t minus 50: Microsoft Requests Emergency Stay of Injunctive Relief

August 21, 2009Injunctions, Patent, Patent Cases 2009, SoftwareClaim ConstructionDennis Crouch

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

On August 11, 2009, Judge Davis (E.D.Tex.) issued his final order in the i4i v. Microsoft patent litigation. That final order gives Microsoft 60 days to stop selling, using, or supporting infringing versions of MS Word. By my calendar, the injunction becomes effective October 10, 2009. I4i’s patent covers xml capabilities of the MS Word that were implemented in Office ’03 and ’07. At this point, it is unclear how difficult it would be for Microsoft to eliminate the adjudged infringing capability from its products.

Microsoft has already filed a motion with the Court of Appeals for the Federal Circuit demanding an emergency stay pending appeal. The Federal Circuit clerk immediately denied Microsoft’s motion for an “administrative stay.” Instead, a merits panel will consider the emergency motion at oral arguments calendared for a special session September 23, 2009. Microsoft’s brief-on-point is due August 25; i4i’s opposition is due September 8; and any reply is due September 14. If the Federal Circuit makes a decision quickly, Microsoft may have time to appeal directly to the Supreme Court for a midnight stay of execution.

The jurisprudence on stays pending appeal is somewhat lacking – largely because these cases are – by definition – decided in a rush and courts often do not have time to fully explain their decisions. Based on the lower court decision, Microsoft’s best arguments for a stay will be based on a combination of (1) its argument on claim construction; (2) the irreparable harm to Microsoft and its customers that would flow from the injunction; and (3) the relatively small amount of irreparable harm that i4i will feel during the few months while the appeal is pending.

Stay of Injunctive Relief Pending Appeal: Unless otherwise ordered by the court, a permanent injunction is not stayed during an appeal. In Hilton v. Braunskill, 481 U.S. 770 (1987), the Supreme Court outlined a four factor test used when determining whether to stay enforcement. The factors are essentially the converse of those used in determining whether to grant a preliminary injunction. These factors include: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits [of the appeal]; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.”

Patent Reform on this Issue: In 2006, patent reform legislation introduced in Congress would have added an automatic stay of permanent injunctions after a showing that “the stay would not result in irreparable harm to the owner of the patent and that the balance of hardships from the stay does not favor the owner of the patent.” Patents Depend on Quality Act of 2006, H.R. 5096, 109th Cong. §8 (2006) (proposing to amend 35 U.S.C. 283).

Notes:

Don Dunner (Finnegan) is representing i4i on appeal; Matthew Powers (Weil) appears to continue to lead the team for Microsoft.
The ABA Journal has an interesting discussion of the trial that focuses primarily on Microsoft’s attempts to paint i4i as a troll seeking a ‘bailout.’ [Link] [Seattle PI]
Prior Patently-O post on District Court Order.

Federal Circuit Rejects Challenge to Patent Rights Obtained Through Foreclosure

August 20, 2009Patent, Patent Cases 2009Affirmed Without OpinionDennis Crouch

Sky Technologies v. SAP AG (Fed. Cir. 2009)

In an interlocutory appeal, SAP challenged Sky’s standing to bring its patent infringement suit – arguing that ownership rights had not been properly transferred. On appeal, however, the Federal Circuit affirmed the decision by Judge Folsom (E.D.Tex.) that title had been “properly transferred by operation of state foreclosure law” even without an affirmative assignment of rights.

Background: The chain of title is somewhat long. Mr. Conkin and his co-inventors assigned rights to the asserted patent to TradeAccess (a company founded by Conkin). TradeAccess later changed its name to Orzo. Orzo, in turn, used the patents as collateral for an investment from Silicon Valley Bank (SVB). SVB assigned its security interests to Cross Atlantic Capital Partners (XACP). Orzo then defaulted and XACP foreclosed. At the foreclosure sale, XACP was the only bidder at a public auction and purchased the patent rights. Then, XACP assigned the patent rights to Sky Technology (another company founded by Conkin and the plaintiff in this case).

Missing from this chain of title is any assignment from Orzo to any other party. Of course, a transfer of rights need not be done through explicit assignment. Interestingly, patent ownership is determined by local (state or foreign) law rather than federal law.

Assignment in Writing: In Akazawa, 520 F.3d 1354 (Fed. Cir. 2008), the Federal Circuit held that patent rights could be transferred through Japanese intestate statute. In the background, however, are (1) 35 U.S.C. Section 261’s requirement that all assignments of patent interest be in writing and (2) the 1881 Supreme Court case of Ager v. Murray holding that patent rights could not be transferred to satisfy a judgment without a written assignment. 105 U.S. 126 (suggesting that a trustee be appointed to assign rights if the inventor refused). In Akazawa, the court avoided those requirements by holding that non-assignment forms of transfer (such as intestate transfer) need not be in writing. I.e., “ownership of a patent may be changed by operation of law” without an explicit assignment from the prior rights-holder.

Likewise, in the present case the appellate panel found that the rights had been properly transferred without an assignment based on Massachusetts implementation of Section Nine of the Uniform Commercial Code (UCC).

We find that Akazawa controls in the instant case, and that the district court’s reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing. … [A]ssignment is not the only method by which to transfer patent ownership. As noted below, foreclosure under state law may transfer patent ownership. Here, XACP’s foreclosure on its security interest was in accordance with Massachusetts law; therefore, Sky received full title and ownership of the patents from XACP providing it with standing in the underlying case.

…

In the instant case the controlling state law is the Massachusetts UCC. Massachusetts UCC § 9-610 permits a secured party to sell the collateral after default, in a commercially reasonable manner, and that same party may purchase the collateral at a public disposition. Section 9-617 of the UCC states that once a secured party disposes of collateral after default, the transferee for value takes all of the debtor’s rights in the collateral. Because XACP foreclosed on the patents-in-suit in conformity with these provisions, XACP obtained title to the patents on July 14, 2003.

Patentee, His Heirs or Assigns: Section 154(a) of the Patent Act adds an additional complication. That section indicates that patent rights are always granted “to the patentee, his heirs or assigns.” Here, SAP argues that Section 154(a) limits the flow of ownership to only those three categories. The precedent of Akazawa does not create a problem under that theory because that case involved intestate transfer to an heir. Without elaborating, the Federal Circuit rejected that argument – holding simply that “Section 154 does not restrict patent ownership to these three classes of individuals, and moreover, this language fails to specifically address transfers of patent ownership.” Thus, although a patent is granted only “to the patentee, his heirs or assigns,” it may be latter transferred to other parties. This decision creates a potential implication that a creditor foreclosing on a pending patent application may not be able to enforce the future patent rights. Here, the court should have laid that issue to rest by noting that the Section 154 argument fails because a “patentee” includes any successor in title to the interest in the patent application. The definitions in Section 100 suggest this result, but is written in the Act’s typical circular fashion: “The word ‘patentee’ includes not only the patentee to whom the patent was issued but also the successors in title to the patentee.”

Notes:

The well written opinion was authored by Judge Spencer sitting by designation from the US District Court of the Eastern District of Virginia. Chief Judge Michel and Judge Bryson joined Judge Spencer on the unanimous panel. As noted in the final paragraph, however, the courts continued semantic distinction of an “assignee” needs reconsideration in light of modern securities law.
Read about the Akazawa decision; See also, How not to divide patent rights during bankruptcy. Morrow v. Microsoft (Fed. Cir. 2007).
At issue here are U.S. Patent Nos. 6,141,653; 6,336,105; 6,338,050; 7,162,458; and 7,149,724.
The patents describe and claim various iterations of a “multivariate negotiations engine for iterative bargaining” that allow buyers and sellers to do a deal online.

Bits and Bytes: Hot News

August 19, 2009Bits and Bytes, PatentFederal Circuit En Banc, obviousnessDennis Crouch

Today’s Posts that may have been lost in the shuffle:

Let’s meet up:

The MBHB law firm has been a longtime sponsor of Patently-O. (Thanks!) The firm is co-sponsoring a reception and dinner at the newly constructed wing of the Art Institute of Chicago on Monday, September 14, 2009 as part of the part of the Intellectual Property Owners Ass’n (IPO) annual meeting. I hope to see you there. [IPO]

Examining:

IPBiz has an interesting headline about rejection rates: Examiners: “We’re the ones who put ‘no’ in innovation”. The post is a discussion of this newspaper article.

En Banc: Methods do not have Exportable Components and Therefore Method Claims Cannot be Infringed Under Section 271(f)

August 19, 2009PatentEnablement, Federal Circuit En BancDennis Crouch

Cardiac Pacemaker v. St. Jude __ F.3d ___ (Fed. Cir. 2009) (En Banc)

In an en banc decision, the Federal Circuit has ruled that 35 U.S.C. § 271(f) “does not cover method claims.” This decision overturns the controversial 2005 decision in Union Carbide v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005). The ruling was widely expected based on the Supreme Court’s 2007 decision in Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007) (holding that “master disks” were not a 271(f) “component” when abroad to be copied and then installed to form a would-be infringing system). In reading Microsoft v. AT&T, the Federal Circuit found “a clear message that the territorial limits of patents should not be lightly breached.”

The holding is based in the logic that a process is a series of steps and, therefore, does not have any physical components amenable to export.

[M]ethod patents do have “components,” viz., the steps that comprise the method, and thus they meet that definitional requirement of Section 271(f), but the steps are not the physical components used in performance of the method.

The result in this case is that Cardiac’s process claim (Claim 4) cannot be infringed under Section 271(f).

Claim 4 of the ‘288 patent is comprised of the steps of determining a heart condition, selecting cardioversion as the appropriate therapy, and executing a cardioverting shock. Cardiac does not allege that all of those steps are carried out in the United States with respect to certain of the ICDs. Moreover, it cannot allege that the steps of the method are supplied, a contradiction in terms. Rather, Cardiac alleges that St. Jude’s shipment of a device that is capable of performing the method is sufficient to fall within the scope of Section 271(f). Although the ICD that St. Jude produces can be used to perform the steps of the method, as we have demonstrated, Section 271(f) does not apply to method or process patents. As Section 271(f) does not encompass devices that may be used to practice a patented method, St. Jude is therefore not liable for infringement … for IDCs exported abroad.

Reversed (on this issue)

Notes

Judge Newman dissented from the opinion – arguing that the language of 271(f) applies to any “patented invention.”
This case was only partially decided en banc. Part (c)(2) is en banc while the rest of the decision is decided by the panel of Judges Newman, Mayer, and Lourie. Judge Lourie signed the entire majority opinion, and Judge Newman only dissented as to Part (c)(2).
Cardiac Pacemaker v. Jude: Challenging 271(f) Liability for Components of a Method (Discussing briefs)

Judge versus Jury: Who Should Decide the Question of Obviousness?

August 19, 2009PatentFederal Circuit En Banc, obviousnessDennis Crouch

Medela AG v. Kinetic Concepts, Inc. (on petition for a writ of certiorari 2009)

Following their success in KSR, James Dabney and John Duffy have combined again to challenge the law of obviousness. This time the focus is litigation procedure. The pair – on behalf of their client Medela – argue that a judge (rather than a lay jury) should determine whether a patent is obvious. In its petition for certiorari, Medela poses the following question:

Whether a person accused of patent infringement has a right to independent judicial, as distinct from lay jury, determination of whether an asserted patent claim satisfies the “non-obvious subject matter” condition for patentability.

The ultimate question of obviousness is a “legal determination.” KSR & John Deere. And questions of law are ordinarily decided by a judge trained in the law. Markman. According to the petitioners, the black-box of the jury is problematic because it effectively limits appellate review to considering the rationales that a jury “might have adopted.” I.e., the current practice does not offer “meaningful appellate review over the legal issue of patent validity.” Quoting Baumstimler v. Rankin, 677 F .2d 1061 (5th Cir. 1982). En banc precedent from both the Fifth Circuit and Ninth Circuit conflict with modern obviousness procedure sanctioned by the Federal Circuit.

Notes:

File Attachment: Medela v. Kinetic Petition for Cert Final.pdf (253 KB)
The Graham v. John Deere obviousness procedure: When deciding the ultimate question of obviousness, the decision-maker considers (1) the scope and content of the prior art; (2) the differences between the claimed invention and the prior art; (3) the level of ordinary skill in the prior art; and (4) secondary considerations of nonobviousness. Of course, the conclusion of obviousness never logically follows from the factual elements– rather ordinarily an obviousness conclusion can only be inferred. In some ways, the jury determination of obviousness serves as a way to cover-up the gaping holes of subjectivity required in the final step of the Deere obviousness procedure. For many (if not most) litigated patents, reasonable minds will differ on the question of obviousness even when parties agree to the underlying factual background. It is precisely this type of imponderable question that calls for a jury decision as a way to maintain respect for the court.
Procedure: If Medela is successful, future jury instructions will likely include more detailed interrogatory questions regarding the facts necessary to reach a conclusion of obviousness. Some courts prefer to avoid detailed jury questions in order to avoid inconsistent jury findings and to eliminate potential grounds for appeal.
Professor Cotropia foreshadowed this issue in a 2007 Patent-O guest post soon after KSR. Chris Cotropia, KSR and the Line Between Fact and Law, Patently-O (May 6, 2007) at https://patentlyo.com/patent/2007/05/ksr_and_the_lin.html (“The Court in KSR introduces a procedural change, folding the TSM-like inquiry into the question of law level of the analysis.”).

Fraud on the Patent Office: Federal Circuit Emphasizes Rule 9(b) Heightened Pleading Requirement for Defense of Inequitable Conduct

August 18, 2009PatentAffirmed Without Opinion, Inequitable ConductDennis Crouch

Exergen Corp. v. Wal-Mart Stores, CVS, and SAAT, ___ F.3d ___, 2009 U.S. App. LEXIS 17311 (Fed. Cir. 2009)

This case focuses only on procedure and does not alter the substantive law of inequitable conduct. However, it is likely to have an important impact on patent litigation by tightening the pleading requirements for anyone attempting to plead inequitable conduct.

Exergen's patents cover infrared thermometer technology. U.S. Patents Nos. 5,012,813, 6,047,205, and 6,292,685. A jury found SAAT liable for willful infringement and also awarded lost profits to Exergen. On appeal, the Federal Circuit Reversed-in-Part

Pleading Inequitable Conduct: At some point during the litigation – well after submitting its initial answer to the complaint – SAAT moved to add inequitable conduct as an affirmative defense and counterclaim. The District Court denied that request – properly holding that inequitable conduct is a form of fraud that must be pled "with particularity" under Fed. R. Civ. Pro. 9(b). On appeal, the Federal Circuit affirmed, but in the process provided guidance for how to properly plead inequitable conduct. Notably, "Rule 9(b) requires identification [in the pleading] of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." (refrain)

The pleading must set forth "the particularized factual bases" that a court would rely upon to decide the substantive elements of inequitable conduct. Here, particularity should be equated with "'in detail . . . the who, what, when, where, and how' of the alleged fraud" Quoting DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990).
When the allegation is failure to disclose, the pleadings must "identify the specific prior art that was allegedly known to the applicant and not disclosed." See Cent. Admixture, 482 F.3d 1356.
When the allegation is intentional misleading of the PTO, the pleading must identify the particular misleading actions.
Although Rule 9(b) allows mal-intent to be "averred generally," the pleading must still "allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind."

The court found four specific failings in SAAT's pleadings:

WHO: Failure to "name the specific [duty bound] individual … "who both knew of material information and deliberately withheld or misrepresented it."
WHAT and WHERE: Failure to "identify which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found."
WHY and HOW: Failure to provide evidence of materiality by, for instance, identifying the claim limitations absent from information of record.
SCIENTER: Failure to allege facts that "give rise to a reasonable inference of scienter, including both (1) knowledge of the withheld material information or of the falsity of the material misrepresentation, and (2) specific intent to deceive the PTO." Rather, the pleadings merely state that "Exergen was aware" of the prior art without explaining that a particular duty bound person was aware of the relevant portion of the reference.

SAAT based its inference of deceptive intent on the fact that the patentee had cited a particular prior art reference during prosecution of only one of the three patents. The court rejected that factual description – finding it insufficient even for the pleadings:

SAAT's purported basis for inferring deceptive intent is that Exergen had cited the '998 patent when prosecuting the '205 patent but then failed to cite it when prosecuting the '685 patent. The mere fact that an applicant disclosed a reference during prosecution of one application, but did not disclose it during prosecution of a related application, is insufficient to meet the threshold level of deceptive intent required to support an allegation of inequitable conduct. Indeed, SAAT's pleading does not contain specific factual allegations to show that the individual who had previously cited the '998 patent knew of the specific information that is alleged to be material to the '685 patent and then decided to deliberately withhold it from the relevant examiner.

The mere fact that an applicant disclosed a reference during prosecution of one application, but [*45] did not disclose it during prosecution of a related application, is insufficient to meet the threshold level of deceptive intent required to support an allegation of inequitable conduct. Indeed, SAAT's pleading does not contain specific factual allegations to show that the individual who had previously cited the '998 patent knew of the specific information that is alleged to be material to the '685 patent and then decided to deliberately withhold it from the relevant examiner.

Although the Federal Circuit affirmed the fraud-pleading holding, it also reversed the final judgment – finding one patent invalid and the other two not infringed.

Dependent Claim Improperly Held Obvious (When Independent is Nonobvious)

August 17, 2009Patentanticipation, obviousnessDennis Crouch

Callaway Golf v. Acushnet, 2009–1076 (Fed. Cir. 2009)

Inconsistent Verdict: The jury found eight of Callaway’s golf ball claims valid – all except for dependent claim 5. According to the jury, that claim was obvious even though the broader independent claim was nonobvious.

On appeal, the Federal Circut vacated – holding that the jury verdict was “based upon irreconcilably inconsistent jury verdicts.”

Although it is true that the jury found “without reservation” that eight claims were not invalid, it is equally true that the jury found claim 5 invalid without reservation. Moreover, the evidence at trial was such that the jury could have rationally reached either verdict with regard to the asserted claims; neither party was entitled to judgment as a matter of law.

Testing Evidence: The Federal Circuit also found fault with Judge Robinson’s exclusion of evidence regarding test balls that Acushnet created based on a prior art reference and used in its anticipation argument. The problem was that the test ball design was not fully described within a single prior art reference. However, on appeal, the court found that the needed disclosures may have been properly incorporated-by-reference within the prior art.

Material not explicitly contained in the single, prior art document may still be considered for purposes of anticipation if that material is incorporated by reference into the document. (Quoting Advanced Displays, 212 F.3d 1272 (Fed. Cir. 2000).

For anticipation purposes the incorporation-by-reference must clearly identify the material being incorporated. Here, the court found that the prior art had done so sufficiently by referring to “foamable compositions” to be found in the incorporated reference.

Making a Federal Circuit Case of That?

August 17, 2009PatentFederal Circuit En BancDennis Crouch

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Guest Post By Andrew J. Dhuey

Welcome to the first installment of Making a Federal Circuit Case of That? – an occasional peek at some unusually entertaining cases before the U.S. Court of Appeals for the Federal Circuit.

Our first case is Cornish v. Doll, argued on August 3, 2009. If you clicked the preceding link, you already know the unhappy ending for Mr. Cornish: a Rule 36 affirmance without opinion. Still, Mr. Cornish had his morning in court, and what a 25-minute session it was (audio file).

Mr. Cornish is an attorney who lost his right to practice patent prosecution before the PTO in 1995. Before he took the podium, Judge Rader quietly – but not quietly enough – prepared his fellow jurists for a bumpy ride:

0:19 JUDGE RADER (whispering to another judge): Fasten your seltbelt.

0:20 CHIEF JUDGE MICHEL: Yeah. Heh.

Safely buckled up, the judges heard Mr. Cornish explain what his case was about: free speech, religious freedom, Tafas v. Doll, continuing legal education, the patent bar exam, a name change in gratitude to God, and Olympic swimming. Mr. Cornish is an ardent opponent of the limits on continuation applications and claims at issue in Tafas. His 39-claim amended complaint suggests that Mr. Cornish dislikes numerical limits, generally.

The opening minutes of oral argument revealed much confusion about what Mr. Cornish was appealing and what he sought in relief. He seemed at least as interested in discussing Tafas as he was his own loss of eligibility to prosecute patent applications:

4:43 JUDGE LOURIE: How have you been damaged? This has nothing to do with Tafas.

4:50 MR. CORNISH: Well, if you would allow me to just mention the final rules, which is my concern.

4:57 JUDGE RADER: Well they’re not the concern of the court in this case. We have that case before us in another sense. We’re interested in you, and what reason you think you have for damages, and you have no stake whatsoever in the Tafas case, so please tell us about something that’s relevant to this matter.

5:18 MR. CORNISH: Alright, the reason why I was interested in Tafas is because it…

5:25 JUDGE RADER: I just said you have no interest in Tafas, tell us about this case.

With the focus back on Mr. Cornish’s personal grievance with the PTO, he explained that he changed his name around the time that the PTO removed him from its list of active patent attorneys:

6:52 MR. CORNISH: My name was Cornell D. Cornish. I went to the court…

6:58 JUDGE RADER: Yes, I know, you’re now Judge Cornish.

Some of the confusion in Mr. Cornish’s case concerned how he took and failed the patent bar exam three times after the PTO had declared him ineligible to prosecute patent applications. If, as Mr. Cornish contends, he was never properly removed from the PTO’s list of patent practitioners, then why did he sit for the patent bar exam three times?

7:35 JUDGE RADER: Well now we come to 2005, they tell you if you’re to be readmitted, you must take the [patent] bar, and you agree with that because you take it three times.

7:44 MR. CORNISH: No, sir, I don’t.

7:46 JUDGE RADER: Well why did you take the test three times?

7:47 MR. CORNISH: Simply because of CLE. I’m required in < ?xml:namespace prefix ="" st1 ns ="" "urn:schemas-microsoft-com:office:smarttags" />New York state to show that I am actively seeking to keep my status up to date.

7:58 JUDGE RADER: You’re educated by taking the tests, is that it?

8:01 MR. CORNISH: Yes, indeed, absolutely. So, I’m like Mark Phelps, who lost a race after winning five gold medals. Just because I simply didn’t get a passing grade on the exam doesn’t mean that I’m not qualified or competent.

Okay, it’s really Michael Phelps and he won gold medals in all of his eight events in Beijing, but we get the point. Even when you’ve risen to the top of the patent prosecution world (e.g., design patent for condom ring), you don’t get every answer right.

As time ran scarce, there was really only one question left to resolve: why did Cornell D. Cornish become Cornell D.M. Judge Cornish?

23:49 JUDGE LOURIE: Question – why did you change your name?

23:53 MR. CORNISH: Well, it’s actually a First Amendment religious case because I changed my name after heart surgery and my heart stopped for one hour. And the only explanation I can find for my survival for quite a few years since is divine intervention. So I took my new names out of the Bible in thanks to God for whatever mercy He had given me. It’s much, much more than I deserve. And my name was told – I told the Patent Office I’ve changed it and it was for religious reasons. It wasn’t as they point out that I was resigning to avoid the embarrassment of disbarment.

And with that miraculous finish, the ride came to a complete stop. So did Mr. Cornish’s appeal, which, as mentioned, the court summarily rejected the following day.

Guest Post: The Applied/Abstract Distinction is the Key to §101 Patentability

August 16, 2009PatentAbstract Idea, anticipation, Enablement, Subject Matter EligibilityDennis Crouch

Guest Post by Polk Wagner (Professor at the University of Pennsylvania School of Law)

Mark Lemley, Michael Risch, Ted Sichelman, and I have authored an amicus brief in the Bilski v. Doll case currently pending before the US Supreme Court. (Get the full brief here [pdf].) In that brief, we argue that the Court's precedents establish that the key to eligible subject matter is ascertaining whether an idea is claimed as applied–in which case it is eligible for patentability (assuming it is not a natural phenomenon or law of nature)–or merely in the abstract–in which case it is not.

We start with the proposition that while the range of subject matter available for patenting is very broad, it is not unlimited. But the restrictions imposed by the Supreme Court, we think, have not focused on the technology, form, or physicality of the claimed invention–the critical mistake made by the Federal Circuit in Bilski. Rather, the Court has uniformly recognized that the key to eligible subject matter is ascertaining whether an idea is claimed as applied, or claimed in the abstract.

This applied/abstract distinction has a long history in Supreme Court caselaw. It can be most clearly seen in the O'Reilly v. Morse case from 1854, where the Court invalidated a claim to all communication by electrical signal as abstract, but allowed a claim to the application of the communications method to stand. 56 U.S. 62, 112-21 (1854). That is, where Morse claimed the idea of communication by electrical signal, the claim was disallowed. But the Court did uphold Morse's claim to a system (e.g., "Morse Code") that applied the communication-by-electricity idea in a practical, concrete way.

One can discern the applied/abstract thread throughout twentieth-century Supreme Court decisions involving §101 subject matter. In Mackay Radio, the Court upheld a claim to a mathematical principle (related to the reception of radio waves) as applied to an antenna, noting that "[w]hile a scientific truth, or the mathematical expression of it, is not patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be." 306 U.S. 86, 94 (1939). In Gottschalk v. Benson, the Court denied patentability to an "abstract and sweeping" claim: the mathematical conversion of binary coded decimals into pure binary format. 409 U.S. 63, 66-67 (1972). And finally, in Diamond v. Diehr, the applied/abstract approach drove the analysis–in upholding the claims, the Court noted that the subject matter was not "directed to a mathematical algorithm or an improved method of calculation but rather recited an improved process for molding rubber articles by solving a practical problem which had arisen in the molding of rubber products." 450 U.S. 175, 181 (1981) (emphasis added). Indeed, in Diehr, the Court makes our argument for us:

It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection. . . . Arrhenius' equation is not patentable in isolation, but when a process for curing rubber is devised which incorporates in it a more efficient solution of the equation, that process is at the least not barred at the threshold by §101.

Id. at 187-88 (emphasis in original).

We also argue that echoes of this applied/abstract distinction can be seen in the related-but-distinct caselaw considering the patentability of products of nature. Here, the Supreme Court has repeatedly emphasized in this context that the patent law is designed to protect applications of human ingenuity, not simply "natures' handiwork." Thus, while a man-made organism is eligible for patentability, see Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980), a natural bacterium is not, see Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 131 (1948). The boundary here is neither the form of the invention nor its ability to transform nature; instead the analysis turns on whether the patent claims describe the application of human knowledge to a practical end. In this way, a claim to an abstract idea is like a claim to a product of nature: unmoored to real-world applications of human inventiveness, and thus ineligible for patenting.

Finally, we note that the applied/abstract analytic framework nicely harmonizes Section 101 with Section 112's enablement requirement. Much like Section 101, Section 112 safeguards the essential function of the patent system: the dissemination of real-world, practical human knowledge. Claims to abstract mathematical concepts (like claims to natural products or physical phenomena) violate this tenet, by failing to demonstrate that the inventor is adding to the storehouse of useful, practical human accomplishment. (Indeed, the subject matter and enablement requirements were formerly part of the same statutory section. Patent Act of 1836, Ch. 357, 5 Stat. 117, § 6 (July 4, 1836).)

In sum, we argue that the patent statutes were wisely drafted with an expansive vision of patentable subject matter. Efforts to graft judicially created limitations onto that expansive scope in the past have proven fruitless and indeed counterproductive. This Court should not impose a requirement that patentable inventions require a machine or the physical transformation of some material. It should instead maintain the rule that patents are available for anything under the sun made by man, including discoveries of ideas, laws of nature, or natural phenomena so long as they are implemented in a practical application. In short, the test should be as it has been: where an idea is claimed as applied, it is eligible for patentability, but if it is claimed merely in the abstract it is not.

Bits and Bytes No. 125: Comments on Comments

August 14, 2009PatentInequitable Conduct, Trade Secrets, USPTO DirectorDennis Crouch

Gil Hyatt’s attorney contacted me this morning and asked that a few “offending” comments be removed from the post associated with his case. I agreed that they were potentially problematic and removed them. Two discuss LL’s role as an examiner of HYATT’s cases. Because Hyatt’s applications were filed before 1995, those files are likely still secret and thus should not be publicly discussed. I also removed the “sleazeball” comments. As a reminder to commenters – you may appear anonymous, but a well heeled plaintiff could probably track you down unless you take special precautions. I have thus-far successfully resisted providing any identifying information to interested parties. However, I would obey a court order.
For PTO Examiners who Comment Regularly. I enjoy your comments and they helpfully reveal aspects of PTO operations that would otherwise be hidden. You should, however, occasionally re-read MPEP 1701: “Public policy demands that every employee of the United States Patent and Trademark Office (USPTO) refuse to express to any person any opinion as to the validity or invalidity of, or the patentability or unpatentability of any claim in any U.S. patent, except to the extent necessary to carry out (A) an examination of a reissue application of the patent, (B) a reexamination proceeding to reexamine the patent, or (C) an interference involving the patent. “
Fraud not Inequitable Conduct: IPO executive director Herb Wamsley (writing as the IP LANGUAGE CURMUDGEON) argues that the term “Inequitable Conduct” is misleading. The doctrine does not follow a traditional balancing of the equities, but is seated in fraud. Thus, Wamsley “proposes scrapping the term ‘inequitable conduct’ in favor of ‘fraud,’ a term that is not very well defined in law either, but which better conveys the idea that patents should be unenforceable only if serious misconduct has been proven. If courts had to find ‘fraud’ before they could hold a patent unenforceable, perhaps they would apply the doctrine now called inequitable conduct only in cases of very clear intent and materiality” as the law requires. I think that Wamsley’s suggestion makes perfect sense.
IPO’s annual meeting is Sept 13-15 in Chicago: Link. Over 500 individuals (including yours truly) are already signed-up to attend this patent law powwow. This is probably the largest mixer of in-house patent counsel and patent attorneys in private practice. The only problem is the cost: IPO members pay $950; Non-Members pay $1,450; Inventors and academics pay $500.
Update on the Faculty Position at the University of Utah Law School : They are hiring, but may not have received your e-mail. “Due to a server switch, the email address facultyrecruitment@law.utah.edu was not functioning correctly for a few days in August. We sincerely apologize for this error. As of today, August 14th, the email address is once again fully functional. We encourage interested applicants to send their materials to us at that email address, particularly those who sent, or attempted to send, materials in the past two weeks, so that we can be sure that we received them.” [Read the Job Listing] [Klarquist Sparkman is also looking for an O-Chem Patent Attorney or Agent]

Federal Circuit Affirms High Standard for Attorney Fees under 35 U.S.C. 285

August 14, 2009PatentClaim Construction, Inequitable ConductDennis Crouch

WedgeTail v. Huddleston Deluxe (Fed. Cir. 2009) 09-1045.pdf

After claim construction, WedgeTail – the patentee – filed a motion to dismiss its claims and granted Huddleston a covenant not to sue. Judge Folsom (E.D.Tex.) agreed and dismissed the case. Huddleston challenged the dismissal because it also wanted to collect attorney fees. Judge Folsom denied Huddleston’s request for a hearing on attorney fees without providing any reasoning.

The Patent Act provides for recovery of “reasonable attorney fees,” but only in “exceptional cases.” Ordinarily, such exceptional cases are only found in situations involving “inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.”

District courts are also given a “high level of deference” on this issue — especially when a request for fees is denied.

On appeal, the Federal Circuit affirmed – holding that the district court was not required to explain its denial (and that Huddleston had not shown sufficient evidence of an exceptional case).

Simply put, Huddleston has failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court’s failure to entertain a motion for attorney fees. A remand is, therefore, unwarranted. . . .

Though findings on ‘exceptional case’ and reasons underlying the discretionary action on fees are helpful to an appellate court, remand should not be a matter of rote in every case in which findings and reason are not expressly set forth. (quoting Consol. Aluminum v. Foseco, 910 F.2d 804 (Fed. Cir. 1990)).

Affirmed

Notes: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. 285.

Federal Circuit Affirms High Standard for Attorney Fees under 35 U.S.C. 285

August 14, 2009PatentClaim Construction, Inequitable ConductJonathan Hummel

WedgeTail v. Huddleston Deluxe (Fed. Cir. 2009) 09-1045.pdf

District courts are also given a “high level of deference” on this issue — especially when a request for fees is denied.

On appeal, the Federal Circuit affirmed – holding that the district court was not required to explain its denial (and that Huddleston had not shown sufficient evidence of an exceptional case).

Simply put, Huddleston has failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court’s failure to entertain a motion for attorney fees. A remand is, therefore, unwarranted. . . .

Though findings on ‘exceptional case’ and reasons underlying the discretionary action on fees are helpful to an appellate court, remand should not be a matter of rote in every case in which findings and reason are not expressly set forth. (quoting Consol. Aluminum v. Foseco, 910 F.2d 804 (Fed. Cir. 1990)).

Affirmed

Notes: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. 285.

Federal Circuit Affirms High Standard for Attorney Fees under 35 U.S.C. 285

August 14, 2009PatentClaim Construction, Inequitable ConductDennis Crouch

WedgeTail v. Huddleston Deluxe (Fed. Cir. 2009) 09-1045.pdf

District courts are also given a “high level of deference” on this issue — especially when a request for fees is denied.

On appeal, the Federal Circuit affirmed – holding that the district court was not required to explain its denial (and that Huddleston had not shown sufficient evidence of an exceptional case).

Simply put, Huddleston has failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court’s failure to entertain a motion for attorney fees. A remand is, therefore, unwarranted. . . .

Though findings on ‘exceptional case’ and reasons underlying the discretionary action on fees are helpful to an appellate court, remand should not be a matter of rote in every case in which findings and reason are not expressly set forth. (quoting Consol. Aluminum v. Foseco, 910 F.2d 804 (Fed. Cir. 1990)).

Affirmed

Notes: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. 285.

Kappos Sworn in as Director

August 14, 2009PatentUSPTO DirectorDennis Crouch

David Kappos was sworn in on August 13, 2009 as Director of the USPTO. His address was directed primarily to USPTO employees who attended the ceremony.

My pledge to you is that I will listen, and I will work with every single USPTO employee as part of your team to understand these issues and address them so that you can reach your maximum effectiveness and achieve everything you want in your careers.

For example, I know many of you have concerns about the count system. We’re going to address the count system.

I know many of you who telework or want to telework have concerns about travel requirements We’re going to address that issue. This is a Trademarks issue; it is a Patents issue; it’s an agency issue.

I know many of you are concerned about the time your managers are able to spend helping you learn the refinements of the patent laws and guiding you in applying 35USC, 37CFR and the MPEP in your work. We’re going to address those issues too.

… The list goes on and on, as you all know better than I do. I’m here to address the whole list.

Broadly, Kappos indicated that he will focus on “reducing the backlog of unexamined patent applications, cutting pendency dramatically, working off the mounting appeals backlog[,] improving re-exam processing”, and “moving the USPTO to more sustainable [financial] footing.” Referring to the recent authorization to use trademark funds to pay for patent operations, Kappos indicated that he does not want to “actually USE that authority if there is a way to avoid it.”

Kappos also indicated that his focus will be on the “U.S. innovation community”; limiting his own overseas travel in order to serve “the best interests of our country.”

Challenging PTO Decisions in District Court: Federal Circuit Affirms Exclusion of Enablement Evidence that “Should Have” Been Raised During Prosecution

August 12, 2009Patent, Patent Cases 2009Affirmed Without Opinion, anticipation, Enablement, Inequitable Conduct, obviousness, Supreme Court, Written DescriptionDennis Crouch

Hyatt v. Doll (Fed. Cir. 2009) 07-1066.pdf

Gil Hyatt is a prolific inventor who has spent much of his time over the past thirty years challenging the bounds of USPTO practice. This August 11, 2009 opinion marks the seventeenth Federal Circuit decision focusing on Hyatt’s patent rights in addition to the 2003 Supreme Court decision Franchise Tax Bd. of California v. Hyatt.

This Case: During prosecution, the examiner rejected each of Hyatt’s 117 computer memory architecture claims based on anticipation, obviousness, enablement, double patenting, and written description. Hyatt appealed (pro se) to the BPAI who reversed the bulk of the rejections, but affirming only the written description and enablement rejections associated with 79 claims. Hyatt then took his case to Federal Court by filing a civil action in DC District Court grounded in 35 U.S.C. 145.

At the district court, Hyatt submitted a new declaration offering additional evidence of enablement and written description. However, the district court excluded that inventor-declaration from evidence based on Hyatt’s “negligence” in failing to previously submit the information to the PTO.

On appeal, the Federal Circuit affirmed the exclusion of evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. (Chief Judge Michel as author joined by Judge Dyk)

Hyatt was obligated to respond to the examiner’s written description rejection by In re Alton, 76 F.3d 1168, 1175 (Fed. Cir. 1996), by explaining where in the specification support for each of these limitations could be found. . . . The Board noted, “It is far easier for appellant to describe where the limitation he wrote is disclosed than for the Office to prove that the limitation is not disclosed.” . . . Hyatt, however, refused to cooperate, even though he necessarily possessed the information the examiner sought by the time he filed his application.

On these facts, the district court’s exclusion of Hyatt’s new evidence must be affirmed. . . . [I]t is clear from the record that Hyatt willfully refused to provide evidence in his possession in response to a valid action by the examiner. Such a refusal to provide evidence which one possessed was grounds in Barrett to exclude the withheld evidence. Similarly, we hold that in light of Hyatt’s willful non-cooperation here, the district court did not abuse its discretion by excluding the Hyatt declaration.

Judge Moore penned a vigorous dissent in support of the patent applicant’s right to a full civil action including the right to submit additional evidence when challenging a PTO decision.

The majority takes away this patent applicant’s fundamental right to a “civil action to obtain [a] patent” as granted by Congress in 35 U.S.C. § 145. Today the majority decides that a patent applicant may not introduce the inventor’s declaration in a § 145 proceeding before the district court because the inventor had an “affirmative duty” or “obligation” to disclose this evidence to the PTO. His failure to fulfill his affirmative duty, by not disclosing evidence he could have disclosed to the PTO, results in such evidence being excluded from the district court § 145 proceeding. The district court made no fact findings indicating willful withholding or intentional suppression; in fact, the district court did not even conclude that Mr. Hyatt’s conduct amounted to gross negligence, but rather excluded the evidence under a negligence “could have” standard. Nor did the PTO even argue, at any stage of these proceedings, that Mr. Hyatt’s conduct in this case was willful or intentional. Nonetheless, the majority concludes that the applicant “owed,” the PTO all evidence he possesses that is responsive to a rejection and that failure to fulfill this newly created “affirmative duty” amounts to willful withholding as a matter of law. There are only two possible ways to interpret the majority’s willful withholding determination. Either the majority is engaging in appellate fact finding or it is determining that breach of its newly created affirmative duty is willful withholding as a matter of law.

. . .

Congress granted patent applicants the right to a civil action in the district court distinct from their right of appeal. It is our obligation to protect the distinction Congress codified in § 145, not to reweigh the virtues of that decision. The § 145 proceeding is a civil action and ought to be governed by the same Federal Rules of Evidence that govern other civil actions. Patent cases do not need, nor should they have, special rules of evidence.

. . .

The statute itself distinguishes the appeal that may be brought pursuant to 35 U.S.C. § 141 because a § 145 action is not an appeal; it is a “civil action.” The statute obligates the district court to adjudicate the facts in this civil action. Because the statute affords no limitations on the type of evidence that ought to be admissible in a civil action brought under § 145, the standard Federal Rules of Evidence that govern all civil actions ought to govern. The legislative histories of § 145 and its predecessor statute, section 4915 of the Revised Statutes, repeatedly and without contradiction indicate that the intent of Congress was to permit a patent applicant to bring a new suit built upon a new record. . . . Congress intended that the district court in a § 145 action have everything that a court would have in an infringement suit. Under this standard, Congress certainly intended for an inventor, such as Mr. Hyatt, to be permitted to introduce his own declaration in a § 145 action.

. . .

The majority holds that by failing to offer his testimony to the PTO, Hyatt has failed to satisfy “an affirmative and specific duty.” Maj. Op. at 2. In this way, this new affirmative duty for prosecution seems to resemble inequitable conduct, though here the applicant is penalized regardless of their intent. . . . With all due respect to the majority, I do not believe a new “affirmative duty” to disclose is warranted, nor do I believe Hyatt was “required by law” or “obligated” to provide his declaration to the PTO. While Mr. Hyatt may have failed to overcome the rejections or to convince the Board based upon his submissions to the PTO, he did not fail to fulfill an “obligation” or “affirmative duty” as the majority alleges.

. . .

In this case, the district court found that Mr. Hyatt’s failure to proffer his

declaration to the PTO was merely negligent. . . . I find troubling the majority’s characterizations of Mr. Hyatt. See, e.g., Maj. Op. at 51 (Mr. “Hyatt purposefully kept [the Board] in the dark”); id. (his “blatant non-cooperation”); id. at 50 (Mr. “Hyatt willfully refused to provide evidence in his possession”); id. (Hyatt “refused to cooperate”); id. (“Hyatt’s willful non-cooperation”); id. at 55 (“Hyatt willfully refused”); id. at 49 (providing his declaration “should have been simple for him”); id. at 55 (that Hyatt’s failure “to perform a simple task that it was his burden to perform is inexcusable”); id. at 54 (“Hyatt’s perverse unhelpfulness”). None of this appears in the district court proceedings, the PTO proceedings, or the record— these fact findings ought to be left to the district court which is in the best position to weigh the contradictory evidence.

. . .

Contrary to the appellate finding of willful withholding, the record contains ample evidence of a lack of willful withholding. Here, the examiner rejected all of Mr. Hyatt’s 117 claims for lack of written description, failure to enable, obviousness-type double patenting (over 8 separate references), and Schneller-type double patenting (over the same 8 references). The examiner also rejected 9 claims as anticipated (Hill reference) and 7 as obvious (over a combination of three references). Technically, Mr. Hyatt was appealing 45 separate issues totaling 2546 separate rejections of his 117 claims to the Board. He wrote a 129-page appeal brief addressing all of these different rejections. And, to be clear, the Board reversed all the examiner’s rejections for obviousness, anticipation, obviousness-type double patenting, Schneller-type double patenting, and many of the written description and enablement rejections. With regard to the written description rejections in particular, the Board reversed the rejections of 38 claims and sustained the rejections of 79 claims. Mr. Hyatt prevailed on 92% of all the examiner’s rejections at the Board level. Despite Mr. Hyatt’s success, the majority declares Mr. Hyatt’s response to be “completely and wholly inadequate” and Mr. Hyatt to have been perversely unhelpful. Maj. Op. at 55, 56.

. . .

Although Mr. Hyatt may have failed to overcome all of the written description rejections based upon his submissions to the PTO, he did not fail to fulfill an “obligation” or “affirmative duty,” and he certainly was not “perversely unhelpful” as the majority alleges. . . I believe the court is wrong to hold that breach of the newly created affirmative duty, i.e., not producing evidence to the PTO, is willful withholding as a matter of law.

. . .

In hindsight, perhaps Mr. Hyatt should have submitted his declaration or that of any other expert earlier in the prosecution process. But hindsight is misleadingly acute. Declarations and expert reports are time consuming and expensive to prepare. It is hardly reasonable or even desirable to require patent applicants to put massive declarations into the record at an early stage of prosecution, weighing the cost to both the applicant and the PTO. See generally Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U.L. Rev. 1495 (2003) (arguing that it would be inefficient for the PTO to overinvest in examination because so few patents are enforced). In this case, for example, the examiner rejected the claims on many different bases (double patenting on 8 different references, obviousness, anticipation, enablement, written description, etc.), totaling 2546 separate rejections. The Board overturned nearly all of them. It is easy with the benefit of hindsight to say Mr. Hyatt should have introduced more evidence on written description to the Board. But Mr. Hyatt was not facing merely a written description rejection, he was facing 2546 separate rejections on many, many different bases. The majority implausibly asserts that 2546 separate rejections is “proportional to Hyatt’s prosecution of an application containing 117 pending claims spanning 79 pages.” Maj. Op. at 56 n.35. An average of 21 rejections per claim is hardly proportional. Mr. Hyatt was forced to appeal 45 independent issues to the Board when the average is two. Dennis D. Crouch, Understanding the Role of the Board of Patent Appeals in Ex Parte Appeals, 4, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1423922. Despite this challenge, Mr. Hyatt was largely successful on appeal. Further, the length of Mr. Hyatt’s application suggests that his efforts to pinpoint pages containing certain terms was helpful and in good faith. Mr. Hyatt’s response may have been especially valuable in the time before searchable electronic applications.

To say that Mr. Hyatt had an affirmative duty to introduce all evidence to the Board or that he “owed” (Maj. Op. at 56) all the evidence he possessed is to put an enormous and undesirable burden on the patentee, one that will foreclose patent protection for many small inventors. Congress foresaw exactly this problem and ameliorated it with § 145 by providing applicants a way to initiate a civil action and introduce new evidence after Board proceedings when the issues are much more succinct and consolidated. This is illustrated perfectly here, where the applicant was contending with 2546 rejections on many different bases before the Board. After the Board overturned nearly all of them, only a small number of rejections—based on written description/enablement—were maintained. Hence at the district court the applicant could proffer much more extensive evidence because the universe of issues was greatly narrowed. This is the sensible approach Congress enacted. The statute even places the cost of the proceeding on the party better positioned to know the value of the application—the applicant. The majority’s new exclusionary rule based upon its new affirmative duty upsets this balance.

Notes: I expect that Hyatt will ask for reconsideration and will then push for Supreme Court review.

Bits and Bytes No. 124

August 12, 2009PatentDennis Crouch

Recent Job Postings:

RAYSPAN (wireless communication interface hardware) is looking for a lead in house IP counsel in San Diego.
MedImmune (molecular biology, biotechnology) is looking for corporate counsel to join its patent department in Maryland.
Oregon Health Sciences University – OHSU – is looking for patent counsel to join its technology transfer office in Portland.
The law firm of Viering, Jentschura & Partner is looking to hire a US patent attorney to join its Munich, Germany office.
University of Connecticut School of Law is looking to hire a clinical professor as part of its Intellectual Property and Entrepreneurship Law Clinic in Hartford.
University of Utah S.J. Quinney College of Law is looking to hire a tenure-track or tenured professor of intellectual property.

Bits and Bytes No. 124

August 12, 2009PatentJonathan Hummel

Recent Job Postings:

RAYSPAN (wireless communication interface hardware) is looking for a lead in house IP counsel in San Diego.
MedImmune (molecular biology, biotechnology) is looking for corporate counsel to join its patent department in Maryland.
Oregon Health Sciences University – OHSU – is looking for patent counsel to join its technology transfer office in Portland.
The law firm of Viering, Jentschura & Partner is looking to hire a US patent attorney to join its Munich, Germany office.
University of Connecticut School of Law is looking to hire a clinical professor as part of its Intellectual Property and Entrepreneurship Law Clinic in Hartford.
University of Utah S.J. Quinney College of Law is looking to hire a tenure-track or tenured professor of intellectual property.

Bits and Bytes No. 124

August 12, 2009PatentDennis Crouch

Recent Job Postings:

RAYSPAN (wireless communication interface hardware) is looking for a lead in house IP counsel in San Diego.
MedImmune (molecular biology, biotechnology) is looking for corporate counsel to join its patent department in Maryland.
Oregon Health Sciences University – OHSU – is looking for patent counsel to join its technology transfer office in Portland.
The law firm of Viering, Jentschura & Partner is looking to hire a US patent attorney to join its Munich, Germany office.
University of Connecticut School of Law is looking to hire a clinical professor as part of its Intellectual Property and Entrepreneurship Law Clinic in Hartford.
University of Utah S.J. Quinney College of Law is looking to hire a tenure-track or tenured professor of intellectual property.

Microsoft Ordered to Stop Selling MS Word

August 12, 2009Best Mode, PatentLicensesDennis Crouch

i4i Ltd. v. Microsoft Corp. (E.D. Tex. 2009)

Texas style, the order from Judge Davis gets right to the point:

In accordance with the Court’s contemporaneously issued memorandum opinion and order in this case, Microsoft Corporation is hereby permanently enjoined from performing the following actions with Microsoft Word 2003, Microsoft Word 2007, and Microsoft Word products not more than colorably different from Microsoft Word 2003 or Microsoft Word 2007 (collectively “Infringing and Future Word Products”) during the term of U.S. Patent No. 5,787,449:

selling, offering to sell, and/or importing in or into the United States any Infringing and Future Word Products that have the capability of opening a .XML, .DOCX, or .DOCM file (“an XML file”) containing custom XML;

using any Infringing and Future Word Products to open an XML file containing custom XML;

instructing or encouraging anyone to use any Infringing and Future Word Products to open an XML file containing custom XML;

providing support or assistance to anyone that describes how to use any infringing and Future Word Products to open an XML file containing custom XML; and

testing, demonstrating, or marketing the ability of the Infringing and Future Word Products to open an XML file containing custom XML.

This injunction does not apply to any of the above actions wherein the Infringing and Future Word Products open an XML file as plain text.

This injunction also does not apply to any of the above actions wherein any of the Infringing and Future Word Products, upon opening an XML file, applies a custom tranform that removes all custom XML elements.

This injunction further does not apply to Microsoft providing support or assistance to anyone that describes how to use any of the infringing products to open an XML file containing custom XML if that product was licensed or sold before the date this injunction takes effect.

This injunction becomes effective 60 days from the date of this order.

In addition to the injunction, i4i was awarded $200 million in compensatory and $40 million punitive damages based on Microsoft's adjudged willful infringement.

Notes:

Read the Injunction Order: File Attachment: 20090811i4iinjunction.pdf (252 KB)
Read the Final Judgment: File Attachment: 20090811i4ijudgment.pdf (257 KB)
Doug Cawley and Mike McKool (McKool Smith) lead the i4i team; Matthew Powers (Weil) is lead counsel for Microsoft.
Microsoft can presumably fix its patent problem by eliminating the .docx format. According to court records, “i4i has presented evidence that it is possible to design a software patch that can remove a user’s ability to operate the infringing functionality.” Alternatively, Microsoft could buy the patent – although the price will now be substantially higher than it was in 2007.
Stays pending appeal: Under ther Federal Rules of Civil Procedure, Microsoft has a right obtain a stay of relief pending appeal after it posts an appropriate bond. However, that right only applies to monetary damages. There is no right to stay injunctive relief pending appeal. On occasions, both District Courts and the Federal Circuit will stay injunctive relief pending the outcome of an appeal.
Stays pending appeal: The district court has already denied Microsoft’s motion to stay injunctive relief. “The fact of Microsoft’s infringement causes i4i to suffer irreparable harm for every new XML customer that purchases an infringing Microsoft product. To stay any injunction would only prolong that harm without providing any remedy.”
Facing OpenOffice: OpenOffice may well be liable as well. If it comes to pass, i4i’s suits against those users may focus on users because no central entity controls its development and distribution (although Sun is a potential target).
Bilski?: i4i’s claim 14 may well fail the Federal Circuit’s Bilski machine-or-transformation test. The claim reads as follows:

A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising:

providing the mapped content to mapped content storage means;

providing a menu of metacodes;

compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and

providing the document as the content of the document and the metacode map of the document.