v. Foseco Int’l Ltd., 910 F.2d 804, 814 (Fed. Cir. 1990). . .

Accordingly, the district court’s determination that this is an exceptional case and its award of attorneys fees are vacated, and the case is remanded to that court to make additional findings in accordance with this opinion. . . . If the court again concludes that this is an exceptional case and that it should award attorneys fees, it should also explain the reasons for the latter conclusion.

Vacated and Remanded.

Patently-O Bits and Bytes No. 43

Bits and Bytes, Patent, ,
  • Obviousness Essays: Lewis & Clark has published results from its Obviousness symposium. [LINK] Papers include Duffy’s thoughts that the timing of an invention helps determine its obviousness; Mandel’s argument that KSR stinks because it does not truly account for hindsight bias; Eisenberg’s predictive analysis of KSR’s impact on pharmaceutical patent protection; and Miller’s suggestion on how courts should determine PHOSITA’s skill level.
  • Prior Art blog discusses Little League Trademark Infringement. [LINK]
  • Director Dudas Responds to Congressional Critics [File Attachment: dudas.ltr.pdf (2048 KB)]

Obvious to Try? BIO Challenges Ex Parte Kubin

Amicus Brief, BPAI, Obviousness, Patent, Patent Cases 2008, ,

In re Kubin (Fed. Cir. 2008)

Immunex (a subsidiary of Amgen) is hoping to patent its a DNA sequence coding for a NK (Natural Killer) cell regulator protein. The BPAI rejected the “nucleic acid molecule” claim — finding it obvious over the prior art. [BPAI Decision]. This decision is one of only three precedential BPAI decisions in 2007.

Just looking at the claimed sequence, it would not seem obvious — its structure is not overly similar to other regulator proteins, and the unpredictable nature of protein folding makes it virtually impossible to predict whether a particular sequence would code for an appropriate protein.

Despite the structural uniqueness, the BPAI found the claim obvious because it could have been isolated and verified simply by following conventional laboratory techniques — thus, making it obvious to try.

Although the CAFC has previously warned the BPAI away from using “obvious to try” analysis in its 1995 In re Deuel case. There, the appellate court held that obviousness analysis of a structure should focus on the structure itself as compared to prior art structures.

In Kubin, the BPAI rejected Deuel as limited by the Supreme Court’s KSR decision. That case focused on combination claims, but included the stray quote that “the fact that a combination was obvious to try might show that it was obvious under Section 103.”

Here, the BPAI argued, the inventor wanted to isolate the NK Regulator and simply used known methods to do so. “Thus, isolating NAIL cDNA was ‘the product not of innovation but of ordinary skill and common sense.’” (again quoting KSR).

The case is now on appeal at the the CAFC. On June 10, the Biotechnology Industry Organization filed an amicus brief asking the court to cabin in the scope of KSR and hold that its obvious to try dicta does not abrogate the Deuel standard. Briefing is ongoing and a decision is not expected until the end of the year.

  • Download kubin.amicus.pdf
  • The PTO’s Obviousness Guidelines have the following rules for making an obviousness rejection based on the obvious to try reasoning:
    • (1) a finding that at the time of the invention, there had been a recognized problem or need in the art, which may include a design need or market pressure to solve a problem;
    • (2) a finding that there had been a finite number of identified, predictable potential solutions to the recognized need or problem;
    • (3) a finding that one of ordinary skill in the art could have pursued the known potential solutions with a reasonable expectation of success; and
    • (4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.The BPAI decision is notable for a few reasons, including the following two: (1) It was written by Nancy Linck, former PTO Solicitor, Newman law clerk, & PhD Chemist. Soon after authoring the decision, Linck left the firm to join the Rothwell Figg firm. (2) It is a unanimous opinion.
  • Thanks to Hal Wegner for providing a copy of the brief which his firm filed on behalf of BIO.

    • (more…)

    Appellate Court Affirms that Generic Omeprazole does not Infringe Prilosec Patent

    Infringement, Patent, Patent Cases 2008, Pharma

    IN RE OMEPRAZOLE PATENT LITIGATION (Fed. Cir. 2008) (nonprecedential)

    Omeprazole is the active ingredient in the best-selling drug Prilosec. Mylan and others challenged Astrazeneca’s patents on grounds that their generic formulations do not infringe two Astra’s listed patents. “After a forty-two day bench trial,” a Southern District of New York district court agreed that the generic formulation do not infringe. On appeal was the question of whether the generic versions contained an “alkaline reacting compound” (ARC) as required by the claims.

    Using the Specification as Proof of Non-Infringement: Astra argued that the talc used by the generic products included an ARC.  The CAFC agreed that the lower court had properly rejected that argument based in part on language in the specification. Specifically, the nearly identical specifications listed several different ARCs but did not include talc on the list.  “In contrast, the specifications also lists a number of ordinary excipients, among which is talc. . . Thus, the specifications themselves indicate that ARCs do not include talc.”

    Defying conventional wisdom at the time, Mylan launched its generic version of Omeprazole in 2003 — despite ongoing patent litigation.

    Non-infringement affirmed.

    Certificate of Correction

    Academic Studies, Articles and Publications, Certificate of Correction, Patent

    According to PTO figures, the Office has issued around 25,000 certificates of correction on issued patents each year since 2001. On a per patent basis, about 15% of issued patents are associated with a certificate of correction.*

    Generally, a certificate of correction can be used to correct a minor mistake such as a “clerical or typographical” error or other minor error. In Superior Fireplace, the court held that a certificate of correction that broadens the claim is only permissible when it is clear from the specification and prosecution history how to correct the error. Similarly, in Central Admixture Pharmacy the CAFC found that the correction from osmolarity to osmolality was void because the error “was not clearly evident to one of skill in the art and the result was to broaden the claims.” The relief for an improper certificate of correction is simply to cancel the certificate. 

    Over the past several years, a number of automated and out-sourcing services have emerged to check against PTO printing errors and other typographical errors. What are the best services and best practices regarding corrections?

    ScreenShot031 

    • * To account for the time delay in obtaining corrections, I looked at only patents numbered 6,000,000 – 7,000,000 for the per patent estimate.

    Auto Parts Design

    Design Patent, Patent, ,

    PatentLawPic356Ford Global Technologies v. ITC (Fed. Cir. 2008) (The F-150 ITC Case) (CURRENTLY ON APPEAL)

    In 2007, the International Trade Commission (ITC) issued a final decision finding three Ford design patents invalid based on a prior public use. The patents relate to various parts of its F-150 truck design. Ford had asked the ITC to stop generic parts manufacturers from imports of the patented designs that were flowing in from Taiwan. In its decision, the ITC found seven of the design patents valid and infringed, but found that three of them were invalid.

    Prior Public Use: The alleged prior public use in this case was an event where Ford selected 900 members of the public to attend in small groups and provide feedback on proposed car designs. At the event, security was “high,” cameras were banned as were sketches. Thus, according to Ford, the attendees could not have truly disclosed the ornamental features of the patented design. The invitees were also paid – and thus, disclosure to those individuals should be presumptively be considered private (as would normal in house discussions with an employee). Ford also argues that the payment to attendees is clear evidence that this public use was not “commercial exploitation.”

    PatentLawPic359Almost no Scope: Many design patent holders run from the Federal Circuit’s 1988 in re Mann decision announcing that “design patents have almost no scope. In the auto-parts industry, however, no scope is needed so long as the patented designs are identical to the marketed products. The generic part importers are “slavishly copying” Ford’s original design — thus infringement should be open-and-shut. (See discussion below).

    Ford embraced the narrow scope of its design rights – arguing that there its controls over the feedback event of preventing cameras or drawings ensures that none of the attendees will be able to place the invention in the public domain. Notably, in a recorded post-show follow-up, attendees who were asked about the design could only describe it in general terms such as “beefy.”

    “The video evidence shows that the claimed ornamental features of the patents-in-suit were not in the public’s possession. Without cameras or sketches – which were specifically prohibited – there was no way here that the claimed designs could have been disclosed to the public. Ford therefore did not “remov [e] inventions from the public domain which the public justifiably comes to believe are freely available.” … In short, “beefy front end” and “a chopped top” do not describe or disclose the design inventions.

    PatentLawPic360Is Point of Novelty Analysis Required?: In its counter-appeal, the Taiwanese manufacturers argue that infringement was improperly found because the ITC failed to perform the point-of-novelty test which, according to the defendants, is required even when the patented design is identically copied.

    “[E]ven though the court compares two items through the eyes of the ordinary observer, it must nevertheless, to find infringement, attribute their similarity to the novelty which distinguishes the patented device from the prior art.”‘ Lawman, 437 F.3d at 1386 (quoting Litton, 728 F.2d at 1444).

    The defendants are correct that Lawman and Litton appear to require the point-of-novelty test in every case of infringement. That issue will likely be resolved in the upcoming en banc decision in Egyptian Goddess. In addition, the defendants argued that the design patents should be considered obvious under KSR v. Teleflex (2007). As in that case the claims appear to be composed of a set of elements all found in the prior art.

    An amicus brief was filed supporting the generic manufacturers. However, I have not yet seen that brief. In addition, the ITC recently began investigating another design patent complaint filed by Ford against the same generic manufacturers. This new case involves repair parts for the 2005 Mustang redesign.

    Note:

    • A reader reminded to me to mention pending H.R. 5638 and the PTO’s town hall meeting next Monday to discuss design patent issues. (written comments due July 15). 
    • Unlike the patent reform bill, H.R.5638 is a partisan Democrat sponsored bill that would primarily support the insurance industry and make automobile repair less expensive by excusing repair parts from patent infringement. The bill would amend 35 USC 271 by adding the following subsection:
    • (j) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States any article of manufacture that itself constitutes a component part of another article of manufacture, if the sole purpose of the component part is for the repair of the article of manufacture of which it is a part so as to restore its original appearance.

    Existence of Non-Asserted Claims Allows Court to Disregard Construction Canon Encouraging Coverage of Preferred Embodiment

    Claim Construction, Patent,

    PatentLawPic355Helmsderfer v. Bobrick Washroom Equipment (Fed. Cir. 2008)

    John Helmsderfer sued Bobrick for infringement of its patent covering tamper-resistant diaper changing stations.  After a markman hearing, the Southern District of Ohio district court awarded the defendants summary judgment of non-infringement. Helmsderfer appeals on claim construction.

    Partially Hidden from View: The claims include a top surface platform that is “partially hidden from view.” On appeal, the patentee argued that “partially hidden” could include “totally hidden.” The CAFC disagreed for two textual reasons:

    1. The patent used “generally” in other portions of the claim but not for this element — providing evidence that the patentee was intentionally distinguishing between those two modifiers.
    2. The patent used “at least” in other portions of the claim but not for this element — providing evidence that in this case the patentee did not intend to claim “at least partially.”

    Quoting its own 2000 CAE Screenplates decision, the court reasoned that “[i]n the absence of evidence to the contrary, we must presume that the use of these different terms in the claims connotes different meanings.” Here, the court could find no evidence to find that partially should include totally.

    Exclusion of preferred embodiment: The applicant did point that its preferred embodiment and also “every illustrated embodiment” would be excluded by the narrow definition of “partially hidden.”  The CAFC, however, rejected that such an exclusion creates any problem here. In particular, the court noted that it was analyzing only teh two claims (6–7) at issue in the case — “[O]ur construction of claims 6–7 leaves open the possibility that claims not at issue in this appeal encompass omitted embodiments. It is often the caes that different claims are directed to and cover different disclosed embodiments. The patentee chooses the language and accordingly the scope of his claims.” 

    The appellate panel gave lip service to the precedential canon of avoiding claim interpretation that “excludes the preferred embodiment from the scope of the invention.”  However, in the end the court gave absolutely no weight to that “caution” in its claim interpretation.  Rather, the decision notes the distinction between the patent as a whole and the particular asserted claims.  In this case, the court noted that other claims are included in the patent and that those may be the ones that cover the preferred embodiment. 

    This interpretation falls on the heels of the PSN Illinois v. Ivoclar Vivadent holding that sometimes unasserted or cancelled claims directed to a particular disclosed embodiment may actually serve as evidence that the scope of the asserted claims does not extend to that embodiment.  PSN Illinois – written by Judge Michel – applies the sensible notion that non-asserted or cancelled claims should be examined to determine if the preferred embodiment is found there. Helmsderfer extends that notion by creating an apparent presumption that – if non-asserted claims exist, then the court need not consider the rule of construction that encourages encompasing preferred embodiments.

    Notes:

    • Preferred Embodiment: Relation to Tafas v. Dudas: Although the patentee lost here, Judge Moore’s decision here creates some interesting support for the Tafas case – by holding that it is the patentee’s right to file alternative claims to cover various parts of the disclosed embodiment.
    • Drafting Thoughts: Non-numeric range limitations – such as “partially” – have benefits and potential liabilities. When including a limitation of this type, you may do well to consider what prior art you are attempting to avoid — and consequently claim either “at least partially” or “at most partially.”

    Patently-O Bits and Bytes No. 41 (False Marking, Etc.)

    Bits and Bytes, Patent,
    • PatentLawPic352Tracking Appeals: There is an interesting new patent litigation blog: Patent Appeal Tracker run by Kyle Fleming and Josh Ryland. They are providing a review of various pre-decision appeals.
    • False Marking: Matthew Pequignot is again a plaintiff in a false marking action under 25 USC 292. He has now teamed with two plaintiffs firms and filed suit in the Eastern District of Texas against Gillette and its parent company P&G. The complaint specifies 683 counts of false marking and requests the maximum $500 per “offense.”  The falsity of the marking appears to be generally summarized as either (1) marking products with expired patent numbers and (2) marking products with patents whose scope do not cover the products.  On the second point, some of the counts allege that the defendants marked products with patents covering a method of manufacture when the product was not manufactured according to the patent. [LINK]
    • False Marking Comment: There are three primary reasons to mark products with the associated patent number. (1) Legally, marking provides evidence of constructive knowledge that can increase a patentee’s damages. (2) Apart from the damage issue, the patent can also serve as at least a low-level deterrent to chill would be competitors.  It will at least cost several thousand dollars to hire a patent attorney to figure out if the patents are expired.  (3) Finally, the patent provides additional market credibility to customers (and perhaps investors). Continued listing of an expired patent would continue to benefit the manufacturer in the last two points — and consequently help the manufacturer maintain its market position. The key point of contention will be whether the listings were made “for the purpose of deceiving the public” as required by the statute.
    • Moving Forward on False Marking: If this type of litigation continues to grow, in house counsel should consider creating a system for ensuring that expired and invalid patents are no longer marked on company products. A system — even if a bit leaky — will likely serve as a good defense against false marking charges because they provide evidence of a lack of intent to deceive the public.
    • Patent Law Jobs:

    Ex Parte Reexamination Statistics I

    Academic Studies, Patent, Reexamination

    PatentLawPic332Through its attorneys Microsoft requested ex parte reexamination almost thirty Avistar patents. In recent days, the PTO denied Microsoft’s request in 14 of those cases.

    Standing alone, this denial does not appear to be big news — except for the fact that over 95% of requests for ex parte reexamination are granted. In FY 2003–07, for instance, the PTO reviewed 2389 requests for ex parte reexamination and only denied the request in 105 cases. (4.4%). (At this point, there is some possibility that the denials are procedural  as the documents are not yet available on PAIR).

    To be granted, a reexamination request must present a “substantial new question of patentability” that affects at least one claim of a patent.  The request must be based on a prior art patent or publication.  Prior public use or sale are not admissible as evidence in an ex parte reexamination proceeding (although affidavits explaining the prior art publications is admissible).

    In general, there has been a rise in requests for ex parte reexamination. As the chart below demonstrates, increase is entirely due to an increase in requests for reexamination that are filed by third parties.

    PatentLawPic333

    Subsidiary’s Lost Profits Do Not Translate to Lost Profit Damages for Parent Patent Holder

    Damages, Patent, Patent Cases 2008, ,

    PatentLawPic327Mars, Inc. v. Coin Acceptors, Inc. (CoinCo) (Fed. Cir. 2008)

    Way back in 1990, Mars sued CoinCo for patent infringement — asserting two patents covering technology for authenticating coins inserted into a vending machine. Eighteen years later, the parties are still battling over damages.

    Lost Profits: In this decision, the CAFC affirmed that the Mars corporate structure (designed to avoid certain taxes) eliminated the company’s ability to recover damages under a “lost profits” theory.  Usually, lost profits are only available when a patentee is a market competitor. Mars itself has never made vending machine coin changers. However, its wholly owned subsidiary, MEI, did operate vending machines and licensed the patents on a non-exclusive per-use basis.  Although it was a wholly owned subsidiary, the court found that MEI’s provable lost profits due to the CoinCo infringement did not translate to lost profits for the patentee itself (Mars).  Of particular importance was the license structure between MEI and Mars that called for a straight per use license rather than a license based on a measure of profits.  Rather, lost profits require a showing that the patent holder itself had lost profits.

    This decision can be seen as a continuation of the 2004 Poly-America case where the court held that the patentee could not recover lost profits for damages felt by a sister corporation. Lost profits damages are usually preferred to damages calculated as a reasonable royalty because the lost profit calculation typically results in a larger number.

    PatentLawPic328Standing: The court also ruled on standing issues. (1) Prior to 1996, MEI had no standing to sue for itself because it was only a non-exclusive licensee. (2) In 1996 Mars transferred ownership to MEI — thus, at that point Mars had no standing to sue for any subsequent infringement.

    Curing standing: In patent cases, standing is typically determined at the point that a claim is filed. Here, we have a seeming loss of standing. In the 2005 Schreiber decision, the CAFC held that a “temporary loss of standing during patent litigation can be cured before judgment.” Despite a half-hearted attempt, the court found that Mars had not properly cured its standing because MEI did not transfer complete ownership back to Mars.