October 2005

How Are Patent Cases Resolved?

Articles and Publications, Patent

An important new working paper by Illinois Professor Jay Kesan and PhD candidate Gwendolyn Ball presents a statistical analysis of the resolution of patent cases.  This type of data can be very useful when planning expected litigation costs and predicting settlement behavior.  The paper, entitled How Are Patent Cases Resolved? An Empirical Examination of the Adjudication and Settlement of Patent Disputes, is available through the SSRN website.

Some findings:

  • The rule of thumb is correct that 5% of cases go to trial. 
  • The rule of thumb that 95% settle is not correct — this ignores the fact that “8–9% of cases are terminated through final rulings on a motion for summary judgment.”  This means that the real battle in most patent cases revolves around establishing a strong position early in the game.
  • The figure below is one of a number of examples from the paper — this one shows the total pendency of cases filed in 1997 that were eventually adjudicated (rather than settled).

Patentlyo012

Caveats

  • Because of the time-lag of patent cases, the authors used 1995 and 1997 data. It is unclear today how things have changed today. Although Professor Kesan reports that they are working on 2000 data, and that anecdotal evidence continues to indicate that summary judgment is as important as ever.
  • The statistical significance of the study is also unclear.

CAFC Denies RIM Rehearing (UPDATE)

Patent, Patent Cases 2005

RIM STOP TRADINGThe big patent news on Friday was that RIM’s petition for a rehearing en banc at the Court of Appeals for the Federal Circuit was denied.  This news was so hot that trading of RIMM on Wall Street was halted for three hours.  (Someone on the Street does not understand odds because the denial was entirely expected.)

RIM has ninety days to file a petition for writ of certiorari with the Supreme Court and line-up any Amicus curiae.  NTP will then have thirty days to respond in opposition.  This time-line easily pushes the Court’s decision on whether to even hear the the case into 2006.  In all likelihood, the Court will decline — thus allowing the case to return to the district court to determine: (1) whether a the “term sheet” was an actual settlement; (2) whether an injunction should issue immediately; and/or (3) how new hearings/trial should proceed on the issues vacated by the August 2005 opinion [pdf]. (see UPDATE below).

In a parallel process, the patents in suit are all undergoing reexamination at the PTO.  Each patent has been initially rejected in a first office action.  However, those initial rejections have yet to be made final.

 UPDATE: I received several comments on my implied conclusion that the district court would not take-on the case until after the Supreme Court came to a conclusion on the petition for cert:

Love your blog. . . . The district court gets jurisdiction back as soon as the Fed Cir mandate issues. . . . The district court can thus act even while RIM is drafting a cert petition and the Supremes are reviewing it.  In most cases, a district court will move forward because the odds of cert are so low.  The district court can, however, stay the case pending Supreme Court review.  If I were NTP, I’d be in Judge Spencer’s face right now pushing for action on this case and telling him that the revised Fed Cir opinion makes Supreme Court review highly unlikely.  If I were RIM, I’d be asking for a stay based on the progress of the re-exams, and I’d be citing the Fed Cir’s stay of the MercExchange case.

 

Case Questioning Patent Injunction Standards Moves Towards Supreme Court

Patent,

MercExchangePatent_small1eBay v. MercExchange (on petition for certiorari).

EBay’s petition for a writ of certiorari had gained further support from a group of patent law professors led by Mark Lemley of Stanford.

In eBay v. MercExchange, the Court of Appeals for the Federal Circuit held that, absent exceptional circumstances, a district court should issue a permanent injunction after finding that a patent is not invalid and infringement.

The amicus brief, signed on behalf of thirty-five of the top patent law professors in the country, argues that the injunction decisions should conform to the traditional principles of of equity and should be reasonable.  These principles of equity are grounded in four equitable factors:

(i) whether the plaintiff would face irreparable injury if the injunction did not issue;
(ii) whether the plaintiff has an adequate remedy at law;
(iii) whether granting the injunction is in the public interest; and
(iv) whether the balance of hardships tips in the plaintiff’s favor.

The professors readily admit that “injunctive relief is the appropriate remedy in ordinary patent cases.”  However, they that the threat of injunctions without considering the equities may lead irreparable harm to the defendant

[A]n absolute entitlement to injunctive relief can and does permit unscrupulous patent owners to “hold up” defendants by threatening to enjoin products that are predominantly noninfringing and in which the defendant has already made significant irreversible investments. . . .

A microprocessor may include 5,000 different inventions, some made by the manufacturer and some licensed from outside.

If a microprocessor maker unknowingly infringes a patent on one of those inventions, the patent owner can threaten to stop the sale of the entire microprocessor until the defendant can retool its entire plant to avoid infringement. Small wonder, then, that patentees regularly settle with companies in the information technology industries for far more money than their inventions are actually worth.

Although not explicitly included in the brief, Professor Lichtman’s consideration of “Irreparable Benefits” might also be an important factor for consideration.

Links:

Disclosing Expected Result as an Actual Result Leads to Unenforceable Patent

Patent

Patentlyo009Novo Nordisk v. Bio-Technology (Fed. Cir. 2005).

The district court held Novo’s patent unenforceable due to inequitable conduct during prosecution.  The patent, covering a synthetic human growth hormone (hGH).

Inequitable conduct was based on:

  • The wording of a prophetic example in the past tense — thus hiding the fact that the example was merely a prediction.  
  • The fact that during the nine years of prosecution, Novo never alerted the PTO to the prophetic example — especially in light of the fact that Novo was never able to produce hGH using the described methodology.
  • During interference, Novo failed to inform the BPAI that it was unable to produce hGH using the described methodology — even though it presented extensive expert testimony regarding use of the methodology.

On appeal, the CAFC affirmed, finding no “clear error” in the district court’s decision.  In addition, the CAFC rejected Novo’s argument that its attorneys should not be charged with inequitable conduct because the inventors had not fully informed the attorneys.

At the same time, Novo asks us to hold that its counsel’s failure to disclose the truth about Example 1 to the PTO or Board is excused because the inventors failed to fully inform them of the details surrounding Example 1. As we have done in similar situations in the past, we reject the “circular logic” of this request.

 

CAFC applies Pfaff case to public use defense.

Patent

Invitrogen v. Biocrest (Fed. Cir. 2005)

Invitrogen sued several defendants for infringement of its patent that broadly covers a method of growing E.coli cells.  On summary judgment, the district court found Invitrogen’s patent invalid under the public use bar of 35 U.S.C. § 102(b).  102(b) codifies a “critical date” of one year before filing of the patent application (or priority document).  Public use or sale of the invention before the critical date will invalidate the patent.

Invitrogen had used the claimed process before the critical date, within its own laboratories.  However, the process was kept confidential within the company, the process was not sold, and no products of the process were sold.

Rule: On appeal, the CAFC first determined that the Supreme Court’s analysis in Pfaff should be extended to cover public use — noting that both the public use and on sale bars are “based on the same policy considerations.  Under the new rule, a patent will be invalid if it is (1) in public use and (2) ready for patenting before the critical date. (Explicitly rejecting the old ‘totality of the circumstances’ test).

Public Use: “The proper test for the public use prong of the § 102(b) statutory bar is whether the purported use: (1) was accessible to the public; or (2) was commercially exploited.” In this case, because there was no evidence that Invitrogen received compensation for internally, and secretly, exploiting its cells, Invitrogen’s use cannot constitute “public use.”

File Attachment: Invitrogen.pdf (78 KB)

 

Single Embodiment Of Claim Element Fails To Describe Element Generically

Patent, Patent Cases 2005,

Patentlyo007LizardTech v. Earth Resource Mapping (Fed. Cir. 2005).

On summary judgment, the district court deemed LizardTech’s patent invalid for failing to meet the written description requirement of 35 USC 112 para 1.  The asserted patents were related to the use of discrete wavelet transform (DWT) to compress digital images.

The specification provides an example method for creating a seamless DWT including the step of “maintain[ing] updated sums” — that procedure is the focus of claim 1.  Claim 21, however, is a broader claim that lacks the “maintains updated sums” limitation.  The specification did not explicitly describe a method that did not include that limitation. (Although claim 21 was included in the original disclosure)

On appeal, the CAFC paid lip service to the rule that a claim will not be invalidated under Section 112 for only disclosing a single embodiment.  However, the court went on to determine that claim 21 was directed at “all seamless DWT’s” — a coverage not adequately supported by the single embodiment.

After reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by “maintaining updating sums of DWT coefficients.”

[A] patentee cannot always satisfy the requirements of section 112, in supporting expansive claim language, merely by clearly describing one embodiment of the thing claimed.

As noted by David Long, this case is a “must read for those addressing written description (or enablement) issues.

Comments:

  • I see this as a quite odd decision.  First, although claim 21 arguably covers either “seamless DWT” or  “non-seamless DWT,” such a result is explicitly claimed.  The CAFC did not point to any element of claim 21 that was not sufficiently described.  Rather, the court found the claim invalid because an an embodiment arguably covered by the claim (seamless DWT) was not sufficiently described. 
  • A fellow patent attorney and Patently-O reader e-mailed this morning with a different take:

Section 112 requires that the patentee have both possession of the invention and an enabling disclosure. In this case, the Court found that because the patentee had only described (and apart from claim 21) claimed the one embodiment that required “maintaining updating sums of DWT coefficients” this shows that the method including this element was really the scope of what the patentee considered their invention. That is, the patentee didn’t think they had invented a more generic way of creating a seamless DWT that did not include that element.

The Court went on to say that any such generic method is also not enabled — first because it is not described in the specification and second because it is not within the ability of one of ordinary skill to practice without undue experimentation. As the Court noted, both these requirements usually rise or fall together. The last paragraph of the opinion makes clear, however, that even assuming that patentee had possession of this invention (by virtue of claim 21 being part of the original application) the claim is still not enabled. That is, even if one of ordinary skill in the art read claim 21 and recognized that it covered a generic method of creating a seamless DWT, that person still would not have been able to come up with the generic method (i.e., one not using the updating sums element) without undue experimentation. Therefore, the claim doesn’t satisfy the requirements of 112.

Thus, after this case (and as was the case, no pun intended, before LizardTech) one is free to describe one or more embodiments in the application and draft claims that cover other broader embodiments that are not described in the application. Those broader claims will be valid provided that the patentee had possession of those broader embodiments and the broader embodiments are enabled. Presumably they would be enabled because, even though not described in the application, they would still be within the ability of one of ordinary skill in the art to practice without undue experimentation.

  • The lesson for prosecutors is that broad claims will generally require multiple embodiments of each element. Specifically, if you claim A+B+C+D, do not expect that you can claim A+B+C without adequately disclosing that D is not necessary or that D can take alternative forms.
  • Philip Mann of IP Litigation Law Blog was counsel for LizardTech.

Documents:

Solicitor General to Opine on Landmark Obviousness Case

Patent, Patent Cases 2005

PatentlyOImage025_smallKSR International v. Teleflex (On Petition for Certiorari).

KSR is challenging the Federal Circuit’s “teaching-suggestion-motivation test” for determining whether two references can be combined in an obviousness rejection.  This test has been a stalwart of Federal Circuit jurisprudence for twenty years.  During that time, however, the Supreme Court has not heard a single obviousness case. 

The case is now on petition for certiorari at the Supreme Court — awaiting the High Court’s decision on whether to hear the case.  Signaling at least a tepid interest in the case, on October 3, 2005, the Court has asked the Solicitor General to file a brief expressing the views of the US Government.  The new Chief Justice (Roberts) took no part in the decision.

At this point, it is likely that the Court will follow the Solicitor General’s recommendations — although it is still unclear what those recommendations will be.

Support for the petition: Respected law professor John Duffy is an attorney of record on the KSR brief, which argues that the CAFC’s obviousness test goes against Supreme Court precedent, against precedent of other circuits, and is bad policy. Professor Duffy is a former clerk of Justice Scalia.

A consortium of five major corporations, including Microsoft, Cisco, and Hallmark have filed as amicus supporting the petition.  Their brief argues that the current structured test for obviousness is too easy a hurdle for patentees and that the formalities of the test undermines courts ability to truly determine whether an invention is obvious to one skilled in the art.

Documents:

Links:

CAFC Finds Liability For Export of Catalyst Used in Patented Process Abroad

Patent, Patent Cases 2005

Patentlyo006Union Carbide v. Shell Oil (Fed. Cir. 2005).

A jury found that Shell infringed Union Carbide’s patented process for producing Ethylene Oxide.  However, the court did not allow Union Carbide to collect damages for Shell’s foreign sales under 35 U.S.C. 271(f) because the statute is “not directed to process claims.”

On appeal, the CAFC reversed the district court and reaffirmed the recent Eolas decision that 271(f) is directed to “every component of every form of invention” and that the statute is “not limited to physical machines.”

Thus, the court found that Shell’s exportation of a catalyst used abroad to facilitate the patented process constituted infringement under the law. Remanded for a new determination of damages.

Links:

Means-Plus-Function: Identification of Function and Corresponding Structure Reviewed De Novo

Patent, Patent Cases 2005

JVW Enterprises v. Interact Accessories (Fed. Cir. 2005).

In a case involving a video game controller, the appeals court reversed-in-part, finding that the lower court had misconstrued the means-plus-function limitation.

De Novo: Like other claim construction, the interpretation of means-plus-function language is reviewed de novo.  More particularly, identification of the function and corresponding structure is reviewed de novo.

In this case, the CAFC found that the district court’s opinion “confuses function with structure.”  According to the appellate panel, “function must be determined before corresponding structure can be identified.” 

Function as claimed: The function of a means-plus-function claim is found in the claim language.  In this case, the district court erred in interpreting unclaimed functions into the claims. 

Structure as described: The corresponding structure of a claimed function must be found in the specification — and must be clearly associated with performance of the function.

The CAFC reversed and remanded based on consequences of the err in claim construction.

Patent It Yourself Book Review

Book Review, Patent

PatentItYourself Patent It Yourself
by David Pressman
2005 (11th edition)
Paperback 512 Pages

$32.99 from Amazon.com

Book Review: When I arrived back from two-years of service as a Peace Corps Volunteer in West Africa with the naive idea of becoming a patent attorney, the first book that I purchased was Patent It Yourself.  The book is written in a very optimistic tone and is easy to read.  It sharpened my already keen interest in the field and gave me an opportunity to learn basics of patent law terminology and practical patent application practice.  When I wrote my first patent application, this book was there by my side.  I have to say that Patent It Yourself is still the best introductory resource book that I have seen for an inventor or new patent professionals.

Caveat: This book is an introduction and is missing many important details of the patent application process.  Rely on it to become familiar with the field but do not use it as your treatise or reference guide. ** Finally, despite the title, do not take this book as a replacement for an experienced patent attorney **

Who should read Patent It Yourself:

  • Inventors (regardless of whether you are working with a patent attorney).
  • New patent agents or techies thinking about joining the field.
  • Litigators moving into patent litigation.

About Book Review Monday: This is the first review of what I hope will be a successful series of reviews of patent related books.  The current plan is to release a two or three book review each month (each on a Monday).  Let me know if you are interested in writing a book review. (Send your proposal to crouch@mbhb.com).

Patently-O Tidbits

Patent

1. Official Patent Opinions: The UK patent office has begun a new program offering opinions on patent validity and infringement for issued UK patents — Cost £200. Link.

2. UChicago Law Faculty Blog: Levmore, Picker, Strahilevitz, Strauss, Sunstein, Lichtman.  Posting begins October 3, 2005. Link. (See also, Becker-Posner, Levitt-Dubner).  Like Will, I enjoy being a cheerleader for my alma mater.

3. Advice for Small Companies and Individual Inventors: Write a business plan before thinking about a patent. Link.

4. Be wary of knock-off logo designers. Link.

 

 

Means Plus Function Disavowal of Equivalents?

Patent, Patent Cases 2005

Patentlyo004Cross Medical v. Medtronic (Fed. Cir. 2005).

After an award of summary judgment of infringement, the Central District of California District Court issued a permanent injunction against Medtronic’s use of Cross’s patented spinal implants.  After determining that it had jurisdiction, the CAFC reversed the claim construction and remanded for a new determination of infringement based on the corrected construction.

Jurisdiction: Cross argued that, the injunction had no coercive effect because had Medtronic pulled its products from the market prior to the injunction, and thus, that there was no jurisdiction for an appeal.  The CAFC disagreed, highlighting their clear rule that: “if the district court’s order expressly grants an injunction, the order is appealable under § 1292(a)(1), without regard to whether the appellant is able to demonstrate serious or irreparable consequences.”

Claim Construction: The appellate panel began its claim construction analysis by referring to Webster’s definition of an “interface.” This was permissible under Phillips because the dictionary definition did not “contradict any definition found in or ascertained by a reading of the patent documents. Using the new definition, the CAFC modified the district court’s construction.

Means Plus Function: In an office action, the applicant referred to the claimed “securing means” as “i.e., the nut.”  Despite this reference to the a specific securing structure, the CAFC found that there had been no disavowal of scope in the means plus function element.  In dicta, the court noted that it had not decided whether there could ever be “a disavowal of § 112, ¶ 6 equivalents.”

The court then conducted a thorough analysis of infringement and validity, eventually vacating the summary judgment and remanding for further proceedings.

Download the case.