March 2010

Guest Post: Update To Recent Patent Damages Article

Guest Post By Michael J. Kasdan and Joseph Casino

In our March 3, 2010 article in the Patently-O Law Journal, Federal Courts Closely Scrutinizing and Slashing Damages Awards, we discussed recent shifts in the Federal Circuit’s reasonable royalty jurisprudence and concluded that the recent Cornell, Lucent, and Lansa cases “indicate an emerging trend to more carefully scrutinize the evidentiary and economic basis of reasonable royalty-based patent damages awards in the setting of the appropriate royalty base, the application of the entire market value rule, and the calculation of the appropriate royalty rate.” We also noted that contemplated legislative reforms in the area of patent damages may likewise “seek to put the burden on district court judges to act as ‘gatekeepers’ and to closely scrutinize the evidence that is relied upon to prove patent damages.”

1. Patent Reform Bill

Shortly after our article was published, the U.S. Senate announced a new “compromise” patent reform bill (full text available here), which includes a section addressing patent damages. Whereas prior versions of the patent reform bill which had been considered over the past years had contemplated introducing more specific statutory limitations on patent damages,[1] the current Senate compromise bill does not.

Rather, the approach taken in the current compromise bill is to statutorily emphasize the district court’s “gatekeeper” role over damages theories and evidence. While there is nothing new about district court judges acting as gatekeepers by conducting so-called Daubert hearings to determine whether to exclude expert testimony under Federal Rule of Evidence 702, including on damages-related issues, the proposed bill essentially makes conducting a thorough Daubert hearing on patent damages mandatory. In the section entitled “Procedure For Determining Damages,” it requires that “[t]he court shall identify the methodologies and factors that are relevant to the determination of damages, and the court or jury, shall consider only those methodologies and factors relevant to making such a determination.” In addition, in a section entitled “Sufficiency of Evidence,” it requires that “the court shall consider whether one or more of a party’s damages contentions lacks a legally sufficient evidentiary basis” and that “[t]he court shall only permit the introduction of evidence relating to the determination of damages that is relevant to the methodologies and factors that the court determines may be considered in making the damages determination.” We expect that this proposed reform bill will not alter the traditional role of the Georgia-Pacific factors, which have been used in the reasonable royalty analysis, or other established damages law. Thus, other than providing for a first review of the damages evidence by the judge before a case is sent to a jury, it is unclear whether the Senate’s proposal would have the effect of limiting damages. The substantive impact will greatly depend on how strict individual judges are when they conduct their Daubert hearings; and this will likely vary from judge to judge. But the recent Federal Circuit case law discussed in our prior article, as well as the additional case discussed below, does signal that the Federal Circuit is providing strong guidance as to the degree of scrutiny of the damages theories and evidence that district courts should undertake.

2. The IP Innovations Case

As many of our readers pointed out, Federal Circuit Judge Rader, who sat by designation in the Cornell case, also recently sat by designation in IP Innovation, LLC v. Red Hat, Inc. et al., Case No. 2:07-cv-447. (Based on his track record in the Cornell case, we are sure that plaintiff was none too pleased that Judge Rader was sitting by designation in their case, at least with regard to damages). In his March 2, 2010 ruling on post-trial motions in IP Innovation, Judge Rader again took the opportunity to illustrate his view of the type of careful scrutiny that district court judges should be giving to damages theories and evidence. The court excluded the testimony of plaintiff’s damages expert, because his damages theory on what would be a reasonable royalty, “improperly inflates both the royalty base and the royalty rate by relying on irrelevant or unreliable evidence and by failing to account for the economic realities of this claimed component as part of a larger system.” Slip. op. at 6.

In IP Innovation, the patents-in-suit related to particular features of the defendants’ Linux operating system software, specifically, the “multiple virtual workspaces and workspace switching features.” Plaintiffs’ expert had propounded a damages theory under the “entire market value rule,” in which he sought damages based on defendants’ total sales of the entire operating system software. Judge Rader excluded this testimony because the damages methodology did not “show a sound economic connection between the claimed invention and this broad proffered royalty base.” Id. at 3. Judge Rader first found that “the claimed invention is but one relatively small component of the accused operating systems” particularly in view of “the relative importance of other features such as security, interoperability, and virtualization.” Id. In addition, the court noted that there was no evidence in the record supported the notion that the claimed feature drove demand – “users do not buy the accused operating systems for their workspace switching feature.” Id. Indeed, plaintiffs’ expert did not make any effort “to even discern the percentage of users” who even used the feature. Id. at 4. Accordingly, the court found that “the record cannot support the unfounded conclusion that the often-unused feature drives demand for a royalty base of 100% of the operating systems as a whole.” Id. As in his decision in the Cornell case, it appears that in order to proceed under an entire market value rule theory, Judge Rader would require that the plaintiff provide specific evidence tying customer demand to the claimed feature, or a survey that addresses whether and to what degree the claimed feature drives demand.

In excluding the damages testimony, Judge Rader also rejected plaintiff’s argument that it was difficult to determine the value of the desktop switching feature relative to other features of the products based on the information produced in discovery and that the desktop switching feature “has no separate valuation, no aftermarket, and thus no way to value the accused feature separately.” The court found that the burden of proof lay with plaintiff and not with defendant: “IPI must show some plausible economic connection between the invented feature and the accused operating systems before using the market value of the entire product as the royalty base.” Id. at 4.

Finally, Judge Rader also addressed the evidentiary value of other license agreements. The court faulted plaintiffs’ expert for disregarding license agreements from years prior to the hypothetical negotiation date in favor of general industry data that was not at all linked to the specific technology of the patents-in-suit. The court found that “these [older specific] licenses are far more relevant than the general market studies” that plaintiff’s expert selected to rely upon.

Judge Rader’s recent active gate-keeping decisions, such as Cornell and now IP Innovation, as well as the Federal Circuit’s recent pronouncements in Lucent and Lansa, are even more significant and instructive when viewed in the context of the currently pending patent reform legislation, which specifically proposes addressing the issue of patent damages by having the courts act as stricter gate-keepers on damages theories and evidence.

[1]   For example, the 2007 Patent Reform Bill proposed limiting the amount of damages recovered as a reasonably royalty based on an attribution of “the economic value properly attributable to the patent’s specific contribution over the prior art” and statutorily limits the application of the “entire market value rule” to circumstances where the patentee has established that that the claimed feature is “the predominant basis for market demand” of an entire product.

FalseMarking.Net: An Information Resource on False Marking Litigation

FalseMarkingforDennis.gifFor the past several days, I have been attending a meeting of in house IP counsel and a portion of the topic has focused on the new phenomenon of false marking litigation.

My friends at the MBHB law firm have created a new information resource on the pending false marking patent cases. The website includes current information on pleadings, decisions, legislation, and other notes and can be found at The site grew out of the firm's work in defending against these lawsuits.

Court: Essentially All Gene Patents Are Invalid

Association for Molecular Pathology and ACLU v. USPTO and Myriad (S.D.N.Y. 2010) (Judge Sweet)

In a powerful move away from standard thoughts on patentability standards, the district court for the Southern District of New York has held that Myriad's patents claiming "isolated DNA" do not qualify as patentable subject matter under 35 USC 101.

The claims-in-suit directed to "isolated DNA" containing human BRCA1/2 gene sequences reflect the USPTO's practice of granting patents on DNA sequences so long as those sequences are claimed in the form of "isolated DNA." THis practice is premised on the view that DNA should be treated no differently from any other chemical compound, and that its purification from the body, using well-known techniques, renders it patentable by transforming it into something distinctly different in character. Many, however, including scientists in the field of molecular biology and genomics, have considered this practice a "lawyer's trick" that circumvents the prohibitions on the direct patenting of DNA in our bodies but which, in practice, reaches the same result. The resolution of these motions is based upon long recognized principles of molecular biology and genetics: DNA represents the physical embodiment of biological information, distinct in its essential characteristics from any other chemical found in nature. It is concluded that DNA's existence in an "isolated" form alters neither this fundamental quality of DNA as it exists in the body nor the information it encodes. Therefore, the patents at issue directed to "isolated DNA" containing sequences found in nature are unsustainable as a matter of law and are deemed unpatentable subject matter under 35 USC 101.

Similarly, because the claimed comparisons of DNA sequences are abstract mental processes, they also constitute unpatentable subjct matter under Section 101.

This decision is the result of an action brought by a coalition of scientists and public interest groups in 2009. The group challenged Myriad's breast cancer gene patents as violating both the patent laws and the US Constitution.

The Federal Circuit is likely to reverse this decision — opening the door to an important Supreme Court showdown.

Download Myriad Opinion

Justifying the Decision in Ariad v. Lilly

In Ariad v. Lilly, defenders of the written description requirement made two primary arguments: (1) that the text of the Patent Act and the accompanying jurisprudential history lead to the conclusion that the statute creates a separate written description requirement; and (2) that the written description requirement serves an important role in policing applicant behavior. An en banc Federal Circuit confirmed that the written description requirement is separate and distinct from enablement, but firmly based its decision on the first argument rather than the second. I believe that the Federal Circuit took the correct approach – especially in its substantial rejection of the second argument. In my recent essay, I wrote that – apart from its value in "new matter" rejections – the role of the written description requirement in ex parte prosecution is negligible. See An Empirical Study of the Role of the Written Description Requirement in Patent Prosecution, 104 NORTHWESTERN UNIV. L.R. Colloquy ___ (2010) (ssrn download). In that essay, I took no position on the larger issue of whether the written description doctrine is nevertheless required by the statute.

In his concurring opinion, Judge Gajarsa explicitly rejects the argument that the written description requirement is a necessary on policy grounds – writing that "[t]he empirical evidence confirms my belief that written description serves little practical purpose as an independent invalidity device [apart from policing priority]." Despite the lack of a policy justification, Judge Gajarsa concurred with the judgment "because the majority's opinion provides a reasonable interpretation of a less than clear statute."

The Relevance of Invention Date in Patent Prosecution: Part VI (BPAI Decisions)

This is Part VI of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here.

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Measuring the Success of Attempts to Swear Behind Prior Art: BPAI Decisions

After being twice-rejected by a patent examiner, a patent applicant has a right to appeal to the USPTO’s administrative court, the Board of Patent Appeals and Interferences (“BPAI”). The BPAI is an active court, which issues several thousand decisions each year. To study BPAI decisions, we first used a broad search criterion of BPAI decisions in Westlaw. The resulting decisions were reviewed to identify whether the BPAI made a decision regarding an attempt to antedate one or more references. We identified 73 BPAI decisions that adjudged the merits of an attempt to antedate.   As shown in Table 13, the BPAI rejected the attempt to antedate in 77% (56) of these decisions, accepted the attempt to antedate in 22% (16), and partially accepted and partially rejected the attempt to antedate in 1% (1).


In each rejected case, the applicant had filed a Rule 131 declaration, but the BPAI rejected those declarations for a variety of reasons, including insufficient evidence to establish reduction to practice prior to the effective date, insufficient evidence to prove conception and/or reasonable diligence toward reduction to practice, failure to assert conception of the entire claimed invention, failure to prove prior conception of the elements taught in a reference, failure to show country of invention, failure to include signatures of all listed inventors,  failure to allege a sufficiently early conception date, failure to properly explain submitted evidence, attempt to antedate a reference that qualifies as a statutory bar under § 102(b), claims to the same invention as the prior art (thus necessitating an interference proceeding), failure to properly submit the affidavit, and an attempt to double-patent.

One survey respondent expressed the difficult in pursuing a Rule 131 declaration in a comment:

It is extremely difficult to get a 1.131 declaration accepted. One nearly needs to justify each day. Personally, I think it would be close to impossible to antedate over 6 months based upon constructive reduction to practice. If it is more than 2 months, I would probably be a waste of the client’s money to try.

Guest Post: Ariad v. Lily: Choosing to Not Disrupt the Settled Expectations of the Patent Community

I asked Howard Skaist for his views on the recent decision in Ariad v. Eli Lilly. He wrote the following:

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By Howard Skaist of Berkeley Law, LLC.

In an en banc case closely watched by the patent bar, the Federal Circuit made little change to the law regarding written description and provided little additional guidance, despite a majority opinion nearly 40 pages long, two concurrences, two dissents and having received 25 amicus briefs. At a high level, the case can probably be best understood as having been resolved on policy grounds in the face of an unclear statute and Supreme Court precedent that does not directly address the question at hand; however, policy is only a portion of the justification that the majority of the full court uses for the outcome. 

The fundamental question is whether or not a separate and independent written description requirement exists under 35 USC section 112, first paragraph.  The majority answers the question in the affirmative, relying on the language of the statute, Supreme Court precedent and policy considerations.  However, the concurrence and dissenting opinions demonstrate that this language of the statute is far from clear and that the Supreme Court precedent does not really address the question directly.  Therefore, the main division among the judges appears to rest on policy considerations.  In addition to the policy considerations regarding the advisability of a written description requirement, the majority apparently does not want to “disrupt the settled expectations of the inventing community….”  Majority Opinion at 16. 

The facts of this case suggest that it may have been a good one to test policy rationales since it was brought by a variety of academic and research institutions, including MIT and Harvard, against Eli Lilly.  The inventors had made a fundamental research discovery in biotechnology and hypothesized several possible ways to take advantage of it, but it took those working in the field several more years to successfully develop a product exploiting the discovery.  Therefore, at the core of this case, a legitimate question exists regarding the role or purpose of a patent system and how research or academic institutions should fare under existing legal standards.  Also telling is the citation by Gajarsa in his concurrence of work by Dennis Crouch and Chris Holman showing that few cases have invalidated claims based on written description.  Linn, in his dissent, also cites to Crouch’s work. 

Ariad and a variety of institutions sued Eli Lilly on US Patent 6,410,516 the day the patent issued.  The inventors were the first to identify NF-xB and uncover the mechanism by which it activates gene expression underlying the body’s immune response to infection.  Thus, the inventors recognized and suggested that artificially interfering with NF-xB activity could reduce harmful symptoms of certain diseases.  At the District Court level, a jury determined that Lily infringed the four claims asserted and determined the patent to not be invalid for anticipation, lack of enablement or lack of written description.  However, on appeal, the Federal Circuit reversed and held the patent invalid under 35 USC 112, first paragraph, for failing to provide an adequate written description.  Ariad petitioned for en banc review and the Federal Circuit granted the petition. 

In the en banc opinion, the majority does a good job clarifying the heart of the dispute by stating: “[A]lthough the parties take diametrically opposed positions on the existence of a written description requirement separate from enablement, both agree that the specification must contain a written description of the invention to establish what the invention is.  The dispute, therefore, centers on the standard to be applied and whether it applies to original claim language.”  The point of departure therefore appears to center more upon whether or not original claims can be held invalid for lack of written description or not.  The conventional view had been that a claim supports itself.  However, Federal Circuit decisions in the last few years have challenged that thinking, such as Fiers v. Revel, Enzo v. Gen-Probe and LizardTech v. Earth Res. Mapping.  Here, the Federal Circuit establishes that those decisions were correct. 

As alluded to above, the majority does not agree with Ariad’s arguments about the wording of the statute or its characterization of the relevant Supreme Court precedent.  However, Gajarsa, while concurring, states: “[T]he text of section 112, paragraph 1 is a model of legislative ambiguity.”  Likewise, even the majority, in discussing the Supreme Court precedent concedes: “Although the Court did not expressly state that it was applying a description of the invention requirement separate from enablement, that is exactly what the Court did.” Majority Opinion at 14. Therefore, Ariad’s points may have more substance than the majority concedes. Nonetheless, the Federal Circuit states that “[a]s a subsidiary federal court,” majority opinion at 15, it is obligated to follow such precedent.  The Federal Circuit, however, does directly address Ariad’s contention that original claims should be treated differently than amended claims saying that the distinction does not exist in the language of section 112 and that Ariad has not provided a principled basis for making the distinction being asserted.  Majority Opinion at 19. 

The court challenges directly the thinking that an original claim necessarily supports itself under written description: 

“Although many original claims will satisfy the written description requirement, certain claims may not. For example, a generic claim may define the boundaries of a vast genus of chemical compounds, and yet the question may still remain whether the specification, including original claim language, demonstrates that the applicant has invented species sufficient to support a claim to a genus. The problem is especially acute with genus claims that use functional language to define the boundaries of a claimed genus. In such a case, the functional claim may simply claim a desired result, and may do so without describing species that achieve that result. But the specification must demonstrate that the applicant has made a generic invention that achieves the claimed result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus.”  Majority Opinion at 20. 

The majority does provide a few clarifying points regarding application of written description: 

“[The] hallmark of written description is disclosure. Thus, ‘possession as shown in the disclosure’ is a more complete formulation. Yet whatever the specific articulation, the test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art.”  Majority Opinion at 24 

The court also acknowledges the disadvantage that this law creates for basic research institutions: 

“[T]he patent law has always been directed to the ‘useful Arts,’ U.S. Const. art. I, § 8, cl. 8, meaning inventions with a practical use, see Brenner v. Manson, 383 U.S. 519, 532-36 (1966). Much university research relates to basic research, including research into scientific principles and mechanisms of action, see, e.g., Rochester, 358 F.3d 916, and universities may not have the resources or inclination to work out the practical implications of all such research, i.e., finding and identifying compounds able to affect the mechanism discovered. That is no failure of the law’s interpretation, but its intention.” 

Conceding that enablement and written description are similar, the court nonetheless maintains that in some fields they can be quite different, particularly in chemistry and biotech: 

“Perhaps there is little difference in some fields between describing an invention and enabling one to make and use it, but that is not always true of certain inventions, including chemical and chemical-like inventions. Thus, although written description and enablement often rise and fall together, requiring a written description of the invention plays a vital role in curtailing claims that do not require undue experimentation to make and use, and thus satisfy enablement, but that have not been invented, and thus cannot be described.”

The Relevance of Invention Date in Patent Prosecution: Part V (Strategies)

This is Part V of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here. This part discusses results of my survey on patent practitioner strategies in choosing whether to swear behind prior art.

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As part of my 2009 survey, I asked a final question that focused on the relative strategic merits of (1) asserting first-inventor rights to negate putative prior art references or (2) distinguishing the scope of the invention from the disclosures found in the references. Responders were offered a hypothetical situation where either strategy might succeed. The question read as follows: Assume that you receive non-final prior art rejection. You believe that you could distinguish the reference without amending any of your claims. However, you also have sufficient evidence to swear behind the reference based on an earlier invention date. Which approach do you take?

Responders were asked to choose one of three options: “Swear behind the reference,” “Distinguish your claims from the prior art,” and “Swear behind the reference and distinguish the claims.” In addition, responders were asked to “Explain your answer.”   

The responses show a large preference for distinguishing claims from the prior art rather than asserting first-inventor rights by filing a Rule 131 affidavit. While 51% of responders would have distinguished the claims, only 31% would have asserted first-inventor rights, and 18% would have attempted to both distinguish the claim and assert first-inventor rights. The responders in the survey who would have distinguished the claims showed more support for a shift to first-to-file and indicated that they had comparably less experience in handling cases associated with Rule 131 affidavits. However, those differences were not statistically significant.

Many responders offered an expositive statement of their strategy selection. These results create a richer data set susceptible to qualitative analysis. Analysis and categorization according to a set of themes that emerged from the statements allowed for a thematic tallying in Table 12.


Responders who preferred to assert first-inventor rights primarily mentioned the concern that distinguishing the prior art creates potential estoppel issues that would limit claim scope. The following examples embody typical responses:

Swearing behind the reference limits the amount of prosecution history estoppel in the case and avoids making statements on the record that may later be used to limit the scope of the claims.

Why go on the record against your claims when you can make the prior art disappear?

It is crazy to make any substantive argument to distinguish over a reference that is not in fact prior art. Why limit the interpretation of your claims?

Responders who preferred to distinguish the claimed invention from the prior art rather than assert first-inventor rights most often mentioned the concern that Rule 131 declarations create their own litigation problems by raising questions of invalidity and inequitable conduct. The following examples embody typical responses:

[Because] swearing back does not provide absolute victory (as a 102g date may later be found), I would always attempt to distinguish first, all other factors being equal.

I would prefer to avoid the risk of an unintentional error in the declaration. If discovered, it would raise inequitable conduct (perhaps groundless, but would still have to be defended) and raise a question of validity.

131 declaration should be a last resort. [T]he resulting patent is weaker (creates [inequitable conduct] issues, defendants can prove an earlier date, etc) plus it looks bad—as if you’re admitting your claims are obvious over the cited reference.  

Many responders shared the concern that swearing behind a cited reference while failing to distinguish the claims on their merits “looks bad” and amounts to a tacit admission that the reference is good but for its effective date. Indeed, one self-described former examiner suggested that swearing behind a reference without addressing the scientific merits of the reference creates a specific challenge for a patent examiner—to find the same prior art, but with an earlier effective date:

Swear[ing] behind the reference may satisfy some, but most [examiners] will try to thwart the swear behind by locating another, similar reference. Practically speaking, to get the case allowed, amend the claims minimally, distinguish from the prior art, and lastly swear behind it, in that order. This provides the examiner enough cover to allow the case.

Some of the responders (12.2%) offered the reminder that patent prosecution is an ongoing process—a series of events or a story unfolding.

Many suggested that if one argument fails, an applicant should move to the next argument. However, many responders, who indicated that they would both assert first-inventor rights and distinguish the invention, suggested that the better approach is to include all arguments within a single response. The following examples embody typical responses:

If you don’t swear behind at the non-final stage the office will go final and not accept the 131 dec[laration] at that stage without the filing of a[ Request for Continued Examination]. A similar situation arises if you rely on the dec[laration] and don’t argue to distinguish. You’ll have to file an RCE to get the arguments considered.

As an examiner, I can tell you this is the best way to get around the reference. More than likely one or the other submitted [sic] on its own will likely have some deficiency. Therefore, doing both will be more persuasive.

Taking the “belt-and-suspenders” approach of both filing a 131 and distinguishing the claims saves time and money for my client. Just because the Examiner has cited a reference with a certain date does not mean that s/he cannot make another rejection based on other art that has an earlier date for the base reference. I prefer to be safe and plan for both eventualities, as long as the claim amendments do not drastically change the claim scope.  

Responders who indicated that they would both assert first-inventor rights and distinguish the invention most often mentioned that their approach increases the odds of obtaining patent protection.  

The cost of patent prosecution certainly drives some applicant behavior. There was some disagreement, however, on which choice was the least-cost mechanism. On one hand, 21.1% of responders who preferred to distinguish the invention suggested that their choice was at least partially driven by the high cost of preparing and filing a successful Rule 131 declaration:

It generally costs much less to distinguish prior art than to do everything necessary to file a 131 Declaration.

Declarations are more work. Specifically, gathering facts related to conception + diligence or actual RTP is time consuming.

As a practical matter, it’s often difficult to track down corporate-type inventors two or three years after the app is filed, so as to be able to get them to sign a Rule 131 dec[laration].  

A handful of responders who preferred to assert first-inventor rights indicated that was the cheaper approach:

It is hard to justify to the client doing all the extra work of distinguishing the claims.

Finally, 13.0% of responders who selected the dual strategy suggested that—in the long run—their approach was more cost-effective.

The Relevance of Invention Date in Patent Prosecution: Part IV (Survey)

This is Part IV of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here.This part discusses the results of a survey on the impact of a switch to a "first-to-file" system.

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In the summer of 2009, I conducted an electronic survey of 1141 responders—mainly self-identified U.S. patent law professionals. These individuals primarily self-identified as U.S. patent attorneys and agents and patent litigators. The purpose of the survey was to elicit practitioner estimates of the reliance upon invention-date-based novelty rights during patent prosecution. In creating the survey, I sought to obtain both quantitative and qualitative results. Thus, the survey asked applicants to select objective responses from a list of choices and provided an opportunity for applicants to more fully explain their answers.

The majority of these responders (83%) indicated that they have “participated in the filing of a Rule 131 affidavit.” Those who have participated in the filing of a Rule 131 affidavit estimate that, on average, 3.1% of the cases they have worked with involve a Rule 131 affidavit. Responders who have not participated in the filing of a Rule 131 affidavit estimate that, on average, 0.9% of the cases they have worked with involve a Rule 131 affidavit. Practitioners who work in the areas of Chemistry, Pharmaceuticals, and Biotechnology report a significantly greater average estimated percent of cases that they have worked with that include Rule 131 affidavits as compared with practitioners working in the areas of Electrical Engineering, Telecommunications, and Software.

Switch to First to File: The survey asked responders whether they support a move to a first-to-file system. A small majority of the U.S. attorney and patent agent responders (55%) indicated that they did not support such a move. The responders were given space to provide short written statements regarding their preference for or against a move to first-to-file. The statements largely track the historic first-to-file debate and create a richer data set susceptible to qualitative analysis and categorization according to a set of iteratively created themes that emerged from the statements for each statement received.  The themes in each statement are identified and tallied in Table 10.


The Relevance of Invention Date in Patent Prosecution: Part III

This is Part III of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here. This part considers the role of provisional patent applications as an incomplete but functional substitute for invention-date rights. 

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With some caveats, I argue that provisional patent applications can serve as functional substitutes for reliance on the U.S. filing grace period. Provisional patent applications have become popular since being made available in 1995. The USPTO reports that applicants filed 143,030 provisional patent applications in fiscal year (“FY”) 2008, compared with 466,147 non-provisional utility applications that year. U.S. applicants file a great majority of these provisional applications Consequently, the provisional filings correspond to more than half of the annual total of utility applications filed by U.S. residents.

A provisional application is essentially a low-cost placeholder that allows an applicant to establish a priority date by filing a description of the invention along with paying an administrative fee to the USPTO. The applicant may later file a non-provisional application claiming the benefit of the provisional application’s filing date. The provisional patent application has a twelve-month non-extendable pendency. During that time-period, the application is kept secret and is not examined. Thus, to rely upon the provisional priority date, the applicant must submit a non-provisional application within one year of the provisional filing date. Professor Seymore notes several additional strategic advantages of filing provisional patent applications: “extending the patent term to twenty-one years, postponing the examination period, trolling for prior art, and avoiding an allegation of inequitable conduct.”

To explore the relevance of provisional patent applications as a tool for claiming priority, I created a dataset of 5000+ provisional patent applications filed between January 1, 2001 and October 1, 2007. Of those, over half (52%) were still secrete as not yet identified in the priority claim of any publicly available non-provisional application. Although some of these will eventually become public as associated with a non-provisional filing, in the end, close to 40% or more of the provisional application filings will never be linked to an issued patent or public non-provisional application.   Collectively, these figures indicate that a large number of provisional applications are themselves left floundering to be abandoned twelve months after filing. The large number of abandoned provisional applications suggests to me that provisional patent applications are likely being used as early place-holders to cheaply secure a priority date, rather than as a means of extending the patent term or postponing examination. In a separate study looking at the 620,000+ issued patents for which applications were filed between 2000 and 2005, I found that seventeen (17) percent of the patents in the data-set claim priority to at least one provisional application. On average, the patents claiming priority listed 1.4 provisional patent applications. In a separate study, I found that on average abandoned non-provisional applications tended to claim priority to 2.0 provisional patent applications. This combining of multiple provisional applications to support a single patent supports this theory that provisional applications as a substitute for filing date evidence. Notably, each provisional can serve as evidence of an incremental advance in place of a corroborated laboratory notebook. Anecdotal reports suggest that this practice has become especially prevalent among universities developing early stage innovations. However, the value of incremental provisional application filings is limited by the hard twelve-month deadline for filing a non-provisional application.

For an inventor who has conceived a new invention, the legal benefits of filing a provisional application, rather than relying on the invention date, are compelling. If the filing deadlines are met, a provisional patent application will serve as conclusive evidence of priority—without any need for any affidavits or declarations—so long as the provisional application discloses the invention claimed in the non-provisional application “in the manner provided by the first paragraph of section 112.” In other words, the specification of the provisional application must “contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable” an ordinarily skilled artisan to practice the invention claimed in the non-provisional application.

Unlike an applicant seeking to assert a prior invention date, an applicant claiming priority to a provisional application need not provide corroborated evidence—or indeed any evidence—of actual reduction to practice, conception date, or reasonable diligence in working toward reduction to practice. Rather, the USPTO and courts treat the filing of a provisional patent application as a constructive reduction to practice, thus allowing the applicant to rely on the simple evidence of the paper filing.

An oft-stated disadvantage of provisional application filings is that they may create a false sense of security among patent applicants. Certainly, a hastily-filed provisional patent application may fail to properly describe the invention to be claimed in a later-filed non-provisional application. However, the validity of this criticism does not suggest that applicants should merely rely upon the hope that they will possess sufficient evidence to antedate references based on a prior invention date. Rather, risk-averse applicants should quickly file a well supported application either in provisional or nonprovisional form.

Miss a Date: $250 Million . . .

Encyclopaedia Britannica v. Dickstein Shapiro (D.D.C. 2010)

EB sued a host of defendants in 2006-2007 for patent infringement. On summary judgment, the district court found the patents invalid — holding that they did not properly claim priority to their parent application. Now, EB has sued its prosecution firm for malpractice.

In the cases of Air Measurement Corp v. Akin Gump (Fed. Cir. 2007) and Immunocept v. Fulbright & Jaworksi (Fed. Cir. 2007), the Federal Circuit clarified that it often holds appellate jurisdiction even over legal malpractice claims.

This claim may be largely driven by the financial woes of the encyclopedia business. [Link]

  • EB's original application was filed in 1989.
  • The invalidated patents are U.S. Patent Nos. 7,051,018 and 7,082,437.

The Relevance of Invention Date in Patent Prosecution: Part II

This is Part II of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here.

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Using the USPTO PAIR electronic database, I obtained biographical data for 21,000+ randomly selected patent applications filed between 2000 and 2007. The biographical data includes a listing of affidavit filings. After obtaining PDF versions of the affidavits, we categorized them by hand to identify those affidavits associated with an applicant asserting rights based on the invention date. These were typically Rule 131 affidavits.

Of the 21,000+ application file histories in the data set, 0.7% (138) included a Rule 131 affidavit asserting invention-date based novelty rights. However, only 0.1% of the applications included a Rule 131 affidavit that led directly to an issued patent without further substantive action. Interestingly, antedating was not even necessary in some of those successful cases. For instance, several of those applicants had received patents in Europe without relying upon any invention-date-based priority.

One of the most oft-cited advantages of the U.S. invention-date focus is the relative benefit it brings to individual inventors, new entrant small companies, and universities. If these groups are disproportionately benefiting from the U.S. system, we would expect to them taking advantage of their invention-date-based rights. To test this hypothesis, I obtained assignment information (if any) for each application in my Rule 131 affidavit sample, and classified each assignee according to its size and type.

In both absolute and relative terms, companies—especially large and publicly-traded companies—claim invention date rights more often and more successfully than do individual inventors. U.S. publicly-traded companies appear to be disproportionate users of novelty rights: 61% of the applications with Rule 131 affidavits were assigned to these publicly-traded companies. However, the same companies hold only 27% of issued patents. Individual inventor usage of invention-date-based novelty rights did not differ significantly from that expected: the proportion of applications with Rule 131 affidavits that were filed by individual inventor-owners closely resembled the proportion of inventor-owners in the general population of patentees. Meanwhile, the percentage of applications with Rule 131 affidavits that were filed by universities essentially doubled the share expected given the ordinary frequency of university-owned patents. The clearly underrepresented group is that of foreign companies whose applications only represent 10% of those asserting novelty rights but occupy almost half of the general population of patents. As measured by allowance rate, companies tend to have a much more success than individual inventors in obtaining patent protection through the assertion of their invention dates in Rule 131 affidavits.

The Relevance of Invention Date in Patent Prosecution: Part I

I am traveling over the next few days and so I pre-wrote a handful of blog posts relating to an article that I wrote for the Michigan Telecommunications & Technology Law Review (MTTLR). The article has the perhaps overly provocative title: Is Novelty Obsolete? Chronicling the Irrelevance of the Invention Date in U.S. Patent Law, 16 Mich. Telecomm. Tech. L. Rev. __ (2010).

The abstract reads as follows:

Abstract: The US first-to-invent patent regime is unique in that it allows a patent applicant to assert priority rights back to the invention date. The level of reliance on inventorship rights is important because it informs the longstanding policy debate over whether the US should conform to a first-to-file system as well as for patent applicant strategy. Prior studies have considered the use of inter partes interference proceedings. However, that approach necessarily ignores ex parte prosecution.   

This paper presents a normative study of patent applicant use of invention-date rights during ex parte prosecution. Three sources inform the primary results: the prosecution history files of 21,000+ patent applications filed in the past decade; a survey of 1,000+ patent practitioners regarding their use of the novelty provisions of the Patent Act; and a collection of 11,000,000+ prior art references cited in recently-issued patents. Additional compilations of prosecution file histories for patents identified as either (1) valuable or (2) worthless supplement these data sets and allow for an evaluation of the differential importance of the novelty rights. Finally, a set of opinions from the Board of Patent Appeals and Interferences (BPAI) evidences the difficulty of proving a prior invention date.

During prosecution, most patent applicants are faced with non-102(b) prior art that could be antedated. Yet, very few applicants actually attempt to assert prior-invention rights. A miniscule 0.1% of cases in my large sample included an assertion of novelty rights that directly led to an issued patent. The process of claiming priority to a pre-filing invention-date requires that an applicant prove prior conception and due diligence or reduction-to-practice. The difficulty of attempting to prove these elements are laid-out in a set of administrative patent appeal decisions where 77% of attempts to antedate references were rejected by the administrative court.

Given the difficulty of asserting invention-date-based novelty rights, it is unsurprising that applicants are more likely to assert such rights in cases of highly valuable inventions, choosing not to waste money in less valuable cases. Furthermore and perhaps contrary to conventional wisdom, my findings suggest that individual inventors assert invention-date-based novelty rights relatively less often and less successfully than large, publicly traded companies. Lastly, a practitioner survey of 1000+ patent law professionals reveals, inter alia, a shared concern that attempts to antedate prior art leave patents open to challenge during litigation by providing “fodder” for validity challenges.


Patently-O Bits and Bytes No. 327

  • Supreme Court: My sense is that Ariad v. Eli Lilly has essentially no shot for Supreme Court review unless the Ariad can do a great job of convincing the court that the written description requirement as applied is (1) new and (2) is severely detrimental to the patenting of breakthrough inventions and discoveries.
  • Supreme Court: A decision in Bilski is expected in the next 6 weeks – perhaps as soon as March 30.
  • Upcoming events:

    • I am traveling the next 10 days or so, but have pre-written a set of interesting (in my view) blog posts.
    • On the 25th and 26th of March, I'll be speaking at the Miami-based IP Law Summit (then to Disney with the kids…).
    • April 27th, I'll be speaking in New York at the Corporate IP Counsel Summit
    • On April 30, I'll be speaking in Kansas City at a KCMBA IP law event.
    • On May 20, the Federal Circuit is hosting its annual conference with an all-star lineup.
    • Statute of Anne: Two competing conferences are being held on the 300th anniversary of the Statute of Anne (the first copyright statute). (If I were turning 300, I'd want at least two parties.) The first is on March 27 at Cardozo Law School in New York [Link] and the second is on April 9-10 at Berkeley Law School [Link]. Professors Peter Jaszi (American) and Daniel Gervais (Vanderbilt) will be speaking at both events.

Patently-O Bits and Bytes No. 327

  • Supreme Court: My sense is that Ariad v. Eli Lilly has essentially no shot for Supreme Court review unless the Ariad can do a great job of convincing the court that the written description requirement as applied is (1) new and (2) is severely detrimental to the patenting of breakthrough inventions and discoveries.
  • Supreme Court: A decision in Bilski is expected in the next 6 weeks – perhaps as soon as March 30.
  • Upcoming events:

    • I am traveling the next 10 days or so, but have pre-written a set of interesting (in my view) blog posts.
    • On the 25th and 26th of March, I'll be speaking at the Miami-based IP Law Summit (then to Disney with the kids…).
    • April 27th, I'll be speaking in New York at the Corporate IP Counsel Summit
    • On April 30, I'll be speaking in Kansas City at a KCMBA IP law event.
    • On May 20, the Federal Circuit is hosting its annual conference with an all-star lineup.
    • Statute of Anne: Two competing conferences are being held on the 300th anniversary of the Statute of Anne (the first copyright statute). (If I were turning 300, I'd want at least two parties.) The first is on March 27 at Cardozo Law School in New York [Link] and the second is on April 9-10 at Berkeley Law School [Link]. Professors Peter Jaszi (American) and Daniel Gervais (Vanderbilt) will be speaking at both events.

Fleshing-Out Design Patent Infringement Doctrine

Crocs, Inc. v. US International Trade Commission (ITC) (Fed. Cir. 2010) (“In the matter of CERTAIN FOAM FOOTWARE”)

In 2006, the ITC began an investigation to determine whether knock-off imports of the iconic Crocs foam shoes infringed either the Crocs utility patent (Patent No. 6,993,858) or the Crocs design patent (Patent No. D. 517789). After a full investigation, the ITC found no patent violation – holding instead that the utility patent was obvious and that the design patent was not infringed. The ITC also held that Crocs had not established a “domestic industry” relating to the patented product and thus, that the Commission did not have standing. On appeal, the Federal Circuit reversed.

Design Patent Claim Construction:

As is ordinary, the Crocs design patent claims “the ornamental design for ___, as shown and described.” Here, the blank (___) was filled by the word “footwear.” Following utility patent claim-construction precedent the ITC had described the drawings and used that description to limit the claim scope. On appeal, the Federal Circuit rejected that approach and instead holding that in the usual case, a design patent’s drawings typically needs very little textual description. The court also held that design patent claim construction should be less textually detailed because design patent infringement (and validity) are judged by looking at the design as a whole. An element-by-element description unduly draws attention to the details and “away from consideration of the design as a whole.”

This case shows the dangers of reliance on a detailed verbal claim construction. The claim construction focused on particular features of the ‘789 patent design and led the administrative judge and the Commission away from consideration of the design as a whole. This error is apparent in the Commission’s explicit reference to two details required by the written claim construction but not by the ‘789 drawings: (1) a strap of uniform width, and (2) holes evenly spaced around the sidewall of the upper. As shown in Figure 1 of the ‘789 patent, the strap bulges to a greater width at the middle of the strap on the far left of the figure. Thus, the design figure does not require a strap of uniform width between the two round connectors. Also, as shown in Figure 4 of the ‘789 patent, the holes are not evenly spaced. Figure 4 shows a gap in the spacing (particularly towards the big toe). Nonetheless, the written claim description required uniform strap width and uniform hole spacing—contrary to the claimed invention. This error distorts the infringement analysis by the ordinary observer viewing the design as a whole. The administrative judge and the Commission needed to apply the ordinary observer test to “the design shown in Figures 1–7.”

Under the now defunct “point of novelty” tests for both infringement and validity, courts had some justification for describing specific elements of the patented design because those elements would potentially be considered as points of novelty. Although not spelled-out by the court, the recent elimination of the “points of novelty” tests also eliminates that justification.

Design Patent Infringement:

The Federal Circuit outlined the “ordinary observer” test of design patent infringement in its en banc Egyptian Goddess decision. Here, the court fleshed-out that test with further details and nuances. Infringement of a design patent requires proof that 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.” The hypothetical ordinary observer is considered to have knowledge of the prior art. Thus, “if the claimed design is close to the prior art designs, small differences between the accused design and the claimed design assume more importance to the eye of the hypothetical ordinary observer.” “The ordinary observer test applies to the patented design in its entirety, as it is claimed. [Therefore, minor differences between a patented design and an accused article’s design cannot, and [do] not, prevent a finding of infringement.” (quoting Payless Shoesource and Litton Sys.).

The court again emphasized that the test considers the design as a whole and that the court should not use drawing details to create an infringement checklist because “concentration on small differences in isolation distract[s] from the overall impression of the claimed ornamental features.” Rather, a better tool for determining infringement is a side-by-side comparison of the patented design and the accused product.

On the facts of this case, the Federal Circuit found that the allegedly infringing shoes were “nearly identical” to the patented design. “If the claimed design and the accused designs were arrayed in matching colors and mixed up randomly, this court is not confident that an ordinary observer could properly restore them to their original order without very careful and prolonged effort. . . . [T]his court perceives that the accused products embody the overall effect of the ’789 design in sufficient detail and clarity to cause market confusion. Thus, the accused products infringe the ’789 design.”

Domestic Industry:

In a decision of some interest for design patent utility patent holders alike, the Federal Circuit suggested what seems a tight definition of the domestic industry requirement of an ITC Section 337 action. The court wrote:

The test for the technical prong of the industry requirement “is essentially the same as that for infringement, i.e., a comparison of domestic products to the asserted claims.” Alloc, Inc. v. Int’l Trade Comm’n, 342 F.3d 1361, 1375 (Fed. Cir. 2003). In other words, the technical prong requires proof that the patent claims cover the articles of manufacture that establish the domestic industry. Put simply, the complainant must practice its own patent.

Although it so stated, I don’t believe that the court actually intended to require that a “complainant must practice its own patent” in order to satisfy the technical prong of 19 U.S.C. 1337(a). Rather, the statute requires that “an industry in the United States, relating to the articles patent . . . exists or is in the process of being established.” The “technical prong” of 337(a)(3)(A)-(B) require significant domestic investment or employment, but neither of those sections require that the complainant be the party that invests.  In the cited Alloc decision, the court stated instead that the question is whether the “industry produces articles covered by the asserted claims.” Here, the dicta is irrelevant because Crocs does manufacture shoes covered by the patent.

Federal Circuit Confirms that Patents Must Meet Both the Written Description and Enablement Requirements of Section 112.

Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co. (Fed. Cir. 2010) (En Banc Decision).

In a 9-2 decision, an en banc Federal Circuit has confirmed that 35 USC § 112 ¶1 includes separate written description and enablement requirements. “If Congress had intended enablement to be the sole description requirement of § 112, first paragraph, the statute would have been written differently.” The court also clearly confirmed the prospect that originally filed claims can violate the written description requirement:

Although many original claims will satisfy the written description requirement, certain claims may not. For example, a generic claim may define the boundaries of a vast genus of chemical compounds, and yet the question may still remain whether the specification, including original claim language, demonstrates that the applicant has invented species sufficient to support a claim to a genus. The problem is especially acute with genus claims that use functional language to define the boundaries of a claimed genus. In such a case, the functional claim may simply claim a desired result, and may do so without describing species that achieve that result. But the specification must demonstrate that the applicant has made a generic invention that achieves the claimed result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus.

Possession vs Disclosure: The court did step away from “possession” as the hallmark of the written description requirement. Rather, the court wrote that “the hallmark of written description is disclosure. . . . [T]he test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art. Based on that inquiry, the specification must describe an invention understandable to that skilled artisan and show that the inventor actually invented the invention claimed.”

General Principles: The court presented “a few broad principles that hold true across all cases”: “the written description requirement does not demand either examples or an actual reduction to practice”; however “actual ‘possession’ or reduction to practice outside of the specification is not enough; and a “description that merely renders the invention obvious does not satisfy the requirement.”

Basic Research – Tough Luck: The court recognized that the written description requirement makes it more difficult to patent “basic research” that has not yet been fully reduced to a practical implementation. The court’s reaction to that problem was tough luck. “That is no failure of the law’s interpretation, but its intention. Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others.”

That research hypotheses do not qualify for patent protection possibly results in some loss of incentive, although Ariad presents no evidence of any discernable impact on the pace of innovation or the number of patents obtained by universities. But claims to research plans also impose costs on downstream research, discouraging later invention. The goal is to get the right balance, and the written description doctrine does so by giving the incentive to actual invention and not “attempt[s] to preempt the future before it has arrived.” Fiers, 984 F.2d at 1171.

Holding: For the foregoing reasons, we hold that the asserted claims of the ‘516 patent are invalid for lack of written description, and we do not address the other validity issues that were before the panel. We also reinstate Part II of the panel decision reported at 560 F.3d 1366 (Fed. Cir. 2009), affirming the district court’s finding of no inequitable conduct. The majority opinion was written by Judge LOURIE and joined by Chief Judge MICHEL and Circuit Judges NEWMAN, MAYER, BRYSON, GAJARSA, DYK, PROST, and MOORE. Judges NEWMAN and GAJARSA filed concurring opinions.

Judges RADER and LINN each filed opinions in dissent. [I will write more on this later]

Design Patent and Replacement Parts

Insurance Industry Testimony: “alternatively-supplied collision repair parts typically are 26% to 50% less expensive than the car company parts, and the mere existence of competition for a given part results in the car companies lowering their corresponding part’s price by 8%. The estimated total benefit to consumers from the availability of competitive alternatives is approximately $1.5 billion a year.”

The following chart shows the cumulative number of design patents on “crash parts” owned by the major car companies. (Via insurance industry testimony).


Consumer Federation Testimony: “Our Concern today is that the car companies are now using design patents, not for the important and legitimate protection of the overall design of their vehicles, but to prevent competition when it comes to getting the parts we need to repair our vehicles.:

Damian Porcari (Director of Licensing for Ford Motor Company): “I freely admit that a company can save money by copying a design as opposed to creating, testing, marketing, and selling an original design. This is not a revelation. It has been and will always be cheaper to steal something than to pay for it. This applies to all markets and all products. Our opponent’s argument is no more than a justification to deny all intellectual property rights across the board.”

Design Patents and Repair Parts

On Monday, March 22, 2010, the House of Representatives is holding hearings on Design Patents and Automobile Replacement Parts. Even when they offer no technologic advantage, many automobile body parts are protected through design patent. This allows the original manufacturers control over the repair-parts market as well.

On the table is H.R. 3059 which would excuse design patent infringement if the accused article of manufacture "itself constitutes a component part of another article of manufacture" and "sole purpose of the [accused] component part is for the repair of the article of manufacture of which it is a part so as to restore its original appearance.’’

The insurance industry and consumer groups have lobbied in favor of the bill because it would be expected to reduce automobile repair costs — especially for newer model vehicles. Leading design patent attorney Perry Saidman will be testifying against the bill. Saidman writes:

And why are we even discussing a bill that proposes this remarkable result? We are here because the proponents of this bill lost a hard fought design patent infringement lawsuit covering auto repair parts, and can no longer make, use, sell or import their knock-offs in the United States.

So, having been adjudicated as an infringer of validly issued U.S. design patents, these companies are asking Congress to carve out an exception to the design patent laws for auto repair parts. . . .

Why is this such a bad idea? Because it will encourage every industry that loses a design patent lawsuit to petition the congress to do the very same thing: to carve out an exception to their industry so that their infringement will not be actionable, so that they can continue to make, use, sell and import their infringing products without fear of liability to the design patent owner. . . . There is almost no industry whose products or services will not cost less with increased competition. This argument, therefore, is much broader than an argument that design patents should not be permitted for auto repair parts. It's essentially an argument that patents should be abolished, because patents allow the owner to monopolize a product and therefore reduce competition.

Download Saidman's Written Statement R1.031910

False Marking: Lobbying against the Senate Bill


A battle over the false marking statute is rising. The currently pending patent reform bill (S.515) would severely weaken the cause of action. In a recent press release, the Public Patent Foundation (PubPat) has argued that the statute “would eliminate an important method of protecting the public from false and deceitful statements.”

The false patent marking law imposes a fine on companies that label unpatented products as patented “for the purpose of deceiving the public.” Currently, the law allows any citizen to sue false markers on behalf of the federal government and any fine awarded by the court is split between the citizen who brought the case and the government. Such "qui tam" suits, which have been part of our country since its founding and originally derived from custom in England, provide an incentive for citizens to spend time and money to bring such cases so that the government does not have to do so itself. While not burdening government officials, the suits nonetheless also supply the federal government with income. The Senate's proposed amendment to the law would eliminate such citizen suits, allowing only competitors to sue for “competitive injury” from the deceptive labeling. In some markets, there are no competitors, and thus no one would be able to pursue a company for deceitfully marking its products as patented.

"Falsely marking an unpatented item as patented harms the public by misleading consumers, deterring competition, and depriving legitimate patentees of the marketplace distinction they deserve," wrote [Dan] Ravicher. "I respectfully urge [you] to preserve the qui tam provision of the false patent marking statute because it operates to prevent harmful, deceptive acts, without cost to the government, while also containing adequate protections for defendants."