Search Results for: "sas institute"

What is Your Experience with Patent Assertion Entities and Patent Licensing?

Patent

One difficulty with studying patent enforcement is that so much of the action goes on behind closed doors and outside of court filings.

A colleague of mine is looking to interview a number of different participants for a research study on patent assertion entities. Specifically, the colleague is looking to talk to the following types of people:

  • Solo inventors or small firms that have sold their invention rights to a patent assertion entity;
  • Solo inventors or small firms that attempted to sell their invention rights to a manufacturing entity but failed;
  • Entities that previously were engaged in manufacturing but now primarily license their intellectual property portfolios; and
  • Entities that have licensed technology from a patent assertion entity that previously was a manufacturing entity (see #3 above)

If you fit within any of these categories and would be willing to answer a few questions, please e-mail your contact information to patentlawone@yahoo.com.

I have been assured that “interview data will remain confidential” and that “information gathered will be used strictly for academic research.” The researcher here has no affiliation to any party on either side of the current debates on patent assertion entities.

— Dennis

Is “Insolubly Ambiguous” the Correct Standard for Indefiniteness?

Indefinite, Patent, , , ,

By Dennis Crouch

Nautilus v. Biosig Inst. (on petition for writ of certiorari 2013)

A major focus of attention in the current arena of patent reform is on the notice function of patent claims and, in particularly, the standard for definiteness. Most of the time, the scope of a patent's coverage is only known once a district court construes those claims. And, in many cases, that knowledge is really delayed until Federal Circuit review. A substantial portion of the blame in this area can be placed on patentees who intentionally draft claims of ambiguous scope. Of course, the Supreme Court has long recognized the policy benefits of allowing ambiguity in patent coverage. (See, Doctrine of Equivalents). Most technology users would prefer to understand the scope of claims before litigation and use that information to decide whether to obtain a license. However, the ambiguity (in combination with other factors) lead to the common practice of holding-out until a court construes the claims.

For indefinite claims, the statutory guidelines come from 35 U.S.C. § 112(b) that requires claims that "particularly point[] out and distinctly claim[] the subject matter which the inventor … regards as the invention." The doctrine of indefiniteness finds its statutory support from §112(b). And, when a claim is indefinite it is both unpatentable and invalid.

Once a patent issues, it tends to be quite difficult to invalidate that patent on indefiniteness grounds. The difficulty begins with the statutory presumption of validity under § 282 that requires clear and convincing evidence of invalidity. That difficulty continues with the standard for indefiniteness itself. In particular, the Federal Circuit has required that invalidity by indefiniteness requires proof that the challenged claim is ambiguous in a way that is "insoluble." In Biosig, the Federal Circuit similarly held that indefiniteness of an issued claim can only be found "if reasonable efforts at claim construction result in a definition that does not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim."

In a new petition, John Vandenberg's team at Klarquist Sparkman has asked the Supreme Court to reconsider the Federal Circuit's standard on this point. Nautilus presents the following questions:

1. Does the Federal Circuit's acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not "insoluble" by a court—defeat the statutory requirement of particular and distinct patent claiming?

2. Does the presumption of validity dilute the requirement of particular and distinct patent claiming?

Many of these same issues have been previously addressed by the Supreme Court in pre-1952 decisions. See, for example, United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942). In Union Carbide, the court wrote that:

The statutory requirement of particularity and distinctness in claims is met only when they clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise. A zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims would discourage invention only a little less than unequivocal foreclosure of the field. Moreover, the claims must be reasonably clear-cut to enable courts to determine whether novelty and invention are genuine. . . . Whether the vagueness of the claim has its source in the language employed or in the somewhat indeterminate character of the advance claimed to have been made in the art is not material. An invention must be capable of accurate definition, and it must be accurately defined, to be patentable.

Interpreting the precursor to Section 112(b), 35 U.S.C. § 33 (1932). The old § 33 included the parallel requirement of claims that "particularly point out and distinctly claim the part, improvement, or combination which he claims as his invention or discovery."

In the Union Carbide, the court's problem with the claims was what it called functionality, writing: [T]he claims are but inaccurate suggestions of the functions of the product, and fall afoul of the rule that a patentee may not broaden his claims by describing the product in terms of function. Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245; General Electric Co. v. Wabash Corp., 304 U.S. 371. The particular claims at issue in Union Carbide are as follows:

1. Substantially pure carbon black in the form of commercially uniform, comparatively small, rounded, smooth aggregates having a spongy porous interior.

2. As an article of manufacture, a pellet of approximately one sixteenth of any inch in diameter and, formed-of a porous mass of substantially pure carbon black.

See U.S. Patent No. 1,889,429. Read the claims again and look for the functional limitations, then read the Supreme Court's decision.

In General Electric Co. v. Wabash Corp., 304 U.S. 364 (1938), the Supreme Court similarly took issue with the indefiniteness of issued patent claims.

The limits of a patent must be known for the protection of the patentee, the encouragement of the inventive genius of others, and the assurance that the subject of the patent will be dedicated ultimately to the public. The statute seeks to guard against unreasonable advantages to the patentee and disadvantages to others arising from uncertainty as to their rights. The inventor must inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not.

. . . . Patentees may reasonably anticipate that claimed inventions, improvements, and discoveries, turning on points so refined as the granular structure of products, require precise descriptions of the new characteristic for which protection is sought. In a limited field, the variant must be clearly defined.

GE v. Wabash.

Reaching further back to the 19th century, the court wrote in Merrill v. Yeomans, 94 U.S. 568 (1876) that a patentee has no excuse for ambiguous or vague descriptions.

The growth of the patent system in the last quarter of a century in this country has reached a stage in its progress where the variety and magnitude of the interests involved require accuracy, precision, and care in the preparation of all the papers on which the patent is founded. It is no longer a scarcely recognized principle, struggling for a foothold, but it is an organized system, with well-settled rules, supporting itself at once by its utility, and by the wealth which it creates and commands. The developed and improved condition of the patent law, and of the principles which govern the exclusive rights conferred by it, leave no excuse for ambiguous language or vague descriptions. The public should not be deprived of rights supposed to belong to it, without being clearly told what it is that limits these rights. The genius of the inventor, constantly making improvements in existing patents,—a process which gives to the patent system its greatest value,—should not be restrained by vague and indefinite descriptions of claims in existing patents from the salutary and necessary right of improving on that which has already been invented. It seems to us that nothing can be more just and fair, both to the patentee and to the public, than that the former should understand, and correctly describe, just what he has invented, and for what he claims a patent.

Merrill (1876). These cases are in obvious tension with the Federal Circuit's current standard. However, there remains only a small chance that the Supreme Court will hear the case.

One key to the petition here is the argument that the Federal Circuit made it triply difficult to invalidate a claim on indefiniteness ground by (1) using the presumption of validity of § 282 to create stringent elements for the invalidity defense and then (2) also requiring clear-and-convincing evidence to prove those elements; all while (3) regularly ignoring the reality that indefiniteness is a question of law (as are patentable subject matter and obviousness).

The European Unitary Patent System – 5 things Patent Attorneys need to know now

Patent

US patentees have many questions regarding the new Unitary Patent system in Europe. Gwilym Roberts of Kilburn & Strode in the UK offers this brief post on practical issues to and immediate action items. – DC

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There has been a lot of talk about the new Unitary Patent system in Europe. As there are so many unknowns at the moment, it is sometimes difficult to work out what the practical implications now are. This brief post highlights the main points.

Overview

The proposed Unitary Patent system has two main components:

Firstly, for patents issued by the EPO, patentees will be able to choose between a) the existing system of multiple national validations from a European Patent, wherein separate renewal fees are paid for each national validation nationally or b) designating the Unitary Patent covering multiple EU countries, wherein a single renewal fee will be payable to the EPO and a single translation required.

Secondly, and separately, a Unified Patent Court will be established, alongside existing national courts, allowing a single action to cover multiple jurisdictions providing wider injunctive and damages type relief than the current fragmented system.

Things you need to understand now

1. The system isn’t here yet. The most optimistic predictions are for early 2015.

2. Any European patent or application (whether or not it designates a “Unitary Patent”) will then be under Unified Patent Court jurisdiction by default. Although details are not known yet, it will however be possible to opt patents back out for at least seven years from entry into force of the new system. This may well be attractive, given that it will then be possible to opt back in. Fees to opt out and to opt back in will be applicable but are not yet known.

There is one key thing that not everyone is understanding: if you designate a Unitary Patent then you are tying yourself into the Unified Patent Court system, but possibly making a saving on translation and renewals. However, the Court will have jurisdiction over both types of patents that are issued by the EPO. Even if you do not designate a Unitary Patent, the Unified Patent Court will still apply to your patent unless you opt out.

Action now: Monitor for further details of the opt out process and consider opting -out.

3. As the Unified Patent Court system will apply to all European patents and applications, whether or not a Unitary Patent has been designated, then there is an opportunity to target competitor patents in Europe for multi jurisdiction revocation in a single action, even if the 9 month post grant opposition period has expired. However, you will need to do this before the patentee opts out and there may therefore be a race on day one.

Action now: Monitor updates on how opt out timing will work, if you see revocation opportunities.

4. A lot of the uncertainty arises because we don’t know how good the Unified Patent Court itself will be. But given that the judges are likely to be the same people who are already operating in Europe – and some of these judges are fantastic – let’s assume that the courts are going to work. That makes the question much simpler – do I want to enforce a patent in multiple jurisdictions in a single action, balanced against the risk of central revocation?

Action now: Start thinking about the tactical pros and cons of multi jurisdiction enforcement and revocation – assume the courts will be good!

5. If you like the idea of the Unified Patent Court and wish to obtain coverage for multiple EU countries, then the Unitary Patent designation may be attractive to you. You cannot request it now, but it will be available for European patents that are granted after the new system enters into force. Given the backlog in prosecution at the EPO at the moment, you may well have applications which are pending now which could grant after the new system comes into force.

Action now: Consider whether it is worth delaying any key patent applications, if you definitely want Unitary Patent protection.

Conclusion

There has been nothing here about costs, languages, translations, procedure etc. – these are important details, but shouldn’t affect your basic decisions. There is not a lot to do now; consider delaying, keep watching and start thinking.

Patent Reform 2013: Adding Clarity and Transparency to the System

Patent

By Dennis Crouch

President Obama today released information on planed executive orders and push for new legislation that will attempt to block companies from asserting their patents unless they are also manufacturing a product based upon the patented design. And at the same time, the President’s National Economic Council and Council of Economic Advisers released a report a report titled “Patent Assertion and U.S. Innovation.” The report generally takes the viewpoint that Patent Assertion Entities are bad for the US Economy and makes the bold claim that, in the past year PAE’s have threatened “over 100,000 companies with patent infringement.” The bulk of the report that identifies the “problem” is based upon the work of professor Colleen Chien (Santa Clara); Jim Bessen & Mike Meurer (BU); Mark Lemley (Stanford) and Michele Boldrin (WUSTL) & David K. Levine (WUSTL).

Despite the unknowing hyperbole of the report, the suggested actions are, for the most, welcome and will benefit the patent system as a whole. In fact, this move to finally address the problem of predictability of patent scope and patent validity hits the sweet spot of where problems emerge in the system. Of course, the devil will be in the details of these approaches.

Executive Actions:

1. Knowing Who Owns the Patents: Through the PTO a new rule will require patent applicants and owners to regularly update ownership information with the “real party of interest” so that the assignment records are accurate complete.

2. Tightening Functional Claiming. The PTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, such as by use of glossaries in patent specifications to assist examiners in the software field.

In my view, these two elements are sorely needed and will generally improve the patent system without actually limiting the ability of patent assertion entities to derive value from their innovations through patent assertion. In addition, the PTO will begin a number of outreach mechanisms intended to provide assistance to non-patent-insiders who receive patent demand letter.

Legislative Actions:

1. Require patentees and applicants to disclose the “Real Party-in-Interest,” by requiring that any party sending demand letters, filing an infringement suit or seeking PTO review of a patent to file updated ownership information, and enabling the PTO or district courts to impose sanctions for non-compliance. [DC: This would add statutory back-up for the PTO rulemaking]

2. Permit more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees under 35 USC 285 as a sanction for abusive court filings (similar to the legal standard that applies in copyright infringement cases). [DC: This can be helpful if allowed to go both-ways, although courts generally find that patent litigators are the most well-prepared and honorable of any that they see in court.]

3. Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB). [DC: This has the potential of capturing a substantial percentage of issued patents, but that may be fine.]

4. Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use. Also, stay judicial proceedings against such consumers when an infringement suit has also been brought against a vendor, retailer, or manufacturer. [DC: We are on our way here toward a fair use of patents.]

5. Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts. [DC: The focus here is to get patent assertion entities out of the ITC]

6. Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public. [DC: This sounds good, I wonder how those writing demand letters would respond.]

7. Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges. [DC: However, must ensure that the flexibility is not used to hire because of particular political bent.]

What Is Happening In Vermont? Patent Law Reform From The Bottom Up

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Guest post by Camilla A. Hrdy, Resident Fellow at the Yale Law School Information Society Project.

Although there have been various proposals for curbing abusive threats of patent litigation by Patent Assertion Entities (PAE’s), or so-called patent “trolls,” and the Federal Circuit appears willing to sanction PAE’s for baseless lawsuits, the U.S. Patent Act does not directly address the problem. Dissatisfied with this situation, the state of Vermont has just passed a new and innovative law amending its Consumer Fraud statute to prohibit “bad faith assertions of patent infringement” against individuals or companies based in Vermont. The law creates a factor-based test for courts to determine when acts constitute “bad faith assertions,” and lists several non-exhaustive factors that courts may consider as evidence of bad faith, including sending demand letters that lack basic information about the infringement claim or that seek payment of unreasonable royalty fees. Targets of bad faith assertions can bring actions (in state or federal district court1) to obtain compensatory damages and exemplary damages, plus costs and fees. Vermont’s Attorney General simultaneously filed a complaint under existing Vermont consumer protection law against a PAE that sent out demand letters to thousands of small businesses in Vermont and around the country.

Some commentators suggest Vermont’s new law is preempted by federal patent law. This is not necessarily the case – so long as courts apply the law in a way that satisfies the Federal Circuit’s standard for a finding of “bad faith.” This requires, at minimum, “clear and convincing evidence” that the infringement assertions are “objectively baseless” to avoid dismissal on summary judgment or a motion to dismiss. As the Federal Circuit explained in Globetrotter, the idea is that patent holders should not be penalized simply for asking the government to enforce their patent rights. That said, as Vermont Attorney Justin McCabe points out, if courts do adhere to the Federal Circuit’s current standard, this will certainly weaken the Vermont law’s utility as a supplement to current options.

Putting aside the question of whether the Vermont law will be preempted, should it be? According to Eric Goldman, we should be wary of state-by-state contributions to patent law (and IP law in general) for numerous reasons, including higher costs for patent owners to enforce their rights and comply with different or inconsistent state standards. Goldman concludes that while he would “enthusiastically favor a nation-wide threats action,” if the choice is between no threats action at all versus state-level threats actions, he might favor the former.

I disagree.

There are certainly costs to introducing decentralization into the patent system, just as there are for any area of law where state and federal governments have concurrent power (immigration, tax, corporate law, to name just a few). But the creation of a novel, state-level solution to the problem of unfounded patent assertions highlights the reasons we accept some of these costs by continuing to support a system of dual sovereignty. Robust federalism can produce a range of benefits, including involvement from local officials in designing policies to support their jurisdictions’ development goals, promoting intergovernmental competition and experimentation, and diffusing authority among different sovereigns in order to avoid consolidation of power in a single lawmaking body or administrative agency (i.e. the U.S. Patent & Trademark Office).

But for federalism to actually benefit patent law and innovation policy generally, states require some autonomy to disagree with federal patent policy and to use state law to grow local innovation ecosystems, like California has with Silicon Valley. According to the preamble of the new law, Vermont is “striving to build an entrepreneurial and knowledge based economy.” State representatives decided the law will facilitate their goal of attracting IT and other knowledge based companies facing costly threats of litigation from PAE’s. Vermont has every right to make this attempt, and we should encourage other states to do the same.

Obviously, as the Supreme Court has made clear, state laws should be preempted when they interfere with the goals and objectives of federal patent law. But Vermont’s law doesn’t: like U.S. patent law, it strives to promote innovation and does not interfere with inventors’ decision to file for U.S. patents and disclose information about their inventions to the public.2 Far from needlessly raising the cost for patent owners to enforce their rights, Vermont’s local solution to a national problem is a prime example of how federalism is supposed to work.

As I argue in a forthcoming article and a recent essay, given the benefits of state involvement in patent law and innovation policy, federal courts should be wary of preempting state laws that attempt to influence national patent policy. I hope the Vermont law is the first, not the last, of its kind, and that it inspires other states to take a greater role in helping federal institutions fix the patent system’s problems. Meanwhile, innovators themselves – whether businesses aggrieved by PAE’s or inventors who are dissatisfied with patent law’s emphasis on propertization versus free access to knowledge – should begin to actively encourage their state and local governments to dissent against federal patent norms by experimenting with laws to make the system work better for everyone. We may ultimately decide that some, or even all, state patent policy innovations are not workable in practice. But the results of a bottom up reform movement will inevitably surprise us. And this is the point.

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1. Federal district courts have exclusive jurisdiction over patent cases, and the jurisdiction statute was recently amended to clarify that “[n]o State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights.” 28 U.S.C. §    338(a). However, if none of the claims for relief under the Vermont law necessarily requires the resolution of a patent law issue, then federal district courts would not have jurisdiction absent diversity citizenship. See ClearPlay, Inc. v. Nissim Corp., 602 F.3d 1364, 1369 (Fed. Cir. 2010).

2. The same cannot be said for state trade secret laws, which we permit despite the risk that inventors of patentable inventions will keep their inventions secret, due to the independent benefits derived from more information sharing within companies and protection of valuable, if not always patentable, information from misappropriation by competitors. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 490-93 (1974).

Average Pendency of US Patent Applications

Patent

The chart above shows the average pendency of utility patent applications at the USPTO grouped by disposal date. The basic calculation compares the patent application actual filing date with the relevant issue date or abandonment date. For this chart, the filing of an RCE does not restart the clock. Although the chart appears to show significant movement, you should note that I set the axis base at three years.

PCT Applications as Prior Art

Patent

By Dennis Crouch

International Patent Applications filed under the Patent Cooperation Treaty (PCT) are ordinarily published by the World Intellectual Property Organization (WIPO) 18-months after the filing date.

In a prior comment section, some debate arose as to the effective prior-art date that would be assigned to those applications. The answer is simple – once the application is published, the application will count as prior art as of its priority filing date so long as the PCT applications designates the United States (under the current system, all contracting states are automatically designated). Here is how I get there:

  1. Under 35 U.S.C. § 102(a)(2) patent applications are counted as prior art as of their effective filing date so long as the application is published under §122(b).
  2. At first glance, the limitation of being “published under section 122(b)” seems to limit the doctrine to US published applications. However, 35 U.S.C. § 374 changes the rules by indicating that WIPO’s publication of international PCT applications “shall be deemed a publication under section 122(b).”
  3. Section 102(d) then stretches the prior art date back to the earliest priority filing date that can claim priority to the relevant disclosure.

The result is that published PCT applications that designate the US count as prior art as of their priority filing date. In this analysis, there is no restriction on application language or country of origin.

Phase-in: The phase in of this rule is fairly simple. The above calculations apply when considering prior art against an application filed on or after March 16, 2013 and that, at any point in its history, included a claim to a claimed invention that has an effective filing date of on or after March 16, 2013.

 

What can Patent Applicants do to Improve Patent Quality?

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By Dennis Crouch

Patent “quality” has many different meanings. The primary focus of the PTO under Director Dave Kappos is on the timely issuance of “right sized,” valid patents. I would add an additional important focus of ensuring that the scope and coverage of each patent is relatively easy to determine. These measures of patent quality fit within broader goals of the patent system — incentivizing innovation and disclosure of those innovations within a competitive marketplace. The patent rules are intended work as something of a feedback system at varying levels of granularity, guiding innovators and applicants in ways that hopefully push us toward those ultimate goals.

I tend to model the patenting process is something of a negotiation between the PTO an the patent applicant. The PTO possesses the authority to grant or deny patent applications, but every word found in the patent is written or approved by the patent applicant. Obviously, the patent applicant’s role in this process is deep and substantial. A patent’s conception begins with words drafted by the patent applicant, not the examiner; amendments are made by the patent applicant, not the examiner, and, after approval by the patent examiner, is the patent applicant must approve the final issuance of a patent (with the payment of a fee).

For many years, I have argued that meaningful change in the state of patent law and patent quality could be implemented in incentives that push applicants toward filing quality patent applications – claiming valid subject matter and drafting claims with well-defined scope. The USPTO agrees and has now published a notice on its project to “focus[] on potential practices that applicants can employ at the drafting stage of a patent application in order to facilitate examination and bring more certainty to the scope of issued patents.” Email comments to QualityApplications_Comments@uspto.gov by March 15, 2013.

The PTO’s current ideas on this front focus on ways to clarify the meaning of terms used in the claims and the resulting scope of the claims. Some of the initial ideas presented are traditional define-your-terms notions while others suggest that new mechanisms of information connectivity may offer solutions.

On these fronts, the PTO lists the following ideas and requests comments:

  1. Clarifying the Scope of the Claims
    1. Presenting claims in a multi-part format by way of a standardized template that places each claim component in separate, clearly marked, and designated fields. For instance, a template may facilitate drafting and review of claims by separately delineating each claim component into separate fields for the preamble, transitional phrase, and each particular claim limitation.
    2. Identifying corresponding support in the specification for each of the claim limitations utilizing, for example, a claim chart or the standardized template described above. This practice could be particularly beneficial where claims are amended or where a continuing application (continuation, divisional, continuation-in-part) is filed.
    3. Indicating whether examples in the specification are intended to be limiting or merely illustrative.
    4. Identifying whether the claim preamble is intended to be a limitation on claim scope.
    5. Expressly identifying clauses within particular claim limitations for which the inventor intends to invoke 35 U.S.C. 112(f) and pointing out where in the specification corresponding structures, materials, or acts are disclosed that are linked to the identified 35 U.S.C. 112(f) claim limitations.
    6. Using textual and graphical notation systems known in the art to disclose algorithms in support of computer-implemented claim limitations, such as C-like pseudo-code or XML-like schemas for textual notation and Unified Modeling Language (UML) for graphical notation.
  2. Clarifying the Meaning of Claim Terms in the Specification
    1. Indicating whether terms of degree—such as substantially, approximately, about, essentially—have a lay or technical meaning and explaining the scope of such terms.
    2. Including in the specification a glossary of potentially ambiguous, distinctive, and specialized terms used in the specification and/or claims, particularly for inventions related to certain technologies, such as software.
    3. Designating, at the time of filing the application, a default dictionary or dictionaries (e.g., a technical dictionary and a non-technical dictionary) to be used in ascertaining the meaning of the claim terms.

As we all move forward with this process (over the years…), I am confident that we will begin to think of patents less and less like “documents” that printed and read, but more like digital information maps that provides a network of information about inventions. Part of this potential comes from linking claim terms to descriptions found elsewhere and direct mark-up that ties original text to post application changes and notations.

None of these changes would make patent quality easy – but they would likely help move us in the right direction.

CLS Bank v. Alice Corp: Software Patentability On the Briefs

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by Dennis Crouch

Briefing continues in the CLS Bank software patent case.  The accused infringer (CLS Bank) has filed its brief arguing that the Alice patent lacks any core inventive concept and therefore lacks subject matter eligibility under Section 101 of the Patent Act.  Briefs in support of CLS and those nominally in support of neither party have also been filed.  Alice will file its brief in January and I expect a set of additional briefs in support.  As in the Bilski case, Alice's asserted claim here is one that appears invalid on other grounds — namely obviousness.  However, the district court ruled on summary judgment (and before claim construction) that the claim was invalid as lacking patent eligiblity under Section 101.

The text of the asserted claim is below:

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

In its first opinion, the Federal Circuit reversed the lower court ruling – finding that the claim did not merely encompass an abstract idea but instead embodied a practical implementation that fits within the scope of patent eligible subject matter.  In a subsequent en banc order, the court asked that the parties focus on two particular questions of law: 

I. What test should the court adopt to determine whether a computerimplemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

II. In assessing patent eligibility under 35 U.S.C. § 101 of a computerimplemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?

I have attempted to extract some core elements of each brief. I should note that all of these brief have much more nuance than is shown. I attempted to categorize the briefs filed on behalf of neither party. My approach was quite subjective and I am confident that others would have classified them in a different manner. 

Practical keys here are (1) whether subject matter eligibility is about the inventive concept or instead more focused on the scope of a well construed claim; (2) invention

Party Brief:

In Support of CLS (Defendant)

  • File Attachment: BSA Software Alliance–ISO CLS.pdf (169 KB) Business Software Aliance believes that software should be patentable, but not the software at issue here. 

    "Simple economics makes clear that, if patent protection for software were curtailed, the adverse consequences would be swift and severe. . . . Two factors are of particular significance—whether a claim can be implemented solely via a mental process or necessarily relies upon a machine for execution; and whether the claim uses an abstract idea or law of nature in a way that is novel, useful, and limited. When an invention falls short under both of these standards, it most likey is not patentable under Section 101. . . . Assessed under this framework, the software at issue here is not patentable. . . . It is plain that credit intermediation long preexisted computer implementation, and that it is a process that can be performed in the human mind, or by a human with pencil and paper. In addition, the computer aspect of the claims here does not add anything of substance to the mental process at issue. The computer implementation of the abstract idea is not limited in any fashion. And there is no suggestion that the process here is in anyway dependent upon computer technology to accomplish the directed end."

  • Download EFF–ISO CLS Patents are causing more harm than benefit. This is especially true for software patents that regularly include broad functional claims. However, Section 101 analysis is problematic because of its ambiguity. The EFF brief argues that the way to cure this is to more broadly interpret 35 U.S.C. § 112(f) (2012) so that functional software claims be given limited scope under the Federal Circuit's Means-Plus-Function doctrine. This approach stems from a recent article by Mark Lemley and fits directly within the avoidance doctrine that Professor Merges and I suggested in our 2010 article.
  • File Attachment: CCIA–ISO CLS.pdf (200 KB) Prometheus requires an inventive concept to pass 101.
  • File Attachment: Clearing House Ass'n–ISO CLS.pdf (819 KB)  Banking industry brief argues that "threshold" language means that "the Section 101 inquiry is the first step in the legal framework to determine patentability" and should be rigorously enforced.  
  • File Attachment: Google et al.–ISO CLS.pdf (982 KB).  Google acknowledges the difficulty with the abstract idea test because the term "abstract" is so difficult to define.  However, Google argues that the abstract ideas are much easier to identify individually than to define generally. This is roughly the same as know-it-when-you-see-it test for obscinity.  Google also writes that "abstract patents are a plague on the high-tech sector."
  • File Attachment: Stites Amicus Brief.pdf (262 KB) "The software patent game is a less than a zero sum game for the participants and has a large inhibiting effect on software innovation." Stites argues that the court should simply eliminate software patents.

 In Support of Neither Party, but Promoting a Stronger § 101 Requirement

  • File Attachment: British Airways et al–ISO Neither Party.pdf (191 KB) Supreme Court has rejected the "course-filter" "manifestly-evident" approach offered by the original CLS panel. Whether a claim fails under Section 101 can ordinarily be determined very early in a case and without and detailed claim construction.
  • File Attachment: Profs Hollaar & Trzyna–ISO Neither Party.pdf (217 KB) The only way to draw a clear and reasonable line on subject matter eligibility is to focus on its link to technology.
  • File Attachment: Juhasz Law Firm–ISO Neither Party.pdf (285 KB) "The test to determine whether a computer-implemented invention is a patent ineligible "abstract idea" should be whether steps that are central to the claim (i.e., not token extra-solution activity) have a "physical" or "virtual" link to a specific real or tangible object."
  • File Attachment: Koninklijke Philips–ISO Neither Party.pdf (549 KB) An applicant and patentee should have the burden of proving that the claimed software implementation is subject matter eligible.
  • File Attachment: Internet Retailers–ISO Neither Party.pdf (2454 KB) Simply rewriting a method claim as a system or storage medium cannot render the claim subject matter eligible. The Federal Circuit should empower district courts to make 101 determinations very early in cases – well before claim construction or the completion of discovery. "The savings to the parties in money and the courts in time are self-evident. And those savings are more likely to be obtained in precisely those cases in which the patents are least likely to be valid or valuable, cases brought under low-quality patents. Judicious application of Section 101 is likely to winnow out the worst patents at the lowest cost."

In Support of Neither Party, but Promoting a Weaker § 101 Requirement

  • File Attachment: IP Owners Ass'n–ISO Neither Party.pdf (301 KB) Software is generally patentable under Section 101. However, a claim "must describe the use of [a] computer with sufficient detail to avoid preempting other uses of the idea and the computer implementation must be a meaningful and significant element of the invention." A detailed claim construction is ordinarily necessary to determine whether that claim is directed to statutory subject matter.
  • File Attachment: CLS-Bank_v_Alice_USA-amicus-ISO-Neither-Party.pdf (311 KB) See this.
  • File Attachment: Sigram Schindler–ISO Neither Party.pdf (474 KB) The abstract idea test is sufficiently defined.
  • File Attachment: NY IP Law Ass'n–ISO Neither Party.pdf (735 KB) Efforts in some decisions to dissect the claim into old and new parts or computer and non-computer elements, should be rejected as squarely inconsistent with the Supreme Court's holdings in Diamond v. Diehr, 450 U.S. 175 (1981), and Bilski. "NYIPLA does not agree that method, system and storage medium claims should ipso facto rise and fall together. Rather, each claim (regardless of its type) should be considered independently as a whole to determine whether it is directed to patent-eligible subject matter."
  • File Attachment: IP Law Ass'n of Chicago–ISO Neither Party.pdf (1024 KB) Subject matter eligibility should be broad and flexible. IPLAC's test is similar to the government's factor's in its brief. However, the tone of the IPLAC questions suggest broader eligibility. When a claim includes a computer program, IPLAC would ask: "(a) Are the claims drawn to subject matter otherwise statutory, because if so, they do not become nonstatutory simply because they use a mathematical formula, computer program or digital computer. Diehr. (b) Are process claims, as a whole, without regard to the novelty of any element or steps, or even of the process itself, nothing more than a statutory process and not an attempt to patent a mathematical formula, because if so, they are not nonstatutory. (c) Do the claims implement or apply a formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), because if so, the claims are statutory. (d) Do the claims apply the laws to a new and useful end, because if so, they are statutory."
  • File Attachment: Conejo-Valley-Bar-Assn–ISO-Neither-Party.pdf (1589 KB) There is no need for a strong section 101 eligibility requirement because the other sections of the patent act do the work already.
  • File Attachment: IBM–ISO Neither Party.pdf (1624 KB) "In the exceptional case when the patent eligibility of a computer implemented invention is not readily apparent, the functional requirement of a computer counsels in favor of patent eligibility." Methods are different from systems and are different from storage media. As such, the subject matter eligibility issues are also different and thus, a system claim might be patent eligible while its parallel method claim may be ineligible.

USPTO Director Kappos will Leave in January 2013

Patent

by Dennis Crouch

112612_1747_USPTODirect1A source at the USPTO has confirmed that the David Kappos will step down from his post as USPTO Director in late January 2013 – concluding four years as the US Undersecretary of Commerce for Intellectual Property and the President's chief advisor on intellectual property matters. Kappos will be remembered for guiding the America Invents Act through Congress and an intense focus on practical implementation of the new provisions. Kappos has pushed a paradigm shift that focuses on mechanisms for improving patent quality by working with applicants rather than against applicants. This approach and his understanding of the business of patent law has allowed Kappos to remain well respected amongst patent attorneys and intellectual property professionals throughout a turbulent four year term.

In an effort to eliminate the patent prosecution backlog, Kappos has led the charge to greatly increase the number of patent examiners over the past two years. During this time, the number of examiners has swelled to over 8,000 – a more than 30% increase from two years before. A future concern will be legacy problems of overstaffing once the backlog has been sufficiently reduced.

USPTO Deputy Director Teresa Stanek Rea is in position to assume the role of acting Director. There is a strong likelihood that she will be nominated to more permanently fill the post.

Congratulations to Director Kappos. You will be missed.

Two Minute Survey:

UK Appellate Court Confirms Pan-European Win for Samsung on iPad Community Design Charges

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By Dennis Crouch

Samsung Electronics v. Apple, [2012] EWCA Civ 1339

The English (and Wales) court of appeals has issued a new decision in the ongoing global intellectual property battle between smartphone competitors Apple and Samsung. This case focused on Apple's Community Design No. 000181607-0001 and affirms the trial court ruling by the High Court Judge Colin Birss that the three accused Samsung Galaxy models do not infringe. The court has also affirmed Judge Birss's equitable order forcing Apple to advertise its loss (in order to partially correct damage done to Samsung's reputation).

Apple's iPad registered community design being asserted here is the simple design shown below.

A registered European Community Design is roughly equivalent to a US Design Patent. However, the Europeans have done away with the examination process and replaced it with registration without considering whether the design is actually novel. Thus, while the European law requires that a registered community design be novel (a lower standard than nonobvious), that issue is not raised in the initial registration process. The US continues to examine design patents for novelty and nonobviousness. However, the USPTO's examination of design patent novelty can best be described as a farce. In a 2010 study, I found that the vast majority of design patent applications do not receive even a single rejection during the examination process and only 1.2% are the subject of an obviousness or novelty rejection. In that essay I identified our system as that of de facto registration. Because of the in-expense and ease of registration, Community Designs have been quite popular.

Up to now, the process of obtaining Community Designs has been largely separate from that of US design patent rights. This will change, however, if the US finalizes legislation implementing the Hague Agreement. Earlier this year the US Senate passed the "Patent Law Treaties Implementation Act of 2012" (S. 3486) that would implement the Hague Agreement (as well as the procedural Patent Law Treaty PLT). If there is no major objection, the House of Representatives is likely to pass its version of the Act in the lame duck session of Congress following the November presidential election.

The opinion in the present case is written by Lord Justice Robin Jacob who has retired from the bench but is regularly called back to hear intellectual property cases. As you will find with virtually all of Lord Justice Jacob's decisions, the case is well written, layered, and informative. Lord Justice David Kitchin (another IP focused jurist) joined the panel. In addition to the related design patent litigation in the U.S., this particular community design is being litigated in Germany, the Netherlands, and Spain.

Infringement of a community design is defined in Article 10 of the Community Design Regulation EC 6/2002 and asks whether the accused design "does not produce on the informed user a different overall impression" after taking into consideration "the degree of freedom of the designer in developing his design." Although worded somewhat differently, this standard is on track with U.S. design patent infringement law that considers whether an "ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design." In both situations, the "most important things [to be considered for infringement] are the registered design, the accused object and the prior art and the most important thing about each of these is what they look like."

Jacob, LJ, begins his opinion with a statement about copying—notably that copying is irrelevant to the infringement analysis:

3. Because this case (and parallel cases in other countries) has generated much publicity, it will avoid confusion to say what this case is about and not about. It is not about whether Samsung copied Apple's iPad. Infringement of a registered design does not involve any question of whether there was copying: the issue is simply whether the accused design is too close to the registered design according to the tests laid down in the law. Whether or not Apple could have sued in England and Wales for copying is utterly irrelevant to this case. If they could, they did not. Likewise there is no issue about infringement of any patent for an invention.

4. So this case is all about, and only about, Apple's registered design and the Samsung products. The registered design is not the same as the design of the iPad. It is quite a lot different. For instance the iPad is a lot thinner, and has noticeably different curves on its sides. There may be other differences – even though I own one, I have not made a detailed comparison. Whether the iPad would fall within the scope of protection of the registered design is completely irrelevant. We are not deciding that one way or the other. This case must be decided as if the iPad never existed.

The appellate opinion fully supported Judge Birss's initial determination that substantial differences led to a rejection of the infringement contention. In particular, when compared with the registered design, Samsung devices are thinner and have substantial surface ornamentation. Other features – such as a flat rectangular screen – the court found to so "banal" as to not contribute to the infringement analysis. The court found the rounded corners also unremarkable and of obvious function for a handheld device. Normally, an accused infringer cannot avoid infringement with use of its distinctive trademark on the product. In this case, however, the court found that Samsung's trademark name on its device helped to distinguish the device from the Apple registered design because of the label was additional ornamentation that contradicted Apple's approach of substantially lacking surface ornamentation.

Taking all this as a whole, Judge Birss could not see any infringement. In the appeal, Jacob, LJ, agreed noting that "Overall I cannot begin to see any material error by the Judge."

54.    I would add that even if I were forming my own view of the matter, I would have come to the same conclusion and for the same reasons. If the registered design has a scope as wide as Apple contends it would foreclose much of the market for tablet computers. Alterations in thickness, curvature of the sides, embellishment and so on would not escape its grasp. Legitimate competition by different designs would be stifled.

European-wide declaration of non-infringement affirmed. Now, in all likelihood Apple will take its appeal to the EU Court of Justice (CJEU) who is the final arbiter of EU community design law.

Parallel Pan-European Preliminary Injunction by German Courts: Prior to Judge Birss's final decision, Apple applied ex parte for a preliminary injunction in a German court that was granted "without Samsung having an opportunity of being heard." In July 2012 (a few weeks after Judge Birss's decision) the German Court of Appeal (Oberlandesgericht) granted a pan-European preliminary injunction (interim injunction) against the Galaxy 7.7. Under community design litigation rules, Judge Birss's decision takes precedent and lifts that preliminary injunction. In his opinion, Lord Justice Jacob was highly critical of the German courts for taking that approach while the case was pending before Judge Birss sitting as a community design judge.

56. Firstly I cannot understand on what basis the [German] Court thought it had jurisdiction to grant interim relief. I do not think it did [have jurisdiction] for several reasons.

At minimum, a national court associated where interim relief is sought loses jurisdiction as soon as the court seized of the substance of the case (according to community design law) issues its decision.

In addition to wrongly hearing the case, Jacob, LJ also argues that the German Court wrongly decided the case.

61. … I regret to say that I find the Oberlandesgericht's reasoning on the merits sparse in the extreme….

62. What the Oberlandesgericht did not do was to consider Judge Birss's decision in detail. It gave only meagre reasons for saying "The Court cannot concur with the interpretation of the High Court". I regret that. …

63. … If courts around Europe simply say they do not agree with each other and give inconsistent decisions, Europe will be the poorer.

There are probably three ways to see this conflict: (1) as a lack of effort on the German court's part (unlikely); (2) as a lack of respect for UK courts (more likely); or (3) as an indication that German's support stronger design rights than do the UK courts (most likely).

The decision also suggests that the German court should force Apple to compensate Samsung for the trouble it has caused with its approach to obtaining a preliminary injunction:

Whether or not Samsung has any claim in the German courts for all the losses it has suffered as a result of preliminary measures which proved to be unjustified is obviously not a matter for us. I hope it does. If the position were the other way round, that the unjustified preliminary measures had been granted by the English and Welsh courts, the "injured" party would have a remedy under the cross-undertaking in damages which the English court normally requires as a condition of granting a preliminary measure which is not ultimately vindicated in a main trial.

At paragraph 78.

Ghost Lines in Design Patents: Although minor in the context of this appeal, Lord Justice Jacob has an interesting comment on the dotted "ghost" lines that have become common in US design patent drafting. According to the MPEP, those lines are allowed as "Environmental structure" so long as "clearly designated as environment in the specification." MPEP § 1503. The Apple registration included a dotted line frame showing the boundary of the operational portion of its screen. Samsung unsuccessfully argued that dotted line should not be given any patentable weight based upon what Jacob, LJ calls "a complicated point based on the guidelines for examination."

21. There is one other point about how the informed user would assess the registered design, a point decided by the Judge adversely to Samsung. Views 0001.1 and 0001.3 show the front of the tablet. There is a rectangular dotted line shown. Apple submitted, and the Judge accepted, that the dotted line indicated a frame below a glass face – of the kind now familiar on all sorts of touch-screen devices. Samsung ran a complicated point based on the guidelines for examination. It submitted these would lead the informed user to conclude that the dotted lines were there to indicate that a feature was not protected: thus the fact that the Samsung device does have a "frame" is to be disregarded.

22. This is faintly absurd: a bit like the notice-board reading "Ignore this notice." For if there were no dotted rectangular line, the front face of the design as registered would be entirely plain. So it would then be for the informed user to form a judgment as to whether a tablet with a frame created a different overall impression. In short, on Samsung's contention if there were no dotted lines the position would the same as if they were there.

This development if applied broadly could actually become a major source of contention and difficulty in implementing the global design rights system suggested by the Hague Agreement.

As an aside on the ghost line point, I briefly reviewed the prosecution history file of the US design patent that serves as the priority filing for the community design in this case. See U.S. Design Patent D504,889. In my review, I did not find any applicant remarks indicating that the dotted line in the frame is merely an environmental structure or indicating that the dotted line should not be considered as an element of the design patent. Judge Koh considered this issue during the US litigation of the '889 patent and agreed in dicta that "A reasonable interpretation of the dotted lines in the D′889 patent … is that the dotted lines are intended to show the inset screen below the glass-like surface. At this point, without the aid of prosecution history, evidence regarding drafting principles, or argument from the parties, the Court considers the dotted lines to most likely indicate an inset screen and are likely part of the claimed design." Apple, Inc. v. Samsung Electronics Co., Ltd., 2011 WL 7036077 (N.D.Cal. December 02, 2011). For its decision, the court cited Bernardo Footwear, L.L.C. v. Fortune Dynamics, Inc., 2007 WL 4561476 (S.D.Tex. Dec.24, 2007). In that case the court held that broken lines in a design patent were part of the claimed design because the drafter had failed to explain the significance (or significance) of the broken lines.

Notes:

Libertarians and Patents: Kinsella vs Mossoff

Patent

Libertarian writer and patent attorney Stephen Kinsella has written a critique of Prof. Mossoff's Trespass Fallacy paper.  LINK.  Libertarian thought on intellectual property is somewhat unsettled.  Kinsella is one of the thought leaders of the modern anti-patent libertarians while Mossoff represents the pro-patent side.

One of Kinsella's basic arguments stems from the traditional libertarian support for individual liberties and strong private property rights.  When some third party holds a patent, that patent limits what I can do with my scarce private property as well as my individual freedoms. 

Deciding Foreign Case Law; Certifying Questions; and Patent Assignments

Patent

by Dennis Crouch

The Wi-LAN decision focuses on a litigation discovery dispute. In 2009, Wi-LAN had its attorneys at Kilpatrick Townsend (then Townsend) analyze the scope of LG's infringement.  After LG refused to pay, Wi-LAN forwarded the results of the Townsend inquiry (the Townsend Letter) to LG.  Once litigation started, LG requested that Kilpatrick disclose documents and testimony relating to the Townsend Letter.  Kilpatrick refused based upon its argument that the requested information was protected by attorney-client privilege.  On the other side, LG argued that any privilege was waived by Wi-LAN's voluntary disclosure of the results.  The district court sided with LG and held Kilpatrick in contempt-of-court.

On appeal, the Federal Circuit has vacated the decision –  holding that the district court applied the wrong standard in determining the scope of waiver. Hefe, the court focused on Ninth-Circuit law to determine the scope of privilege waiver and held that –  if faced with this case – would require a fairness balancing before requiring disclosure of otherwise privileged information.

The most inwardly interesting aspect of the decision stems from the short opinion dubiante by Judge Reyna.  A dubiante opinion is typically seen as the weakest form of concurrence.  Here, Judge Reyna writes:

The majority embarks on a winding course as it explores Ninth and other regional circuit case law, and evidentiary rules. At the start of its journey, the majority recognizes, “The parties do agree that the Ninth Circuit has not spoken squarely on this issue, i.e., whether fair-ness balancing is either required or proscribed in this case.”

Still, the majority discerns a trend in the law and on that basis takes a guess that the Ninth Circuit, if its hand were at the helm, would hold that there must be a fair-ness balancing in the context of express extrajudicial waivers.

I examine the trend and find in it no gates that lead to secure blue water. Indeed, I find that even a route that lies opposite the route charted by the majority is as good a route as any.

Thus, while instinct tells me the majority could be correct, I am concerned that our heading is not based on an accurate bearing. As I cannot prove or disprove our result, I go along with the majority—but with doubt.

Certifying Questions of Non-Federal-Circuit-Law: The decision here could well be contrasted with the court's recent opinion in Preston v. Marathon Oil (Fed. Cir. 2012).  That case involved a patent ownership dispute between Mr. Preston and his former employer Marathon.  At oral arguments, the court discovered a disputed question of Wyoming law as to whether particular additional consideration is necessary to support an IP assignment agreement signed by an at will employee.  The Wyoming supreme court took-up that case and held that the continuation of the at-will employment is sufficient consideration.   Preston v. Marathon Oil Co., 277 P.3d 81, 82 (Wyo. 2012).  Based on the state court decision, the Federal Circuit then quite easily held that the assignment agreement was valid and that the disputed patents were owned by Marathon.

Perhaps Judge Reyna would have been more satisfied with certifying the Wi-LAN case to the Ninth Circuit for determination of the privilege question in that case.  

= = = = =

Employment agreements are generally covered by local law –  thus, this result may vary state-to-state. One catch is that the court has federalized some bits of the law of IP assignments. Probably most importantly, the Federal Circuit has held that a prospective assignment agreement works to automatically transfer ownership rights at the moment of invention –  so long as the previously-signed agreement includes the correct magic words.

Made or Conceived: As an aside –  but critical to Preston's case – the IP assignment agreement included an assignment of any “invention … made or conceived” while at Marathon.  Preston argued that he had the idea for the invention before starting work.  The Federal Circuit found Preston's argument lacking, even if factually correct since the invention was made (i.e., reduced to practice) after Preston joined Marathon.  The Court did not indicate whether this aspect of its decision was decided under state law or federal law.  

Supreme Court Grants Cert in Already v. Nike

Patent

By Jason Rantanen

This morning the Supreme Court granted certiorari in Already, LLC dba Yums v. Nike, Inc., No. 11-982, an appeal carrying the potential for profound implications for patent law.  The question presented asks:

Whether a federal district court is divested of Article III jurisdiction over a party’s challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party’s then-existing commercial activities.

The Petition focused on a split between the Second and Ninth Circuit, but similar disagreements have simmered in the Federal Circuit.  Under controlling Federal Circuit precedent, it has long been the law that a patent holder can divest a federal court of Article III jurisdiction over the defendant's counterclaim for a declaratory judgment of patent invalidity by promising not to sue.  See Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059-60 (Fed. Cir. 1995).  A subsequent dissent by Judge Dyk, however, urged the abandonment of the Super Sack rule.  See Benitec Australia, Ltd. v. Nucleonics, Inc., 497 F.3d 1340, 1350-55 (Fed. Cir. 2007) (Dyk, J., dissenting). 

Should the Court agree with Petitioners, it thus would very likely spell the end of the so-called Super Sack covenant, making it harder for patent holders to withdraw their patents once placed into litigation. 

Notes:

Patentable Subject Matter: Supreme Court Challenges Chief Judge Rader’s Broad Notion of Software Patentability

Patent, , ,

by Dennis Crouch

WIldTangent v. Ultramercial (Supreme Court 2012) Docket No 11-962

The Supreme Court has rejected another Federal Circuit patentable subject matter decision with a GVR and has ordered the appellate court to review its patentability decision with further consideration of Mayo Collaborative Services v.Prometheus Laboratories, Inc., 566 U.S. ___ (2012). In its standard GVR language, the Supreme Court wrote:

The petition for a writ of certiorari is granted [G]. The judgment is vacated [V], and the case is remanded [R] to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

The patent at issue in this case claims a particular method for distributing copyrighted products over the Internet. Patent No. 7,346,545. The basic gist of the invention is that the consumer receives a copyrighted product in exchange for viewing an advertisement — and it all takes place over the internet and with a particular monetization scheme.

In its broadly written opinion, the Federal Circuit (Rader, C.J.) found the claimed invention patentable under Section 101 based upon the requirement that a computer be used to perform the method and the programming complexity required to carry out the claimed elements. The court wrote that while “the mere idea that advertising can be used as a form of currency is abstract, just as the vague, unapplied concept of hedging proved patent-ineligible in Bilski,…the ‘545 patent does not simply claim the age-old idea that advertising can serve as a currency. Instead, the ‘545 patent discloses a practical application of this idea.”

Following the Federal Circuit decision in Ultramercial, the Supreme Court decided Mayo v. Prometheus. In that case, the Supreme Court rejected the Prometheus patent as effectively encompassing an unpatentable law of nature. That revives the historic notion that the scope of knowledge held in the prior art is an important aspect of the Section 101 analysis.

The Supreme Court issued a parallel GVR in the gene-patent case of Myriad Genetics. Other pending 101 appeals include Fort Properties v. American Master Lease (en banc petition); Accenture Global v. Guidewire; Bancorp Services v. Sun Life; and others.

Claim one the ‘545 patent reads as follows:

1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;

a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;

a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

Inter Partes Reexamination: Standard for Initiating Reexamination No Longer Requires “New” Issues

Patent,

The threshold standard for initiating an inter partes reexamination was changed on September 16, 2011 – the enactment date of the America Invents Act.  The revised law eliminates the old “substantial new question of patentability” standard and now requires “a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request.”  This reasonable likelihood of prevailing (RLP) standard must now be met before the USPTO can initiate an inter partes reexamination.

In my initial review of the change, I wrote that the new standard is “stricter” than the old.  Certainly, a reasonable likelihood of success is more difficult to prove than simply raising a substantial question. However, I must add an important caveat — the old standard required that the substantial question be “new” while the revised standard does not have such a limitation. 

In a recent petition decision, the USPTO confirmed this analysis — indicating that the a reexamination request under the RLP standard can be based entirely upon issues previously addressed by the Office. In other words, “the determination of whether the question presented in the request are new is no longer a prerequisite of the determination of whether to order inter partes reexamination.” (Quoting from the petition decision) The USPTO wrote:

Whether the issue being brought forth for consideration has been addressed in a previous Office proceeding does not preclude reexamination under the current standard for ordering inter partes reexamination. Under 35 U.S.C. 312, the Office has the discretion to reconsider issues that have been addressed in the past, provided the estoppel provisions of 35 U.S.C. 317 do not apply.

In a footnote, the decision noted that the question of whether the raised objections to patentability are “new” is simply “not relevant to deciding this petition.”

File Attachment: Dismissal of Petition.pdf (210 KB).

Robert Frame had argued on behalf of petitioner that the new RLP standard should be interpreted as SNQ+.  Frame pointed to the House Report on the AIA that stated:

The threshold for initiating an inter partes review is elevated from ‘significant new question of patentability’ -a standard that currently allows 95% of all requests to be granted — to a standard requiring petitioners to present information showing that their challenge has a reasonable likelihood of success.

As discussed above, that approach was rejected by the USPTO (CRU).

The patent being reexamined is No. 8,028,491 and covers a particular type of tactile warning surface units used to warn visually impaired individuals of a hazard (such as a curb).  The design allows the surface units to be wet-set (in concrete) and also replaceable.  This type of device is required in many situations in order to comply with requirements of the ADA.

In 2011, the patent holder (ADA Solutions) filed suit against several alleged infringers. On that same day, several of the accused infringers filed this reexamination request. (The parties are litigating other patents as well).

New Post Grant Options and Associated Proposed Fees

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Proposed Filing Fee for Petition for Post-Grant Opposition or Covered Business Method Patent Review: $35,800 to review up to 20 claims, $44,750 to request review of 21 to 30 claims, $53,700 to request review of 31 to 40 claims, $71,600 to request review of 41 to 50 claims, $89,500 to request review of 51 to 60 claims, and an additional $35,800 to request review of additional groups of 10 claims.

Proposed Filing Fee for a Petition for Inter Partes Review: $27,200 to review up to 20 claims, $34,000 to request review of 21 to 30 claims, $40,800 to request review of 31 to 40 claims, $54,400 to request review of 41 to 50 claims, $68,000 to request review of 51 to 60 claims, and an additional $27,200 to request review of additional groups of 10 claims.

Proposed Filing Fee for a Petition for Ex Parte Reexamination: $17,760.

Proposed Fees for Supplemental Examination: Filing Fee of $7,000; Examination Fee of $20,000.

Petition for Derivation: $400.

Third Party Submission of Prior Art in Pending Cases: $0 for up to three references with notation; $180 for up to ten.

Injunctive Relief and the Public Interest at the ITC

Patent,

by Dennis Crouch

The U.S. International Trade Commission is a branch of the U.S. government designed to protect and serve U.S. interests.  The ITC handles a variety of international trade issues, including passing judgment on whether importation of accused products constitutes actionable patent infringement. These Section 337 disputes have become more important as more expensive and high-technology products are being imported rather than being manufactured in the US and because of legal changes that have made injunctive relief relatively more likely in an ITC proceeding as compared with federal court litigation.

Although both the patentee and accused infringers have standing to argue their respective cases, ITC proceedings are administrative in nature with a focus on whether a domestic industry deserves protection.  Thus, rather than being captioned Apple v. HTC, the recent dispute between the two parties has the title: In the Matter of CERTAIN PERSONAL DATA AND MOBILE COMMUNICATIONS DEVICES AND RELATED SOFTWARE, 337-TA-710.

In its decision on the case, the Commission concluded that HTC’s Android phones violated Apple’s Patent No. 5,946,647 (Claims 1 and 8) and that the HTC phones do not infringe the asserted claims of Apple’s Patent Nos. 5,481,721, 6,275,983, or 6,343,263.  Commentators have noted that HTC should have little trouble designing around the the ‘647 patent. This is especially true because the Commission gave HTC four–months to alter its product before injoining further importation. 

In federal court litigation, a court can only award injunctive relief after considering teh four equitable factors outlined in eBay v. MercExchange. The ITC is not bound by eBay, but is required to consider the impact that an injunction (or “exclusion order”) would have on competition and consumers.  Interestingly, the ITC order follows a recent NYTimes editorial, by Professors Mark Lemley and Colleen Chien who argued for delay in exclusion orders in order to serve the public interest.

If the ITC continues to give more weight to the public interest factor, the result is that ITC exclusion orders may begin to parallel the injunction that a court would have ordered under eBay. Although the ITC still does not directly consider the first three eBay factors, it does require a domestic industry being harmed by the alleged importation.  That harm is often the type of harm that would help a patentee prove its case under eBay.

Notes:

  • The ITC does not have power to award damages. This could suggest that the ITC decisions automatically satisfy the first-two eBay factors.
  • In the Apple v. HTC case, the full decision on the merits that discusses the public interest factors has apparently been held as classified (or at least under seal).  The US President has the statutory right to disapprove of the decision within the next 60 days.
  • Claim 1 of the infringed ‘647 patent is the broadest of the infringed claims and is directed to a system of detecting structures in data and then performing some action on the structures. The claim reads as follows: 1. A computer-based system for detecting structures in data and performing actions on detected structures, comprising: an input device for receiving data; an output device for presenting the data; a memory storing information including program routines including an analyzer server for detecting structures in the data, and for linking actions to the detected structures; a user interface enabling the selection of a detected structure and a linked action; and an action processor for performing the selected action linked to the selected structure; and a processing unit coupled to the input device, the output device, and the memory for controlling the execution of the program routines.
  • These patents were all filed in the mid-1990’s and no, Steve Jobs is not listed as an inventor of any of them.

IP Hall of Fame Nominations

Patent

by Dennis Crouch In 2006, the publishers of the UK based Intellectual Asset Magazine (iam) founded the non-profit IP Hall of Fame to honor individuals who have made an outstanding contribution to the development of IP law and practice. The process begins with nominations from the public and then voting by members of the 45 members of the IP Hall of Fame Academy. The Academy includes previous inductees to the Hall of Fame and a handful of additional members. (I am a voting member of the Academy but not the IP Hall of Fame). The focus is global and includes all areas of intellectual property law and practice.

Call for Nominations: The nomination process closes on December 9, 2011. To nominate someone, simply fill in the nomination form and supply a paragraph of between 50 and 100 words to support your nomination. The award ceremony and gala dinner will be held at the Estoril Casino near Lisbon, Portugal during the IP Business Congress in June 2012.