September 2013

Under the AIA,

A person shall be entitled to a patent unless-(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or (2) the claimed invention was described in a patent … or in [a published] application … [that] names another inventor and was effectively filed before the effective filing date of the claimed invention.

35 U.S.C. 102(a) (2013).

The USPTO is now examining patents under this new standard. I would love to see a real world example of this law being applied in a way shows the difference between our new filing-date focus and the old invention-date focus.

Licensee Underreporting

By Dennis Crouch

One problem with royalty agreements is the annual fight over whether the licensee is paying full royalties to the licensor. In a recently released report, the technology-license auditors at Invotex say that there is good reason for a fight based upon their finding that "89% of audited licensees underreport and underpay royalties." According to their audits, a full 25% of licensees were paying less than half of what they should.

Now, one potential issue with this report is that Invotex has some amount of bias because the company primarily represents licensors willing to pay for an audit (and who have some suspicion of under-reporting). In addition, Invotex has a financial incentive to make audits appear larger. That said, the results found here are not surprising to me and attorneys should recognize that a licensor's role must be an active one.

Read the report here:

Bits & Bytes from Jonathan Hummel


#1. Patent Battle over Cash-Cow Cameras in St. Louis

American Traffic Solutions (ATS) is suing B&W Sensors for patent infringement on a patent that covers, “technology using photography to simultaneously clock multiple vehicles on a single roadway.” Largely known for manufacturing controversial red-light cameras (see story in Missouri Appeals Court). ATS says B&W has misrepresented its speed-camera services to potential customers by falsely claiming that ATS could not offer them. ATS also complains that B&W has brought negative local attention to speed cameras, damaging the potential market for ATS in the St. Louis area.


#2. Troubled Trolls Pen Letter to Congress Re Covered Business Method Expansion

Matt Levy, writing at Patent Progress, breaks down a letter sent last week by concerned NPEs. Last Friday, BSA (Business Software Alliance) and a number of companies sent a letter to Senate and House Judiciary Committee leadership. BSA puts forth the standard “hamper to innovation” argument against expanding covered from only those business method patents dealing with financial services to all business methods. The letter was delivered to Senate Judiciary Chairman Patrick Leahy (D-Vt.) and Ranking Member Chuck Grassley (R-Iowa), and House Judiciary Chairman Bob Goodlatte (R-Va.) and Ranking Member John Conyers, Jr., (D-Mich.).Read the letter here.


#3. Martha Stewart Embroiled in Patent Battle with LodSys

Timothy B. Lee, writing for The Switch, at the Washington Post, reports that NPEs have a new, very formidable enemy: Martha Stewart. In July, Lodsys sent Stewart's media empire letters warning her that four of its iPad apps infringed LodSys's patent. Lodsys demanded $5,000 for each of the four apps to license the patents. Rather than simply pay the fee to make LodSys go away, Martha Stewart Living Omnimedia filed suit in Wisconsin seeking declaration that it had not infringed.


#4. Police Intellectual Property Unit Makes First Arrests

The Guardian reports that a new police unit to tackle illegal downloads and counterfeit DVDs and CDs has carried out its first raids and arrested two men. The police intellectual property crime unit (PIPCU), which launched on Friday, is being run by City of London police and has government funding of £2.56m over two years.



Apple Applies For a Patent on E-Book Signing Technology

Writing for PC Magazine, Stephanie Mlot, explains, "A digital tome would come embedded with a specific autograph page, or a 'hot spot' autograph widget area configured to receive autographs."  Adding, "Don't expect to see this e-autograph system added to iBooks anytime soon. Find the patent here.



#1. Intellectual Property Symposium – 10/4 – University of Misosuri

Join us at the University of Missouri, School of Law for a discussion of the current issues facing Intellectual Property practice. Hosted by the school’s Center for Dispute Resolution, the Symposium will feature Greg Gorder, co-found of Intellectual Ventures giving the Keynote Address.

#2. Antitrust and Intellectual Property Conference  — 10/10 

-ABA Section of Intellectual Property


#3. International Laws Governing Cross Border Discovery, Privilege, Confidentiality and Data — 10/16

-ABA Section of Intellectual Property





IP Attorney – Law Firm – Lansing, Mich.

            –Fraser Trebilcock Davis & Dunlap, P.C., an established Lansing Law Firm, has an opportunity for an experienced IP Attorney.

            -Please send resume with cover letter to Thaddeus E. Morgan, 124 W. Allegan, Suite 1000, Lansing, MI 48933.


Technical Writer/Patent Agent – Law Firm – Charlotte, N.C.

            –Additon, Higgins, Pendleton & Ashe, a boutique intellectual property law firm based in Charlotte, North Carolina, is seeking an experienced technical writer or patent agent to immediately join the firm. The candidate should also have a degree in electrical engineering, computer engineering, or computer science. Admission to practice before the USPTO is a plus.

            -Please send your resume, writing samples, and cover letter to



USPTO and Government Shutdown

There is a potential of a substantial government shutdown on Tuesday, October 1 when the new fiscal year begins without moneys being appropriated.  The Patent Office has more control over its budget than some agencies and has a reserve fund that can be spent without further appropriations. So, for patent filers, the USPTO will remain open for business for at least a few weeks. A parallel fiscal hurdle is expected to hit October 19 when the US government’s debt load will to reach its self-imposed ceiling.  At that point, the PTO would likely be severely required to restrict spending.

FTC on Patent Trolls

By Dennis Crouch

The Federal Trade Commission has decided to move forward with a full study of patent assertion by companies who are in the business of buying and then asserting patents. In FTC lingo, these are referred to “Patent Assertion Entities” or PAEs. From the agency:

PAEs are firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies. The FTC is conducting the study in order to further one of the agency’s key missions—to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.

In addition to seeking voluntary information, the FTC proposes to use its subpoena power of to require the assertion entities to provide information to the agency and address the following questions:

  • How do PAEs organize their corporate legal structure, including parent and subsidiary entities?
  • What types of patents do PAEs hold, and how do they organize their holdings?
  • How do PAEs acquire patents, and how do they compensate prior patent owners?
  • How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?
  • What does assertion activity cost PAEs?; and
  • What do PAEs earn through assertion activity?

Federal Circuit: Intentional Abandonment Equals Unintentional Abandonment?

Network Signatures v. State Farm (Fed. Cir. 2013)

Section 282 of the Patent Act lists the defenses to allegations of patent infringement. In recent years, the Federal Circuit has applied that statute somewhat strictly in finding that the section defines the complete list of defenses. In one case, the court held that the patent office's improper revival of an abandoned patent application could not justify fit as defense. See Aristocrat Technologies Australia v. International Game Technologies (IGT) (Fed. Cir. 2008) (erroneous revival not a cognizable defense under §282).

The present case also involves revival of an abandoned application. Trying a different tact, the defendant here (State Farm) argued that the patent is unenforceable because the patentee lied to the PTO regarding the "unintentional" nature of the abandonment. (Generally, abandoned patents and patent applications can only be revived if the abandonment was unintentional). The charge is inequitable conduct.

The patent at issue is owned by the US Government but currently exclusively licensed to the private company – Network Signatures. U.S. Patent No. 5,511,122. The patent issued in April 1996 and the second maintenance fee was due in October 2003. (7 ½ years after issuance). The PTO then gives patentees another six-months grace period to pay the fee. However, the Navy decided not to pay the fee because of there was no known "commercial interest" in the patent at that time. As a result, the patent was deemed abandoned and thus unenforceable in April 1996. Two weeks later, the predecessor of Network Signatures contacted the Navy IP folks to see whether it could license the patent. At that point, the patent suddenly became valuable and the Navy immediately requested that the PTO revive the patent based upon the "unintentional" abandonment of the application. Without requiring the submission of any evidence or explanation, the PTO granted the petition and revived the patent. Since obtaining the license, Network Signatures has filed almost 100 infringement lawsuits against a wide variety defendants. Now, I should mention here that the predecessor to Network Solutions had actually tried to contact the Navy prior to final expiration to express interest in the patent, but was not routed to the IP department until after the patent had been abandoned.


Neither the patent statute nor the regulatory rules "unintentional," but the MPEP indicates that "[a] delay resulting from a deliberately chosen course of action on the part of the applicant is not an 'unintentional' delay within the meaning of [the code]." MPEP 711. Seemingly addressing the particular situation at issue here, the MPEP indicates that "a change in circumstances that occurred subsequent to the abandonment of an application does not render 'unintentional' the delay resulting from a previous deliberate decision to permit an application to be abandoned." Id. On the other hand, a "mistake of fact" appears to be a justified "unintentional" reason.

After reviewing this evidence, the district court sided with the defendant and held (on summary judgment) the patent unenforceable due to inequitable conduct based upon the patentee's statements that the abandonment was unintentional. On appeal, however, the Federal Circuit has reversed – finding that the patentee's action does not constitute "material misrepresentation with intent to deceive."

Mr. Karasek's compliance with the standard PTO procedure for delayed payment, using the PTO form for delayed payment, does not provide clear and convincing evidence of withholding of material information with the intent to deceive the Director. On matters unrelated to the substantive criteria of patentability, but within the authority of the Director, "it is almost surely preferable for a reviewing court not to involve itself in the minutiae of Patent Office proceedings and to second-guess the Patent Office on procedural issues at every turn." Laerdal Med. Corp. v. Ambu, Inc., 877 F. Supp. 255, 259 (D. Md. 1995) (citation and internal quotation marks omitted).

Judge Newman penned the opinion that was joined by Judge Wallach with the result of a reversal. With the complete reversal, it appears that the majority opinion result is a summary judgment of no inequitable conduct.

Writing in Dissent, Judge Clevenger argued that the unintentionality statement made by the patentee was clearly material but that the question of intent should go to trial. For Judge Clevenger, the issue of materiality is clear: "If the PTO had known the true facts, I have no doubt whatsoever that Karasek's revival petition would have been denied." However, from Judge Clevenger's perspective, the issue of intent is still up in the air. In particular, whether the Karasek knew that the circumstances of the revival were, and made a deliberate decision to withhold them.

Responding to Judge Clevenger's position in a footnote, Judge Newman explained that we could not expect further explanation from the attorney regarding the unavaoidability of the abandonment because PTO rules and the revival official form only require a statement that the abandonment was unavoidable. In essence, because the standard practice is to not explain the reasons for abandonment that we should not blame the filer for failing to provide reasons.

PTO Post-Issuance Filings

By Jason Rantanen

This afternoon my frequent collaborator Lee Petherbridge will be presenting Unenforceability (which we wrote with Polk Wagner) at the Houston Intellectual Property Law Association's annual IP Institute.  As we were talking about the presentation, our conversation turned to the subject of the AIA's impact on post-grant proceedings at the PTO (particularly supplemental examination).  I was able to assemble the following charts based on data from the PTO's website (specifically, from this page and this page).

Ex Parte ReexamInter Partes
Note that the inter partes review data points are my estimates based on graphical data from the PTO; practically speaking, however, any deviations from the "true" values are going to barely show up here due the scale of this graph. 

Unsurprisingly, there was a large jump in both ex parte and inter partes filings in Q4 of 2012.  These spikes corresponded with the approximately 5-fold fee increase for filing an ex parte reexamination request, and the transition to inter partes review coupled with a similarly high fee structure on September 16, 2012.  Since then, ex parte reexamination requests have remained low while inter partes review filings have been on the rise, eclipsing even pre-September 16 inter partes reexamination levels (for just the first two months of Q4 of FY 2013, there have already been more than 130, which constitutes more inter partes filings than any previous 3-month quarter except for Q4 2012). 

What about supplemental examination requests?  In the past I've expressed skepticism that supplemental examination will be a widely used mechanism.  To date, the actual filing data appears to have born that skepticism out: the PTO's supplemental examination final rules predicted about 1,430 requests anually; as of August 30, 2013 there were 40. 





What surprised me the most about this data is that supplemental examination was widely believed to be the new path to ex parte reexamination for patent owners (i.e.: rather than file an ex parte reexamination request, just file a supplemental examination request), including by the PTO itself.  See 77 Fed. Reg. 48828, 48847 (Aug. 14, 2012) ("In view of the benefits to patent owners afforded by supplemental examination under 35 U.S.C. 257(c), the Office is estimating that all 110 requests for ex parte reexamination that would have been filed annually by patent owners will instead be filed as requests for supplemental examination.").  So  far, however, traditional ex parte reexamination requests are an order of magnitude greater than supplemental examination filings.  Of course, this can all change with time – inter partes post grant proceedings started off slow but now have eclipsed ex parte reexamination.

One last chart, again from the PTO's website: pre-issuance submissions are becoming a relatively common, although by no means ubiquitous, type of filing. 





Amending the America Invents Act 2013

By Dennis Crouch

One aspect of the Goodlatte discussion draft legislation is a series of “Improvements and Technical Corrections to the Leahy-Smith America Invents Act.” The AIA was passed in September 2011 and is gradually being fully implemented across the US patent system. The further changes here are fairly substantial, although buried within the proposed bill itself. The following post offers some explanation of the provisions with only a few comments on the policy implications.


For several years, the PTO has been pushing to weaken or eliminate the “civil action” option that is currently available to patent applicants who are refused a patent. The current system allows a patent applicant to file a federal lawsuit that asks a district court to order the PTO to issue a patent covering the claimed invention. The civil action approach allows for extensive presentation of evidence, live witness testimony, and an ultimate decision by a district court judge. And, since the civil action is not an “appeal” per se, substantial deference is not given to prior factual findings by the PTO (as long as the applicant presents its own evidence on point). The civil action approach is not widely used because of the expense of pursuing a district court claim. However, it has been a very successful approach for a number of patent applicants. Under the new provision, the only avenue for challenge an adverse PTO decision on the merits of an application would be through appeal to the Court of Appeals for the Federal Circuit.


The current estoppel rules of post-grant review indicate that a petitioner will be estopped from latter asserting in-court that the challenged patent “invalid on any ground that the petitioner raised or reasonably could have raised during that post-grant review.” The amendment would substantially narrow the estoppel to cover only grounds that the petitioner actually raised.

This change would result in Post-Grant review being much more of a parallel option rather than an alternative option to challenging patent validity.


The proposal would require that the claims under review be construed in the same way that they would be construed by a district court rather than using a “broadest reasonable construction.” The statute as written requires that the PTAB construe “each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.” However, that method is somewhat different than what has been ruled as the law by the Federal Circuit.


The statute would create a new statutory provision that is intended to codify the obviousness-type double patenting doctrine. This ensures that the doctrine is carried through into the AIA. I have not parsed through the new provision to see if it does what they say it does:

35 U.S.C. §106 that reads as follows:

A claimed invention of a patent issued under section 151 (referred to as the ‘first patent’) that is not prior art to a claimed invention of another patent (referred to as the ‘second patent’) shall be considered prior art to the claimed invention of the second patent for the purpose of determining the non-obviousness of the claimed invention of the second patent under section 103 if—

(1) the claimed invention of the first patent was effectively filed under section 102(d) on or before the effective filing date of the claimed invention of the second patent;

(2) either—

(A) the first patent and second patent name the same inventor; or

(B) the claimed invention of the first patent would constitute prior art to the claimed invention of the second patent under section 102(a)(2) if an exception under section 102(b)(2) did not apply and, if applicable, if the claimed invention of the first patent had not been effectively filed under section 102(d) on (but was effectively filed before) the effective filing date of the claimed invention of the second patent; and

(3) the patentee of the second patent has not disclaimed the rights to enforce the second patent independently from, and beyond the statutory term of, the first patent.


The AIA creates an option for third parties to attack patents on non-technological “covered business method” innovations through the use of a new post-grant review proceeding. Through the review program, third parties can raise any ground of invalidity and can use this approach to pre-AIA patents. The amended provision would appear to sweep-in virtually all software-type patent claims.

Under the changes, the 7-year sunset provision would be removed; the expansive definition of business methods found in SAP America, Inc. v. Versata Dev. Group, Inc., CBM2012-00001, 12 Paper 36 (January 9, 2013), would be codified; and the “non-technological” requirement would be clarified/expanded to make clear that a claim’s recitation of technological features does not make the claim technological “if it is readily apparent that the recited [technological] feature is anticipated by or obvious in light of the prior art.”


The bill proposes a clear rule that no PTA can be awarded for any delays that occur following the filing of a Request for Continued Examination (RCE). This would reduce the patent term for a substantial portion of patents and the bill indicates that the recalculation would be retroactive against any patent application still pending at the time of enactment.


Although not a statutory change, the bill would make the “clarifying” statement that:

CLARIFICATION OF JURISDICTION.—Congress finds that the Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole.

This provision has the potential of bringing patent malpractice claims back under Federal Court jurisprudence. And, to the extent that patent licenses depend upon the scope of a patent claim, licensee disputes would also be heard in Federal Courts.

Patent Reform 2013 – A Discussion Draft

by Dennis Crouch

House Judiciary Chairman Bob Goodlatte has released a new version of a "discussion draft" of proposed legislation focusing attention on "abusive" litigation tactics. In a major way, the Bill is focused on making it more difficult for patentees to enforce their patents and is designed to put additional financial risk on patentees who lose in court. Members of both the House and Senate are looking for constituent input on this topic. Senator Leahy is also likely to distribute a draft bill within the next month or so.

[Download Goodlatte – Patent Discussion Draft]

1. Raising Pleading Requirements for Allegations of Patent Infringement

Under current Federal Circuit precedent, a patentee pleading patent infringement can file a bare-bones complaint that basically only indicates the patent at suit and the general activity by the defendant that leads to the infringement accusation. In Iqbal and Twombly, the Supreme Court generally raised the pleading standards and federal courts now require significantly more factual assertions in complaints than they did a few years ago. However, the Federal Circuit found that patent infringement complaints fall within an exception that allows less-informative pleadings so long as they comply with Form 18 of the FRCP. The court has applied the higher Iqbal standards to other pleadings such as defenses and counterclaims raised in an answer and especially focused on allegations of inequitable conduct.

The bare-bones approach of Form 18 leaves tremendous wiggle. And, patentees typically do not identify, for instance, (1) which claims of the patent are being asserted, or (2) what products or services of the defendant are allegedly infringing. The amendment would essentially tell patentees that patent infringement must be pled with particularity. And, at least the patentee must identify those two important elements listed above (if known). In addition, the proposal in its current form asks for a claim chart showing "where each element of each claim . . . is found within the accused instrumentality" and a description, "with detailed specificity, how the terms in each claim … correspond to the functionality of the accused instrumentality." The complaint would also be required to list all other cases where the patent has been asserted and identify whether the patents at issue are subject to any FRAND commitment.

One exemption that appears throughout the proposal is that these changes do not apply when an innovator drug company is suing a would-be generic manufacturer. Rather, throughout the proposal an exception is made for cases where the cause of action arises under 35 U.S.C. § 271(e)(2) (the typical statutory provision invoked in innovator-generic patent litigation).

Federal courts have been using a "notice pleading" system since the 1930's – requiring a "short and plain statement of the claim showing that the pleader is entitled to relief." FRCP 8. It would be interesting to see some pre-1938 complaints and consider whether the apocryphal tale that "fact pleading" was actually much more comprehensive. But the changes appear to move the patent world into the world of fact pleading. The idea behind notice pleading is to provide the accused with sufficient notice of the claim without unduly burdening the plaintiff or creating overly formalistic rules. However, for at least some cases, the current standard does not provide sufficient notice for an accused infringer to actually understand what the patentee is claiming. In addition to providing better notice, the proposed legislation would also significantly raise the burden of filing a patent infringement complaint.

The statute also requires that the Judicial Conference propose rules that would eliminate Form 18 as it stands and create a new form that complies with the new factual pleading described above.

How the courts will likely solve this problem before Congress takes action: The courts recognize that the current pleading standard is too low in patent cases (including a likely majority of Federal Circuit judges). To deal with this the court basically has two options: (1) amend Form 18 through the Judicial Conference procedures; or (2) decide that the court is not bound by Form 18.

2. Award Attorney Fees for Prevailing Parties – And Against All Interested Parties

The new bill creates a presumption in favor of attorney fees being awarded to the prevailing party. Unlike other proposals during the past couple of years, the discussion proposal here is not overtly biased against patent assertion. Rather, the attorney fee statute (§ 285) would require courts to award "reasonable fees and other expenses" to the prevailing party "unless the court finds that the position [of the losing party] was substantially justified or that special circumstances make an award unjust."

Now, in order to ensure that patent holding companies are able to pay as losing party, the provision allows for attorney fee recovery against "interested parties" that have been joined under new provision 299(d). Under 299(d), interested parties include assignees, anyone with a right to sue, anyone with a right to sublicense, and anyone with a direct financial interest in the patents. However, neither ordinary contingency fees attorneys nor equity owners of the patentee qualify for joinder despite their obvious financial interests.

3. Limit Discovery in Patent Cases.

For many reasons, patent lawsuits are hotly litigated and the discovery process is long+expensive. The discussion bill provides for particular limits on discovery prior to claim construction. Under the proposal, a court would be barred from allowing discovery prior to a claim construction decision (except for discovery necessary for claim construction).

In addition, the bill would require the judicial conference to propose a number of limits on discovery that have the potential of significantly changing the process of patent some litigation.

4. Additional Initial Disclosures for Public Release

Under current law, information on each patent lawsuit is sent to the USPTO and placed on public record there. The proposed legislation would extend that program by requiring the patentee in an infringement lawsuit to disclose (1) any assignees of the patent; (2) any entities with the right to enforce or sublicense the patent; (3) any entity with a financial interest in either the patent or the plaintiff; (4) the ultimate parent entity of any of the entities named.

In addition, the law would mandate updates of assignee information for all patents within 90-days of any change of assignee.

5. Exception for Customer Lawsuits that Allows for Stay of those Actions

Sometimes alleged infringement is simply based on the defendant's use of an infringing product. The proposed legislation would require a court to stay actions against such customers pending resolution of the case against the manufacturer. However, the grant of stay requires that the customer agrees that the court decisions in the manufacturer suit will become res judicata have preclusive affect against the customer.

6. Foreign Bankruptcy Effect on US Patent License

Business bankruptcy and reorganization is sometimes mind-bending. Bankruptcy trustees are generally authorized to choose whether to reject or enforce (assume) any of the contracts that were binding on the debtor at the time of bankruptcy filing. However, the Bankruptcy code significantly reduces that power when the contract involves the a license of the debtor's intellectual property rights. 35 U.S.C. §365(n). One issue that has arisen lately is the impact of foreign bankruptcy on the debtor's US intellectual property rights holdings. The proposed bill protect the creditor-licensees in those cases so that an IP owner's foreign bankruptcy cannot be used to unilaterally cancel one of its licensee's US IP rights. To be clear, 365(n) applies to US IP rights, but not Trademark rights or state-law rights other than trade secret rights.

Next Federal Circuit Judge: Todd Hughes

The Senate has unanimously (98-0) confirmed Todd Hughes to the US Court of Appeals for the Federal Circuit. With Hughes on the bench, the Federal Circuit will now have a full-bench of twelve judges in addition to six judges with senior status. Although not a patent litigator, Hughes has apparently argued more cases at the Federal Circuit than any other attorney based upon his long career in the commercial litigation branch of the Department of Justice. No date has been announced for his swearing-in. However, Chief Judge Rader prefers to take action quickly and I expect that Judge Hughes will be hearing cases within the next few weeks.

Hughes is the first openly gay judge to be confirmed for any Federal appellate court. The 98-0 confirmation decision suggests that no senator has a principled reason for rejecting judicial candidates based upon their sexual orientation.

Congratulations Judge Hughes!

Patent Reform 2013

Coming soon … “Anti-troll” bills in both the House and Senate that focus on transparency in patenting and litigation, attorney fees, reducing discovery costs, raising pleading requirements, and offering an outlet for lawsuits against the customers of infringing manufacturers.

Patent Law Federalism

Activision TV v. Pinnacle Bancorp (D.Neb 2013)

The Supreme Court has held that state governments are preempted from legislating substantial patent law issues and from deciding patent law cases. Rather, in those contexts, patent law is the exclusive purview of the US national government. Of course, the Supreme Court also recently held (again) that there are many patent law issues that are not “substantial” and that a state can still exert power over those lesser issues. See Minton v. Gunn.

Activision owns a number of patents, including U.S. Patent Nos. 8,330,613 and 7,369,058. And the company has sued a host of defendants alleging infringement based upon the use of a digital menu board – as shown here at Western Sizzlin.

After five local companies received cease-and-desist letters from Activision TV, the Nebraska Attorney General’s office began an inquiry and then filed a cease and desist letter against the Texas based law firm of Farney Daniels ordering that the firm to stop sending these letters. The Attorney General letter raised a variety of potential violations involving unfair and deceptive actions and offered the following concluding paragraph:

The possible violations specified in this letter are serious and require your immediate and unconditional cooperation. Given the significant ramifications posed to Nebraska consumers and businesses by your potentially unlawful conduct, I hereby demand that you immediately cease and desist the initiation of any and all new patent infringement enforcement efforts within the State of Nebraska pending the outcome of this office’s investigation.

(Bold in original) [AG Letter].

In response, Activision amended its complaint against Pinnacle Bancorp to include allegations against the Attorney General and his chief deputies and requesting a declaratory judgment that Farney Daniels’ enforcement actions do not violate Nebraska State Law and that the Attorney General’s action violates “Activision’s rights under 42 U.S.C. § 1983, the First, Fifth, and Fourteenth Amendments to the U.S. Constitution” as well as the Supremacy Clause found in Article IV. Activision also requested a preliminary injunction. For its part, the State Attorney General argued that Activision had no authority to bring the action because the Attorney General letter was sent to the law firm Farney Daniels and not to the patentee. The Attorney General also stood by its guns in alleging that the letters from Farney Daniels were unlawful under Nebraska law.

[T]here are a number of possibly deceptive statements in the Farney Daniels letters on which businesses to detrimentally rely. For example, the letters warn there are “serious consequences for infringement,” and “[i]nfringers who continue to infringe in the face of an objectively high risk of infringement of a valid patent can be forced to pay treble (triple) the actual damages, as well as the patent owner’s litigation costs, including all attorney’s fees.” The letters … that [the recipients] contact Farney Daniels and Plaintiff “within three weeks of the date of this letter … further claiming Plaintiff has “suffered damages due to…past infringement, and will suffer damages and irreparable harm in the future in the absence of injunctive relief.” . . . The MPHJ letters also “encourage” the business to “retain competent patent counsel to assist you in this matter” and warn that “additional steps might be required” if a license is not purchased.

In all respects, these seem like “threats to sue.” . . . These threats to sue are deceptive, the Attorney General believes, because Farney Daniels had no intention of suing all, most, or many of these targeted businesses if they did not agree to licenses, and, of the businesses they actually sued, Farney Daniels had no intention of actually serving summons and/or prosecuting the case to trial. In the debt collection arena, misrepresentations of legal consequences have been held to violate deceptive trade practices laws.

Furthermore, they may be deceptive to the extent Farney Daniels and Plaintiff implied that they have a reasonable basis for identifying the target business as one that actually infringes on the patent. . . . Further facts that may show Farney Daniels’ intent, and/or the amount of letters it sent nationwide or to Nebraska businesses, however, have not yet been developed, as the investigation is still nascent.

With regard to the Supremacy clause and patent law’s preemption of state-law, the Attorney General argued that its consumer protection action does not impact the patent laws.

Federal law does not preempt the state regulation of entrepreneurial letter writing campaigns. The Attorney General’s possible state law deceptive trade practices claims do not involve any legal application to the validity of the patent, to the scope of what is infringing, or to the public domain in any way.

Finally . . . the July 18 letter in no way affects Plaintiff’s rights to bring suit in this or any Court.

In considering these claims, the Federal District court partially granted Activision’s preliminary injunction motion. In particular, the court held that “Farney Daniels can file an appearance in this case or any other federal cases without running the risk of violating the State of Nebraska Attorney General’s cease and desist order. Further, Farney Daniels and its attorneys may proceed to prosecute their cases, including all discovery, as it would in any other lawsuit.”

What’s missing from the court order, however, is any discussion of whether Farney Daniels can continue to pursue any pre-filing activity such as threatening suit against alleged infringers.

2014 Holiday Gift Guide for Patent Attorneys – No. 1


I've been biking to work almost every day this semester – usually taking my kids to school on our train but sometimes on my own. You'll note that the bike has a 36-v battery that speeds us up and down the rolling hills of Columbia Missouri and makes the 5-mile ride feel like a breeze. The result is that I get some gentle morning exercise but arrive at work ready to teach. Because Columbia has nice bike trails and easy bike parking, I the bike ride turns out to be quicker than driving. For gifting purposes, Volton does mail-order and then takes about 20 minutes to build – easy enough that any patent attorney could figure it out. [] – Dennis



Is “Insolubly Ambiguous” the Correct Standard for Indefiniteness?

By Dennis Crouch

Nautilus v. Biosig Inst. (on petition for writ of certiorari 2013)

A major focus of attention in the current arena of patent reform is on the notice function of patent claims and, in particularly, the standard for definiteness. Most of the time, the scope of a patent's coverage is only known once a district court construes those claims. And, in many cases, that knowledge is really delayed until Federal Circuit review. A substantial portion of the blame in this area can be placed on patentees who intentionally draft claims of ambiguous scope. Of course, the Supreme Court has long recognized the policy benefits of allowing ambiguity in patent coverage. (See, Doctrine of Equivalents). Most technology users would prefer to understand the scope of claims before litigation and use that information to decide whether to obtain a license. However, the ambiguity (in combination with other factors) lead to the common practice of holding-out until a court construes the claims.

For indefinite claims, the statutory guidelines come from 35 U.S.C. § 112(b) that requires claims that "particularly point[] out and distinctly claim[] the subject matter which the inventor … regards as the invention." The doctrine of indefiniteness finds its statutory support from §112(b). And, when a claim is indefinite it is both unpatentable and invalid.

Once a patent issues, it tends to be quite difficult to invalidate that patent on indefiniteness grounds. The difficulty begins with the statutory presumption of validity under § 282 that requires clear and convincing evidence of invalidity. That difficulty continues with the standard for indefiniteness itself. In particular, the Federal Circuit has required that invalidity by indefiniteness requires proof that the challenged claim is ambiguous in a way that is "insoluble." In Biosig, the Federal Circuit similarly held that indefiniteness of an issued claim can only be found "if reasonable efforts at claim construction result in a definition that does not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim."

In a new petition, John Vandenberg's team at Klarquist Sparkman has asked the Supreme Court to reconsider the Federal Circuit's standard on this point. Nautilus presents the following questions:

1. Does the Federal Circuit's acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not "insoluble" by a court—defeat the statutory requirement of particular and distinct patent claiming?

2. Does the presumption of validity dilute the requirement of particular and distinct patent claiming?

Many of these same issues have been previously addressed by the Supreme Court in pre-1952 decisions. See, for example, United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942). In Union Carbide, the court wrote that:

The statutory requirement of particularity and distinctness in claims is met only when they clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise. A zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims would discourage invention only a little less than unequivocal foreclosure of the field. Moreover, the claims must be reasonably clear-cut to enable courts to determine whether novelty and invention are genuine. . . . Whether the vagueness of the claim has its source in the language employed or in the somewhat indeterminate character of the advance claimed to have been made in the art is not material. An invention must be capable of accurate definition, and it must be accurately defined, to be patentable.

Interpreting the precursor to Section 112(b), 35 U.S.C. § 33 (1932). The old § 33 included the parallel requirement of claims that "particularly point out and distinctly claim the part, improvement, or combination which he claims as his invention or discovery."

In the Union Carbide, the court's problem with the claims was what it called functionality, writing: [T]he claims are but inaccurate suggestions of the functions of the product, and fall afoul of the rule that a patentee may not broaden his claims by describing the product in terms of function. Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245; General Electric Co. v. Wabash Corp., 304 U.S. 371. The particular claims at issue in Union Carbide are as follows:

1. Substantially pure carbon black in the form of commercially uniform, comparatively small, rounded, smooth aggregates having a spongy porous interior.

2. As an article of manufacture, a pellet of approximately one sixteenth of any inch in diameter and, formed-of a porous mass of substantially pure carbon black.

See U.S. Patent No. 1,889,429. Read the claims again and look for the functional limitations, then read the Supreme Court's decision.

In General Electric Co. v. Wabash Corp., 304 U.S. 364 (1938), the Supreme Court similarly took issue with the indefiniteness of issued patent claims.

The limits of a patent must be known for the protection of the patentee, the encouragement of the inventive genius of others, and the assurance that the subject of the patent will be dedicated ultimately to the public. The statute seeks to guard against unreasonable advantages to the patentee and disadvantages to others arising from uncertainty as to their rights. The inventor must inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not.

. . . . Patentees may reasonably anticipate that claimed inventions, improvements, and discoveries, turning on points so refined as the granular structure of products, require precise descriptions of the new characteristic for which protection is sought. In a limited field, the variant must be clearly defined.

GE v. Wabash.

Reaching further back to the 19th century, the court wrote in Merrill v. Yeomans, 94 U.S. 568 (1876) that a patentee has no excuse for ambiguous or vague descriptions.

The growth of the patent system in the last quarter of a century in this country has reached a stage in its progress where the variety and magnitude of the interests involved require accuracy, precision, and care in the preparation of all the papers on which the patent is founded. It is no longer a scarcely recognized principle, struggling for a foothold, but it is an organized system, with well-settled rules, supporting itself at once by its utility, and by the wealth which it creates and commands. The developed and improved condition of the patent law, and of the principles which govern the exclusive rights conferred by it, leave no excuse for ambiguous language or vague descriptions. The public should not be deprived of rights supposed to belong to it, without being clearly told what it is that limits these rights. The genius of the inventor, constantly making improvements in existing patents,—a process which gives to the patent system its greatest value,—should not be restrained by vague and indefinite descriptions of claims in existing patents from the salutary and necessary right of improving on that which has already been invented. It seems to us that nothing can be more just and fair, both to the patentee and to the public, than that the former should understand, and correctly describe, just what he has invented, and for what he claims a patent.

Merrill (1876). These cases are in obvious tension with the Federal Circuit's current standard. However, there remains only a small chance that the Supreme Court will hear the case.

One key to the petition here is the argument that the Federal Circuit made it triply difficult to invalidate a claim on indefiniteness ground by (1) using the presumption of validity of § 282 to create stringent elements for the invalidity defense and then (2) also requiring clear-and-convincing evidence to prove those elements; all while (3) regularly ignoring the reality that indefiniteness is a question of law (as are patentable subject matter and obviousness).

AIA Changeover: Claiming Subject Matter Not Found in the Provisional Application

By Dennis Crouch

New patent applications are now being examined under the first-to-file rules codified in the America Invents Act of 2011. In my patent class, I talk about these as effectively rules of evidence that indicate what does and does-not count as evidence against patentability. Any change in the rule of law always has changeover difficulties where policymakers must figure out where to draw the line between the old and new rules. For the AIA, new patent applications filed on or after March 16, 2013 are examined under the new rules so long as the new application contains (or ever contained) at least one claim whose effective filing date is on or after March 16, 2013.

Under the new rules, the USPTO also requires that patent applicants help the PTO understand whether a new application should be examined under the AIA. In particular, the applicant must tell the PTO whenever it is pursuing a patent application that claims priority to a pre-AIA filing but that includes (or once included) at least one claim that had a post-AIA priority date. In the cut-out above, this statement is shown as a check-box as part of the application data sheet form.

The Risk: Over the next year, this issue will arise in thousands of cases – typically those will involve a pre-AIA provisional application followed by a post-AIA non-provisional application with some amount of new matter added in the claims. Under the rules, if any of the claims in that non-provisional lacked sufficient support in the provisional then the entire application is to be analyzed under the first-to-file regime of the AIA. Of course, the difficulty is that in US law the dividing line between supported and unsupported subject matter is not crisp and the determination is now being placed on patent applicants to make that determination at the risk of an inequitable conduct finding down-the-line.

Overturning the PTOs Approach?: It is possible that the USPTO’s interpretation of the new law is incorrect. The PTO rules require a patent-by-patent analysis of the effective filing date. Under the USPTO’s approach either a patent is an AIA patent or it is not. However, another reading of the AIA suggests that the proper approach is to go claim-by-claim rather than patent-by-patent. In particular, revised Section 102 focuses on the “effective filing date of the claimed invention” not the effective filing date of the patent application as a whole. 35 U.S.C. 102(a). In addition, the definitions Section 100(i) also focuses on individual claims – indicating that the effective filing date of a “claimed invention” is “(B) the filing date of the earliest application for which the patent or application is entitled, as to such invention, to a right of priority [or benefit].” It seems to me that the statutory guidance of Sections 102 and 100(i) collectively instruct us to consider the effective date of a claimed invention rather than for a patent application as a whole, and when thinking about prior provisional/parent/grandparent applications, the focus should be on whether those prior applications disclose the claimed invention in question.

But the PTO’s Approach is Probably Correct: Now, the PTO’s rule makes sense under the AIA, Section 3(n) that provides that the first-to-invent rules apply to

any application for patent, and to any patent issuing thereon, that contains or contained at any time— (A) a claim to a claimed invention that has an effective filing date as defined in [35 U.S.C. §] 100(i) … that is on or after the effective date described in this paragraph; or (B) a specific reference under [35 U.S.C. §§] 120, 121, or 365(c) … to any patent or application that contains or contained at any time such a claim.

The result here is really that whether-or-not a claim is adjudicated under the first-to-file regime is determined on a patent-by-patent basis but the priority date (i.e., effective filing date) associated with any particular claim may be prior to March 16, 2013, even when the patent is being adjudicated under first-to-file.

Trends in Inequitable Conduct

By Jason Rantanen

Last fall, I presented a set of data on inequitable conduct pleadings at the America Invents Act: One Year Later conference at the Indiana University Mauer School of Law. That data revealed two significant findings: first, that the rate at which inequitable conduct pleadings rose between 2000-2008 was much slower than previously believed (and never came close to the alleged 80% of all patent cases) and second, that since 2008 the rate at which inequitable conduct is pled has fallen substantially.  The results of that study have since been published in IP Theory; you can read the relatively short article here:

Since the article only included data up to the end of 2012, however, I thought it would be useful to update it to include 2013 data.  The below chart compares the number of patent cases in which an Answer was filed to the number of patent cases in which an Answer was filed containing the term "inequitable conduct" for each year based on searches performed in LexMachina.  The 2013 data is as of 9/18/2013.

 Inequitable Conduct Chart

This chart indicates that the rate at which inequitable conduct is being pled continues to decline (at least measured through this crude metric), although it may have reached a plateau.  I've also generated a similar chart that shows Answers containing "inequitable conduct" as a percentage of all "Answers" in patent cases that are searchable using LexMachina; it shows a similar pattern.  


Competitive and Paid Patent Prosecution Law Internship Starting Now

By Dennis Crouch

The attorneys at Plumsea Law Group in Bethesda are organizing an interesting trial – Starting October 15, the group will be bringing-on five new paid interns as part of a four-month-long intensive patent prosecution training program. This is designed as a real training program, although it is also a recruiting tool and one or two of the interns may be hired-on following the internship. [Job Posting on Patently-O Jobs]. The technology focus is on mechanical-engineering and physics.

I caught up with Patty Hong who is one of the attorneys running the program. Patty provided me with some further details on the program:

1. Who?

New law school graduates or even older graduates who do not have patent prosecution experience and face that obstacle when interviewing with law firms. We are also open minded about newly graduated engineers who may be thinking about the PTO or law school.

2. What?

The program will be an intensive, closely supervised training being run by 3-4 attorneys in the firm. Patty notes "This is school – we have been developing a training set for teaching newbies how to draft from scratch." Folks at the firm follow a particular "information design / movie making approach" to patent application drafting.

3. When?

The first program will start October 15, 2013 and will last for four months. If the first goes well, the firm expects to repeat.

4. Where?

The program will be based in the firm's Bethesda, MD office. Interns must be physically present for the program. "We know there may be a demand to do this as a distance learning, but that's not available this time."

5. How?

"We've been developing a method for this for years, and we will fine tune it for people who may have never seen, touched or smelled a patent. We will use an issued patent at first, and use our writing materials to teach how to think about what they are writing. The open interview session will include an on-the-spot writing sample that they need to produce. Something routine and narrative like 'describe what you had for breakfast today, and how you prepared it.'"

6. Why?

"Patent drafting is a craft, and this is an apprenticeship." Students will walk away with real training and a good writing sample.

Apply immediately by submitting your resume with grades/rank, a writing sample and cover letter explaining your interest in this opportunity. Please highlight relevant PTO / law firm / industry experience. Interviews will be held the mornings of September 26, October 2, 3, 9 and 10. The interview will include a short writing portion. Apply by emailing Patricia Hong at: