Patent applications filed on or after June 8, 1995 have a term of twenty years from the date of application filing. The prior rule offered a term of seventeen years from the issue date. This change was part of the Uruguay Round Agreements Act (URAA) that harmonized US law with that of other countries and also helped to substantially move away from the problem of patent application sandbagging / submarining where patent applicants intentionally delayed prosecution in order to accrue additional end-stage patent term. That problem has arisen again, although to a lesser extent, with the generous patent term adjustment offered for delays in prosecution.
Although the change-over was almost twenty-years ago, there are still a number of pre-URAA patents pending at the PTO. When they issue, these patents have the benefit of having 17-more years of patent term remaining. For some fundamental technologies whose market has blossomed over the past two decades, that potential value is enormous. According to the PTO, there are now 450 of these old applications still pending at the USPTO. That is down from about 600 three years ago.
The chart below shows the number of pre-URAA patents issued each year for the past decade.
The twenty pre-URAA patents issued in 2013 are owned by only seven different entities, and twelve of them are owned by Personalized Media Communications.
BAE Systems: 8,576,108 (active expendable decoy to fool enemy missiles);
Children's Medical Center: 8,597,910 (DNA encoding Von Willebrand Factor Proteins);
Colgate-Palmolive: 8,535,730 (tarter control toothpaste);
Genentech, Inc.: 8,357,513; 8,399,250; 8,557,768 (genes and methods relating to the human mpl ligand polypeptide);
Institut Pasteur: 8,507,196 (A kit for determining the absence of HIV-1 RNA in a biological sample);
Personalized Media Communications: 8,395,707; 8,558,950; 8,572,671; 8,584,162; 8,587,720; 8,607,296; 8,559,635; 8,566,868; 8,601,528; 8,555,310; 8,613,034; 8,621,547 (programmable TV remote control);
ZymoGenetrics: 8,603,777 (Genetically modified cells that produce human Factor IX).
I recently wrote about the Gil Hyatt case that involves several patent applications filed in the 1970s and an additional handful of applications pending since the mid 1990s. The PTO has not issued a Hyatt patent since 1997.
As I mentioned a few weeks ago, next week The Sedona Conference will be presenting a major webinar entitled Patent Litigation Best Practices: A Matter for Congress or for Bench and Bar? This webinar will discuss discuss patent law legislation that is currently pending before Congress and the Patent Pilot Program launched two years ago as part of the AIA’s reform of U.S. patent law. Faculty include former Chief Judge Paul R. Michel and Judge Kathleen O’Malley of the Federal Circuit, Tina Chappell of Intel Corporation, Philip S. Johnson of Johnson & Johnson, and Alexander Rogers of Qualcomm Incorporated.
This webinar is being developed in conjunction with an introductory chapter for a Patent Litigation Best Practices document. This document has the potential to impact judicial decisionmaking at the trial and appellate levels (Judge Taranto referenced The Sedona Conference Glossary: E-Discovery & Digital Information Management (3rd ed. 2010) numerous times in the CBT Flint Partners, LLC v. Return Path, Inc. opinion), and the panel will take questions by text and telephone during the program.
For information on how to register, click here, or copy and paste the following link into a web browser: https://thesedonaconference.org/VD012214. Free registrations are available to courts, government agencies, and law schools on a first-come, first-serve basis. To receive a discount code, email igg@sedonaconference.org.
Edwards Lifesciences v. Medtronic (D. Delaware, 2014)
A Delaware jury has awarded Edwards Lifesciences almost $400 million in lost profit damages for patent infringement and has also determined that the infringement was willful – opening the door to an award of both treble damages and attorney fees.
The patents adjudged to be infringed and not-invalid are both related to prosthetic aortic valve stents. U.S. Patent Nos. 8,002,825 and 7,892,281. Edwards obtained the patent rights as part of a $125 million purchase of Percutaneous Valve Technologies. Judge Sleet has not yet determined whether to issue an injunction as well.
H.R.3547 – Consolidated Appropriations Act, 2014 will soon become law, only 3 ½ months into the fiscal year being budgeted. The new compromise budget offers $3,024,000,000 (three billion dollars) to the USPTO for FY2014 (that started October 2013) and that will “remain available until expended” provided that the USPTO cannot spend more than it collects in user fees and surcharges. In addition the PTO will be allowed to keep and later spend any receipts over the $3 billion mark. The inspector general gets $2 million to investigate and audit the agency.
If I understand the math correctly, this total figure is a significant increase over the $2.5 billion spent by the PTO in FY2013. The chart below shows the USPTO’s annual spending with the budgeted figure for FY2014 in place. The PTO handles both patent and trademark operations, although the bulk of the money is spent on patents.
The question: Will Director Lee be able to use this money to get us better examination, patents with clearer boundaries, and a significant reduction in the backlog?
Over the past decade, we have seen a steep decline in “jumbo” patents. In my estimation, this is largely due to fee increases instituted in 2004 that make it cost prohibitive to file a large number of claims. Many applicants find it more economical to file two patents each with fewer claims rather than a single patent with more claims. In addition, the PTO continues to have an active restriction practice.
Nazomi Communications, Inc. v. Nokia Corp. (Fed. Cir. 2014) Download 13-1165.Opinion.1-8-2014.1 Panel: Lourie (concurring), Dyk (author), Wallach
Nazomi is a small software and semiconductor development company that sued a set of large technology companies for patent infringement in a series of lawsuits. This appeal involved the district court's initial claim construction order in one of these suits and its grant of summary judgment of noninfringement in favor of Western Digital and Sling Media.
Two of Nazomi's patents were at issue in this appeal: Nos. 7,225,436 and 7,080,362. During the district court proceeding, the defendants moved for a "preliminary" construction of the asserted claims, arguing that all the claims "require that the processor of the claimed apparatus, when operated, will perform the recited functions related to the processing of stack-based instructions without modification." The court analyzed the issue in the context of representative claim 48 of the '362 patent
48. A central processing unit (CPU) capable of executing a plurality of instruction sets comprising:
an execution unit and associated register file, the execution unit to execute instructions of a plurality of instruction sets, including a stack based and a register-based instruction set;
a mechanism to maintain at least some data for the plurality of instruction sets in the register file, including maintaining an operand stack for the stack-based instructions in the register file and an indication of a depth of the operand stack;
a stack control mechanism that includes at least one of an overflow and underflow mechanism, wherein at least some of the operands are moved between the register file and memory; and
a mechanism to generate an exception in respect of selected stack-based instructions.
Nazomi contended that the claim required only hardware that was capable of performing the claimed functionalities (here, indicated by italics). The district court concluded, however, that the asserted claims required a combination of hardware and software capable of performing the functional limitations.
To understand why this distinction matters, some background in the defendants' products is useful. Western Digital and Sling Media use a processor designed by another company, ARM. In 2000, ARM developed a design involving a hardware component called "Jazelle." However, recognizing that not every product would use every circuitry feature in its processors, ARM also designed its processors so that unused functionality would remain dormant unless activated (and thus not unnecessarily drain resources). In order to activate the Jazelle circuitry, it is necessary to first install a software package called "JTEK." In both the accused Western Digital and Sling Media products, Jazelle is dormant and there was no evidence that any end user had installed JTEK. Nazomi's argument, however, was that Jazelle's presence in the accused products was sufficient sufficient for a finding of infringement (i.e.: hardware "capable").
On appeal, the Federal Circuit agreed with the district court's construction as requiring both hardware and software. It reasoned that because hardware cannot meet the functional limitations in the absence of enabling software, "the claims are properly construed as claiming an apparatus comprising a combination of hardware and software capable of practicing the claim limitations." (my emphasis). In reaching this conclusion, it distinguished cases involving "programmable" language, such as Intel Corporation v. U.S. International Trade Commission, 946 F.2d 821, 832 (Fed. Cir. 1991). Here, the claims did not merely cover hardware that could be programmed to perform the claimed functionality; they required that the processor be capable of executing the stated instruction sets. Since hardware alone cannot do that in the absence of enabling software, the only possibility was that the claims required both hardware and software.
The panel also affirmed the district court's grant of summary judgment of noninfringement (Judge Lourie agreed with outcome, but did not join as to the bulk of the court's reasoning), drawing on precedent that "“an apparatus claim directed to a computer that is claimed in functional terms is nonetheless infringed so long as the product is designed in such a way as to enable the user of that [product] to utilize the function without having to modify the product.” Silicon Graphics, Inc. v. ATI Technologies, Inc., 607 F.3d 784, 794 (Fed. Cir. 2010). The critical issue was thus whether the installation of the JTEK software would constitute a "modification" of the accused product.
The Federal Circuit concluded that installation of the software would constitute a modification because in the asserted claims the software is part of the claimed structure. In other words, this is not a case where the software component already resided on the hardware and could be unlocked by using a key, or where the claims recited programable software that also resided on the hardware. Rather, the software was a necessary structural component of the claimed invention and its addition would constitute the addition of functionality that is not currently present.
Inventor Gilbert Hyatt recently filed a lawsuit against the USPTO in his home state of Nevada asking that the USPTO be ordered to go ahead and examine his applications already. The complaint focuses primarily on two applications that have been pending "since the early 1970s – over 40 years." Hyatt's patents cover early microchip technology and have proven extremely valuable because of the ongoing explosion in that marketplace. Because these applications were filed prior June of 1995, they will have a patent term of 17 years from the issue date (assuming they eventually issue and their term not disclaimed). Hyatt keeps his pending applications secret and so we do not know which applications are at stake here, or the actual content of the file histories.
In the lawsuit, Hyatt alleges that these two applications have been pending before the USPTO Board of Appeals for a very long time (one more than twenty years):
In these two appealed patent applications – referred to herein as patent application Docket Nos. 104 and 112 – the PTO's patent examiners issued rejections of Mr. Hyatt's patent applications, which Mr. Hyatt timely appealed to the PTO's Board of Patent Appeals and Interferences, now known as the Patent Trial and Appeal Board ("Appeal Board"). In both cases, the PTO failed to file any response. Rather than decide the appeals, the PTO has left them undecided for more than 20 years (in the case of patent application Docket No. 104) and for more than five years (in the case of patent application Docket No. 112). Each of these two patent applications has been pending before the PTO for more than forty years. . . .
Mr. Hyatt filed his patent applications and has prosecuted them in good faith and in accordance with PTO rules. Whether out of animus toward Mr. Hyatt or for other reasons, the PTO has demonstrated its determination not to allow Mr. Hyatt to obtain patents for his inventions. This Court's intervention is required to ensure that the PTO complies with the law.
Hyatt then asks the court to place strict deadlines on the PTO to decide his cases.
Hyatt makes the almost believable allegation that: "Several years ago, the PTO apparently determined that it would refuse to grant Mr. Hyatt any further patents, irrespective of the merits of his patent applications."
The complaint also highlights several other Hyatt applications where the PTO has "suspended examination" for very long periods of time:
At some point, rather than subject its decisions to review, the PTO apparently embraced a strategy of denying Mr. Hyatt any reviewable adjudication of his patent applications. Mr. Hyatt consequently has a large number of patent applications that have languished for years in various states of procedural limbo without an action on the merits or a decision on appeal.
In many cases, the PTO has simply ceased examination of Mr. Hyatt's patent applications on the merits. In many other cases, the PTO has refused to allow Mr. Hyatt's patent appeals to go to the Appeal Board for decisions.
For example, in seven cases that Mr. Hyatt filed in 1995, the patent examiners issued first office actions in 1995 or 1996, and Mr. Hyatt responded, yet the PTO has not issued an action on the merits in more than 17 years. Instead, the PTO repeatedly suspended action on these patent applications. Mr. Hyatt filed numerous "Petition[s] For An Action On The Merits" in these patent applications, but the PTO summarily dismissed those petitions.
For another set of applications, Hyatt walks through the PTO churning that involves repeated withdrawal of final rejections following appeal-brief filings by Hyatt.
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For the past 40+ years, the PTO has seen Hyatt as something of a pesky thorn in its side. The "problem" is that Hyatt takes full advantage of the law, hires excellent lawyers, and does not give-up. It turns out that it is the PTO's job to deal with Hyatt and to issue him the patents that he deserves.
This case results in a minor shift in patent term adjustment (PTA) for patents whose prosecution included an RCE filing. The basic change is exemplified with the diagram above. Up-to-now, the USPTO has only looked at the Pre-RCE Period when determining the amount of PTA to award associated with the 3-year examination guarantee. Following this decision, the USPTO must add together both the Pre-RCE Period and the Post-Allowance Period. The law has strict 180 day post-issuance time-limit for filing a civil action for a PTA modification.
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A patent's term generally begins at the date of patent issuance and continues 20 years from the date that the application was filed. As a practical matter, the time between filing and issuance is lost to the applicant because the patent is not enforceable during that time. Because of the very real patent office delays, Congress created a system of Patent Term Adjustment (PTA) that adds additional time to the patent term based upon unreasonable delays in issuing the patent rights that would have otherwise shortened the effective patent term. PTA is defined in Section 154(b) of the Patent Act. Unfortunately, that provision is poorly drafted and subject to potential alternative interpretations.
PTA typically falls into three "patent term guarantees":
Prompt responses from the PTO;
No more than 3-year application pendency; and
Compensation for delays due to appeals, secrecy orders and derivation proceedings.
35 U.S.C. §154(b)(1)(A)-(C).
The appeal here focuses on part (B) that guarantees "no more than 3-year application pendency." The three-year guarantee further states that it does not include: "(i) any time consumed by continued examination of the application requested by the applicant under section 132(b)." Here, the continued examination is prompted by a request for continuation (RCE).
The PTO and Novartis propose two different interpretations of the provision. The PTO argues that no part-B term adjustment should be awarded following the filing of an RCE. On the other hand, Novartis argues that the RCE cutoff only applies if the RCE is filed prior to the three year deadline.
In the appeal, the Federal Circuit has sided largely with the PTO (with slight modification):
The provision indicates that the "3 years" (the goal for issuance) does "not includ[e]" time identified in three enumerated categories. . . .
The better reading of the language is that the patent term adjustment time should be calculated by determining the length of the time between application and patent issuance, then subtracting any continued examination time (and other time identified in (i), (ii), and (iii) of (b)(1)(B)) and determining the extent to which the result exceeds three years. Such a reading ensures that applicants recover for any "delay[s] due to the failure of the [PTO]," without allowing the applicant to recover for "any time consumed by continued examination," as the statute requires. Id. § 154(b)(1)(B)(i).
The slight modification to the PTO's position is the Court's finding that the period between allowance and issuance should not be counted as being consumed by the continued examination and thus counts "toward the PTO's three-year allotment."
The end result here is that there will be a few weeks of PTA added to tens of thousands of patents and pending applications. Anyone with a recently issued patent or soon-to-issue patent should take immediate steps to make take advantage of this change.
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You may note the case caption: Novartis v. Lee, indicating that Michelle K. Lee is now deputy director of the PTO and Acting-as-Director until President Obama nominates a replacement for David Kappos and that nomination is confirmed by the Senate.
MPHJ Technology v. Federal Trade Commission (W.D. Texas 2014)
In a bold lawsuit, patent owner MPHJ has sued the Federal Trade Commission and the Individual FTC Commissioners for "the unlawful interference and threats by the FTC against MPHJ and its counsel directed at stopping or impeding the lawful, proper, and constitutionally protected efforts by MPHJ to identify and seek redress for infringement of its US patents."
MPHJ has been publicly accused by a number of private and governmental entities of "shaking down small businesses" by alleging infringement of the company's patents that apparently cover a scan-to-email system. See US Patent 6,185,590; 6,771,381; 7,477,410; 7,986,426; and 8,488,173.
The basic push-back has been (1) that MPHJ has been going after small companies for infringement and (2) that its demand letters have been sent-out without the proper due diligence to ensure that the receiving entity is actually infringing. In its complaint, MPHJ alleges that:
The FTC's threatened suit is principally based upon the FTC's contention that if any U.S. patent owner threatens suit for infringement, even against a single infringer, and then fails promptly to bring suit for infringement, then that U.S. patent owner has committed an unfair trade practice under Section 5 of the FTC Act unless the patent owner bears the burden and can prove that at the time the threat was made, it intended to bring suit. Here, the FTC contends that MPHJ did not intend to bring suit at the time it allegedly threatened suit, and that such conduct is a violation of Section 5 of the FTC Act unless MPHJ can prove otherwise. Setting aside that the FTC's factual premise is false, and that MPHJ can show that it did intend to bring suit at the time the alleged threats were made, the FTC's legal premise is flawed on multiple grounds.
In the complaint, MPHJ walks through the steps that it took in preparing its demand letters. Basically, MPHJ "concluded that businesses having at least 20 employees would be very likely to have an infringing networked scanning system if they were in certain types of businesses, such as professional services" MPHJ then purchased "the best available commercial databases" of such companies and sent out close to 20,000 demand letters to businesses with fewer than 100 employees across the country and then followed those demand letters with second and third letters.
Following that mass enforcement campaign, the FTC got involved and threatened to sue MPHJ for unfair competition. "As a result, to secure its rights under the U.S. Constitution and federal law, and to stop the improper and ultra vires interference with and impingement of MPHJ's lawful and constitutionally protected patent enforcement rights, MPHJ is forced to file the present suit."
Attorneys will be aware that the European Patent Office announced a few months ago that it is reverting to its practice predating the controversial law change in 2010. That change, which effectively put in place a two year window on divisional application filings, and was almost universally unpopular, disappears as of 1st April 2014. From that date it will be possible to file divisional patent applications from any pending European patent application whether or not the two year window has closed. The EPO has now announced the final piece of information, namely the costs to be applied. In particular, to reduce the perceived risk of abuse of the system by users filing multiple generations of divisionals, the EPO has confirmed a fee regime where surcharges going up in €210 steps are applied for second and successive generations. In other words, if a first divisional is filed and then another application is filed as a divisional of it, a €210 surcharge will be applied to the first, €420 for the grandchild and so on.
Take Homes
From 1st April 2014 you will be able to file divisionals from any pending European patent application. That means that if you have a case which is near grant and you can get extensions on deadlines you should if a divisional is wanted. This applies equally to cases where the previous two year window had already closed. Although surcharges are now being applied for second and subsequent generation divisionals, they are not high and are likely to be inconsequential against the back renewal fees due on divisionals anyway.
By: Michael Risch, Professor of Law, Villanova University School of Law
Read the whole draft here, forthcoming in the George Mason L. Rev. It is about half the length of a typical law review article, so I call it an essay.
Back in October, I presented at the Center for the Protection of Intellectual Property Conference on The Commercial Function of Patents in Today’s Innovation Economy. I spoke on a panel entitled “Patent Licensing: New Business Models and New Opportunities.” I decided to focus on the commercialization benefits of licensing patents purchased from another – thus, my highly creative title: Licensing Acquired Patents.
This was actually a tall order. On the one side, licensing has been around for 150 or more years, so arguing that licensing acquired patents is a new opportunity took some work. On the other side, economic theory holds that late stage licensing (that is, ex post licensing) offers the least commercialization benefits, so convincing skeptics (read: licensees) that there are commercial benefits to the practice was also no easy task. This is why acquisition is important. Original owners usually have a chance at early stage licensing. Acquirers almost never do.
I begin the essay with a short section on the stages of patent licensing, but I’ll start here with the historic part. There’s no real dispute that there has long been licensing, sale, and other secondary market activity for patents, dating into the early 1800’s. Economic historians have done a great job of tracing this history, and I cite several articles and books in my essay. But a sustained business model of acquiring patents and licensing them was not really common. For the most part, secondary markets involved inventors attempting to sell or license patents to those who would practice the invention, not to those who would – in turn – license others.
Of course, there were exceptions, and I focus on them in the essay. The big ones were railroad, agriculture, and dental patents. In each case, there were a few higher profile non-producer patent buyers who attempted to license others (and sued those that refused). While there is a smattering of other activity, licensors aren’t discussed by name in the press and they did not buy and license more than two or three patents each. In the essay, I discuss what we might learn from the rise and fall of these patent “sharks,” which appeared to thrive only in limited industries at a very particular time in our patent history. Both laws and producer behavior were part of the equation.
Following the history discussion, I turn to commercialization benefits of licensing. I make some key assumptions in the paper about such licensing – most primarily that pricing is negotiated in good faith. In other words, if a patent owner refuses to acknowledge low quality patents and insists on too high prices, then commercial benefits are unlikely. Similarly, if manufacturers refuse to acknowledge high quality patents and insist on too low prices, then commercial benefits are unlikely. And finally, I note that there may be private commercial benefits that are not socially beneficial (that is, they enhance private but not total welfare).
I discuss several commercialization benefits. The first is a signaling benefit. There are a lot of patents, and even if a company attempted to find all of them associated with a complex product (which often doesn’t happen), it likely will not. But owners know what patents they have. Thus, owners are the least cost information producers, and informing manufacturers of relevant patents can have some commercialization benefits. Even if the patents are of low quality, the manufacturer is in a better information position than before; it can buy, license, or challenge the patents.
This signaling leads to a second benefit: some freedom to operate that was unavailable before, assuming a reasonable license is entered. At least one study shows that litigation costs more than simply “litigation costs.” Litigation can also hamper investment in the product itself. This is not surprising, of course: litigation is a drag, literally and figuratively. So avoiding litigation can enhance commercialization of the accused product. I acknowledge that investment would be really enhanced if nobody enforced their patents, but that’s an unlikely scenario and this is an essay about licensing.
I make a few other suggestions of commercialization benefits, and finally discuss how licensing acquired patents may help drive licensing toward the earlier, more beneficial stages of licensing – where technology licenses predate investments in products, even if it winds up cutting out the acquirers. I give a few examples of how this might happen and how the process has already begun.
There is more in the essay than I can write about here. If you are interested, please take a look at the full version.
In this case, the Federal Circuit determined—as a matter of first impression—that “the principles of prosecution history estoppel apply to design patents.” This case has a number of implications for design patent application strategy, including for applications filed under the Hague System.
Pacific Coast Marine Windshields Limited (“PCMW”) accused Malibu Boats (“Malibu”) of infringing U.S. Patent No. D555,070 (the “D’070 patent”). Here is a comparison of the patent drawings and the accused design, as shown in PCMW’s opening appellate brief:
As can be seen from this illustration, a major difference between these two designs is that the patented design features four circular vent holes while the accused design has three roughly rectangular-shaped holes.
The D’070 patent matured from a patent application filed (apparently pro se) by PCMW’s owner and CEO, Darren Bach. In the original design patent application, Bach claimed an “ornamental design of a marine windshield with a frame, a tapered corner post with vent holes and without said vent holes, and with a hatch and without said hatch, as shown and described.” The submitted figures included the following:
A design patent may contain only one claim. It is possible to claim multiple embodiments—but only if those embodiments involve the same inventive concept. The question of whether a claimed embodiment satisfies this standard is left largely to the examiner’s discretion.
In this case, the examiner decided that Bach’s application included five “patentably distinct groups of designs” and issued a restriction requirement. Bach did not challenge the restriction requirement. He elected to prosecute the design shown in Figure 1 above—i.e., the version with “four circular holes and a hatch.” He also amended the claim language, deleting the reference to any hole and hatch variations. So when the D’070 patent issued, it simply claimed “[t]he ornamental design for a marine windshield, as shown and described.” Bach later filed a divisional application for the no-holes-with-hatch variant, which matured into U.S. Pat. No. D569,782. But he did not pursue design patents for any of the other variations, including the two-hole variation shown above.
Malibu moved for partial summary judgment, arguing that PCMW’s infringement claim was barred by prosecution history estoppel. Malibu argued that PCMW surrendered the two-hole design during prosecution and that the accused three-hole design fell within the territory surrendered “between the original claim and the amended claim.” The district court agreed and entered judgment of noninfringement based on prosecution history estoppel.
On appeal, PCMW argued that the principles of prosecution history estoppel should not apply to design patents at all. It argued, among other things, that there was no good policy reason to extend the doctrine to design patents. The Federal Circuit did not agree, noting that “[t]he same principles of public notice that underlie prosecution history estoppel apply to design patents as well as utility patents.”
The Federal Circuit then considered whether prosecution history estoppel barred PCMW’s infringement claim. That issue “turn[ed] on the answers to three questions: (1) whether there was a surrender; (2) whether it was for reasons of patentability; and (3) whether the accused design is within the scope of the surrender.” The court concluded Bach did surrender the cancelled figures and that the surrender was done for reasons of patentability. In doing so, the Federal Circuit rejected PCMW’s argument that the restriction requirement was merely “administrative” or “procedural.” The court concluded “that, in the design patent context, the surrender resulting from a restriction requirement invokes prosecution history estoppel if the surrender was necessary . . . ‘to secure the patent.’”
However, the Federal Circuit decided that the accused design was not within the scope of the surrender. It rejected Malibu’s argument that “by abandoning a
design with two holes and obtaining patents on designs with four holes and no holes, the applicant abandoned the range between four and zero.” The court noted that “[c]laiming different designs does not necessarily suggest that the territory between those designs is also claimed.” Moreover, according to the Federal Circuit, neither party claimed that the three-hole design was a colorable imitation of the surrendered two-hole design. (The Federal Circuit expressly avoided answering “whether the scope of surrender is measured by the colorable imitation standard”—an interesting issue for another day.) Therefore, prosecution history estoppel did not bar PCMW’s claim.
On remand, it will be interesting to see how PCMW argues its infringement case. It seems difficult to argue that the accused three-rectangular-hole design is not a colorable imitation of the surrendered two-rectangular-hole design but that it is a colorable imitation of the claimed four-round-hole design.
This decision also has important implications for other cases. Design patent applicants often claim multiple embodiments. If the examiner approves those embodiments, the resulting patent will be (at least arguably) stronger and more flexible. Following Pacific Coast Marine, however, this is a riskier—or, at least, potentially more expensive—strategy. If an applicant claims multiple variations on a design and the examiner decides they are patentably distinct, the applicant must file divisional applications for the unelected variants to avoid prosecution history estoppel. And more applications means more fees.
This case also will be important when the United States becomes a party to the Hague System for the International Registration of Industrial Designs. The Hague System allows applicants to file up to 100 designs in a single registration, as long as the designs are all in the same Locarno class. But the PTO has indicated that it will apply its single-invention rule to any applications it receives via the Hague System. So applicants who include multiple designs in their Hague applications should expect restriction requirements, with all the attendant estoppel risks.
Guest Post by Jason J. Du Mont, Microsoft IP Fellow at the Indiana University Maurer School of Law and Mark D. Janis, Robert A. Lucas Chair of Law at the Indiana University Maurer School of Law.
In Pacific Coast Marine Windshields Ltd. v. Malibu Boats, the Federal Circuit addressed a question of first impression: whether an applicant’s actions taken during prosecution of a design patent should be available for use when determining the design patent’s scope in subsequent litigation. The court’s answer was yes. While the answer may be unremarkable, the court’s unusual journey from question to answer raises broader questions about the wisdom of absorbing utility patent law’s judicially-derived doctrines into design patent law.
The applicant had filed a design patent application claiming “an ornamental design of a marine windshield with a frame, a tapered corner post with vent holes and without said vent holes, and with a hatch and without said hatch, as shown and described.” The application included eleven drawings showing windshields with various numbers of vent holes, with and without hatches. During prosecution, the examiner imposed a restriction requirement and identified five patentably distinct groups in the application: windshields having “(1) four circular holes and a hatch; (2) four circular or square holes and no hatch; (3) no holes and a hatch; (4) no holes and no hatch; and (5) two oval or rectangular holes and a hatch” (internal citation omitted):
The applicant elected group one without traverse (which showed four circular holes and a hatch), deleted the figures not associated with this embodiment, and eventually rewrote the claim in a more conventional form, claiming “[t]he ornamental design for a marine windshield, as shown and described.” The application issued as D555,070. The applicant later filed a divisional directed to group three, which issued as D569,782, but there were apparently no further divisionals.
Pacific Coast subsequently asserted the ‘070 patent against Malibu Boats, which was producing a windshield having three square vent holes, as depicted below:
Malibu Boats moved for summary judgment of non-infringement based on prosecution history estoppel. The district court granted the motion and Pacific Coast appealed.
No Distinct Doctrine of Equivalents for Design Patents
Prosecution history estoppel is a limitation on the doctrine of equivalents, so before it reached the district court’s prosecution history estoppel analysis, the Federal Circuit first had to determine whether the design patent law should recognize a doctrine of equivalents. The court concluded that for design patents, literal infringement and infringement under the doctrine of equivalents are “intertwined,” pointing to the statute (35 U.S.C. § 289, which provides a remedy when another party “applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale” (emphasis added)), and the Gorham v. White case (which holds that infringement is based on substantial similarity).
The court could have been more forthcoming as to what it means for the two infringement standards to be intertwined, but the key takeaway is clear: the design patent infringement analysis isn’t bifurcated into a literal infringement prong requiring identicality and an equivalency prong. It relies on a test of substantial similarity based on the design’s overall impression. The court’s analysis signals that there’s no longer a need to speak of a distinct “equivalents” concept in design patent law; concepts of equivalency are built into the substantial similarity test.
So Why Incorporate Prosecution History Estoppel?
Having recognized that design patent law includes no distinct doctrine of equivalents, the Federal Circuit could have declared that design patent law need not incorporate the utility patent law’s prosecution history estoppel jurisprudence. The court could have formulated a prosecution history-based limiting doctrine that was customized to connect to design patent law’s “intertwined” infringement standard. Or, the court could have even analogized to prosecution disclaimer, a simpler concept which limits literal claim scope and avoids entanglement with the presumptions and rebuttal routes of a post-Festo prosecution history estoppel doctrine. See, e.g., Trading Techs. Intern., Inc. v. Open E Cry, LLC, 728 F.3d 1309 (Fed. Cir. 2013) (discussing the distinction).
Instead, the court stated that the “principles” of prosecution history estoppel applied to design patents, and resolved those principles into a three-step test: “(1) whether there was a surrender; (2) whether it was for reasons of patentability; and (3) whether the accused design is within the scope of the surrender.” It then relied on Festo and other utility patent cases in applying its test, concluding that “no presumption of prosecution history estoppel could arise” because there wasn’t any showing that the third part of the test was met.
Whatever this presumption is, it surely isn’t the Festo presumption. Festo holds that a narrowing amendment that is substantially related to patentability triggers a presumption that the applicant surrendered all territory between the original and amended claim scope with regards to the claim limitation in question. See, e.g., Duramed Pharma. v. Paddock Labs., Inc., 644 F.3d 1376 (Fed. Cir. 2011). There isn’t any third step calling for scrutiny of the accused device. That inquiry would only be relevant to determining the scope of the estoppel—and that only comes into issue once it’s determined that the presumption of estoppel applies, and that the presumption hasn’t been rebutted.
The court’s approach is likely to lead to confusion in design patent cases about how much utility patent doctrine really has been borrowed. (It may also create some confusion in utility patent cases if it’s invoked there. Doing so would be erroneous, in our view.) This illustrates why it’s not always so easy, or desirable, to fling utility patent doctrine into design patent law. The court could have avoided all of these doctrinal convolutions by steering clear of prosecution history estoppel jurisprudence and either drawing on simpler analogies or developing a test specific to design patents.
Applying the Court’s Three-Step Test
The Federal Circuit’s application of its three-step test further illustrates why borrowing from prosecution history estoppel doctrine may have been a bad idea. In addition to diverging from the Festo presumption, the court’s rhetoric slips towards the element-by-element conceptions of equivalency and estoppel that govern in utility patent law, and away from conceptions of the design’s overall impression that design patent law mandates.
The court concluded that steps one and two of its test were met. As for step (1), the applicant had deleted drawings directed to the patently distinct two-hole and no-hole embodiments, resulting in a surrender of scope, according to the court; and, as for step (2), deletions made in response to a restriction requirement were made for purposes of patentability and thus could trigger estoppel. As the court pointed out, however, this latter point hasn’t been resolved in utility patent law.
Nevertheless, the court decided that step (3) (whether the accused design was within the scope of the surrender) wasn’t met, and that was enough for a reversal. The defendant had chosen not to argue that the accused three-hole design was within the scope of the patentee’s non-elected designs. Instead, the defendant asserted that because the patentee had elected designs having four holes (in the ‘070 patent-in-suit) and zero holes (in the ‘782 divisional), the patentee had surrendered any designs having a number of holes between zero and four. The court was not persuaded, reasoning that the notion of surrendering an entire range “does not work in the context of design patents where ranges are not claimed, but rather individual designs. Claiming different designs does not necessarily suggest that the territory between those designs is also claimed.” These are crucial observations for limiting the impact of prosecution history estoppel, especially since the court didn’t address any other way of rebutting this presumption.
But the court left unaddressed the key question about applying step (3): what is the standard for determining whether an accused design falls within the scope of the surrender? Some raw notion of “colorable imitation”? A fully elaborated substantial similarity analysis in view of the prior art as per Egyptian Goddess? Something else?
Moreover, by framing its analysis of the designs at issue by reference to the number of holes, the court encourages a mode of analysis that rests on individual design features, rather than the design’s overall impression. There’s a deep disconnect here between utility and design patent law. Equivalency (and, correspondingly, prosecution history estoppel) in utility patent law is to be applied on an element-by-element basis, but that doesn’t translate neatly to design patent law. Here, where the embodiments differed by discrete, readily-identifiable features (such as the number of holes or hatches), perhaps the presence or absence of the features dictate one’s conclusions about the design’s overall impression. We think this will not be so easy in most cases involving visually-complex designs.
More to Come …
The prospect that restriction and election practice will give rise to estoppel in design matters has significant practical consequences. First, the implementation of the Hague will unquestionably lead to an influx of international applications that often contain plural embodiments—either explicitly allowed or because they are filtered from registration systems. When coupled with distinctions in the determination of scope, between offices, the USPTO can expect to receive higher volumes of applications that may necessitate restrictions. Second, the Federal Circuit’s In re Owens decision, and the USPTO’s apparent turn towards a more aggressive application of the written description requirement in design cases, may force design patent applicants to submit applications including large sets of drawings that depict numerous implementations of a design concept. To the extent that these implementations are deemed patentably distinct embodiments, many applicants will find themselves facing restriction requirements.
That leads to the case’s key practical point: if courts choose to apply Pacific Marine’s estoppel rule aggressively, practitioners may need to advise their clients to expect to file more divisionals—and, consequently, face higher prosecution costs.
The Supreme Court agreed today to hear four new intellectual property cases this session: Two patent cases, a copyright case, and a trademark case:
Nautilus v. Biosig Instruments (13-369): what is the proper standard for indefiniteness.
Limelight Networks v. Akamai Technologies (12-786): Does inducement require underlying direct patent infringement infringement by another as a prerequisite to liability.
ABC, Inc., v. Aereo, Inc. (13-461): when does an internet transmission count as a “public performance” under the copyright laws?
POM Wonderful v. Coca-Cola (12-761): Who has standing to challenge a food or beverage label as misleading or false under the Lanham Act.
The cases should all be decided by the end of June 2014.
Susan Cain's book Quiet walks through an historic societal transformation toward an "Extrovert Ideal" that "dramatically undervalues introverts" and incorrectly equates introversion with shy and antisocial behavior. This transformation parallels the shift from a culture that values character to one that values personality. See, Susan Cain, Quiet: The Power of Introverts in a World That Can't Stop Talking (2013).
The movement toward extroversion is present within the patent system as well with a push toward "teamwork" in inventing. Team-developed inventions appear to be more likely to receive corporate backing and to be patented. What is unclear, however is whether the shift moves us toward better innovation. Arguably, the rise in collaborative inventing is driven by the complex nature of modern inventions and facilitated by our improved communications tools. However, I suspect that Cain's social thesis in Quiet provides a more compelling explanation: that social pressure and top business school training shift our attention toward the committee work (and hiring workers who do well in committee).
The great Steve Wozniak provides some opposite advice:
The inventors and engineers I've met are like me—they're shy and they live in their heads. They're almost like artists. In fact, the very best of them are artists. And artists work best alone where they can control an invention's design without a lot of other periople designing it for marketing or some other committee. I don't believe anything really revolutionary has been invented by committee. If you're that rare engineer who'se an inventor and also an artist, I'm going to give you some advice that might be hard to take. That advice is: Work alone. You're going to be best able to design revolutionary products and features if your're working on your own. Not on a committee. Not on a team.
Of course, Wozniak did his most revolutionary work in the 1970's when two-thirds of patents listed a single person as "the inventor," today that figure has dropped to less than one-third. Over the past four decades, the number of inventors per patent has steadily crept upward as the lone inventors have gradually been crowded out.
The chart below shows the number of inventors per patent over the past eight years. What you can see is a continued increase in the percentage of patents with teams of inventors. In particular, the percentage of patents with only one inventor continues to fall while the percentage of patents with three or more inventors continues to rise.
Although inventing can still be a solo endeavor, patenting data indicates that paradigm no longer predominates.
In 2011, I discussed an emerging downward trend in the percent of patents awarded at least some patent term adjustment (PTA). PTA extends the life-span of patent rights beyond the ordinary 20-year term and is intended to compensate a patentee for USPTO delays in issuing the patent.
The downward trend first reported in 2011 is continuing and is a further indication that the PTO is beginning to seriously tackle the rampant backlog and prosecution delays that have been an ever-present part of the system for so long. Still, over 70% of recently issued patents have lengthened patent terms due to patent office delays that go beyond the statutory bounds outlined in 35 U.S.C. 154. The time-series chart below breaks-down the numbers even further, showing impressive drops in the percentage of patents that receive more than one- and two-years of term adjustment.
The break-point of the charts in early 2010 shows the impact of the Federal Circuit’s Wyeth decision holding that the PTO had been under-calculating patent term. The second chart shows the average PTA award (for those receiving PTA).
For many innovative new products, regulatory approval is a much greater hurdle than patent protection. And, unlike patent rights, regulatory approval is often a necessity. The present case is interesting in that the mascara product straddles the border between a lightly regulated beauty aide and a medical drug treatment.
Allergan, Duke University, and Dr. Murray Johnstone v. Athena Cosmetics (Fed. Cir. 2013) (CaseText)
Duke & Dr. Johnstone each hold several patents that are apparently embodied by Allergan's eyelash growth medicine Latisse and exclusively licensed by Allergan. In 2009, these partners collectively sued Athena Cosmetics for selling RevitaLash mascara in a way that infringes the patents. In addition, Allergan alleged violation of state (California) unfair competition law by selling drugs (i.e., medicated mascara) without regulatory approval.
Following some amount of pretrial litigation (including a claim construction and summary judgment of non-infringement), the district court dismissed all of the patent claims without prejudice (stipulated dismissal). A dismissal without prejudice means that the patentee to can re-file those claims at a later date. The district court then found summary judgment for the plaintiffs — holding that Athena violated California's unfair competition law (UCL) by marketing, distributing and selling the mascara without regulatory approval. The district court then ordered a nationwide injunction against the sales.
Federal Circuit Jurisdiction. On appeal, the Federal Circuit first focused on the question of appellate jurisdiction. Under the law, the Federal Circuit has appellate jurisdiction over "any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents."
Although the original complaint clearly raised substantial issues of patent law, Allergan argued that the stipulated dismissal without prejudice removed the arising under jurisdiction. See Gronholz v. Sears, Roebuck & Co., 836 F.2d 515 (Fed. Cir. 1987) (dismissal of patent claims without prejudice operated as an amendment of the complaint and thus eliminated arising under jurisdiction); Rothe Dev. Corp. v. Dep't of Def., 545 F.3d 1023 (Fed. Cir. 2008) ("the basis of a district court's jurisdiction—and thus the path of appeal—may change over time in a case, for example, if certain claims are dismissed without prejudice").
On appeal, the Federal Circuit determined that the non-prejudicial dismissal did not eliminate the court's arising-under appellate jurisdiction. The court agreed that a non-prejudicial dismissal can eliminate its appellate jurisdiction, but distinguished this case because the prior patent rulings in the case indelibly altered the parties legal rights. In particular, the district court's prior claim construction ruling and summary judgment of non-infringement.
In the decision, the Federal Circuit did not discuss either the importance of amendments to the jurisdictional law found in the AIA or the recent Minton v. Gunn decision. By ignoring Minton, the Federal Circuit skipped over the more holistic interests-based approach to arising-under jurisdiction required there in favor of a more bright-line analysis that has been previously rejected by the Supreme Court.
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No Nationwide Injunction for Violating California Law: The Federal Circuit agreed that the district court correctly found Athena liable for violating California law, but the Appellate Panel rejected that court's nationwide injunction order as an abuse-of-discretion. The Federal Circuit wrote:
The injunction impermissibly imposes the UCL on entirely extraterritorial conduct regardless of whether the conduct in other states causes harm to California. This injunction is so broad that it would bar Athena from making its product in Idaho, distributing it from a facility in Nevada, and selling it to Connecticut consumers.
Interestingly, because the cause of action here was based on California law, the Federal Circuit looked to see whether California courts would have imposed a nationwide injunction and found that the "[t]he conduct enjoined here is exactly the sort of purely extraterritorial conduct that the California Court of Appeals expressly held could not be regulated by the UCL."
In addition, the Federal Circuit held that such extraterritorial application of California would be a violation of the U.S. Constitution's dormant Commerce Clause.
In short, California may, as it has in this case, conclude that its own unfair competition law has been violated, and it may prohibit any future conduct within its borders that would cause continued violation of its law. California is not permitted, however, to extend its unfair competition law to other states.
The upshot then is that RevitaLash is back on the market, but not in California (as shown in the image above).
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Professor Shubha Ghosh has written a number of important and interesting academic works. One is his recent book titled Identity, Invention, and the Culture of Personalized Medicine Patenting (2012 Cambridge Press). That book relates here because Ghosh identifies the '105 patent as a "race specific patent." The patent made Ghosh's book because identifies the race and gender of study subjects: e.g., "[study included] 38 Caucasian, 3 African-American, 1 Asian, 1 Hispanic; 13 male, 30 female." Ghosh argues that race-specific categories should not be allowed to be particularly claimed (they were not in this particular patent).
Patent attorney J. Nicholas Gross has a number of his own patents pending. Application No. 11/565,411 is directed to a computerized business method of serving content appropriate advertisement.
Claim 1 requires a “plurality of different websites characterized by a common parameter including at least one of a common content topic and/or a common contractual arrangement.”
The examiner rejected claim 1 as indefinite based upon the “and/or” term. On appeal, however, the PTAB reversed – finding that “A and/or B” does have a meaning and that meaning is A alone, B alone, or A and B together. However, the Board noted the “preferred verbiage” should be more simply “at least one of A and B.”
The biggest problem with the Board’s decision is that it was four-years in the making – reversing an examiner rejection mailed February 2, 2010.
In early 2013, the USPTO raised many of its fees and lowered a few. One accounting trick, however, is that some of the fee reductions were delayed until January 1, 2014. The two key areas of newly reduced fees are the publication fee and the issue fee.
Publication Fee was $300 and is now $0, even for early-publication requests. This takes away one incentive to file a non-publication request.
Issue fee was $1,780 and is now $960. That fee is reduced by 50% for small entities and 75% for micro entities and universities.
PCT Fees are now subject to the small and micro entity status discounts.
Assignment recordation is now free if done electronically.
Despite being held-back by the Federal spending sequester and a focus on implementing the first-to-invent and post-issuance review procedures of the America Invents Act, the US Patent Office has also awarded more patents than ever. The preliminary figure for 2013 is 277,861 patents issued, which represents a 10% jump over last-year’s record. See USPTO Patent Grants: Another Record Year (3rd in a Row). The average pendency of utility applications (application filing to issuance or abandonment) has been slowly decreasing over the past several years, but has hovered around 37-months for the past six months.
walks through an historic societal transformation toward an "Extrovert Ideal" that "dramatically undervalues introverts" and incorrectly equates introversion with shy and antisocial behavior. This transformation parallels the shift from a culture that values character to one that values personality. See, Susan Cain, 
