January 2005

The Dissent in Merck v. Teva: Patentees Need Direction in How to Define Their Terms

Merck v. Teva (Fed. Cir. 2005) The Dissent

When there is a dissent, I read it first.  Dissents get to the point quickly and rarely mince words.  They are often fun to read and relatively short.  Judge RADER’s dissent in Merck v. Teva fits these attributes quite well. Rader made two specific points: (i) that the majority erred in its analysis of the lexicographer doctrine and (ii) that the majority should have given some deference to the lower court’s decision.

(i) Can a Patentee Be His Own Lexicographer Anymore?

Rader disagreed sharply with the majority’s finding that the word "about" had not been defined in the specification.  In the specification, the patentee noted that nomenclature in the area was unclear and outlined an example meaning of "about 70 mg of [the drug.]":

Because of the mixed nomenclature currently in use by those o[f] ordinary skill in the art, reference to a specific weight or percentage of a bisphosphonate compound in the present invention is on an acid active weight basis, unless otherwise indicated herein. For example, the phrase "about 70 mg of a bone resorption inhibiting bisphosphonate selected from the group consisting of alendronate, pharmaceutically acceptable salts thereof, and mixtures thereof, on an alendronic acid active weight basis" means that the amount of the bisphosphonate compound selected is calculated based on 70 mg of alendronic acid.

According to RADER, this passage is a classic example of the patentee’s attempt to invoke the lexicographer doctrine.  Specifically, the patentee defined the phrase by stating that "the phrase ‘about 70 mg of [the drug]’ means …"  And, to underscore the definition, the patentee gave a reason for calling out the definition, "mixed nomenclature currently in use."

Therefore, even a casual reader, let alone one with skill in this art, would immediately recognize that the patentee intended to avoid any ambiguity inherent in "mixed nomenclature" by explicitly defining the entire phrase.

(ii) Deference – Truth in Advertising

According to Judge Rader, the court "often hears criticism from district court judges that its reversal rate on claim construction issues far exceeds that of other circuit courts. . . . In response, nearly every judge on this court has publicly professed to accord some level of deference to district courts regardless of this court’s de novo."

In Rader’s view, after this case profession of deference is "rather hollow."

This is the classic "close case," so close in fact that ultimately two federal judges and the USPTO agreed with Merck, and two federal judges agreed with Teva Pharmaceuticals. The District Court tried this case from March 4 – 7, 2003, then issued a 75-page opinion analyzing the claims and arguments in consummate and accurate detail. This [appellate] court received the typical briefs from the parties, an appendix containing selected portions of the record, and heard a total of approximately thirty minutes of argument by the parties on the issues before this court. Despite the district court’s superior tools and time to evaluate the complete record, to hear and inquire from expert and fact witnesses, to delve into countless related details, to probe the scientific and semantic context, and to entertain argument as long as necessary for clarity, this court with its reading three briefs before its half-hour hearing becomes enamored with its own analysis of a very close issue and reverses the district court.

Response:

Professor Polk Wagner, for one, believes that "Rader is absolutely dead wrong on this argument." 

The majority does exactly what it should do: any fair reading of the specification does not clearly convey to a PHOSITA an intent to use the term "about 70mg" to mean "exactly 70mg" [as found by the district court]; at best, the language is unclear and ambiguous.

Further, Rader’s suggestion that this case means that patentees shouldn’t use the lexicographer option is specious: the message of this case is that the court isn’t going to infer a definitional statement where one doesn’t exist, and — more importantly — that attorneys can’t dress up the tired old arguments about how the specification limits the claims by inference in the guise of lexicography.  Rader’s approach would take us exactly the wrong direction: towards patent
claims that have no meaning whatsoever until several years of litigation proceed, and no finality until a Federal Circuit panel divines a so-called ‘contextual’ meaning that varies according to the idiosyncratic senses of the judges involved.

Kudos to Gajarsa for getting this one right.  Let’s hope the majority in Phillips similarly holds back the tides of hysteria over clarifying the rules.

Dennis Crouch’s January 2005 Report on New Academic Research

Each month I post a note discussing the academic side of patent law.  My on-line sources for material are the SSRN electronic library, a few hard copy journals, and several more that are freely available on-line.  Most of my material, however, comes from articles directly e-mailed to me from professors and law review editors.  Please feel free to e-mail articles for February’s edition. (Include information on where the article is being published). — DDC

1) In a forthcoming paper, Professor Joseph Miller provides a new solution for making claim construction more predictable.  His idea is to require that patentees provide certain additional disclosures up-front — Disclosures that will appear in express statements on the face of the patent itself. 

Four additional patentee disclosures: (a) the field of art to which the claimed invention pertains; (b) all problems that the claimed invention helps solve; (c) a lexicon of all claim terms to which the applicant gives a meaning other than its accustomed meaning to people having ordinary skill in the pertinent art; and (d) a list of preferred objective reference sources, such as technical treatises and dictionaries (general or specialized), to which an interested reader should refer to learn about the ordinary meaning of the remaining claim terms to a person having ordinary skill in the art. [SSRN Link]

According to Miller’s approach, in any subsequent claim construction process, whether for licensing, design-around, or litigation purposes, parties would have the benefit of patents enriched with this new information.  The paper will come out in March in the Lewis & Clark Law Review.

2) I just found out that an old college friend is quickly becoming a leader in the area of Patent-Antitrust law.  In the recent Issue of the Richmond Journal of Law & Technology, Aaron Rabinowitz writes on Antitrust Liability for Refusals to Deal in Patented Goods. The article highlights the circuit split between the Ninth Circuit and the Federal Circuit over whether patent holders must have a business reason for refusing to sell or license patented products.  In Kodak II, 125 F.3d 1195 (9th. Cir. 1997), the California based appeals court determined "that a patentee who refuses to license his patented invention to others without legitimate business justifications for doing so has violated antitrust law."  However, CSU v. Xerox, 203 F.3d 1322 (Fed. Cir. 2000), the Federal Circuit held that a patentee may refuse to license or sell a patented invention without violation of the patent laws, regardless of his business justification.

3) Bill Burgess, a 3L at Penn has written an interesting comment on the "Failed Promise of Cybor" published in the UPenn Law Review.  In Cybor, the Federal Circuit held that claim construction is a matter of law that is reviewed de novo by the Appellate Court.  Bill makes the arguments that (i) the ‘bright-line rule’ of Cybor has resulted in less rather than more consistency in how claims are construed and (ii) Cybor is actually inconsistent with the Supreme Court’s Markman decision.

Patent TRIVIA CONTEST: Fluid-Filled Lens

One of our loyal readers sent in a TRIVIA question about camera lens technology.  Before going to law school, I spent some time as a consultant for a major lens manufacturer, so this topic is also of interest to me.

Both Philips Electronics and Varioptic have patents on fluid-filled camera lenses. The IP dispute between these two companies will likely become quite hot in the near future. [link, link].

However, neither company has made any public reference to a seminal U.S. Patent that teaches a fluid lens that was patented before World War II (WWII).  This patent has no prior art cited against it, has 14 independent claims and no dependent claims. 

Contest: Can you find that seminal patent? A quite small non-monetary prize for the first correct answer.

Fosamax case: Patentees should elect the lexicographer option at their own risk

Bone Resorption

Merck v. Teva (Fed. Cir. 2005)(Fosamax case)

Merck has FDA approval to market a once-weekly dose of alendronate monosodium trihydrate, which it does under the trade name Fosamax.  In 2000, TEVA amended an existing ANDA, and sought FDA approval to market a generic version of Fosamax.  Merck sued, alleging infringement of Merck’s patented "Method for Inhibiting Bone Resorption."

After construing the claims, the district court found the patent valid (not invalid) and delayed the effective date of the FDA approval of Teva’s ANDA until the patent expires.

Teva appealed the court’s claim construction and non-obviousness findings.  On appeal, the Federal Circuit Reversed. 

Claim Construction:

In a Markman proceeding, the district court determined that the claim term ‘about’ had been specifically defined by the patentee — and thus given a special meaning.  The Federal Circuit disagreed, finding that ‘about’ had not been clearly redefined in the specification.

Because the patentee did not clearly redefine "about" in the specification, and because the district court construed the claim term in a manner inconsistent with the specification, we reverse the district court’s claim construction. We thus hold that the term "about" should be given its ordinary and accepted meaning of "approximately."

Validity:

Next, the appeals court vacated the district court’s determination that the invention was not obvious.  The court went on to specifically find claims 23 and 37 invalid as obvious and not infringed.

A. Graham Factors

Amongst the several errors explained by the appellate court, an interesting error came from the district court’s weighing of secondary considerations of non-obviousness.

Although the district court correctly found Merck’s once-weekly dosing of Fosamax was commercially successful, in this context that fact has minimal probative value on the issue of obviousness. . . . Financial success is not significantly probative of that question in this case because others were legally barred from commercially testing the [] ideas.

According to the CAFC panel, commercial success is not probative on obviousness if others are barred from commercially testing the patented ideas.  Couldn’t this same theory be applied in other non-drug cases?

B. Weight Given To Prior Art

In its decision, the district court discounted one piece of prior art that had been published in the Lunar News because the article was not published in a peer-reviewed journal or authored by one skilled in the art.  The federal circuit diagreed again —

The Lunar News Article had clearly suggested the once-weekly dosing . . . to avoid or minimize problems related to dosing frequency. And as shown above, the district court itself found this particular set of problems were of greatest concern in the art. Indeed, to the extent the district court finds Merck’s weekly-dosing idea non-obvious because it went against prevailing wisdom, the court must still explain why Merck and not Dr. Mazess should get credit for the idea. Because Merck’s idea added nothing to what came before, the district court’s answer comes down to nothing more than the credentials of the authors. In this case that difference is not enough to avoid invalidating the claims.

The district court’s judgment of infringement was therefore REVERSED.

DISSENT:

In a scathing dissent, Judge Rader made several conclusions based on the majority opinion, including:

  • Patentees should elect the lexicographer option at their own risk — it is paid only lip-service by the court.
  • In this case, this court eschews all deference, a particularly striking choice in the face of a very close case and a district court whose diligent and intelligent process and resolution earned more respect than it received. . . . [T]his case . . . certainly makes any protestations of deference in fact sound rather hollow.

This dissent is likely indicative of the approach Rader will take in the Phillips v. AWH rehearing.

Settlement Agreement Requiring Royalty Payments as a Condition for Dismissal is Not Appealable Until Payments Are Made

Silicon Image v. Genesis Microchip (Fed. Cir. 2005).

Silicon sued Genesis for infringement of its patents on video display technology. After a Markman hearing, the parties represented to the district court that they had reached an agreement to settle the action.

The district court then entered an order, enforcing the agreement and ordering Silicon to certify that it had received a royalty payment as a precondition to the dismissal of the infringement action.

Genesis disagreed with the district court’s interpretation of the agreement and appealed.

On appeal, however, the Federal Circuit determined that the court order, despite being so titled, was not a final judgment.  Thus, the appellate court lacked jurisdiction to hear the appeal.

The final judgment rule cannot be satisfied by stipulation of the parties. Regardless of whether a case is resolved by being fully adjudicated on its merits or by a settlement between the parties, the final judgment rule remains a precursor to an appeal as of right before this court. . . In order to satisfy this requirement, the trial court must dismiss, with or without prejudice, all of the claims as a predicate to a final judgment before appellate jurisdiction may lie to challenge any matter relating to the settlement. . . .

Genesis’s payment and Silicon’s stipulation to the court that it had received such payment are conditions precedent to dismissal of the underlying infringement claims. The conditions precedent were never satisfied. As a result, the underlying claims were never dismissed. 

Case Dismissed for Lack of Jurisdiction. 

 

Battle over Pet Food: Mars wins at district court

Mars filed a patent infringement suit against Del Monte, alleging infringement on its patented pet food. (U.S. Patent 6,312,746)(A dual texture animal food product with a soft inner component surrounded by a harder, more rigid shell). After a Markman hearing, the district court issued summary judgment of noninfringement to Del Monte.  On appeal, the Federal Circuit reversed.  In the Mars appellate decision, the appellate court modified the claim construction and remanded.

Now, based on the new claim construction, the California district court has decided the case in favor of Mars.  The trial moves to a damages phase next month.  According to Teresa F. Lindeman at the Pittsburgh Post-Gazette,

A jury trial has been ordered next month to determine whether Mars will get $2.3 million in compensatory damages, plus additional damages for willful infringement and a permanent injunction to stop Del Monte from making the so-called dual-textured products.

Mars’s affected products include Pounce Purr-fections and Meaty Bones Savory Bites.  An appeal is expected.

Avoiding Loss of Intellectual Property Rights During Government Contracting

The Federal Acquisition Regulation (FAR) provides a uniform policy for acquisition of supplies and services by U.S. federal government agencies.  The FAR is is like the tax code in that carelessness is dangerous.  One common point of carelessness concerns intellectual property rights.  Companies have inadvertently given the government licenses in source code and inventions because they did not conduct their business in accordance with the regulations.  In a recent presentation, Robert Cogan of Nath & Associates laid out several important points on the topic. [PPT].

The most common avoidable consequences of failing to follow the FAR include:

  • Having your proprietary notices on technical proposals ignored so that the government may publish them without violation of statute;
  • Inadvertently granting the government a license in an invention or in computer source code or object code; and
  • Allowing the government to procure products from competitors using your technical information.

Although it is important to maintain a good relationship with contracting officers, it is your responsibility to ‘say no’ to contract clauses that would result in a loss of your intellectual property.

Patents & Antitrust: Rebuttable Presumption of Market Power Arises From the Possession of a Patent Used in an Explicit Tying Agreement

Independent Ink v. Illinois Tool Works (Fed. Cir. 2005).

by Deana Larkin

Trident, a wholly-owned subsidiary of Illinois Tool Works, is a manufacturer of printheads and owns U.S. Patent No. 5,343,226 covering the technology.  The ‘226 patent discloses an ink jet device and a supply system with a hand actuated peristaltic pump.  Trident also manufactures ink for use with the patented printheads.  Although the ink is not protected by any of Trident’s patents, their standard license agreements grant the right to “manufacture, use and sell… ink jet printing devices…” to other printer manufacturers only “when used in combination with ink and ink supply systems supplied by Trident.” 

Independent Ink also manufactures ink useable in Trident’s patented printheads.  Independent filed suit in the Central District of California against Trident and Illinois Tool Works alleging, among other things, an illegal tying arrangement in violation of section 1 of the Sherman Act.  The district court, however, dismissed the case on summary judgment. 

On appeal, the Federal Circuit reverses and remands the district court’s grant of summary judgment in favor of Trident on the tying claim. 

According to the Appellate Court, Trident’s licenses are “explicit tying agreement[s]” because the sale of a patented product is conditioned on the sale of an unpatented one.  Although the district court required affirmative proof of market power from the plaintiff, the Federal Circuit reiterated that the Supreme Court has clearly established a presumption of market power unique to patent and copyright tying cases, it holds that this presumption is rebuttable. 

“Once the plaintiff establishes a patent tying agreement, it is the defendant’s burden to rebut the presumption of market power and consequent illegality that arises from patent tying.” 

Rebuttal evidence requires expert testimony or “credible economic evidence of the cross-elasticity of demand, the area of effective competition, or other evidence of lack of market power.” 

Furthermore, the Court admonishes the district court for not following clearly established Supreme Court precedent and for dismissing the High Court’s holdings as “vintage.”  Commenting that it may be time to abandon the doctrine, a significant portion of the opinion emphasizes that it is up to the Supreme Court or Congress to expressly overrule its own precedent — this prerogative does not lie with the district courts.

Note: Deana Larkin is an attorney at the law firm McDonnell Boehnen Hulbert & Berghoff LLP in Chicago with a background in biotechnology.  Ms. Larkin received a PhD in biochemistry from the University of Houston where her research concerned RNA-Protein interactions. [Brief Bio]

District Court Erred in Dismissing Case without Allowing Discovery on Personal Jurisdiction Issues

Screenshot030

Commissariat a L’Energie Atomique (CEA) v. Chi Mei OptoElectronics (CMO) (Fed. Cir. 2005).

Plaintiff CEA is a French governmental agency that develops new technologies for sale and license to the private sector for commercial use. One such technology is their design for liquid crystal display (LCD) technology used for flat panel monitors.

Defendant CMO is a Taiwanese company and is one of the largest manufacturers of LCD monitors in the world.  CMO serves as an original equipment manufacturer (OEM) for Dell and other companies.

Early on in the litigation, the Delaware district court dismissed CEA’s suit for lack of personal jurisdiction over CMO.  On appeal, the Federal Circuit vacated the dismissal.

Specifically, the appellate panel found that the trial court had erred in denying CEA’s request for discovery on the issue of personal jurisdiction.  According to the Court, CEA had established at least a prima facie case that the court had personal jurisdiction over the Defendant — and thus should be entitled to further discovery.

Indeed, CEA has gone beyond factual allegations, and has already made a prima facie case for CMO’s use of an established distribution network that likely results in substantial sales of its products in Delaware. As we have discussed, this showing likely satisfies the standard set forth by Justice Brennan in Asahi, of the "regular and anticipated flow of products from manufacture to distribution to retail sale."  However, CEA is entitled to jurisdictional discovery to determine whether it can satisfy Justice O’Connor’s more restrictive version of the stream of commerce theory.

VACATED AND REMANDED

NOTE: This is the second case in a row where the Federal Circuit has reversed findings of no personal jurisdiction. The last case was Pedre Promotional.

Phillips v. AWH: Patent Examiners Do Rely on Dictionaries

An e-mail from a UK patent examiner prompted me to reconsider the U.S. Government’s brief in the Phillips v. AWH rehearing.

For those who have not followed this case, the Federal Circuit has decided to rehear the Phillips v. AWH in order to determine the proper method of construing claim language of a patent.  The two major theories of claim interpretation involve (i) the use of dictionaries and (ii) the use of the patent documents filed by the inventor.

The government brief argues that dictionaries should not be a primary reference for claim construction, in part because dictionaries are not used by examiners during prosecutionThis assertion by the government certainly overstates the facts.  When an examiner starts at the PTO, they are given a copy of Webster’s.  Examiners also regularly use www.Dictionary.com to find various definitions for terms.  While it is true that the Examiner rarely explicitly relies on a dictionary in an office action, the definition of terms is always in the background.  For instance, examiners often use the dictionary to examine the clarity of the claims and as a way to asses the scope of terms used in the application.

Although this discrepancy was not raised in any of the briefs, it may come up in oral arguments slated for Tuesday, February 8, 2004. 

UPDATE I: L&C Law Professor Joseph Miller, in his recent article on the role of dictionaries, has noted that ‘[w]e know anecdotally that examiners sometimes cite and quote dictionary definitions in their interactions with patent applicants.’  Manuscript page 50.  Miller and his co-author James Hilsenteger cite Cordis v. Medtronics, 339 F.3d 1352, 1359 (Fed. Cir. 2003), as a case where the examiner used the definition of the claim word ‘slots’ from Webster’s Ninth New Collegiate Dictionary to help explain to the applicant how a prior art reference showed the claimed structure. 

UPDATE II: I received a comment from a former USPTO primary examiner who made several points:

  • The example cited in Professor Miller’s article of an examiner citing a dictionary definition in an office action is the exception rather than the rule. 
  • The Office did not emphasize the use of dictionaries to assign meaning during training. (although dictionaries may have been mentioned in training sessions as ‘available sources for determining the meaning of a claim term’)
  • Rather, examiners are primarily taught to give each claim term its "broadest reasonable meaning." 
  • "The examination process is so fast-paced that I believe examiners do not use any formal methodology when construing claims. Instead, an examiner relies more on intuition, on what a word or phrase means to him or her.  If a word is foreign to an examiner, he or she would likely consult a dictionary, but only to get a "feel" for the word. 

Field Reporter Needed: I am not going to be able to attend the Phillips v. AWH rehearing, but I would like to post an article on the oral arguments written by an attending patent attorney.  Let me know if you would like to write a brief article (<750 words) on the topic for the Patently-O Blog. (We operate on same-day service, so you would need to write it within a couple of hours after hearing the arguments).  You’ll get some good publicity — we have a fairly wide circulation with over 10,000 hits each week from people working in the patent field. (crouch@mbhb.com).  Also, I would like to post an .mp3 file of the oral arguments if anyone would be willing to get the set of tapes from the clerk and convert them.

Five Things Corporate Counsel Need to Know About Patents

A new article that is available online at Law.com discusses the Five Things Corporate Counsel Need to Know About Patents by Stephen Nipper, an Idaho based patent attorney.  The article is available here, but I have written a condensed version of Stephen’s list with my condensed answers.

1. WHAT IS PATENTABLE?

A. Essentially anything made by man that has not been done before (novel) and would not have been obvious to someone working in the technological area.

2. WHO CAN BE AN INVENTOR?

A. Everyone who makes a ‘patentable contribution’ to the invention.

3. WHO OWNS THE PATENT?

A. The inventor unless there is a duty to assign the patent to the company.  It is best to get this in the employment contract.

4. WHAT CAN WE FIND OUT ABOUT OUR COMPETITORS’ PATENTS AND PATENT APPLICATIONS?

The Patent Office publishes issued patents and patent applications online at its website (www.uspto.gov).  You can search by assignee to find patents owned by competitors.

5. WHAT IS THE IMPACT OF MY COMPANY’S EXPANSION ON OUR PATENT PORTFOLIO?

If your company dramatically increases the number of employees, you will be required to pay a "big entity" fee rather than a "small entity" fee.  Essentially big companies pay twice as much in fees to the Patent Office as compared to small companies and individual inventors. Failing to pay the correct fee may result in a loss of patent rights.

Thanks to David Orange for the link.

UPDATES from Other Blogs:

Melody Wirtz at PHOSITA thinks the title should be "Five Things Corporate Counsel or Anyone Associated With the Upper Echelons of a Corporation Needs to Know About Patents."

Matt Buchanan at Promote the Progress notes that this is information that all corporate counsel should know about patents — a great primer for the “jack of all trades” attorney not familiar with patent practice.

Bill Heinze at IP/Updates outlines Mr. Nippers qualifications for writing the article — Author of the InventBlog.

Proposed Amendment to Section 271 of the Patent Act

Last week, I wrote the Federal Circuit should re-hear the BlackBerry Case (RIM v. NTP).  Today, I propose a simple legislative change to move the debate concerning extra-territorial application of U.S. Patent laws to the legislature.

Section 271(a) of the patent act currently provides a definition of infringement.

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

Generally, in order show that a patent is infringed, the plaintiff must prove that the defendant (or his agent) performed each element of the claimed invention.  In this case, RIM was found liable for infringement for using a patented method.  However, as the diagram shows, RIM performs an element of its infringing activity in Canada. 

From my point of view, RIM should not be held liable for patent infringement because a portion of the patented method was performed on foreign soil, and the statute requires that the use take place within the united states.  The Court, however, read an exception into the statute — that internationally performed elements of the invention did not defeat an infringement charge so long as the "control and beneficial use" of the infringing system was within the United States. 

Rather than legislating from the bench, I would propose the following draft amendment that incorporates the rule created by the court in RIM. 

Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority uses any patented invention, under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the preponderance of components of the invention are within the United States.

Does anyone have anything against my proposed legislation?

Update I: I have received several excellent comments on the proposed legislation. 

(i) A major issue is the "preponderance" language that requires a preponderance of components to be located within the United States.  This arises from the RIM v. NTP case where the court, in finding infringement, included as a factor that only one or two of the components of RIM’s system were located outside of the United States.  Preponderance is a little vague and subject to too much interpretation — so we need a better word.

(ii) Initially, I only included the "use" of a patented invention within the statute.  However, a reader asked that this be extended to include making and selling.  I agree that these actions should be included as well.

(iii) A colleague pointed out that the statute should be more clearly written to indicate that it is the patented invention that is under the control and beneficial use of persons in the U.S. 

Here is a new version of the Revised Amendment:

Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses or sells any patented invention, where the patented invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of components of the invention are within the United States.

Update II:

CE Petit added more comments.  Rather than looking at the number of "components" of an invention he suggests looking at the number of elements of a given claim.  "This is particularly relevant when some or all of a claim concerns a process or an intangible. Since ‘elements of claims’ are parseable as a matter of law by the court."

Petit’s version III of the Proposed Amendment to 35 U.S.C. Section 271(j) looks like this:

New Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of the elements of an otherwise infringed claim of the invention are within the United States.

I wonder what our blogging legislative guru has to say on this issue?

Update III: A couple of clients contacted me directly with more ideas and edits for the proposed legislation.  Our newly edited version is here, with changes underlined

271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of entities or persons within the United States, shall be liable as an infringer so long as either (i) at least one key claimed element is within the United States or (ii) at least one key claimed step takes place within the United States.
271(j) Definitions: A Key Claimed Element or Step is one that if missing, makes the invention inoperable, or that makes the claim patentable in view of cited prior art.

Let me know if you think that we should include other changes.  Either leave a comment below or e-mail me (crouch@mbhb.com).

Update IV: The real trick here is, as Ken Hobday correctly pointed out, eliminating the potential for a company to set up computer servers in some foreign land, practicing claimed methods using those servers, and then simply providing a point of access through the internet to U.S. customers.  Any proposed legislation should be carefully examined to ensure that we capture this type of activity as infringement of U.S. patents. I’m not sure that the draft proposal is there yet.

Update V: Matt Buchanan made the point that we may be getting off-track.  He has a solution that is directly related to the "extra-territorial server farm" problem.

Matt’s Proposal — 271(j): Whoever without authority makes, uses, or sells any patented invention by providing persons located in the United States electronic access to a process performed by an extraterritorial computer shall be liable as an infringer notwithstanding the extraterritorial location of the computer so long as the provision of electronic access and the performance of the process is required by the claim at issue.

Pfizer Wins Zoloft® Patent Dispute: Orange Book Listing Does Not Create Reasonable Apprehension of Lawsuit

Teva Pharmaceuticals v. Pfizer (Fed. Cir. January 21, 2005).

Pfizer holds two patents relating to Zoloft®.  Teva is a manufacturer of generic drugs and filed an Abbreviated New Drug Application (ANDA), seeking approval from the FDA to market a generic version of sertraline hydrochloride (Zoloft®). 

Under the provisions of the Hatch-Waxman Act, Pfizer had 45-days to sue Teva for patent infringement based on Teva’s ANDA filings.  However, Pfizer did not sue.  Teva then brought a declaratory judgment action against Pfizer, seeking a determination that its generic drug did not infringe Pfizer’s patent. 

The district court (D.Mass.) dismissed Teva’s suit for lack of jurisdiction for failing to establish an actual controversy under the Declaratory Judgment Act.

The district court applied the two-part test formulated by this court to determine whether an actual controversy exists in a patent infringement suit. Under that test, there must be both (1) an explicit threat or other action by the patentee which creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff which could constitute infringement, or concrete steps taken by the declaratory judgment plaintiff with the intent to conduct such activity. See Amana Refrigeration, Inc v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999). The district court determined that Teva had satisfied the second prong of the test by filing its ANDA for generic sertraline hydrochloride. However, the court concluded that Teva had failed to satisfy the “reasonable apprehension” prong of the test.

On appeal, Teva argued that the district court erred when it determined that Pfizer had not created a reasonable apprehension that it would bring suit against Teva for infringement of the patent.  In its apprehension argument, Teva primarily relied on the facts that Pfizer placed the patent in the Orange Book.   However, the Federal Circuit determined that “Teva’s reliance on Pfizer’s listing of the ’699 patent in the Orange Book is misplaced.

The listing of a patent in the Orange Book by an NDA filer is the result of a statutory requirement. Without more, Pfizer’s compliance with the Hatch-Waxman listing requirement should not be construed as a blanket threat to potential infringers as far as Pfizer’s patent enforcement intentions are concerned. . . . More is required for an actual controversy than the existence of an adversely held patent. . . . We are not prepared to hold that listing a patent in the Orange Book evinces an intent to sue any ANDA filer who submits a paragraph IV certification with respect to the patent.

Dismissal Affirmed.

In a spirited dissent, Judge Mayer argued that the filing of an NDA application combined with listing of the patents in the Orange Book does give rise to a reasonable apprehension that an Abbreviated New Drug Application (ANDA) filer and declaratory judgment plaintiff will face a patent infringement suit.

Patent Attorney Invents Device then Sues Ford Motor Company for Patent Infringement

Ford MyColor Patent

The Chicago Tribune has reported on a patent infringement action by an individual inventor, Frank Weyer, against Ford Motor Company.  In the suit, Weyer accuses Ford of infringing his patent that covers a "user selectable multi-color automobile instrument panel illumination."  (Patent No. 5,975,728).

Ford’s new 2005 Mustang includes a MyColor feature that reportedly infringes.

Weyer says he has spoken to Ford’s attorneys about this. "I told them that all that I was seeking was a very reasonable royalty for their use of the patent," he says. "All that Ford has done so far is ask for more time to answer the complaint."

Of note, in addition to being an inventor, Weyer is a patent attorney with an office in Beverly Hills, California.  In an earlier lawsuit, Weyer sued Network Solutions and Register.com for violating their patent on the selection of an e-mail address based on a domain name. www.whois.sc/news/2004-01/registrars-sued.html.  He also spent time working for the Peace Corps.

I hope that the case ends quickly because I really like the new Mustang!

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Patent Board Codifies Two-Way Test for Interference, Streamlines Process.

In September 2004, the Patent Office (USPTO) amended its regulations regarding practice before the Board of Patent Appeals and Interferences. One substantive change in the rules codifies the “two-way” test for determining whether subject matter is interfering.  Under the two-way test, “An interference exists if the subject matter of a claim of one party would, if prior art, have anticipated or rendered obvious the subject matter of a claim of the opposing party and vice versa.”  Thus, the interference requires that each invention obviate the other.  A second substantive change involves “threshold issues” that provide a “quick” way to end an interference.  According to the new rules, a threshold issue is “an issue that, if resolved in favor of the movant, would deprive the opponent of standing in the interference.”  These threshold issues include (i) no interference-in-fact; (ii) a bar to interference under 35 U.S.C. 135(b) (e.g., application published more than one year prior); or (iii) a lack of written description to suggest the interference.

The net effect of these changes is expected to reduce the number of provoked interferences. The BPAI is expected to hear motions on the threshold issues prior to getting into the meat of the interference.

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Federal Circuit: Corroboration of Evidence Needed to Prove Patent Invalidity

Rosco, Inc. v. Mirror Lite Company (Fed. Cir. 2005).

by Joseph Herndon

Rosco and Mirror Lite are competitors in the school bus mirror market.  Rosco sought a declaratory judgment that Mirror Lite’s mirror patent was invalid, and Mirror Lite counterclaimed for infringement of the patent.

Rosco argued that prior to the date of invention, it conceived, reduced to practice, and sold mirrors as in the patent, thus rendering the patent invalid under 35 U.S.C § 102(a) (e.g., known or used by others).  The trial court held the patent invalid.  However, on appeal, the Fed. Cir. found that testimonial evidence of invalidity must be corroborated.

Weight of the Evidence: The trial court relied upon two pieces of evidence, other than Rosco’s testimony, to find that Exhibit 110, an example of the alleged prior art mirror, disclosed a decreasing radius of curvature as in the patent: testimony of Rosco’s patent expert (indicating that Rosco demonstrated to him Exhibit 110’s decreasing radius of curvature), and the court’s own inspection of the mirror.  The Fed. Cir. held that none of this evidence provided sufficient corroboration that Exhibit 110 had a decreasing radius of curvature because both the district court and the patent expert were not skilled in the mirror arts.  Thus, the Fed. Cir. found no basis for a finding of invalidity.

Inequitable Conduct: On the issue of inequitable conduct, the trial court held that Mirror Lite intended to mislead the examiner by failing to disclose Trial Exhibit EC, a prior art oval Mirror Lite mirror that existed more than one year prior to the patent’s priority date.  However, the Fed. Cir. held that “[a]n applicant’s conduct in its entirety must ‘manifest a sufficiently culpable state of mind to warrant a determination that it was inequitable.’” The Exhibit was not so undisputedly material that intent could be inferred from materiality. Thus, there must be other evidence supporting a finding of intent. The district court found that Mirror Lite’s use of terms inconsistently in other patents having the same inventor suggested the requisite intent. The Fed. Cir. held that use of terms inconsistently (one way in the earlier patents and one way in testimony) does not render testimony deceptive, given admission in the testimony that terms could have two meanings. Thus, the Fed. Cir. reversed the judgment of inequitable conduct.

The case was remanded for further proceedings solely on the issue of infringement.

Joseph Herndon is a law clerk and at MBHB and is a registered patent agent.  Joe has a stellar background in electrical engineering and will graduate from law school this year. herndon@mbhb.com.

Sale of product through an intermediary can create personal jurisdiction for patent infringement.

Trintec v. Pedre Promotional Products (Fed. Cir. 2005).

Trintec sued Pedre for patent infringement in the District of Columbia accusing Pedre of violating Trintec’s patents on automation of printed faces for use in clocks and watches.  Pedre moved to dismiss for lack of personal jurisdiction and improper venue.  Pedre attached a declaration attesting that its sole office and place of business was in NY and that it has no facilities or representatives in Washington D.C.  The district court granted Pedre’s motion and dismissed the complaint based on a lack of personal jurisdiction.

On appeal, the Federal Circuit reviewed the details of general and specific jurisdiction:

“Specific jurisdiction ‘arises out of’ or ‘relates to’ the cause of action even if those contacts are ‘isolated and sporadic.’ . . . General jurisdiction arises when a defendant maintains ‘continuous and systematic’ contacts with the forum state even when the cause of action has no relation to those contacts.

The appellate court also noted that they were "left totally in the dark about the reasons for the district court’s action.  The panel then vacated the dismissal, finding that jurisdiction could be established under D.C.’s long-arm statute if Pedre’s products were sold in DC. (The sale creating a tort).

Interestingly the court discussed the extent that Pedre’s interactive website would create jurisdiction — however, in the end, they expressly decided not to decide that issue. (because it was moot).

The case was remanded for a further exploration of factual issues to determine whether jurisdiction does exist.

Pharmaceutical Patent Extension in Exchange for Promise of Cheaper Generics?

Everyone in America realizes that we are approaching a health-care crisis.  Costs are increasing and many are un-insured.  My daughter was born two months ago in an uncomplicated delivery with no anesthesia, and not even an OB/GYN (we used a Registered Midwife).  The total cost will be over $30,000. Luckily we do have insurance.

[Article Link] In the Chicago Tribune, Dr. Henry Black gets into ten ways to fix our health-care system.  Dr. Black is chair of the department of preventive medicine at Rush University Medical Center in Chicago, and is well regarded in the field.  Interestingly for Patently-O readers, number nine on Dr. Black’s list is to "extend the patent life of pharmaceutical drugs." 

Generally, patented items are more expensive — that is the premium that the patent holder is able to extract.  This is essentially a reward to companies who advance the state of technology.  So, extending patent life would normally result in extending higher prices.  In Dr. Black’s plan, however, the government could offer a patent extension to pharmaceutical companies in return for them reducing the price of the drug by 50 percent when its patent life expires. 

According to Dr. Black: If the pharmaceutical industry could count on their successful products being protected longer, they could turn their attention to real advances. Rather than the shortsighted approach of importing cheaper branded drugs into America, we should devise ways to make our branded drugs cost less.

Interesting Proposal.

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