2012

Director Kappos’s Speech on Software Patents, the PTO, and Innovation

Patent, ,

By Jason Rantanen

Last week, Director of the USPTO David Kappos delivered a keynote address to the Center for American Progress that focused on software patents and the smartphone "patent wars."  The speech is noteworthy for the Director's strong defense of software patents. The entire speech is worth reading – here are a few excerpts to induce you to read the full speech:

Software patents, like all patents, are a form of innovation currency. They are also ecosystem enablers, and job creators. The innovation protected by software patents is highly integrated with hardware. All of it must remain eligible for protection. The current software patent “war” is hardly the first patent war—and unlikely to be the last in our nation’s patent history. Whenever breakthrough technologies come onto the scene, market players find themselves joined in the marketplace by new entrants. The first instinct of the breakthrough innovators is to bring patents into play. This is not only understandable, it is appropriate. Those who invest in breakthrough innovation have a right to expect others to respect their resultant IP. However, in the end, as history has shown time and time again, the players ultimately end up agreeing to pro-consumer solutions via licenses, cross-licenses or joint development agreements allowing core technologies to be shared.

***

So does that mean we’re done? End of speech? Should we just accept the problems, given the importance of the innovation and the illogic of discriminating against great technology that happens to be implemented in software? Of course not. The right point of inquiry is quality. By getting that right, we grant patents only for great algorithmic ideas worthy of protection, and not for everything else. This administration and its innovation agency understand that low-quality patents do no good for anyone. Low quality patents lead to disputes, uncertainty, and lost opportunity. Quality is central to our mission. All of this especially for software.

So we’ve been working on the underlying drivers for software patent quality from the beginning. Knowing that you get what you measure, starting in the summer of 2009 we assembled a taskforce to devise a comprehensive new set of quality metrics. That work culminated in 2010, when we rolled out the most complete, broad, objective patent quality measurement system on the planet – seven metrics, which we report eagerly to the public. The Lexus of quality metrics. And what do those metrics show? Patent quality isn’t broken at all. In fact, our decisions on both allowances and rejections correctly comply with all laws and regulations over 96 percent of the time.

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You know, the history of software patents is not a perfect one, although things are improving. Some of the most troublesome patents have expired; others can be challenged with new post-grant proceedings; and newer patents are quantifiably clearer, and aligned with current legal standards. But it’s important to note that, during the so-called smartphone patent wars, innovation continues at breakneck pace. A system like ours, in which innovation is happening faster than consumers can keep up, cannot fairly be characterized as “broken”. Nor can it be said that the U.S. is just a receiver of all this innovation. Most of the innovation is taking place right here. Broken? What?

The fact is, the explosion of innovation—and follow-on litigation—that we see across consumer electronics hardware and software is a direct reflection of how our patent system wires us for innovation. It's both natural and reasonable that in a fast-growing, competitive market, innovators would seek to protect their breakthroughs using our patent system.

The full version of Director Kappos's speech is available here: http://www.uspto.gov/news/speeches/2012/kappos_CAP.jsp

 

 

Guest Post: Territorial Thinking Misguides on International Exhaustion Doctrine

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Guest Post by John Rothchild, Associate Dean and Associate Professor at Wayne State University Law School. Rothchild's 2011 article Exhausting Extraterritoriality is published in the Santa Clara Law Review.

The Supreme Court granted certiorari in Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697, to settle the question whether exhaustion of a copyright owner's public distribution right results from a first sale of a copy or phonorecord that was manufactured, with the authorization of the copyright owner, outside the territorial limits of the United States. The outcome of the case, however, could have broader ramifications: in particular, it could bear upon an analogous international exhaustion issue with respect to patents.

Under § 109(a) of the Copyright Act, a copyright owner's right to control public distribution of a physical embodiment of a copyrighted work — such as a book, a music CD, the label attached to a shampoo bottle, or a brand-signifying logo engraved on the back of a watch — is exhausted once there has been an authorized first sale of that object. In international contexts application of this rule presents some special issues. One of those is how the first-sale rule interacts with the copyright owner's right to control importation of copies of her work under § 602(a) of the Copyright Act. The Supreme Court largely resolved that issue in Quality King Distributors, Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 (1998), holding that the first-sale rule is a limitation on the importation right. The remaining issue, and one with enormous practical consequences, is how the first-sale rule applies to copies that are manufactured abroad. The issue turns on the interpretation of critical language in § 109(a), which provides that the distribution right is exhausted only with respect to a copy "lawfully made under this title." This is the issue facing the Court in Kirtsaeng, which was argued on October 29.

One possible outcome of Kirtsaeng is a rejection of the holding of the court below that "lawfully made under this title" means "made, with the authorization of the copyright owner, at a location within the territorial limits of the United States." The petitioner, who invoked (so far unsuccessfully) the first-sale rule in an effort to justify his unauthorized importation and resale in the United States of textbooks manufactured and first sold abroad, urges that the Court instead interpret that language along the lines suggested by Judge Murtha's dissent in the case below, as meaning something like "made with the authorization of the U.S. copyright holder." See John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d 210, 226 (2d.Cir.2011) (Murtha, J., dissenting). Following such an interpretation, "lawfully made under this title" would not speak to the geographical provenance of the copy, but would refer only to whether the making of the copy was permissible as judged by the Copyright Act's allocation of rights.

Such a holding would deflate the mistaken view that giving legal significance, with respect to the operation of a U.S. law, to conduct occurring outside the United States inevitably amounts to impermissible extraterritorial application of that law. This view underlies the holdings of some courts that a sale of a patented article that occurs outside the United States does not exhaust the patentee's rights with respect to that article. The Court's resolution of this issue in Kirtsaeng therefore could have a significant impact on international exhaustion of patent rights.

A misguided application of the rule that the patent and copyright laws do not apply extraterritorially underlies holdings of the courts in both of these subject matters. Consider copyright first. In the first case addressing international exhaustion, a federal district court interpreted "lawfully made under this title" as if it read "lawfully made within the United States," concluding that no exhaustion occurs by virtue of the sale of copies that were manufactured outside the United States. It justified this result as necessary to avoid extraterritorial application of the Copyright Act, explaining: "The protection afforded by the United States Code does not extend beyond the borders of this country unless the Code expressly states." Columbia Broadcasting System, Inc. v. Scorpio Music Distributors, Inc., 569 F. Supp. 47, 49 (E.D.Pa.1983), aff'd mem., 738 F.2d 424 (3d Cir.1984). The Ninth Circuit subsequently arrived at the same outcome in several cases of its own, which were likewise predicated on an overly expansive view of what constitutes extraterritorial application of a statute. See Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982, 987 (9th Cir.2008) ("applying § 109(a) to foreign-made copies would violate the presumption against the extraterritorial application of U.S. law"), aff'd by an equally divided Court, 131 S.Ct. 565 (2010).

That same mistaken view of what constitutes extraterritorial application of U.S. law underlies the doctrine that a first sale abroad cannot exhaust a U.S. patent. The Federal Circuit adopted this doctrine in the Jazz Photo case, setting it forth as if it were self-evident but offering no justification for it. See Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094, 1105 (Fed.Cir.2001) (exhaustion occurs "when a patented device has been lawfully sold in the United States"). Four years later, in a follow-on case, the Federal Circuit court offered this rationale for its holding in Jazz Photo:

[T]his court in Jazz stated that only [single-use cameras] sold within the United States under a United States patent qualify for the repair defense under the exhaustion doctrine. Moreover, Fuji's foreign sales can never occur under a United States patent because the United States patent system does not provide for extraterritorial effect.

Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 394 F.3d 1368, 1376 (Fed.Cir.2005).

If the Supreme Court decides Kirtsaeng in favor of the interpretation of "lawfully made under this title" urged by the petitioner and dissenting Judge Murtha, this rationale goes out the window. In other words, the Court will have declared that it is not an extraterritorial application of the Copyright Act for the scope of a copyright owner's public distribution right to depend on the transfer of ownership of an article that was manufactured outside the territorial limits of the United States. That conclusion would likewise undermine the rationale of the Federal Circuit's rejection of international exhaustion in the patent context, since it would then not be an extraterritorial application of the Patent Act for exhaustion to depend on a first sale that occurred abroad. One court has declared that the Jazz Photo rejection of international patent exhaustion has already been overruled sub silentio by the Supreme Court's decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008). See LG Electronics, Inc. v. Hitachi, Ltd., 655 F. Supp. 2d 1036, 1044-45 (N.D.Cal.2009). The outcome of Kirtsaeng could resolve the issue.

Rejection of a geographical limitation on what conduct results in exhaustion of rights would be a welcome return to first principles under both patent and copyright law. The relevant first principle is that the owner of an intellectual property right, whether a patent or a copyright, is entitled to only a single reward attributable to the sale of an article that embodies the protected intellectual property: "[T]he ultimate question embodied in the 'first sale' doctrine [is] 'whether or not there has been such a disposition of the article that it may fairly be said that the patentee [or copyright proprietor] has received his reward for the use of the article'. . . ." (third alteration in original) (quoting United States v. Masonite, 316 U.S. 265, 278 (1942)). Platt & Munk Co. v. Republic Graphics, Inc., 315 F.2d 847, 854 (2d Cir. 1963). An overly expansive application of the rule that the patent and copyright laws do not have extraterritorial effect has allowed patent and copyright owners to extract greater rewards from their intellectual property rights than Congress intended.

Unenforceability

Patent

By Jason Rantanen

A few months ago Polk Wagner, Lee Petherbridge, and I circulated an early draft of our empirical study on the characteristics of patents that the Federal Circuit has held to be unenforceable due to inequitable conduct.  In response to comments, including many from this site, we have substantially revised the piece (now called simply Unenforceability). We've also put together a 4 page Research Report version that summarizes the key findings.  Here's the abstract:

There has been no systematic attempt to determine whether the patent doctrine of inequitable conduct is or is not working as theorized. This study fills that gap. We find that patents held unenforceable have clear hallmarks of risky prosecution behavior, such as longer pendency and fewer disclosures of prior art as compared to other types of litigated patents. The results indicate that the doctrine is likely to be operating better than the conventional wisdom would suggest.

The shorter Research Report is available here.   For those interested in the full-length version, it can be downloaded here. As always, comments are welcome.

Ritz Camera v. SanDisk: Expansion of Standing for Walker Process claims

Patent,

By Jason Rantanen

Ritz Camera & Image, LLC v. Sandisk Corporation (Fed. Cir. 2012) Download 12-1183
Panel: Bryson (author), Dyk, and Moore

In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), the Supreme Court held that a party who uses a patent procured through intentional fraud on the PTO to obtain or preserve a monopoly may be subject to antitrust liability.  Ritz Camera addresses an important standing issue for Walker Process claims: whether a direct purchaser of goods covered by the patent has standing to bring a Walker Process antitrust claim against the patentee even if the purchaser would not be entitled to seek declaratory relief against the patentee under the patent laws.  In an opinion authored by Judge Bryson, the court held that such direct purchasers do have standing. 

Background: SanDisk is a major producer of NAND flash memory; allegedly, SanDisk controls about three-quarters of the market.  It holds several patents relating to the memory products under which it sells and licenses flash memory technology.  Ritz is a retailer that purchases flash memory products from SanDisk and its licenses. 

In 2010, Ritz filed suit alleging that SanDisk had violated Section 2 of the Sherman Act.  Ritz contended that SanDisk had fraudulently procured two patents central to its flash memory business by failing to disclose known prior art and making affirmative misrepresentations to the PTO, that SanDisk established its monopoly position by enforcing those patents and by threats of enforcement, and that these actions caused direct purchasers to pay supra-competitive prices for NAND flash memory products.  SanDisk sought to dismiss the complaint on the ground that Ritz lacked standing, an argument that the district court rejected.  The appeal arrived at the Federal Circuit on a petition for interlocutory review.

Antitrust Standing Even When No Patent Law Standing: The sole question at issue was:

Whether direct purchasers who cannot challenge a patent's validity or unenforceability through a declaratory judgment action (have not been sued for infringement, and so cannot assert invalidity or unenforceability as a defense in the infringement action) may nevertheless bring a Walker Process antitrust claim that includes as one of its elements the need to show that the patent was procured through fraud.

Slip op. at 5.  The Federal Circuit held that direct purchasers do have such standing and, more broadly, that antitrust standing is not limited by the rules of patent standing.  Rather, "[t]he “full play” of antitrust remedies encompasses the standing requirements that apply in the antitrust setting,… including the recognition that direct purchasers are not only eligible to sue under the antitrust laws, but have been characterized as “preferred” antitrust plaintiffs." Slip Op. at 6 (internal citations omitted).  In Walker Process itself, "[t]he Court did not suggest that the class of “those injured by any monopolistic action” should be limited to those within that class who would have standing to bring an independent challenge to the patents at issue."  Id.

In reaching this conclusion, the court expressly rejected SanDisk's argument "that allowing direct purchasers to bring Walker Process claims would allow an intolerable end-run around the patent laws because parties unable to pursue invalidity claims could achieve the same result by way of a Sherman Act claim."  Slip Op. at 9.  The court noted that a Walker Process claim "is a separate cause of action from a patent declaratory judgment action."  Id. It is governed by antitrust law, and the patent issue is only one of several elements that must be proven by the claimant.

Nor did the court agree that the result here "would trigger a flood of litigation and stem innovation," particularly given the demanding proof requirements of a Walker Process claim.  Walker Process claims involve patents procurred through intentional fraud, which "cannot well be thought to impinge upon the policy of the patent laws to encourage inventions and their disclosure."  Id., quoting Walker Process, 382 U.S. at 176 (Harlan, J., concurring). 

Note: Judge Bryson recently annouced his move to senior status, effective January 7, 2013.  He has written a number of significant opinions over his tenure, including Phillips v. AWH.  Once he assumes senior status, he will have a likely have a reduced caseload and will no longer be eligible to participate in en banc decisions unless he is part of the original panel that heard the case.  I will certainly miss reading his opinions as often as I was previously able.

Guest Post: The RCE Cliff

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Guest post by Dr. Kate S. Gaudry of Kilpatrick, Townsend & Stockton LLP and Dr. Joseph J. Mallon of Knobbe, Martens, Olson & Bear LLP. 

A recent PatentlyO posting noted that the growth in Request for Continued Examination (RCE) filings has leveled off.  It appears that RCE filings have become less desirable, at least in part because the PTO is now responding to them much more slowly.  Changes to the "count" system and RCE docketing implemented by the PTO in 2009 have resulted in significant increases in both the RCE backlog and the pendency from RCE filing to the next Office Action.  The PTO dashboard shows a near doubling in two years, with the RCE backlog increasing from under 50,000 in October 2011 to over 95,000 in September 2012, and pendency from RCE filing to the next Office Action going from an average of 2.7 months in October 2011 to 5.9 months in September 2012 (see http://www.uspto.gov/dashboards/patents/kpis/kpiBacklogRCEDrilldown.kpixml and http://www.uspto.gov/dashboards/patents/kpis/kpiRCEtoOFCACTION.kpixml).  The current 5.9 month pendency from RCE filing to the next Office Action may not seem particularly long to many. However, anecdotally, we are aware of an increasing number of cases in which the pendency is over two years, suggesting a significant increase in post-RCE-pendency variability as well.

To quantify and expand on our anecdotal observations about the increase in pendency, we turned to PatentCoreTM, which is a database that provides a variety of statistics derived from file histories of more than 6 million applications. PatentCoreTM provided us with a list of all utility applications in each of five art units (1618 – Organic compounds; 1644 – Drug, bio-affecting and body treating compositions; 2161 – Data processing: database and file management or data structures; 2822 – Semiconductor device manufacturing: process; and 3622 – Data processing: financial, business practice, management or cost/price determination) in which an RCE was filed between October 1, 2002 and October 1, 2012. For each of these applications, the following information was collected: the date of the RCE, the date of the next PTO action and the type of the next PTO action (Office Action, Notice of Allowance, or Notice of Abandonment). Next-action Notice of Abandonments were rare and seemed to follow unusual fact patterns, so we excluded these cases from our data set.

For each art unit, we asked the following question for each fiscal year (FY) between 2003 and 2012: what percentage of the applications having RCEs filed in the given FY received a next Action (i.e., an Office Action or Notice of Allowance) within 3 months, 6 months, 1 year, 2 years or 3 years from the RCE filing?1

Perc_examined_per_post_RCE_time_sm
The Figures accompanying this post show the results of our analysis. Each subplot corresponds to a different art unit. The x-data indicates the FY of RCE filings. The y-data (% Examined) indicates the percentage of the applications with RCE filings in the fiscal year that received a next Action within a given time period following the RCE filing. The color of the data symbols indicates the duration of that time period.  Thus, the first red data point in the top graph indicates that, for applications in art unit 1618 for which an RCE was filed in fiscal year 2003, 64.6% of those applications received an Office Action or Notice of Allowance within 3 months from the RCE filing. Not surprisingly, for a given fiscal year the percentage examined increases as longer durations are considered.

Of note, however, is how dramatically the data changes across fiscal years. For example, averaging across the five art units, the percentage of applications examined within three months in FY 2012 was less than half (43.7%) the percentage of applications examined within three months in FY 2003. The trends are most striking in the business-method art unit (3622) and the chemistry art unit (1618). For example, in FY 2011, only 52% (art unit 3622) and 25% (art unit 1618) of RCE filings received a next Action within two years of the RCE filing. 

Ideally, the PTO will address this type of art unit-specific pendency data in its approach to tackling the increasing RCE-backlog problem. In the meantime, practitioners should be prepared to adjust prosecution strategies in view of the trends. In instances in which fast patent procurement is desirable, several options exist to attempt to avoid potential long RCE backlogs. First, in view of this data, practitioners may wish to be more conscientious about how they respond to first Office Actions (e.g., entering amendments less cautiously).

Second, practitioners can use services such as PatentCoreTM to review art-unit- or examiner-specific data identifying RCE backlogs and determine whether appealing a rejection is a more desirable (and potentially faster) way to respond to a final rejection as opposed to filing an RCE. Third, practitioners can consider filing a continuation instead of an RCE. Finally, while expensive, the Track One prioritized examination initiative by the PTO provides an opportunity for examination of an application to be accelerated following an RCE filing.

1 For recent years, this query entailed identifying all applications for which sufficient time had passed since the RCE filing to answer the query. For example, if a set of applications had RCE filings in September 2012, it would be too soon to calculate what percentage of these applications received a next Action within 6 months from the RCE filings.

Transocean v. Maersk, Part II: Secondary Indicia of Nonobviousness Outweigh Prima Facie Case of Obviousness

Obviousness, Patent, , , , ,

Guest post by Professor Lucas Osborn, Campbell University School of Law.  Before joining the academy in 2009, Professor Osborn worked on the Transocean case while at Fulbright & Jaworski, which represented Transocean.

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc. (Fed. Cir. 2012)

Panel: Prost, Wallach, Moore (author)

This is the second Federal Circuit opinion in this litigation.  Jason Rantanen wrote about the first opinion in 2010.  The patented technology involves offshore deepwater drilling vessels have "dual activity" capability, which is roughly a vessel with two advancing stations that can cooperate together to drill and finish a single oil well at the ocean floor.  The technology decreases the time it takes to drill and complete an oil well compared to the prior art.  Since offshore drilling rigs rent for around $500,000 a day, every time savings counts.  In Transocean I, the Federal Circuit overturned the district court's summary judgment finding of obviousness, noting that although Maersk provided prior art that made a prima facie case of obviousness, the summary judgment was improper in view of Transocean's significant secondary indicia of nonobviousness.  On remand, the trial jury found Transocean's patents were not obvious and awarded Transocean $15,000,000 in damages.  The district court granted Maersk's motion for JMOL notwithstanding the jury's verdict.

Obviousness – Secondary Considerations and Weighing the Strength of the Prima Facie Case

In Transocean I, the Federal Circuit found Maersk had made a prima facie case of obviousness based on two prior art references, and thus the remand was focused on secondary indicia of nonovbiousness.  On remand, the parties fought over whether the jury could consider the two prior art references in addition to the secondary indicia evidence.  Transocean, apparently believing the prima facie case was weak, wanted the jury to consider the two prior art references for two purposes: (1) to determine whether the references taught each limitation of the claims and provided a motivation to combine, and (2) to consider the strength of the prima facie case.  Maersk opposed both, insisting that the only issue was the secondary indicia of non-obviousness.  The district court allowed the jury to review the prior art references for both purposes.  The Transocean II panel said it was error to allow the jury to reconsider whether the references taught each limitation of the claims and provided a motivation to combine: because that issue was decided in Transocean I, it was the "law of the case."  On the other hand, the court held it was not error to allow the jury to weigh the strength of the prima facie case together with the objective evidence of nonobviousness.

This presents a nice strategy for patentees to (essentially) re-litigate the prima facie obviousness determination.  While the jury technically does not get to decide whether a prima facie case of obviousness exists, it might be difficult for jurors to avoid forming their own opinion about the prima facie obviousness issue if it is allowed to learn about the prior art in detail. 

On the ultimate issue of nonobviousness, the court reinstated the jury verdict as supported by substantial evidence.  The evidence of nonobviousness included evidence of commercial success (including customers willing to pay a premium or even requiring rigs with the patented features), industry praise and unexpected results, copying (including by Maersk itself), industry skepticism, licensing, and long-felt but unsolved need.  The court concluded that "Few cases present such extensive objective evidence of nonobviousness, and thus we have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness. . . . This, however, is precisely the sort of case where the objective evidence establishes that an invention appearing to have been obvious in light of the prior art was not."

The panel also held that substantial evidence supported the jury's finding of enablement. 

Infringement and Damages – Option to Modify to Avoid Infringement

The court also reiterated its Transocean I holding that Maersk may have infringed even though its original contract for "sale" of the rig contained an option to modify the rig before delivery if any patent infringement was likely.  The jury found that Maersk committed infringement when it "offered to sell" and "sold" its rig to Statoil.  The contract evidencing the sale/offer expressly indicated that Maersk could modify the final rig design based on the outcome of then-pending district court litigation between Transocean and a third party based on the same patents.  Before actually delivering the rig, Maersk modified it to avoid infringement.  But the Federal Circuit reiterated that the option to modify and subsequent modification could not save Maersk.  The jury found that the specifications of the rig offered and sold met all the claim limitations.  Post-offer/sale modifications did not matter even though they occurred before actual delivery.

Moving to damages, the panel reinstated the jury's award, but it was sympathetic to Maersk's apparent good intentions to avoid infringement.  The court stated, "We are sympathetic to Maersk's arguments. It offered drilling services which would use an infringing drill, but expressly reserved the right to modify the drill to avoid infringement. It did then modify the drill prior to delivery to avoid infringement – hence never actually using an infringing dual-activity drill."  Nevertheless, the court held that the $15,000,000 reasonable royalty verdict was supported by substantial evidence. 

What can defendants take away from this?  A contract with an option to modify the product will not avoid infringement.  It would seem defendants in situations like Maersk's (i.e., watching a patent to see if it issues or is held valid) should contract not for an "option" to modify, but for a mandatory modification to avoid infringement upon the triggering event (patent issuance or litigation upholding the patent's validity).

The Ignored Issue – When is a "Lease" a "Sale" Under Section 271?

As in Transocean I, the court did not reach a potentially dispositive issue that the parties strongly contested at times in the litigation.  Section 271(a) provides that "sales" and "offers to sell" can be acts of infringement.  Here, however, Maersk did not offer to sell or sell its drilling rig.  Rather, it "leased" and offered to "lease" its rig to a third party.  While previous cases have found that some leases can be tantamount to a sale (and thus infringe under 271), those cases primarily involved the transfer of property indefinitely or for its entire useful life (think of your typically software "license").  See Minton v. Nat'I Ass'n. of Secs. Dealers, Inc., 336 F.3d 1373, 1378 (Fed. Cir. 2003).  This case presented a closer issue:  Here, Maersk argued that it (1) the lease did not last for the entire useful life of the drilling rig, and (2) the contract was for the provision of drilling services and at all time Maersk maintained possession of the rig.  The court ignored this issue and, as it did in Transocean I, referred to the transaction as a "sale" without comment.   

From an economic perspective, "sales" and "leases" would seem to present the same harm to the patentee.  On the other hand, the statute only mentions sales, not leases.  For whatever reason, the Federal Circuit didn't want to touch this issue.  Maybe we will have to wait for Transocean III to know the answer?

Supplemental Examination: Looking at the First Supplemental Examination Request

Patent,

By Dennis Crouch

Supplemental examination has been seen by many as a complete replacement for the filing of ex parte reexaminations. The process offers an added level of legal benefits to patentees for a relatively small additional cost and no change to the timing structure. The America Invents Act of 2011 (AIA) created the supplemental examination option but delayed implementation until the one-year anniversary of AIA enactment in order to allow the USPTO sufficient time to finalize its procedures and prepare for the influx of supplemental examination requests. Thus, on September 16, 2012 (the one-year anniversary) supplemental examination became an option available to all patent owners.

Supplemental examination requests become public as soon as they are given a filing date by the USPTO. However, prior to today, no supplemental examination request has been given a filing date. The first public request is 96/000,007, filed on October 31, 2012 by a company known as "Merchandising Technologies" asking for supplemental examination of its U.S. Patent No. 7,909,641 that claims a cable-management system that swivels, extends, and retracts. The product is used for electronic device displays in retail stores such as Best Buy and Target. Earlier this year, a competitor sued MTI asking for a declaratory judgment of noninfringement, invalidity and unenforceability. Invue Security Products Inc v. Merchandising Technologies, Inc,.C. Docked No. 3:12cv88 (filed February 9, 2012, W.D. N.C). The judge dismissed that case without prejudice for lack of case or controversy. If the same case arises again, this supplemental examination should prevent a recurrence of the unenforceability claim.

Now, it appears from the serial number given to this particular supplemental examination number that it was the seventh one filed by now – at the two month point – we may be up to ten on file. In its final rules, the USPTO had estimated a filing rate more than twenty-times this. See Changes To Implement the Supplemental Examination Provisions of the Leahy-Smith America Invents Act and To Revise Reexamination Fees; Final Rule, 77 Fed. Reg. 48827 (2012) (Estimating 1,430 supplemental examination requests per year). The seemingly low number of actual filings may be due, in part, to the glut of ex parte requests filed just before the seven-fold fee increase in September 2012. Other explanations involve the high cost of supplemental examination; novelty of the program; and weakening of the inequitable conduct doctrine by the courts.

A second concern is why this supplemental reexamination is the first to publish. I have communicated with attorneys who filed some of the non-published cases. Apparently many of those are being rejected for failing to comply with the supplemental examination rules. I don't have any further information at this point on why those were rejected. Unfortunately we may never have that information if the PTO continues its practice of providing no public access to supplemental examinations prior to awarding a filing date.

The petition filed in this case is quite simple:

  • $21,260 filing fee ($16,120 reimbursed if there is no reexamination ordered);
  • Submission of seven prior art documents;
  • An explanation of what is provided by the prior art with relation to the patent and a claim chart showing that relationship; and
  • An explanation of how the claims are still valid over the prior art.

The request itself is six pages long. [Download 96000007]. There is no admission that these references were improperly withheld during prosecution since that statement is not called for even if it were true.

Now, the USPTO has until December 31, 2012 to determine whether the identified references raise a substantial new question of patentability and, if so, order a reexamination. If not, the PTO will issue the first supplemental examination certificate.

Director of the Silicon Valley United States Patent & Trademark Office

Patent

The USPTO continues to move toward opening its full complement of four satellite offices in Detroit, Dallas, Denver, and San Jose. Detroit is up and running with about ½ staff of 50 patent examiners and 10 administrative patent judges.

Today, the PTO announced that Google deputy GC Michelle Lee is taking on the role of Director of the Silicon Valley United States Patent and Trademark Office. Lee has been a leader of the Silicon Valley patent bar for a number of years and is a current member of the USPTO’s Patent Public Advisory Committee (PPAC).

This is another excellent hire by the USPTO.

Zoltek v. United States: Patents, the Federal Government, and 271(g)

Patent, ,

By Jason Rantanen

Zoltek Corporation v. United States (Fed. Cir. 2012) (en banc in part) Download 09-5135
Majority: Rader, Newman, Lourie, Bryson, Linn, Prost, Moore, O'Malley, Reyna, and Wallach
Dissent: Dyk

Two_F-22_Raptor_in_flyingWe recently discussed the Federal Circuit's en banc opinion in Zoltek v. United States from this past spring in the Contemporary Issues in Patent Law tutorial that I run here at Iowa, and it prompted me to write up a summary.

Zoltek is different from your typical infringement case in that it involves a patent claim brought against the Federal Government for a contractor's actions, and thus liability arises through a separate statutory scheme.  Zoltek is the assignee of a patent relating to methods of manufacturing carbon fiber sheets with controlled surface electrical resistivity.  Lockheed Martin designed and built F-22 fighter jets for the Federal Government; the F-22 contains carbon fiber sheets that allegedly were produced through the method claimed in Zoltek's patents. However, the process for making the sheets was begun in Japan, the partially completed product was imported into the United States, and the process was completed in the United States, which created a significant problem for Zoltek's infringement claim.

In 1996, Zoltek filed a Complaint against the Federal Government in the Court of Federal Claims under 28 U.S.C. § 1498(a).  Section 1498(a) states:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

This statute does two things: first, it acts as a waiver of the government's immunity, and second, it operates an assumption of liability by the government, thus insulating the government contractor itself from liability. However, during an earlier stage of this case, the government argued that because the process was partially performed abroad, it did not fall under Section 1498(a).  In a 2006 opinion (Zoltek III), a panel of the Federal Circuit agreed, and held that the scope of 1498(a) was limited to direct infringement under 35 U.S.C. § 271(a).  (That opinion also rejected a Fifth-Amendment takings argument).  Because 271(a) does not include manufacturing processes that are begun abroad and completed in the United States, the court concluded that the United States had not assumed liability under 1498(a).

The practical effect of the Federal Circuit's ruling was that on remand, Zoltek sought leave to amend its Complaint to add a claim against Lockheed for infringement of the patent under 271(g) and to transfer the action to federal district court.  In granting Zoltek's motion, the trial court rejected the Government's argument that 1498(a) insulates government contractors from suit even when the government could not be liable.  The Court of Federal Claims certified for interlocutory review the question "“whether 28 U.S.C. § 1498(c) must be construed to nullify any government contractor immunity provided in § 1498(a) when a patent infringement claim aris[es] in a foreign country.” 

The Federal Circuit did not directly answer that question.  Instead, the new appeal caused it to "re-examine the premises on which our earlier opinion in Zoltek III was based, and to reconsider the consequences of that opinion."  672 F.3d 1314.  In other words, the panel had erred.

Revisiting the issue en banc, the court concluded that the correct interpretation of 1498(a) is that it creates a cause of action for direct infringement that is separate and different from 271(a), and that it could include conduct falling under 271(g).  Infringement under 271(a) is thus not a necessary predicate for liablity under § 1498(a) as the earlier panel had held.  Instead, the court reasoned, the Government's liability "under 1498(a) is linked to the scope of the patent holder's rights as granted by the patent grant in title 35 U.S.C. section 154(a)(1).  As the patent grant has expanded over the years, so too has the coverage of § 1498(a)."  672 F.3d 1323.  Applying this reasoning, the court concluded that the government could be liable here: "we hold that for the purposes of section 1498, the use or importation “within the United States [of] a product which is made by a process patented in the United States” constitutes use of the invention without lawful right because the products embody the invention itself."  672 F.3d 1326.

Judge Dyk, writing in dissent, disagreed both that the court had jurisdiction to address the issue of the scope of 1498 sua sponte, as well with as the court's revised interpretation. 

The scope of 271(g): In concluding that the Government could be liable for Lockheed's conduct, the court held that "[i]f a private party had used Zoltek's patented process to create the resulting product there would be liability for infringing Zoltek's patent right under § 154(a)(1) and § 271(g)."  672 F.3d 1323.  However, 271(g) states that:

Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent….A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—

(1) it is materially changed by subsequent processes; or
(2) it becomes a trivial and nonessential component of another product.
Here, Lockheed was not importing "a product which is made by a process patented in the United States"; instead, it was importing a nearly-finished component of that process.  I haven't found any cases dealing with this scenario in the regular 271(g) context, so it may be a novel issue.  The court essentially avoids the issue in Zoltek by imbuing the product of the process with the essence of the process itself: "In the context of § 1498, the product of a patented process is not only the product, but also the physical embodiment of the invention."  672 F.3d 1326.  Zoltek itself is of limited use in settling this issue, however, since by the court's express instruction, "nothing in this opinion should be construed to affect our Title 35 jurisprudence."  Id.

Patent Issues in the 2012 Lame Duck Session of Congress

Patent,

By Dennis Crouch

Congress began its "lame duck" session this week and the session can potentially last until January 3, 2013 when the new Congress is sworn in. The primary focus of this session will be resolving budget issues and the pending "fiscal cliff" that would significantly reduce government spending (including USPTO spending). We can also expect that some patent reforms will be pushed in the session. Traditionally, Congress has used mega-bills (such the expected fiscal cliff fix) as carriers for small but potentially controversial rider bills. This approach is especially effective in a lame duck session such as this because of the time pressure and lack of accountability over some of the members of Congress who are permanently leaving town. Most governments have created rules that largely limit the effectiveness of riders. However, the U.S. Government has not taken that approach.

There are several patent issues that are likely to make their way into the lame duck session. The most likely is implementation of two patent law treaties.

Patent Law Treaties Implementation Act of 2012: Earlier this year, the Senate passed the Patent Law Treaties Implementation Act by unanimous consent. S. 3486. The House version (H.R. 6432) is jointly sponsored by the bipartisan leaders of the House Judiciary Committee, including Representative Lamar Smith who chairs that important committee. The USPTO has lobbied for passage of this bill and provided the original draft legislation. The bill has two main parts: (1) implementation of the provisions of the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (Hague Agreement) and (2) implementation of the provisions of the procedural Patent Law Treaty. These treaties have both been signed by a president and ratified by the Senate. However, both require implementation legislation in order to become effective. The idea behind both of these agreements is to streamline the filing of international applications.

On the industrial design front, the two the most substantive elements of the changed law would be (1) an extension of the design patent term by an additional year with the resulting term being fifteen years from issuance; and (2) allowing applicants to include up to 100 different design inventions within a single international design application. About 45 countries, including virtually all of Europe have signed-on to the Hague Agreement (Geneva Act).

The major change with regard to the patent law treaty is that the law would now allow for revival of unintentionally abandoned international applications.

Foley's Hal Wegner has written on the bill with relation to design patents and explains his view that US Design law is in violation of the TRIPS agreement that mandates protection for industrial designs based upon novelty alone. Wegner writes:

Enactment of the new law will have two major consequences for the United States intellectual property community:

First, of immediate interest, once the Geneva Act becomes effective, American industry will be better able to attack knockoff products at their source in overseas producing countries of Asia while also being able to attack such knockoffs in the upper end consumer countries such as Japan, Korea and China and the several states of the European Union.

Second, the apparent violation of the TRIPS coupled with the inadequacies of the design protection law in the United States will refocus domestic debate on the question whether it is time for the United States to implement a better system to protect industrial designs.

Read Wegner's Paper "The New Industrial Design Law, a TRIPS Trap?"  Download Wegner industrial designs nov12

Technical Amendment to the AIA: A second likely push in the lame duck session will be a "technical amendment" to the AIA. There are currently no official proposed texts and neither the USPTO, the IPO, nor the AIPLA were willing to provide any draft language of what is being discussed. Topics being discussed are (1) reducing the estoppel associated with PGR filings; (2) expanding the scope of prior-user rights to include prior non-commercial users; (3) defining the meaning of "otherwise publicly available" and "disclosure" in redefined Section 102; and (4) allowing IPR during the first-nine-months after issuance for pre-AIA patents. The USPTO does not appear to be pushing for any of these reforms, but other parties are doing so.

USPTO Spending: Assuming that the "fiscal cliff" debate results in across-the-board spending cuts, the USPTO would look to be treated as an exceptional case because it is fully user-fee funded rather than taxpayer funded.

Other Potential Patent Reforms: Fee shifting in software and computer hardware lawsuits (H.R. 6245); Protecting Consumer Access to Generic Drugs (H.R. 3995); Infringement exception for automotive repair parts (H.R. 3889); Research Works Act allowing publication of federally funded research (H.R. 3699); Enhanced Penalties for Counterfeit Drugs (H.R. 3468); Design Rights for Fashion under the copyright laws (S. 3523); Federal civil cause of action for trade secret theft involving interstate or international commerce (S. 3389).

Peace Corps Fellowship for Law School at the University of Missouri

Patent

by Dennis Crouch

This is totally off topic, but may be relevant to you.

I am involved with our Peace Corps Coverdell Fellows program here at the University of Missouri. Our fellowship is an amazing opportunity for potential law students because we are offering and two-years of tuition free law school (with, I suspect an in-state waiver for the third-year), a small stipend for two years ($12,000 per year), and health insurance. The requirement is that you be a Returned Peace Corps Volunteer and admitted to our law school. There is then a fairly painless selection and nomination process. I believe that we are the only law school in the country currently offering this opportunity for RPCVs. In addition to our IP curriculum, Mizzou Law is known for its dispute resolution program that is largely keyed to cross-cultural issues. We also have close ties with the MU Schools of Journalism, Public Policy, Public Health, and Social Work.

The fellowship can be awarded to folks who are just now returning from service as well as those who have been back for years.

Contact me if you are interested. All materials are due in February.

dcrouch@gmail.com

Recent Patently-O Posts

Patent, ,

Can you Wait 20-Years to Challenge Inventorship?: In this case, Yes

Patent

by Dennis Crouch

Pei-Herng Hor and Ruling Meng v. Ching-Wu "Paul" Chu (Fed. Cir. 2012)

Sometimes I'm surprised that there are not more inventorship disputes. But, the rise in power of HR managers in most corporate settings has helped to lock-down rights through initial employment or consulting contracts. On the other hand, the loose liberalism of the university setting continues to create problems on this front. One element that adds complexity for universities is that, in most cases, universities provide a percentage of any patent-related revenue to the inventors – in this case 50%. For the most part, major US corporations do not use that approach.

This dispute stems from the work of award winning and highly regarded University of Houston Professor Paul Chu. The superconductor innovator (Chu) is listed as the sole inventor of U.S. Patent Nos. 7,056,866 and 7,709,418, but his former assistants (Hor and Ming) argue that they should also be listed as co-inventors. The original applications were filed in 1987 and 1989 and did not issue until 2006 and 2010 respectively. The bulk of the long prosecution was occupied by an interference proceeding in the '418 case that was eventually resolved in Chu's favor. During that time, the original application was also put on hold pending the outcome. The interference was prompted by a former Chu lab assistant who had by then moved to the University of Alabama.

The patents cover a super-conducting material that does not require liquid nitrogen coolant. So far, the patents have netted $680,000 based upon a DuPont option on the patent. UH gave half of that money to Chu who, in turn, distributed about $140,000 to the lab assistants, including Hor, Meng, and the Alabama Elephant. Apparently those few thousand dollars were not enough.

= = = = =

35 U.S.C. §256 implicitly provides the basis for a federal court action to correct the inventor inventorship. Hor filed his complaint in 2008 and Meng joined the action in 2010. However, the district court dismissed the case as barred by laches since those parties should have known for a long time that they were not named inventors on the patent application.

On appeal, the Federal Circuit has rejected the lower court's decision on laches – holding that the period for laches for a section 256 inventorship action cannot begin to run until the patent-in-question actually issues even if "the omitted inventors knew or should have known prior to patent issuance that their names were omitted."

The lower court also held that the action was barred by equitable estoppel. On appeal, the Federal Circuit also rejected the equitable estoppel claim because it had been raised sua sponte by the lower court and without notice to the parties. On remand, the court will need to more fully develop the law of equitable estoppel as it relates to this dispute – of interest will be whether the court applies Texas law of equitable estoppel or else some federal patent law version of the doctrine.

= = = = =

The majority decision was written by Judge Prost and joined by Judge Newman. Judge Reyna wrote a concurring opinion that agrees with the statutory interpretation of Section 256 but argues that the statute is poorly drafted. Judge Reyna argues that a better approach would encourage the alleged co-inventors to take action under Section 116 to correct the inventorship during prosecution of the application. The weight of Judge Reyna's argument may well be determined based upon how the lower court rules on the equitable estoppel claim and whether that doctrine serves as a sufficient substitute for laches.

= = = = =

We have had something of a shift in the culture of inventorship in the 25 years since Chu filed his original application in 1987. Back then, the vast majority of patent applicants listed only one inventor as "the inventor." Today, most new applications at least two inventors. And, in highly-scientific fields such as Dr. Chu's, the number of inventors-per-application is even higher. A key question to be discerned is whether the difference between then and now reflects differences in the process of inventing or rather does it reflect a difference in how we identify inventors. If filing his Reardon metal patent today, perhaps Hank Rearden would have included co-inventors. One element of American ethos is steeped in the idea and ideal of rugged individualism. As President Obama's recent public statements to the contrary are absorbed into our culture, I expect that our notion of inventorship will continue to shift as well.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Chisum Patent Academy

  • The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

  • Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

  • Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
  • Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
  • Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
  • Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
  • Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
  • Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
  • Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
  • The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
  • Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
  • Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

  • Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
  • IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
  • ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
  • C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Chisum Patent Academy

  • The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

  • Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

  • Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
  • Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
  • Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
  • Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
  • Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
  • Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
  • Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
  • The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
  • Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
  • Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

  • Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
  • IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
  • ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
  • C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Chisum Patent Academy

  • The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

  • Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

  • Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
  • Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
  • Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
  • Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
  • Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
  • Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
  • Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
  • The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
  • Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
  • Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

  • Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
  • IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
  • ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
  • ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
  • C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Linking Pigs and Humans through the Enablement Doctrine

Patent,

By Dennis Crouch

Edwards Lifesciences AG v. CoreValve, Inc. (Fed. Cir 2012)

In an opinion by Judge Newman, the Federal Circuit has sided with the patentee – rejecting the challenger’s argument that the patent lacked an enabling disclosure under 35 U.S.C. § 112(1). The claims (and accused infringer activity) are all seemingly focused on using the claimed cardiac valve prosthesis in a human. However, at the time of the patent application, the invention had only been tested in a pig and the human link in the specification was only the statement that “the cardiac valve prosthesis for use in human beings has a corresponding form.” (In its brief, CoreValue also notes that none of the pigs survived more than five hours.). See U.S. Patent No. 5,411,552. The real question was whether the conversion to a human prosthesis would require undue experimentation. If not, then the specification is sufficient.

The court writes:

CoreValve [the accused infringer] argues that in no event does testing in pigs enable use in humans. However, it has long been recognized that when experimentation on human subjects is inappropriate, as in the testing and development of drugs and medical devices, the enablement requirement may be met by animal tests or in vitro data. See MPEP §2164.02 (“An in vitro or in vivo animal model example in the specification, in effect, constitutes a ‘working example’ if that example ‘correlates’ with a disclosed or claimed method invention.”). This general rule has been elaborated in various situations, e.g., In re Brana, 51 F.3d 1560, 1566 (Fed. Cir. 1995) (“one who has taught the public that a compound exhibits some desirable pharmaceutical property in a standard experimental animal has made a significant and useful contribution to the art, even though it may eventually appear that the compound is without value in the treatment in humans”); Scott v. Finney, 34 F.3d 1058, 1063 (Fed. Cir. 1994) (“Testing for the full safety and effectiveness of a prosthetic device is more properly left to the Food and Drug Administration. Title 35 does not demand that such human testing occur within the confines of Patent and Trademark Office proceedings.”).

Rather than following any bright-line rule requiring human testing, the court refocused attention on the so-called “Wands factors” of undue experimentation summarized by the court in the case of In re Wands, 858 F.2d 731 (Fed. Cir. 1988). These factors include:

  1. the quantity of experimentation necessary,
  2. the amount of direction or guidance presented,
  3. the presence or absence of working examples,
  4. the nature of the invention,
  5. the state of the prior art,
  6. the relative skill of those in the art,
  7. the predictability or unpredictability of the art, and
  8. the breadth of the claims.

In this vein, so to speak, the patentee had provided expert trial testimony as to how someone skilled in the art would be able to take the pig results and use them for a human version without undue experimentation. Based upon that testimony, the court was able to confirm that the jury conclusion was based on substantial evidence.

Validity judgment confirmed.

Construing Claims for Enablement: From a doctrinal standpoint, the question of whether a claim is sufficiently enabled should not depend upon the accused infringing activity. In practice that link is regularly found in the caselaw where courts focus the enablement question on activities related to the accused infringement. This case is no different. It turns out that the asserted claims are not expressly limited to a product for use with humans. Rather, the claims are directed toward “a valve prosthesis for implantation in a body channel.” Now, the specification does suggest that the problem being addressed deals with people and that suggestion cold potentially limit the claim scope. However, the court does not deal with the real reality that the claims are drafted in a way that would encompass use of the device in a variety of animals – many of them vastly different from a pig. In mind, this comes together to mean that we have a de facto special claim construction for enablement purposes that is used to understand the “full scope” of the claims.

Note:

  • The case has an important remedies discussion that will be included in a future post.
  • The parallel patent has been already litigated in both Germany and the UK with both cases resulting in non-infringement determinations. The key difference here is that the US courts have more broadly interpreted the claim term “cylindrical” to include shapes that are not really cylindrical. (The relevant portion of the accused device does not have a uniform diameter along its axis). That construction was confirmed on appeal since the specification does not explicitly require constant diameter.
  • In regards to the image accompanying this post, do you read from left-to-right or right-to-left?

Patent Stats for FY 2012

Patent

By Dennis Crouch

Yesterday I posted on the rising number of patent attorneys. There is also a rising number of patents and patent applications. The three tiered chart below shows the number of utility patents granted and nonprovisional utility applications filed for each fiscal year going back to 1981.

In addition to patents and applications, the chart also includes requests-for-continued-examination (RCEs) (and that form’s predecessors). I include RCE filings here because the PTO has traditionally reported RCEs as applications whereas I tend to consider them an element of prosecution within an application. Thus, for FY2012, the USPTO will report 515k patent applications while I would calculate that number at a much more modest 357k.

RCE FILINGS: RCE filings grew at an exponential rate for much of the last decade. However, for the past three years there has been almost no growth in the number of RCEs being filed each year. A few years ago, it appeared that RCEs were serving a role in an informal collusion between examiners and applicants where the filing of an RCE provided the examiner with an additional “count” and the applicant quickly received an issued patent following the filing. For several reasons, that approach appears to have largely subsided. Today, only a small number of RCE filing lead to a quick patent issuance and in fact, most applications where RCEs are filed are eventually abandoned.

The Baby Boom of Patent Practitioners

Patent

By Dennis Crouch

This morning, the USPTO provided official notice that Practitioner Registration No. 70,549 has been assigned and Robert Kent of Houston is now a patent agent. The PTO rolls have been steadily growing for the past 15 years – with about 10,000 new practitioners registering every 4-6 years. That rate is roughly triple of what it was throughout the 1980s and mid-1990s.

The chart below shows the number of currently registered US Patent Practitioners grouped by the number of years that they have been registered. The “baby boom” of patent practitioners that began 15 years ago will likely have some important impacts on career opportunities for patent attorneys who want to move into a senior or leadership role. Today, many patent practitioners with 10-15 years of experience are moving into leadership roles within their organizations.

See also, Estimate: Fewer than 26,000 Active US Patent Attorneys & Agents and Are you a Patent Attorney Masquerading as a Patent Agent?