Bilski’s Patent Application

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The Supreme Court is reviewing Bernard Bilski’s patent application to consider whether the application appropriately claims “patentable subject matter” under 35 U.S.C. 101 as interpreted by the Supreme Court. Much of the focus in the case is on the Federal Circuit’s exclusive “machine or transformation” test. However, I thought it would also be important to look at the underlying Bilski patent application because of how it may drive the debate at the Court.

Bilski’s application is not published. However, a copy of the 14-page application was included in a joint appendix submitted to the Federal Circuit during the en banc appeal. The application includes one independent claim; eight subsequent dependent claims; no drawings; and a priority claim to a 1996 provisional application. It appears that Buchanan Ingersoll (Pittsburgh) led the prosecution. The BPAI opinion rejected eleven claims – indicating that some amendments occurred during prosecution. (A docket sheet also indicates that drawings were later added.) Amazingly, Bilski’s case is based on an appeal from a March 2000 final rejection.

The Invention focuses on a method of managing consumption risk by commodity trading something that – in 1996 was “not currently managed in energy markets.” According to Bilski there was a “need for a fixed bill product to manage total energy costs including the consumption of risk.” The general idea of using commodity trading as a hedge against risk has been well known for years. However, Bilski proposes that consumers purchase commodities “at a fixed rate based on historical averages.” In a dependent claims, Bilski indicates that the risk to be avoided is a “weather-related price risk.” Later, that risk is drilled-down to focus on temperature shifts (heating and cooling degree days). Another dependent claim spells-out the equation for calculating the fixed cost based on prior fixed and variable costs, transportation costs, local delivery costs, and a location specific weather indicator. Additional dependent claims require specific Monte Carlo simulations and statistical tests to better calculate the fixed rate. In some claims, the commodity being traded is identified as “energy” and the market participants as “transmission distributors.”

The Claims do not focus on any particular machine or software implementation. Rather, they are organized as “methods” followed by a series of steps such as “initiating a series of transactions . . . “; “performing a Monte Carlo simulation . . .”; and “continuing to re-price the margin in the transaction until the expected portfolio margin and likelihood of portfolio loss is acceptable.”

No Machine: Even an amateur implementation of these methods would make extensive use of software and computer hardware. However, those elements are not present in the claims. Why did Bilski not include software and computer hardware in his application? My speculation: First, it does not appear – at least from the patent application – that he invented any software application of his hedging theory. Second, perhaps Bilski believed that a computer implementation element would unduly limit the scope of his invention.

Obvious and Not Enabled: The claims are likely obvious based on extensive prior art in the industry. In addition, the claims may well fail the tests of enablement and/or written description (if it survives Ariad v. Eli Lilly). However, the PTO worked-hard to properly couch this case as a test of patentable subject matter.

The abstract reads as follows:

A method is provided for managing the risk-associated costs of a commodity sold by a commodity provider at a fixed price. Such risk-associated costs include the weather-related costs of a fixed price-energy bill. The commodity provider initiates a series of transactions with consumers of the commodity wherein the consumers purchase the commodity at a fixed rate based upon historical averages. The fixed rate corresponds to a risk position of the consumers. The commodity provider then identifies market participants for the commodity who have a counter-risk position to that of the consumers. The commodity provider then initiates a series of transactions with the market participants at a second fixed rate such that the series of market participant transactions balances the risk position of the series of consumer transactions.

Read the application here: BilskiApplication.pdf

Bits and Bytes No. 123: Judge Schall

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IPO Reports that Judge Alvin Schall intends to take Senior Status in October 2009 — opening a vacancy on the Federal Circuit to be filled by the Obama Administration. Three patent law professors have played important roles in the Obama campaign and transition: Mark Lemley (Stanford); Arti Rai (Duke); and Beth Noveck (NYLS; now Whitehouse). At least some patent litigators will push for Obama to nominate an experienced district court judge.

Judge Schall was appointed by the first President Bush in 1992. He spent many years as a prosecutor and DOJ trial attorney after graduating from Princeton (go Tigers) and Tulane Law.

Article: Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009

Patent

By Ed Reines and Nathan Greenblatt*

The Patent Reform Act of 2009 includes a provision allowing interlocutory appeals of claim construction orders.[1] As drafted, the provision gives the authority for approval of such an appeal to the district courts, without giving the Federal Circuit discretion to decline the appeal.[2] This approach is misguided. Failure to give the court of appeals a voice in the interlocutory appeals process flouts cautions inherent in the final judgment rule since its enactment in 1789, ignores the different institutional concerns of district and appellate courts, and will create problems of piecemeal appeals, undue delay, and crowded dockets that will impair the effectiveness of the Federal Circuit and contravene the purpose for enacting the provision in the first place.

In addition, the perceived problem of excess reversals of claim construction rulings that has motivated the current provision is a function, if anything, of the de novo review standard applicable to claim construction, not the final judgment rule.[3] Thus the proposed solution does not address the true issue in any event – it masks it.

Continue reading the article Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009.pdf

* The views expressed in this article are those of the authors and do not necessarily reflect the views of Weil, Gotshal & Manges LLP or any of its clients.

[1] See S. 515 sec. 8(b).

[2] Id. (amending 28 U.S.C. § 1292(c)(2) by giving the Federal Circuit exclusive jurisdiction):

(3) of an appeal from an interlocutory order or decree determining construction of claims in a civil action for patent infringement under section 271 of title 35. Application for an appeal under paragraph (3) shall be made to the court within 10 days after entry of the order or decree. The district court shall have discretion whether to approve the application and, if so, whether to stay proceedings in the district court during the pendency of such appeal.

[3] See, e.g., 6/6/2007 Testimony of Mary E. Doyle before the Senate Committee on the Judiciary regarding “Patent Reform: The Future of American Innovation” at 9-10 (arguing that interlocutory appeal is needed because “claim construction rulings are so frequently reversed by the Federal Circuit”).  

Bilski Briefs [Updated with 44 Briefs]

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The question of patentable subject matter has returned to the Supreme Court — this time with a focus on business methods. In January 2009, an en banc Federal Circuit implemented the “machine or transformation test” as the exclusive test for determining whether a claimed process qualifies as patentable subject matter under 35 U.S.C. 101. Now, the case is pending before the Supreme Court with two focused questions:

QUESTIONS PRESENTED

1. Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

2. Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

In this post, I have attached recently filed briefs which either (1) support Bilski or (2) support neither party. The government brief in opposition is due Sept 25 and friendly brief in opposition due within seven days of that filing.

  • Yahoo (Bilski – Yahoo! Amicus Brief (S.Ct) (as filed) (8-6-09).pdf) The focus on physicality does not make sense in today’s technology.
  • IBM (08-964 IBM.pdf) The proper test looks for a “technological contribution.”
  • Regulatory Data Corp ( 08-964 Regulatory Datacorp et al..pdf) Brief by John Duffy focuses directly on the historical importance of the statutory test. “The government is now asking this Court to impose a formalistic restriction on definition of “process” that would create an unprecedented and uncertain judicial limitation on patentable subject matter. This Court should reject that invitation just as it did more than a third of a century ago, when the government unsuccessfully advanced the very same argument. See Gottschalk v. Benson, 409 U.S. 63, 71 (1972).”
  • Accenture (08-964 tsac Accenture and Pitney Bowes, Inc.pdf) Machine or transformation test is not a reliable indicator of anything relevant. The standard for patentability should “usefulness” as set forth in the Constitution, in the patent statute, and by the Court.
  • Austin IP Law Ass’n ( 08-964 Austin Intellectual Property Law Association.pdf) The patent statute explicitly defines process quite broadly in Section 100(b). The Federal Circuit’s version of “process” in 35 U.S.C. § 101 is far narrower than the broad definition of “process” in 35 U.S.C. § 100(b) (2008).   
  • Double Rock and other IP entities (08-964tsacdoublerockcorporation.pdf) The Federal Circuit test conflicts with Supreme Court precedent and Congressional intent.
  • Law Professors [Lemley et al.] (08-964ac20lawandbusinessprofessors.pdf) The distinction on patentable subject matter should be based on the distinction between applied and abstract inventions. Bilski’s claims fail this test.
  • Chakrabarty (08-964 Chakrabarty.pdf) Brief by Scott Kieff and Richard Epstein argue that patent rights operate “like a beacon in the dark” to start conversations between innovative entities and potential users.
  • Franklin Pierce Law Center (Bilski.pdf) Court should adopt the “useful, concrete, and tangible result” test.
  • TeleCommunication Systems (08-964nsactelecommunicationsystemsinc.pdf) Subject matter eligibility should be predictably broad.
  • BIO, AdvaMed, WARF and U of Calif (08-964 tsac Biotechnology Industry Organization et al..pdf) Any decision should be clear that biotechnology is patentable.
  • Conejo Valley Bar Ass’n (08-964.ac.Conejo Valley Bar Association.pdf) The substantive elements of the patent act (102, 103, and 112) do all the necessary work.
  • Novartis (08-964tsacNovartisCorporation.pdf) A process of diagnosis should be patentable.
  • Dr. McDonough (08-964_PetitionerAmCuTMcDounough.pdf) “American innovation is not confined to Industrial Age mousetraps and other cleverly contrived gadgets. The modern economic agent is more likely to encounter innovation today in the services they consume than in the contraptions they use. The present amicus curiae suggests that the decision of the Federal Circuit in this case is an attempt to apply an Industrial Age standard to address a perceived Services Age problem, a problem that the present amicus curiae suggests does not exist.”
  • State of Oregon (08-964_NeutralAmCuOregon.pdf) (The Patent Hawk filed this brief on behalf of all Oregonians – although apparently without any official state approval) The brief makes an important point: Although Section 101 comes first in the statute, it does not make sense to use it as a screening tool at the PTO. Rather, the PTO’s skills are in comparisons of prior art and ensuring that the elements of Section 112 have been satisfied.
  • Chicago IP Law Ass’n (08-964 ac Intellectual Property Association of Chicago.pdf) There are strong parallels here with KSR; CAFC rule is too rigid.
  • Borland (Amicus Curiae Brief (Borland Software Corporation).pdf) The CAFC test does not properly follow Supreme Court precedent.
  • Time Systems (08-964 ac On Time Systems.pdf) Some abstract ideas should be patentable.
  • Monogram BioSciences and Genomic Health (08-964 ac Monogram Biosciences Inc.pdf) Patentable processes can be non-physical.
  • Sachs and Brownstone (08-964 ac Robert R. Sachs.pdf) The CAFC test is limits the patenting of software, and a bad result.
  • Boston Patent Law Association (08-964tsacbostonpatentlaw.pdf) A broad scope of patentable subject matter better preserves the health of an innovative culture; many landmark inventions fail the Federal Circuit’s Bilski test.
  • Georgia Biomedical Partnership, Inc. (08-964 Georgia Biomedical Partnership Inc.pdf) The Supreme Court has consistently refused to offer a “rigid” test.
  • Dolby Labs (08-964 Dolby Laboratories et al..pdf) The important thing is to settle expectations.
  • Teles AG ( 08-964 Teles AG.pdf) Subject matter eligibility should be “dynamic.” “Further, the global nature of today’s economy strongly recommends that the United States patent system be harmonized with robust patent systems of other nations wherever possible.”
  • Medtronic (08-964 Medtronic.pdf) Provides specific examples of medical innovations that may be unpatentable under the Federal Circuit test
  • Intellectual Property Owners (08-964acintellectualproperty.pdf) Machine or transformation test is not the only test; In its transformation test for signals, the CAFC “unduly focuses on the contents of the data . . . rather than the manner in which those signals are generated;” a general purpose computer should be considered a “particular machine.”
  • AIPLA ( 08-964 American Intellectual Property Law Association.pdf) A new exclusionary test is not needed.
  • Houston IPLA (08-964 Houston IP Law Assoc..pdf) The test negatively impacts Dell’s “build-to-order” patent (5,963,743) ; AT&T’s linear programming patent (4,744,028); and Sperry Corporation’s LZW compression patent (4,558,302).
  • Armanta, Asentinel, Cybersource, and Hooked Wireless (08-964 Entrepreneurial Software Companies.pdf) Questions of patentability are causing software companies to lose value.
  • Mr. Meiers ( 08-964 Raymond C. Meiers.pdf) A patentable invention “applies manifestations of nature and achieves a useful result.” This is the tripartite system.
  • Univ. South Florida ( 08-964 University of South Florida.pdf)
  • Awaken IP ( 08-964 AwakenIP.pdf) The CAFC test is unworkable and is as bad as the vague idea/expression dichotomy of copyright.
  • BSA ( 08-964 Business Software Alliance.pdf) Section 101 has been consistently and correctly interpreted to cover software innovations.
  • PhRMA, etc. ( 08-964 PhRMA et al..pdf) Medical processes should be patentable.”
  • Caris Diagnostics ( 08-964 Caris Diagnostics, Inc.pdf) Diagnostic method patents are important and have been called into question by Bilski.
  • AIPPI (AIPPI SupremeCourt_3455697.pdf) A flexible test is better, and TRIPS requires a flexible standard.
  • FICPI ( 08-964 FICPI.pdf) “The § 101 analysis should focus on the section’s substantive utilitarian requirement, rather than retrospectively attempting to rigidly define the categories of patentable subject matter without the foresight of the particular form technological innovations may take in the future.

Update: More Briefs

  • Professor Collins (08-964 Prof. Kevin Emerson Collins.pdf) Professor Collins has written a number of very interesting PSM articles. In his brief, he argues that the test should focus on whether “the claim impermissibly seeks a patent on a fundamental principle or an abstract idea.” One concern of the CAFC test is that it takes us off the path toward international harmonization.
  • Legal Onramp (08-964 Legal OnRamp.pdf) “Pure” business methods should not be patentable. “Unlike traditional patents on technological advances, the patenting of pure business methods is a serious obstacle to innovation because it unduly impedes competition.”
  • Eagle Forum (08-964 Eagle Forum Education & Legal Defense.pdf) Reminds us of the important constitutional role of the patent clause. “The decision below usurps the legislative role and adds complexities to patent law that are neither welcome nor justified in the 21st century.”
  • Fed Cir Bar Ass’n (08-964 Federal Circuit Bar Association.pdf) The CAFC test does not follow Supreme Court precedent.
  • Washington State Patent Law Association (08-964 tsac WSPLA.pdf) The Court should focus on Chakrabarty and Diamond v. Diehr: “any,” “new,” and “useful” “process.”
  • San Diego IP Law Ass’n (08-964 ac San Diego Intellectual Property Law Assoc.pdf)

Bits and Bytes No. 122: Nominees

Patent,

According to reports, David J. Kappos has now been confirmed by the US Senate as the Under Secretary of Commerce for Intellectual Property and Director of the US Patent and Trademark Office. Director Kappos was nominated in June and has received praise from many quarters because of his career-long experience in working with patents. Congratulations, now get to work!

It is likely in the first few weeks, DIrector Kappos will review the proposed rules being challenged in Tafas v. Dudas and somewhat alter the PTO’s course.

John Doll (Acting Director) and Peggy Focarino (Acting Commissioner of Patents) should both be commended for their proactive leadership over the past eight months during a difficult financial situation.

Seeing the Forrest: Considering Worldwide Patent Trends

Patent

Guest Post by Joff Wild – Editor of IAM Magazine and the IAM Blog.

The decline in patent flings and consequent fall in income causing the US Patent and Trademark Office so many worries has been extensively chronicled on PatentlyO, as well as many other US-based blogs and IP news sites. What seems to have received far less attention is that what is currently happening in the US is part of a worldwide phenomenon. The simple fact is that, to a greater or lesser extent, the USPTO's experience is being replicated in just about every other major patent office you can think of.

Take the other two offices of the Trilateral Authorities, for example. At the JPO, the most recent publicly available figures – which cover the six months until the end of March 2009 – show a decline in first filings of 6%. At the EPO, meanwhile, the very latest numbers, which I got today from the office's Controller, Ciarán McGinley, show a first filings fall of 8% so far for 2009. And just like the USPTO, the EPO has introduced a freeze on the recruitment of new examiners.

The story is similar, if not worse, elsewhere. In Korea, applications were down 9% in the first quarter of this year; in France the figure stands at minus 5%. The UK, Australia and Denmark are just three countries in which things are so bad patent office staff have actually been laid off. On the international front, World Intellectual Property Organization Director-General Francis Gurry told delegates at the Trading Ideas conference in Singapore last week that use of the PCT is down 5% compared to this time in 2008 (applications from the US have fallen by a massive 14%, by the way).

In fact, the one major economy which currently seems to be bucking the trend is China. In Singapore, Gurry told delegates that PCT applications with a Chinese origin are up 19% in 2009. At the same event, the head of the Chinese State Intellectual Property Office, Tian Lipu, stated that it had seen a 12% rise in filings in the year to the end of June, including a 23% rise from domestic applicants. For the first time ever in China, invention patent grants made to local applicants now exceed those made to foreign entities.

SIPO currently employs just over 6,100 staff and is actively seeking to bring in more examiners. It will have to. Currently, just 1% of Chinese companies use the country's patent system. Can you imagine the applications the office will have to deal with if that figure merely doubled to 2%? As an aside – any patent prosecution service provider in the world that does not already have a serious Chinese element to its offering (at least in terms of being able to access and understand Chinese prior art) is doing its clients a tremendous disservice.

Anyway, given what is happening globally (China excepted), those seeking to pin the USPTO's income and backlog problems solely or mainly on decisions taken at the office are not seeing the bigger picture. The same trends are being experienced across the world. This suggests to me that some of the solutions that the USPTO under David Kappos may put into place to tackle the difficulties it faces in these areas may also be similar to those introduced elsewhere.

Kappos is a well-known figure internationally and is familiar with the challenges that granting authorities face. Senior officials I have spoken to in both Europe and Asia welcome his potential appointment precisely because there will be no need for any learning on the job. This means that he can hit the ground running in discussions on issues such as reform of the PCT and procedural and substantive patent harmonisation.

In recent years, Kappos has spent a good deal of time in Europe and has expressed his admiration for the EPO's Scenarios for the Future project. This involved research-based scenario construction which was centred on different hypotheses as to how the world may have developed both economically and politically by 2020. The scenarios were then used as launch pads for discussion as to how the patent system may have to evolve to take account of wider change.

One result of the Scenarios project was a document, approved by the EPO's Administrative Council at the end of 2007, entitled Future Workload. There is no doubt that Kappos will also be familiar with this and its suggestion that in order to ensure patent quality and a reduction of the backlog the EPO faces, patent applicants should do more up-front work and pay more money to access a system that will make it harder than ever before to secure patent rights. During his appearance before the Senate Judiciary Committee last week Kappos spoke of the importance of reducing the USPTO backlog and talked about reworking the office's fee structure.

In 2007, EPO president Alison Brimelow told me that the office loses 30% of applicants once the search results and the preliminary opinion have been delivered; while of the 70% that remain, another 30% drop out before the end of the application process. She went on: “The fees that these people have paid do not cover the cost of the work that has been done at the office. I have nothing against what they are doing, but it is not compatible with our current funding model.” Basically, she explained, the office survives on maintenance fees, not those related to applications. As the length of the average patent's life declines, and the office consequently collects fewer maintenance payments, so there is increasing pressure on income. While not proposing a solution, Brimelow posed a question that left little doubt as to what she thought: “Should all applicants pay what it costs for the office to do the work that they request?" I wonder if David Kappos is thinking the same kind of thing.

Links:

Patent Office Keeps Check, Lets Patent Go Abandoned For Being $10 Short

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Guest Post by Stephen R. Albainy-Jenei, Partner at Frost Brown Todd and Author of the Patent Baristas Bio/Pharma blog.

Dealing with the Patent Office is a lot like standing in front of the airline ticket counter where the agent keeps typing in endless strings of random numbers and letters and politely explains that you can’t possibly make a change in your reservation because your ticket is a A389X-27-Purple ticket and not the B347L-Triple-Lindy ticket.

Although nonprecedential, the U.S. Court of Appeals for the Federal Circuit laid into the Patent Office this week for behaving in what it said was an ” arbitrary and capricious” manner after it cashed a payment that was $10 short and then promptly let the patent expire. See Taylor v. USPTO (CAFC 09-1133).

Jorge Taylor had a patent for a chemical sealant device for repairing flat tires (U.S. Pat. No. 5,178,701) and had to pay the seven-and-a-half-year maintenance fee of $1040. But, Mr. Taylor sent a check for $1030, rather than $1040, in the mail and used the wrong form for transmitting his payment, and sent it to the Applications Branch rather than the Maintenance Fee branch – sort of a hat trick of errors.

Mr. Taylor marked in capital letters at the top of his transmittal form:

“NOTE: IF THIS IS NOT THE CORRECT FORM, PLEASE MAIL THE CORRECT FORM TO THE RETURN ADDRESS ON THE CHECK.”

The PTO employee who processed the form may not have recognized this filing as an attempt to pay a maintenance fee, and may have just processed it as a regular application filing fee. Whatever the thinking, the PTO deposited the check in its account.

Fast forward several years later when Mr. Taylor called the Office in preparation for paying the required eleven-and-a-half-year maintenance fee and the PTO says “Oops, your patent went abandoned for failure to pay the seven-and-a-half-year maintenance fee.”

Taylor asked the PTO for reinstatement of his patent saying that he was “not an attorney but a pauper disabled living on a fixed income (SSI) who cannot pay $200 to petition your office.”

The PTO dismissed the case (for not including $200) also helpfully pointed out that Mr. Taylor’s original payment had not included a certificate of mailing. Thus, because the Office received the payment on January 17, 2001, five days had passed beyond the window for accepting maintenance payments with a surcharge.

Taylor then sued in district court, alleging that the PTO had “misappropriated” his $1030, and sought $1 billion in damages, his estimation of the worth of his intellectual property “in the U.S. and world market.”

The district court dismissed the complaint saying that PTO regulations do not provide a waiver of petition filing fees for indigent applicants and that Taylor had not shown that the PTO’s actions were “arbitrary and capricious” for purposes of making out a claim under the Administrative Procedure Act.

Mr. Taylor appealed to Federal Circuit, which seemed perturbed that the case had to go all the way to the appellate level and was not happy that that the PTO cashed Mr. Taylor’s check and still proceeded to consider his patent expired.

The court said that the PTO’s actions were arbitrary and capricious in accepting Mr. Taylor’s deficient payment on the one hand, while on the other hand expiring his patent without notifying him under MPEP § 2531 (Notice of Non-Acceptance of Patent Maintenance Fee) that his payment was inadequate.

The PTO tried to weasel out of the suit saying it would refund the $1030 and said that Taylor could still file a petition — along with $200, of course — to have his patent reinstated for unavoidable delay. But, the USPTO then mused that even if the failure to properly pay the 7.5-year maintenance fee could be overlooked, Mr. Taylor has now also failed to pay the 11.5 year maintenance fee, and has also missed the deadline for reinstatement based on “unintentional delay” of that payment. Nice.

In the end, the Federal Circuit said that it wasn’t fair for the PTO to take Mr. Taylor’s payment without notifying him of the $10 shortfall and demanded an equitable remedy:

In this case, equity would counsel that the PTO should reinstate Mr. Taylor’s patent upon receipt of his payment for all outstanding maintenance fees. This relief will remedy, to this court’s best estimation, the PTO’s arbitrary and capricious actions.

While I feel bad for Mr. Taylor, the real issue here is why doesn’t the Patent Office put more procedures in place that make the application process more of a mutual partnership? Yes, Mr. Taylor paid the wrong amount. Yes, he used the wrong form. But, even very experienced attorneys make these kinds of mistakes.

The present case illustrated that the Patent Office needs to adopt more equitable rules and procedures for helping inventors correct mistakes in the first place so that valid patents issue. Shouldn’t the Patent Office be on the inventor’s side?

Transformers v. Decepticons – Petitioner’s Brief In Bilski

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Guest post by Brett Trout, author of BlawgIT 200908052209.jpg

Background

Petitioners Bernard Bilski and Rand Warsaw filed their Brief For Petitioners last week in what could be this decade’s watershed patent ruling. The patent at issue relates to a method for managing risk when buying or selling energy commodities. The law at issue is whether a process must be tied to: 1) a machine or 2) a transformation of a particular article into a different state to be patentable (the “machine-or-transformation”/“MOT” test). The Brief breaks the case down into five issues:

1)     No New Limits On §101

Petitioners note §101 covers “any … process” and argue court’s limits on patentable subject matter, should not exceed limits outlined by Congress. Citing Benson and Flook, Petitioners note the Supreme Court has twice refused to limit §101 to the MOT test. Processes must, they argue, be subject to the same patentability requirements (and no more) than the other categories of subject matter. Petitioners enlist caselaw to attack the machine requirement of the test. They enlist Judge Rader’s dissent in Bilski to attack the transformation requirement which “links patent eligibility to the age of iron and steel as a time of subatomic particles and terabytes.”

Petitioners argue that Congress drafted the language of §101 broadly enough to encompass emerging technologies and the CAFC’s inability to apply its MOT test to “information-age processes” demonstrates the test is anathema to Congressional intent. Pitting the Supreme Court’s flexibility in interpreting patent cases against the CAFC’s rigidity, Petitioner’s analogize the MOT test with the CAFC’s KSR “teaching, suggestion or motivation test,” which the Supreme Court unanimously rejected.

2)     Conflict with §273, State Street and J.E.M. Ag Supply,

In 1999, Congress enacted 35 U.S.C. §273, which insulates entities from patent infringement liability based on using a method of conducting business, if the entity reduced the method to practice at least one year before the effective filing date of the patent and the patent contains claims the method would otherwise infringe. Since §273 of the Patent Act specifically recognizes patent protection for business methods Petitioners argue §101 cannot be read to exclude those same claims. Petitioners note the legislative history of §273 provides “[a] method is any systematic way of accomplishing a particular business goal” with “[t]he State Street decision [bringing the financial services] industry to the forefront of cutting edge patent law protection.”

In J.E.M. Ag Supply the Supreme Court upheld the validity of plant patents, basing its decision on the PTO’s history of issuing patents on plants and Congress’ failure to amend the Patent Act to prevent the practice. Petitioners analogize the facts underlying J.E.M. Ag Supply with the PTO’s grant of more than 15,000 patents in the “business methods” technology group. Weilding   J.E.M. Ag Supply, Petitioner’s argue, settled PTO practice and Congressional non-interference mandate a reversal of the Bilski decision.

3)     Disruption of Public Policy and Settled Expectations

Petitioners argue the MOT test constitutes legislation from the bench, straying from the CAFC’s prior technology neutral position to one of anti-technology Luddism. Acknowledging the problem of vague or trivial patents, Petitioners assert an unfettered §101, along with §112, §102 and §103 are far more better suited to vet patents than the MOT test. Petitioners cite Judge Newman’s dissent in which she notes the MOT test diminishes incentives available to new enterprises and disrupts settled expectations of those who rely on the law. Festo is also cited for the proposition that disrupting settled expectations destroys legitimate property expectations.

4)     Practical Applications

In lieu of the MOT test, Petitioner’s suggest the more flexible “practical application” test of Funk Bros. Petitioner’s argue the Supreme Court finds a principle is “practically applied,” and therefore patent-eligible, when the principle is applied (1) to a new and useful result; 2) in a particular apparatus or structure; or 3) in a particular art or process. Under this test, a method or transformation is sufficient, but not necessary, to make a principle patent-eligible. Petitioners analogize practical and patentable applications of mathematical formulas, natural laws, industrial processes, chemicals and manufacturing processes.

Petitioners point to the historical rejection of the English “manner of manufacture” in favor of the broader Constitutional “and useful Arts” as support for protection of processes being a seminal Constitutional right. Diehr is cited for the proposition that processes have historically enjoyed patent protection as a form of “art” as that term is used in the 1793 Patent Act.

5)     The Bilski Patent Claims Comport With §101

Petitioners reiterate the expansive nature of the language of §101, the admonition not to overrule Congressional intent by placing unnecessary restrictions on §101, and the availability of the Supreme Court’s “practical application” test as an alternative to the MOT test. Petitioners argue Claim 1 of the Bilski patent falls within the broad reach of §101 and embodies a practical application of using an intermediary to manage consumption risk costs associated with buying and selling a commodity. Even if Claim 1 fails the “practical application” test, Petitioners argue the much narrower and detailed Claim 4 is patentable for its inclusion of a mathematical formula, practically applied to a useful result.

Conclusions

Though well argued, Petitioners’ Brief buries its most persuasive argument. Arguments relating to the scope of §101, concordance of various statutes, general principles of patent law and application of particular claims to the law are all the true grist of every patent attorney’s mill. The issue with the most far-reaching and potentially catastrophic consequences is the disruption of public policy and settled expectations. Even the first U.S. patent ever granted covers a process.

It is no surprise the CAFC, left with applying flexible formulations to mercurial facts, constantly strives for hard and fast measures against which to adjudicate patent cases. Sweeping aphorisms (while simple to understand and apply) risk excluding entire technologies. Moreover, invalidating decades of case law and established practice undermines faith in our entire patent system. If there can be no reliance that patents granted today will endure, all patents immediately become less valuable and infringers are more apt to challenge them in court.

Disputed issues of patentability must be settled. Any decision of this magnitude must take into account rules regarding statutory interpretation, stare decisis and the application of the law to the facts. The decision should also take into account the tens of thousands of current inventors whose patents may be made worthless by this decision. Of course the value of the property interest at issue is not a pivotal factor in cases such as these. The public policy underlying reliance on the fairness and settled expectations under the law however, not only for past inventors, but for future inventors as well, is a factor of critical import. While simple rules and bright lines make resolving patent disputes easier, surrendering fairness for simplicity achieves neither end.

Cooper Cameron: First Inter Partes Reexam Appeal to the Federal Circuit

Patent, Patent Cases 2009, Reexamination

Cooper Cameron v. SAFOCO (Fed. Cir. 2009) (2009-1435) (Reexam No. 95/000,017)

The Cooper Cameron case looks to be the first inter partes reexamination appeal heard by the Federal Circuit. In a recent filing to the Federal Circuit, PTO Solicitor Ray Chen filed an interesting brief – indicating that the PTO should be captioned as a party in the case under 35 USC 143. Federal Circuit Appeal No. 2009-1435.pdf . Substantive briefs have not yet been filed in the case.

In the parallel infringement litigation, the S.D. Tex. court recently held that the reexamination is not yet “finally determined” under the estoppel provisions of Section 315(c) because (1) a reexamination certificate has not yet issued and (2) all appeals are not final. CooperCameron.pdf

Notes: A parallel case with the same parties is also pending appeal for Reexam No. 95/000,015. The BPAI treated these cases jointly in a December 2008 decision. The patents cover a valve actuator for hydraulic systems.

New Proposed Patent Rules Significantly Change Claim Construction Briefing

Patent

by David Donoghue (of Chicago IP Litigation and Holland & Knight)

The Northern District of Illinois judges are currently considering public comments on a new set of proposed Local Patent Rules – click here to download a copy of the proposed rules. The Court expects to enact a finalized version of the proposed Patent Rules later this year. As currently written, the rules likely will have a significant impact on the way that patent cases are litigated in the Northern District, and may result in an influx of patent cases to the Northern District, which is already among the top five for patent cases. As a result, patent litigators throughout the country should keep an eye on the proposed Patent Rules as they progress through the Court’s committee. While the proposed Patent Rules resemble those of the other major patent districts such as the N.D. California and the E.D. Texas, they differ in two rather significant respects:

1.     The proposed Patent Rules promote uniformity, not speed.

The proposed Patent Rules contemplate a trial approximately two years after a complaint is filed. During a public comment session, several Northern District judges pointedly stated that, in seeking to promulgate local patent rules, the Court does not want to become a “rocket docket” for patent cases. And the Court does not seek to become the busiest patent docket in the country. Instead, the aim of the local patent rules is simply to promote uniformity and best practices among the judges of the Northern District. The Northern District of Illinois is one of the largest districts in the country, and uniformity among the District’s would promote case management predictability for both the Court and the litigants. Each Northern District judge currently schedules patent cases based upon her own experience, with little uniformity among the judges. The proposed Patent Rules attempt to remedy that.

That said, the rules are optional, not mandatory—individual judges will be able to deviate from the proposed Patent Rules. But the proposed Patent Rules at least will provide a starting point for uniformity and a suggested framework for the judges who choose to adhere to them.

2.     Defendant opens and closes Markman briefing late in fact discovery.

The biggest deviation from the Northern District of California and Eastern District of Texas patent rules occurs in the claim construction phase. Significantly, the proposed Patent Rules do not contemplate two rounds of simultaneous briefing, as has become commonplace in patent cases. Instead, the proposed Patent Rules provide for a single set of briefs: the accused infringer files the opening brief, the patent holder responds, and the accused infringer replies. Notably, the accused infringer—not the patent holder—submits the initial and final briefs. The accused infringer necessarily will not have the benefit of the patentee’s claim construction position at the outset of the briefing. The practical impact of having the accused infringer file the opening claim construction brief remains to be seen, although some practitioners view this provision as having the potential to greatly increase the number of patent cases filed in the Northern District.

At the public comment session held on March 23, the judges on the rules committee explained the rationale behind this provision. Concurrent briefing, they noted, wasted a lot of time. The parties’ opening briefs tend to be ships passing in the night—the parties often argue past each other, rendering the opening briefs incomprehensible, or they agree with each other, rendering those points moot. As a result, neither the disputed claims nor the parties’ positions are fully understood until the concurrent responsive briefs. The proposed Patent Rules contemplate streamlining the process by eliminating simultaneous briefs.

The judges also addressed their decision to have the accused infringer, rather than the patent holder, begin the briefing. The judges explained that the patent holder’s opening argument is often for the “ordinary” meaning of claim terms. As a result, when the patent holder opens the briefing, the accused infringer has no chance to address many of the patent holder’s arguments because the patent holder often does not make those arguments until the reply brief. So, the judges explained, the Court and the parties are better served by having the accused infringer open the briefing with the patent holder responding to the accused infringer’s claim construction arguments.

Interestingly, a comment was made at the session pointing out that the Court has not decided how to schedule briefing when both parties assert patents against each other, that is, when each party is a patent holder and each party is an accused infringer. A possible resolution would be to allow two sets of parallel briefs with the accused infringer for each set of patents opening the briefing for those patents.

Conclusion

The proposed Patent Rules notably differ from the rules of other courts in two significant respects: the new briefing schedule, and for the fact that they are not aimed at decreasing the time to trial or at significantly growing the Northern District of Illinois’s patent docket. Assuming that the Court institutes the proposed Patent Rules with the current claim construction briefing schedule, it will be very interesting to see whether and how the claim construction procedures impact both case outcomes and the number of patent filings in the Northern District of Illinois.

For those interested in the specifics of the proposed Patent Rules, here is a general outline of the timeline and procedure that the Rules outline:

  • A standard protective order in place from the beginning of the case, unless and until it is modified, to avoid discovery delays being blamed upon entry of a protective order;
  • Automatic document production requirements of plaintiff when initial disclosures are served and of defendant when initial noninfringement and invalidity contentions are served;
  • Plaintiff serves initial infringement contentions two weeks after initial disclosures and defendant respond with initial noninfringement and invalidity contentions two weeks after that, followed two weeks later by plaintiff’s response to the invalidity contentions;
  • Plaintiff files final infringement contentions twenty one weeks after its initial contentions and defendant responds four weeks later with final noninfringement, invalidity and unenforceability contentions (after the final contentions, leave of Court is required for any amendments);
  • No party can seek a stay pending reexam after serving its final contentions;
  • The claim construction process begins two weeks after defendant’s final invalidity contentions are served;
  • Defendant files an opening claim construction brief along with a joint appendix including the patents in suit and their prosecution histories consecutively paginated, plaintiff then files a responsive brief within four weeks, and defendant has two weeks to file a reply;
  • Fact discovery closes forty two days after the claim construction rulings, which triggers expert discovery followed by a dispositive motion deadline; and
  • A trial is contemplated approximately two years after the filing of the complaint.

Ex parte Competitive Technologies, Inc. (B.P.A.I. 2009)

Patent, ,

[REPRINTED with permission from the excellent Patent Docs Blog]

Board Finds Metabolite Claim to be Patentable

    By Kevin E. Noonan – 

LabCorpThe most significant non-decision from the Supreme Court in recent memory is Justice Breyer's dissent over the Court's decision to dismiss its granted certiorari petition (as improvidently granted) in the Laboratory Corp. v. Metabolite Laboratories, Inc. case regarding the patent-eligibility of this claim:

13.  A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:  assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Columbia UniversityThe bases for the dissenters' objections to the patentability of this claim has been discussed in prior Patent Docs posts (see "The Supreme Court,In re Bilski and the Lingering Question of Labcorp v. Metabolite").  Today, the Board of Patent Appeals and Interferences issued its decision in an appeal from a final rejection of this claim in reexamination, reversing the Examiner's assertion that the claim was unpatentable for obviousness.

The ex parte reexamination, Control No. 90/008,305, of U.S. Patent 4,940,658was requested on October 23, 2006, and claims 13, 15-17 and 33 were finally rejected for obviousness over the following references:

•  Refsum et al., "Radioenzymic Determination of Homocysteine in Plasma and Urine," Clinical Chemistry 34: 624-28 (1985), cited for teaching methods for determining homocysteine levels in plasma by converted total homocysteine to radiolabeled S-adenosylhomocysteine and then quantifying;

•  Kass, "Cytochemical Detection of Homocysteine in Pernicious Anemia and in Chronic Erythremic Myelosis," American Journal of Clinical Pathology 67: 53-56 (1977), cited for teaching chemical methods of homocysteine detection in permicious anemia to detect B12 deficiency, but which test showed cross-reactivity with Coenzyme A;

•  Wilcken et al., "Homocysteinemia, Ischemic Heart Disease, and the Carrier State for Monocystinuria," Metabolism 32: 363-70 (1983), cited for teaching homocysteine detection in a twin study showing different folate and B12 levels consistently detected from RBCs; and

•  Westhyyzen et al., "Plasma amino acids and tissue methionine levels in fruit bats (Rousettus aegyptiacus) with nitrous oxide-induced vitamin B12 deficiency," British Journal of Nutrition 53: 657-62 (1985), cited for showing in correlation between plasma methionine levels and vitamin B12 deficiency.

USPTO Seal - backgroundThe Examiner rejected the claims in reexamination for obviousness, citing the Refsum reference as the primary reference (showing a method for detecting plasma homocysteine) combined with the other references showing a correlation with vitamin deficiency.  It would have been obvious to combine the teachings of these references, according to the Examiner, "[b]ased on the correlation between the elevated levels of homocysteine (free and/or complexed) in blood and urine samples with deficiency of cobalamin or folate taught by Kass, Wilcken . . . and Westhuyzen."

Saith the Board:  We disagree.  The panel first stated the principle, enunciated in KSR International Co. v. Teleflex Inc., requiring "some articulated reasoning with some rationale underpinning to support the legal conclusion of obviousness" (550 U.S. 398, 418 (2007)).  Here, the Board opined that the claimed invention requires assaying for "total" homocysteine, which comprises four species (homocysteine, homocystine, homocysteine-cysteine disulfides, and protein-homocysteine mixed disulfides), based on specific findings of fact, and correlating elevated levels with folate and/or vitamin B12 deficiency (without discriminating between the two).  The panel then distinguished the cited secondary references (which the Examiner used to establish the correlation between elevated homocysteine levels and vitamin deficiency) from the claimed invention.  According to the Board, Kass teaches a chemical reaction test that measures not only homocysteine (and not "total" homocysteine) but also Coenzyme A and further distinguishes between B12 and folate deficiency (contrary to the claimed invention).  The Board further opined that the ordinarily skilled worker would not have "reasonably" read the Wilcken reference as teaching a correlation between elevated total homocysteine levels and either folate or B12 deficiency, since neither twin was reliably deficient in either folate or B12.  The Westhuyzen reference does suggest a correlation between elevated plasma homocysteine and B12 deficiency, the Board conceded, but only detects homocysteine, not total homocysteine, and there is no evidence that the detected increased in homocysteine would "necessarily mean an increase in 'total' homocysteine."  In addition to these deficiencies, the Board found that none of the cited references show any correlation between plasma homocysteine levels and folate deficiency.

The Board then held that "[t]he Examiner has failed to provide a sufficient factual basis to support her conclusion of obviousness i.e. that the applied prior art teaches or suggests all of the claim limitations" (phraseology applying — but not rigidly applying — the traditional TSM test remaining as one option underKSR and the Patent Office Guidelines for implementing the KSR decision).

Competitive TechnologiesThis decision cannot be appealed by the third-party requester, and at least with regard to claim 13 provides no basis for appeal by the patentee (since the patentability of this claim was affirmed in unamended fashion by the Board's decision).  It is unlikely that this determination would change Justice Breyer's mind, in any event, since he is on record as believing that:

Even were I to assume (purely for argument's sake) that claim 13 meets certain general definitions of process patentability, however, it still fails the one at issue here:  the requirement that it not amount to a simple natural correlation, i.e., a "natural phenomenon."  See Flook, supra, at 588, n. 9 (even assuming patent for improved catalytic converter system meets broad statutory definition of patentable "process," it is invalid under natural phenomenon doctrine); Diehr, 450 U. S., at 184–185 (explaining that, even if patent meets all other requirements, it must meet the natural phenomena requirement as well).

At most, respondents have simply described the natural law at issue in the abstract patent language of a "process."  But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge.  Cf. id., at 192 (warning against "allow[ing] a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection").  One might, of course, reduce the "process" to a series of steps, e.g., Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly.  But one can reduce any process to a series of steps.  The question is what those steps embody.  And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered.  In my view, that correlation is an unpatentable "natural phenomenon," and I can find nothing in claim 13 that adds anything more of significance.

The Board's decision properly addresses the legal flaw in Justice Breyer's reasoning, as explicated by Judge Rich in In re Bergy:  the question of patent eligibility is distinct from whether an invention satisfies the statutory requirement for patentabity.  The Board has affirmed that Claim 13 is patentable; perhaps the Supreme Court will use its review of In re Bilski to address the question of whether the claim is also patent-eligible.

Ex parte Competitive Technologies, Inc. (B.P.A.I. 2009)
Panel: Administrative Patent Judges Spiegel, Adams, and Delmendo
Opinion by Administrative Patent Judge Spiegel

Innovation Alliance Video

Patent

The innovation alliance has a well engineered video focusing on various inventor-patentees explaining the “value of a strong patent system.”

A couple of the inventors (Richard Dean, Qualcomm & Rob Smithson, Fallbrook Tech) make the argument that strong US patents preferentially generates R&D in the US.  I don’t really understand that argument. US patents are available to inventors from around the world almost regardless of where the R&D took place. As a consequence, a strong US patent regime provides a global incentive to innovate products that will be valued in the US.

Four New Job Postings on Patently-O Jobs

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A 30–day job listing costs $200. Contact the Job Board manager Ryan Swarts (jobs@patentlyo.com) for more information

Statement of David J. Kappos, Nominee for Under Secretary of Commerce for Intellectual Property

Patent,

Statement of David J. Kappos
Nominee for Under Secretary of Commerce for Intellectual Property
and Director of the United States Patent and Trademark Office
Nomination Hearing before the Senate Judiciary Committee
July 29,2009

Chairman Leahy, Ranking Member Sessions and distinguished members of the Senate Judiciary Committee, thank you for the opportunity to appear before you today. I am grateful to President Obama and to Secretary Locke for the trust they have placed in me and to you for considering my nomination to serve as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

… It is exceptional and humbling under any circumstance to have the chance to serve one's country. But it is particularly so for me as the son and grandson of immigrants – my father came to this country from Greece and my mother's parents came to the US from Italy. So, the opportunity to be here today is particularly poignant for me, as it is for my family.

If recommended by this Committee and confirmed by the Senate, I look forward to joining Secretary Locke and his team at Commerce in their mission as stewards of American economic growth, job creation and innovation.

I have spent nearly my entire professional career in the field of intellectual property law, and indeed my entire career around technology and innovation. After receiving my education from the University of California system, first in electrical and computer engineering and subsequently in law, I went to work for IBM as an intellectual property law attorney.

During my career at IBM, I have held intellectual property law positions in nearly all of its business units. I have written and prosecuted patent applications in many technical areas and I have searched the prior art files of the USPTO alongside other patent professionals, including examiners themselves. I have handled many trademark matters in the US and globally. I managed IBM's IP law interests across the Asia-Pacific region, and lived in Japan during that period. Currently and for the past six years, I have served as Vice President and Assistant General Counsel for intellectual property law at IBM's corporate headquarters. In that role, I am responsible for the management of intellectual property interests – patents, trademarks, trade secrets and copyrights – on a worldwide basis. Additionally, I have served in leadership positions in the major professional associations that represent the intellectual property law community in this country and globally, including the Intellectual Property Owners Association and the American Intellectual Property Law Association.

I care passionately about this field and the role intellectual property plays in advancing American innovation. So, it is particularly exciting for me to be considered for the position of Director of the USPTO, an organization that traces its roots to the founding fathers and their understanding that promoting and rewarding innovation is critical to our country's success.

The PTO faces many challenges. Most immediate are those resulting from the current economic downturn, the need for a stable and sustainable funding model, the need to address pendency concerns while preserving and enhancing patent quality, and the imperative to attract and retain skilled personnel at a time of fiscal constraint. Secretary Locke has personally asked me to make it my number one priority to refashion the patent examination process to meet these challenges. In carrying forward this direction, I will focus substantial personal attention within the USPTO. Additional challenges flow from a rapidly globalizing trade environment , impacting trademark and patent interests, as well as respect for intellectual property and the consequences where IP is not respected.

Longer term, the USPTO must keep abreast of the astounding pace of technological change across a broad range of scientific disciplines. It needs to understand new modes of innovation and their effect on its mission. And it will need to constantly rethink how to maintain and enhance the constitutional imperative to promote innovation and scientific advancement for the public good – both in terms of the technology confronting the Office and in terms of leveraging and applying the law to that technology.

I welcome this challenge and pledge to you all of my energy, creativity and intellect should I be confirmed. As I consider this challenge, I am mindful of several things.

I am mindful that the USPTO serves the interests of ALL innovators in this country, small and large, corporate and independent, academic and applied, and – most importantly — the public interest. While I have spent my career to date at a large corporate enterprise, I am familiar with the concerns and issues of all USPTO constituents – including small and independent inventors, the venture and start-up community, public interest groups, the patent bar and many others – and will reach out to all of them.

I am mindful of the incredible dedication of the thousands of USPTO employees, and the essential role they play to the success of the US innovation system. I will work every day with the USPTO employees and the unions that represent them to establish strong, positive relationships grounded in professional treatment for these workers producing work product based on professional judgment.

I am acutely mindful that innovation today is global and that IP policy is of paramount importance, not only in our country, but also in the EU and Japan, in China, India, Brazil and many other developing countries. I will use my international experience and my understanding of global IP trends to help this Administration represent, advance, and protect the interests of American innovators in the global arena and to lead the world in developing strong, balanced, inclusive intellectual property systems that advance the well-being of all participants.

Finally, I am mindful that the office for which I am being considered, working as part of Secretary Locke's team and within the Administration's agenda, must be intensely focused on how to serve the American people at this time of economic uncertainty. I believe the USPTO can play a significant role in enhancing economic growth, creating jobs and advancing American innovation. I hope to play a part in this important mission.

Again, I am grateful for the opportunity to address you today. I am honored by the opportunity to serve and I look forward to joining this Administration and Secretary Locke's team should I be confirmed.

I am pleased to answer any questions.

David J. Kappos

Claim Construction

Claim Construction, Patent, Patent Cases 2009

PatentLawPic745Wavetronix v. EIS Electronic Integrated Systems (Fed. Cir. 2009)

Wavetronix’s patent covers a big brother sensor to monitor vehicle trafic and to ensure that drivers are properly using the carpool (high-occupancy vehicle) lane. EIS was accused of infringement but convinced the Utah-based district court to grant summary judgment of non-infringement.

On appeal, the Federal Circuit has affirmed – largely based on claim construction of the claim term “probability density function estimate” or PDFE used to define the traffic lanes.

The excerpted claim reads as follows: 1. … a method for defining traffic lanes, comprising … b. generating a probability density function estimation … of said selectable plurality of vehicles; and c. defining said traffic lanes … from said probability density function estimation.

Writing for the court, Judge Patel (sitting by designation from the N.D. of Cal.) construed PDFE to as “a finite data set large enough to approximate a function of a continuous variable whose integral over a region gives the probability that a random variable falls within the region.”

[Updated] That definition – requiring an approximation of a continuous variable – helps EIS. The EIS system can also automatically define the traffic lanes based on traffic data, but the company claims that its device does not do so with “probability analysis” but rather uses large binary bins. Based on this distinction Judge Patel held that the EIS system data is “too coarse” to be a PDFE.

Even in a close case such as this, the court held that the DOE cannot rescue the patentee because of the tight requirements of element-by-element application of the DOE and the doctrine of vitiation.

Patently-O Bits and Bytes No. 121: #Kappos

Patent
  • The Kappos recently ended. Bryan Beel tweeted.
    • Some statements as recorded by Beel:
    • Need to refashion fee system to accurately assess relationship between fees and work being done
    • “Overhaul count system” means completely remake, on orders from Secretary Locke.
    • My job is to watch out for the U.S., not IBM.
    • Should do more [to accelerate examination], wants to do more. Will submit writing.
    • I hate fee diversion. Community happy to fund PTO, even higher fees, but diversion is bad.
  • Tafas v. Dudas case appear is be suspended until Kappos is confirmed.
  • Remember to check your PTA calculation [Link] (snooze you lose).

Requester Success Rates In Inter Partes Reexamination

Patent, Reexamination

by Matthew A. Smith. Smith regularly updates his treatise entitled Inter Partes Reexamination (available online for free).

Much attention has been paid in the past week to the recently released PTO statistics on inter partes reexamination. These statistics show a high success rate for third party Requesters. In particular, 60% of all cases surveyed resulted in all claims being canceled.

As has been recognized by a number of observers, however, the PTO statistics are based on a sample population (the 77 issued inter partes reexam certificates) that is systematically biased. This is demonstrated by the absence of any Federal Circuit decision on the merits in an appeal from an inter partes reexamination. As a matter of logical necessity, every single one of the 77 reexam certificates resulted from a proceeding where someone either missed a hard deadline or gave up.

This has obvious implications for the PTO’s overall pendency statistics. Barring a change in the way reexams are handled, the average and median pendencies should rise as more certificates issue. The effect on Requester success rates is not so clear, however. Ideally, a potential Requester would like to have data that predict the outcome of cases that are fully contested. Do the PTO’s statistics provide that?

At the end of 2008, the author studied Requester success rates while attempting to avoid the systematic bias introduced through the use of reexam certificates. The study was done in two different ways, both of which yielded similar results. First, Right of Appeal Notices were examined. Right of Appeal Notices, although they reflect a result that is alterable on appeal, are a potentially more accurate predictor of the outcome of fully contested reexaminations. This is because the PTO will not issue a Right of Appeal Notice where there is no right to an appeal,i.e., where someone missed a hard deadline or gave up at the Examiner level.

At the time of the study, 99 such notices had issued. The results are detailed in the attached excerpt. Briefly summarized, about 47% of the cases resulted in all claims being rejected, with about 70% of all cases resulting in cancelation or amendment of all independent claims. Of course, the effect of an amendment on the Requester’s overall position is not easy to judge. An amended claim may be a victory for a Requester, but can also be a disaster if past damages are unimportant, and the Patent Owner manages amend the claims to preserve infringement while excluding prior art.

The second approach attempted to capture some of these subtleties by examining the respective probabilities that the Patent Owner and Requester will be the primary appellant. The “primary” appellant is one that files a Notice of Appeal, as opposed to a Notice of Cross-Appeal, or no notice at all. The status as the primary appellant tends to indicate a party’s subjective dissatisfaction with the result before the Examiner. This study demonstrated that appeals were initiated three times more often by the Patent Owner than by the Requester. In a significant number of cases (35%), however, no appeal was filed by either party.

The results of these studies tend to support the effectiveness of inter partes reexamination as a tool for the Requester. Such statistics may also ultimately have an impact on whether events from reexamination are admissible in court. For example, the Federal Circuit’s decision in Hoechst Celanese Corp. v. BP Chemicals Ltd.,78 F.3d 1575 (Fed. Cir. 1996), affirming a district court’s exclusion from evidence of a PTO grant of ex parte reexamination, was based on 1994 ex parte reexam statistics. This decision is still being followed by district courts, but a significant uptick in requester success rates may change the way such cases are decided.

===

Also on Patently-O: Inter Partes Reexamination Statistics (2009); Ex Parte Reexamination Statistics (2008)

Published Applications as Prior Art

Academic Studies, Articles and Publications, Patent

[edited to fix my pre-coffee typos where my eyes though provisional = published]

In 2001, the USPTO published its first patent application. Since then, almost two-million patent applications have published. During this same time period, about 1.3 million patents issued. There are a couple of ways that the prior art created by patent applications change the prosecution game. First, published applications increase the sheer volume of prior art. Most notably, around ten percent of the published applications will never issue and would not have been otherwise published. And, even if published elsewhere at a later date, applicants would be faced with the later 102(a) effective date rather than the 102(e) effective date associated with a published application. This ties in with the second importance of published patent applications — they bring innovations to light more quickly and in a manner that patent examiners can readily use. Along these lines, the early publication of published applications triggers the clock for the statutory bar of 102(b).

Looking at patents issued during the past four years, I calculated the average percent of cited references that are US published patent applications. As you might expect, that figure has been rising steadily – doubling from under 6% in 2006 to almost 12% for patents issued in the early part of 2009. The evidence shows that examiners are using the patent applications. On their own examiner’s locate 41% of all cited US patent application publications even while locating only 25% of other cited references. (The remaining references are submitted by the applicant).

ScreenShot040

Note, this post was prompted by an interesting series of comments on IPWatchdog questioning whether this newly available prior art has been a factor in the dropping allowance rate.

Question on dedication of material

Bits and Bytes, Patent

I’m working on compiling the data from the recent survey on antedating prior art through the use of Rule 131 affidavits during patent prosecution. I have a question for practitioners on the current state of the dedication rule.

MPEP 715 reads as follows:

An affidavit or declaration under 37 CFR 1.131 is not appropriate . . . (F) Where the reference is the disclosure of a prior U.S. patent to the same party, not copending. The question is one of dedication to the public. Note however, In re Gibbs, 437 F.2d 486, 168 USPQ 578 (CCPA 1971) which substantially did away with the doctrine of dedication.

What is the current state of the law regarding later claiming material disclosed in earlier not-copending application?

Blackboard: Federal Circuit Again Find Software-Related Means-Plus-Function Claims Invalid for Failing to Disclose Sufficient Structure

CAFC, Claim Construction, Means Plus Function, Patent, Patent Cases 2009, , ,

Blackboard v. Desire2Learn (Fed. Cir. 2009) 08-1368.pdf

Blackboard’s patent covers an internet-based educational support system and method. (U.S. Pat. No. 6,988,138). On summary judgment, the district court (Judge Clark, E.D. Tex.) found claims 1-35 invalid as indefinite, but a jury found found that Desire2Learn liable for infringement of claims 36-38. On appeal, the Federal Circuit agreed that Claims 1-35 are indefinite, and – after altering the claim construction – held that the remaining claims were also invalid as anticipated. pic-54.jpg

Means-Plus-Function: Blackboard’s seemingly broadest claim (claim 1) includes several means-plus-function clauses, including a “means for assigning a level of access and control.” The specification briefly discusses an “access control manager” (ACM) with an “access control list.” On appeal, however, the court found that brief description to be an insufficient “disclosure of the structure that corresponds to the claimed function” and consequently indefinite under 35 U.S.C. §112 ¶2. See In re Donaldson, 16 F.3d 1189 (Fed. Cir. 1994)(en banc).

“[W]hat the patent calls the ‘access control manager’ is simply an abstraction that describes the function of controlling access to course materials, which is performed by some undefined component of the system. The ACM is essentially a black box that performs a recited function. But how it does so is left undisclosed.”

Important for patent drafter, means-plus-function claims require disclosure in the specification even if the means are already well known in the art.

The fact that an ordinarily skilled artisan might be able to design a program to create an access control list based on the system users’ predetermined roles goes to enablement. The question before us is whether the specification contains a sufficiently precise description of the “corresponding structure” to satisfy section 112, paragraph 6, not whether a person of skill in the art could devise some means to carry out the recited function.

Because claims 2-35 all depend upon claim 1, they are all invalid as indefinite

Claim construction: At the trial, Blackboard’s expert could only identify one difference between claims 36-38 and the prior art. Namely, that the Blackboard patent identified a “single login” feature that allowed one user to have various roles within the system. “For example, Blackboard asserted that its claimed method would allow a graduate student who was a student in one course and a teacher in another to use a single login to obtain access to both courses and to obtain access to the materials for each course according to the graduate student’s role in each.” However, on appeal, the Federal Circuit determined that the claims do not actually require that feature — leading them to hold the claims invalid based primarily on the admissions of Blackboard’s own expert.

[O]nce the claims are properly construed, the conclusion of anticipation is dictated by the testimony of Blackboard’s own witnesses and the documentary evidence that was presented to the jury. Based on that evidence, and in the absence of a “single login” requirement in claims 36-38, it is clear that the prior art contains every limitation of those claims.

Defendant Desire2Learn wins a complete victory (after a few million in attorney fees).