October 2008

Patently-O Bits and Bytes: Judge Lourie on the Federal Circuit

Bits and Bytes, Patent
  • Federal Circuit Judge Lourie recently discussed the state of the court. Here are some points [LINK]:
    • 11.3 Months: Time from docketing to disposition of district court [patent] appeals in the past year.
    • 2.1 Months: Time from calendaring to disposition of the same cases.
      • Note: It is unclear from Judge Lourie’s speech if the times are averages or medians. The court has made great strides in keeping the average and median pendency quite low. There are however, a group of outliers with much longer pendency. The outliers are, for the most part, associated with a couple of particular Federal Circuit judges.
    • 50-mile rule: “On this issue of district court judges sitting with us, some recent patent bills have proposed to eliminate the current statutory requirement that judges on our court live within a 50-mile radius of the district. In my view, no persuasive reason has been given for that change. I believe it would be contrary to the best interest of the court and its functioning, and hence the law”
    • PTO Discussion: “No doubt an overcrowded examination system that places quotas on examiners plays a role in our less-than-perfect examination system.”
    • Pro Patent Court: “Since I have been on the court, over 18 years, not once have we [as a court] had a discussion as to what direction the law should take, whether we should be pro-patent or not. That is because we are not a policy-making body. We have just applied the law and precedent as best we could determine it to the cases that have come before us. In fact, we have been criticized for, in the view of some people, narrowing the doctrine of equivalents, emphasizing the need for a written description commensurate with the claims, and affirming summary judgments of non-infringement that in effect preclude juries from deciding these cases.”
    • Appellate Advice:
      • Make sure your case is final before filing the appeal
      • Cross appeals are only for the purpose of challenging the decision (not for arguing that the decision is correct)
      • Don’t allege that “every business fact is super-confidential. It makes it difficult for us to ask questions from the bench and write an opinion.”
    • Limit the issues: “Having more than three issues in a brief suggests to us that you don’t have a strong appeal.”

No Personal Jurisdiction for Patent Case Against Sprint Nextel

Jurisdiction, Patent, Patent Cases 2008

Datascape v. Sprint Nextel (N.D. GA, 2008)

Datascape sued Sprint Nextel for infringement of its patents covering a system for linking non-standard devices to an open network.

In an interesting holding, the Federal district court in Georgia held it lacks personal jurisdiction over Sprint Nextel. It turns out that – despite indications from its website – Sprint Nextel is simply a holding company that holds stock in operating companies.

Based on the evidence presented in this case, the Court is unable to find that Sprint Nextel has contacts with the State of Georgia sufficient to confer either general or specific jurisdiction over Sprint Nextel. Moreover, as to the analysis for specific jurisdiction, in particular, the Court is unable to find, as required by Supreme Court and Federal Circuit law, that Sprint Nextel purposefully directed its activities at the State of Georgia or that the assertion of personal jurisdiction would be reasonable and fair. operating activity of Sprint Nextel, according to Mr. Andreasen, is a telephone refurbishing business in Kansas. Sprint Nextel denies manufacturing, using, selling, importing, and/or offering for sale products or services related to wireless products

Patently-O Bits and Bytes No. 68: People in the News

Bits and Bytes, Conference or CLE, Patent

IP Law Hall of Fame New Inductees (Sponsored by IAM) [LINK]:

  • Jane Ginsburg – Columbia Law Professor; written extensively on the intereconnection between copyright and trademark law.
  • Francis Gurry – New Director-General of the World Intellectual Property Organisation (WIPO)
  • Dolores Hanna – Retired partner from Bell Boyd & Lloyd. Former head of INTA, IPLAC, WBA of Illinois, etc.
  • Michael Kirk — Recently retired Executive Director of the American Intellectual Property Association.
  • Niels Reimers – Former director of Stanford University’s Office of Technology Licensing. Founder of AUTM.

New IPO Board Members:

  • Wayne Sobon (Accenture)
  • Roger Gobrogge (Dow Corning)
  • Michelle Lee (Google)
  • George Johnston (Hoffman-La Roche)

Washington University:

  • Tonight WashU will host the VP debate
  • On Friday, October 10, I will be speaking at WashU law school to a much smaller crowd. (3:00 – 4:00pm) The topic trademak law and the protection of designs. I believe that CLE credit is being arranged for the free event. [LINK]

Sensitivity to USPTO Fees

Academic Studies, Articles and Publications, Patent

The graph below shows the average number of claims filed with each patent application. I used as my sample 400,000+ original published patent applications. “Original” means that these applications do not claim priority back to an earlier filing. The trend leading up to late 2004 was a very slight (but statistically significant) rise in the total number of claims being filed. Then, in late 2004, we see a sudden drop. Over a one-month time period, the average number of claims dropped from about twenty six claims per application to about twenty two claims per application.

The simple explanation for that change is that the Patent Office dramatically increased its prosecution fees. Instead of charging $18 for each additional claim (over 20), applicants who filed on or after December 8, 2004 were required to pay $50 per additional claim. At the same time, independent claim fees were also more than doubled from $86 per additional independent claim to $200. The PTO also began charging a hefty fee for patent applications that were exceedingly long. All these forces came together to give applicants a clear incentive to forgo potential claim scope in favor of reducing the up-front fees. Since January 2004, the number of claims has continued to fall slightly (but significantly).

This change is good. Applicants will tend to drop red-herring and worthless claims. That in-turn will hopefully lead to tighter prosecution times and more clarity of claim scope.

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • Like everyone else, patent attorneys like to clean their desks for the weekend and are less productive on Mondays. The chart to the right shows the percentage of patent of patent applications filed on each day of the week. (My data is from a sample of 1.4 million published patent applications filed 1999 to 2007). With the advent of electronic filing, patent attorneys are now able to file on Sunday. For published applications filed in 2007 about 1 out of every 250 was filed on a Sunday. (0.41%).
  • Patent Reform Act: Senator Kyl has introduced S.3600.
  • Hal Wegner Reports:
    • No pay raise for judges this year
    • PTO Budget: $2.1 billion
    • Six supreme court petitions may be decided within a week:
      • Nuijten (patentability of a signal)
      • Translogic (constitutionality of BPAI appointments)
      • Echostar (expert issues)
      • Monsanto (patentability of seeds)
      • IR v. IXYS (timing of appeals)
      • Samsung v. Rambus (sanctions)
  • Biomedical Patent Management Corp. v. California Dept. of Health Services (state immunity) is still awaiting the views of the Administration.
  • Can someone explain the various curves and bumps from the graph below?

Shaping Nuanced Patent Injunctions: Broadcom v. Qualcomm

Injunctions, Patent, Patent Cases 2008,

Broadcom v. Qualcomm (Fed. Cir. 2008) [Part II]

On appeal, the Federal Circuit affirmed the permanent injunction against Qualcomm – finding that the district court acted within its equitable discretion and properly followed the injunctive relief guidelines set forth by the Supreme Court in eBay v. MercExchange (2006).

Although recognizing the importance of its eventual decision, the Federal Circuit again refrained from determining whether a finding that a patent has been infringed should serve as presumptive evidence of irreparable harm.

“It remains an open question ‘whether there remains a rebuttable presumption of irreparable harm following eBay.'” Quoting Amado (Fed. Cir. 2008)

Irreparable Harm: The patentee Broadcom is a non-practicing entity in the sense that it does not make or sell the invention claimed in the asserted patents. The patentee does, however, compete indirectly with Qualcomm by making an alternative chipset. Here, the Federal Circuit agreed that eBay does not allow a general rule that would prevent a non-practicing from obtaining injunctive relief and that in this Broadcom had been able to show the potential for irreparable harm.

“Broadcom provided evidence of irreparable harm, despite the fact that it does not currently practice the claimed inventions. This result is consistent with eBay, in which the Supreme Court cautioned that ‘traditional equitable principles do not permit such broad classifications’ as presuming that a patentee cannot establish irreparable harm based on a patentee’s ‘willingness to license its patents’ or ‘its commercial activity in practicing the patents.'”

Adequate Remedy at Law: Broadcom had licensed its patents Verizon. A license can theoretically show that monetary damages are adequate. However, the particular market situation is important for that determination. In this case the Verizon license is a vertical license while a license to Qualcomm would be a horizontal license. Thus, the court agreed that “the Verizon license has little bearing on the effect of a compulsory license to a direct competitor.”

Hardships and Public Interest: The district court created the injunction order with a “sunset provision.” Under the plan, Qualcomm may continue infringing for twenty-months while paying a compulsory license rate. At the end of those twenty months, the company will be enjoined from further infringement. The delayed nature of the injunction consequently removed any notion that the a balance of hardships or the public interest would favor the adjudged infringer because it gives plenty of time to redesign and redeploy to customers without any interruption of service.

This decision is insightful in how it moves the proper focus from whether an injunction should issue to the more nuanced issues of how to shape the injunction in a way that best serves the public interest while still protecting property rights. One problem with complex injunctions and ongoing compulsory licenses is that the district court must continue to monitor and make judgments on the situation. In this case the district court recently found Qualcomm in contempt for failing to pay its ongoing royalties of more than $93 million. As a sanction, the court ordered Qualcomm to pay gross profits – noting that “[w]hile an award of gross profit may overcompensate … it will do so in an amount which bears a direct relationship to the degree of infringement. The more that were sold, the greater the award.”

Notes:

Read more about the case here.