The Soaring Rate of BPAI Appeals

Academic Studies, Articles and Publications, BPAI, Patent

In two earlier posts, I discussed the BPAI reversal rate (link) and the reopening of prosecution after a reversal (link). In the reversal rate, I also looked at the historic jump in the absolute number of BPAI appeals filed. In FY2008 (ending Sept 30, 2008), the BPAI received over 6,000 ex parte appeals– concluding two consecutive years of over 35% annual growth rate in appeal filings.

Although dramatic, the reported filing increases pale in comparison to those seen in the past four months. The BPAI reports that in the period of Sept-Dec 2008, it received an average of 954 ex parte appeal cases per month. That value is well more than double the monthly average for the same span in 2007.

At this rate, the number of BPAI appeals would easily reach 10,000 in FY2009.

The planned BPAI rule changes may explain at least part of the sudden jump. In a recent presentation, William Smith of Woodcock Washburn stated that the new rules are “onerous and will significantly increase the cost of preparing an Appeal Brief.” [Link]. I have spoken with several patent attorneys who intentionally filed appeal briefs early in order to beat the December 10 deadline. That deadline has now been postponed. If the rules truly are onerous, then we may see a drop in appeals once they become effective.

Jury verdict forms

Articles and Publications, Damages, Patent, Patent Cases 2009

Agere Systems v. Sony Corp (E.D. Tex. 2008).

In November 2008, a jury returned a verdict finding that Sony had induced infringement of Agere’s patent by marketing and selling its PlayStation Portable (PSP) game. It is interesting to look at the simplicity of the jury form:

Post-verdict motions are still pending in the Sony case, but an appeal is expected.

In Spine Solutions v. Medtronic (D.Del. 2008), the jury found that the asserted claims were non-obvious and that the patentee was entitled to lost profit damages.

Some of the damages were also awarded based on a “reasonable royalty” of 18%.

BPAI Appeal Statistics: The Plummeting Reversal Rate

Academic Studies, Articles and Publications, BPAI, Patent,

In an earlier post, I examined what happens to patent applications after the BPAI reverses an examiner rejection. [LINK] This next post looks at the BPAI reversal rate itself. Here, I define the reversal rate as the percentage of cases where the Examiner rejections are completely reversed (as opposed to partial reversals).

Over the past several years, the BPAI reversal rate has dropped dramatically. From FY1999-FY2005, the reversal rate remained relatively steady between 35% and 40%. Then, in FY2006 we began to see a smaller proportion of reversals. By the first two months of FY2009, the reversal rate had dropped to 20%. Part of the drop is likely attributable to new filtering mechanisms that keep low-quality rejections from reaching the Board. The pre-appeal brief conference program started in 2005 and allows a patent applicant to request an internal review of the examiner’s final rejection at the Tech Center (TC) level before an appeal brief is filed. Even if no pre-appeal brief conference request is made, the examiner’s case for a rejection is usually reviewed at the TC level before the examiner is allowed to file a responsive brief.

In recent years, these filters have operated to weed-out 80% of the cases where an appeal brief or pre-appeal brief conference request had been filed. Prior to implementation of these filters, the majority of appeal briefs led to BPAI decisions. [See Katznelson, Slide 15]

When the low quality rejections are eliminated from consideration, we should expect that the BPAI reversal rate would drop – as it has. The BPAI is no longer seeing many of the easy reversal cases where the examiner made a clear legal error. Rather, today’s cases before the board tend to be more focused on arguable issues involving obviousness, enablement, and patentable subject matter.

The filters only tell part of the story, and the reversal rate masks the fact that – in absolute numbers – the Board is reversing more cases than ever. Over this same period, the number of appeals filed has increased dramatically. And, although the BPAI has increased its throughput, the backlog has grown five-fold since 2005. These pendency pressures give the Board an incentive to make appeals less hospitable – as we saw with the new (not-yet-final) BPAI appeal rules.

Notes:

On the Price Elasticity of Demand for Patents

Academic Studies, Articles and Publications, Patent

In a recent working paper, two European economists studied the price elasticity of demand for patents based on data from past twenty-five years. Their empirical result – the demand for patents is responsive to price, but relatively inelastic. I have created the following table showing where their result fits in the overall elasticity schema of goods and services.

Good

Estimated Elasticity

Description

Salt

0.1

Highly Inelastic

Patents

0.4

Inelastic

Legal Services in General

0.4

Inelastic

Utilities

0.4

Inelastic

New Tires

1.0

Moderate

Restaurant Meals

2.3

Elastic

Chevrolet Automobiles

4.0

Elastic

Elasticity is simply a way to measure (or estimate) the how the demand for a good changes in response to a change in the price of that good. Their results essentially show that pricing mechanisms could be effective in shaping applicant behavior, but that a significant result would require a dramatic change in fees. From a historical perspective, the authors attribute at least part of the “boom” in patent filings to a relative fee reduction and generally “very inexpensive” fees. “Higher fees would … [help] reduce the upward trend in propensity to patent.”

Notes:

  • Read the paper: On the Price Elasticity of Demand for Patents by Gaetan de Rassenfosse and Bruno van Pottelsberghe de la Potterie. [LINK]
  • Historical data is only available for a limited range of pricing schemes.  In his paper on Patent Demand Tim Wilson proposes raising the patent filing fee to $50,000 with the assumption that the demand for patents becomes more elastic as the price becomes dramatically higher.  

What Happens After the BPAI Reverses an Examiner Rejection

Academic Studies, Articles and Publications, BPAI, Patent,

Even after the Board of Patent Appeals and Interferences (BPAI) reverses an examiner’s rejection, the case is returned to the same examiner to ensure that the application is in condition for allowance. 37 CFR 41.54. At that point, the examiner is not allowed to make another search for prior art. However, the examiner may reopen prosecution and enter a new grounds for rejection “[i]f the examiner has specific knowledge of the existence of a particular reference or references which indicate nonpatentability of any of the appealed claims.” MPEP §1214.04. According to the MPEP, reopening prosecution requires written approval of the Technology Center Director.

To get a sense of how this post-reversal process operates in practice, I looked at a set of 149 decisions from 2006 where the BPAI had reversed examiner rejections. In 80% of cases, the examiner accepted the BPAI decision and did not re-open prosecution. In these cases, a patent generally issued within nine-months of the BPAI decision (median of six months) unless the applicant caused some delay. A typical delay is seen in IBM’s Application No. 10/047,116. After winning an appeal on nonobviousness grounds and receiving a notice of allowance, IBM failed to pay the issue fee in a timely fashion. The patent finally issued after the PTO granted a petition to revive.

In the remaining 20% of the reversals, the PTO re-opened prosecution by offering new grounds for rejection. Occasionally the new grounds are suggested by the BPAI but more often they come from the examiner and fall under §101, §103, or §112. The current status of those re-opened cases from my 2006 sample can roughly be broken into thirds: a third of the cases were eventually patented despite the new rejection; a third of the cases are still pending; and a third of the cases were abandoned after the PTO continued to press its case. A handful of the pending cases are on their way to the BPAI for a second go-round.

Notes:

  • One PTO insider takes issue with my statement that after being reversed “the examiner is not allowed to make another search for prior art.” The MPEP §1214.04 states that “[t]he examiner should never regard such a reversal as a challenge to make a new search to uncover other and better references.” According to the insider, that statement is not a prohibition on making a new search, but only a “discouragement.” In practice, new searches are conducted and, if new art is found the PTO will reopen prosecution.

Professor Collins: In re Bilski: Tangibility Gone “Meta”

Academic Studies, Articles and Publications, Patent, Patent Cases 2008, Patentable Subject Matter, , ,

By Professor Kevin Emerson Collins (Indiana University Law School – Bloomington) [PDF Version]

In its recently issued en banc majority opinion in In re Bilski, the Federal Circuit articulates a “machine-or-transformation” test for patent-eligible subject matter under § 101 of the Patent Act. Although they are both legitimate questions, this short comment addresses neither whether there is a legitimate statutory basis for this test nor whether Supreme Court precedent should be interpreted so as to mandate (or even support) this test. Rather, it focuses solely on the criteria that the court offers to draw the line between patentable and unpatentable transformations. The Federal Circuit has added a new twist to the tangibility test that has for many years played a role in determining patent-eligibility: the tangibility test has gone “meta.” The tangibility of the formal data that is actually transformed by a method of processing information is not relevant to patent-eligibility, but the tangibility of the things that the data is about—the tangibility of the informational content of the data or the things to which the data refers—now appears to be dispositive.

Bilski sets out a disjunctive two-prong “machine-or-transformation” test for patent-eligible subject matter: “A claimed process is surely patent-eligible subject matter under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” Slip op. at 10. The opinion declines to elaborate on the implications of the particular-machine prong of the test because the applicants conceded that their claim did not satisfy this prong. Id. at 24. It addresses only the transformation prong. It puts forward a conjunctive, two-prong test that must be satisfied for a method to “transform[] a particular article into a different state or thing” and thus to qualify as patent-eligible subject matter. First, the transformation implicated “must be central to the purpose of the claimed process.” Id. In other words, it must also “impose meaningful limits on the claim’s scope” and not “be insignificant extra-solution activity.” Id. Second, the transformation only qualifies as patent-eligible if it transforms a certain type of “article.” “[T]he main aspect of the transformation test that requires clarification here is what sorts of things constitute ‘articles’ such that their transformation is sufficient to impart patent-eligibility under § 101.” Id. at 24–25. This is the distinction—the distinction between the “articles” that, if transformed, constitute patent-eligible subject matter and the other “articles” that, if transformed, do not constitute patent-eligible subject matter—on which the opinion elaborates at length, id. at 25–32, and on which this comment focuses.

Most importantly for the point addressed here, the Federal Circuit implies in Bilski that there are two different categories of “electronically-manipulated data,” id. at 25, and that the data in each category is a different type of “article” insofar as patent-eligibility is concerned. The data in the first category is an “article” that, if transformed by a method claim, constitutes patent-eligible subject matter, but a method that transforms the data in the second category is not a patent-eligible method.

The first category is comprised of data that represents a “physical object or substance.” Id. at 28. For example, citing In re Abele, 684 F.2d 902 (C.C.P.A. 1982), the Federal Circuit stated that a method that transforms data that “clearly represent[s] the physical and tangible objects, namely the structure of bones, organs, and other body tissues” is a patent-eligible method. Slip. op. at 26.

The second category of data seems to have two distinct subsets. The first subset is data that, as claimed, does not represent anything (or, alternatively, that can represent anything). This data is semantically empty; it is a variable without any specified informational content. Bilski again uses Abele—but this time the claims that the court rejected under § 101—as an example. Id. The fact that methods reciting the transformation of this meaningless (or infinitely meaningful) data are not patent-eligible should come as no surprise to those familiar with the history of patent-eligibility in the last several decades: methods that recite the manipulation of variables without semantic meaning are nothing more than methods that recite mathematical algorithms in the abstract.

The second subset of the second category, however, is likely to raise some eyebrows: it contains data that represents something specific or something in particular, but that something represented is itself intangible. Here, the informational content of the data—the thing in the world to which the data refers—is intangible. The Federal Circuit holds that the method at issue in Bilski is not patent-eligible because it “transform[s]” or “manipulat[es]” data representing “public or private legal obligations or relationships, business risks, or other such abstractions,” which critically is not data “representative of physical objects or substances.” Id. at 28.

The idea that the meaning that the user attributes to the data transformed or manipulated by an information processing method is relevant to patent-eligibility is not a novel feature of the “machine-or-transformation” test announced in Bilski. For example, the “concrete, useful and tangible result” test of State Street Bank required the courts to examine the meaning of the data, variables or “numbers” in the course of determining patent-eligibility. State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1373–75 (Fed. Cir. 1998). However, what is new in Bilski is the importance now placed on the physicality of the thing to which the data refers. Thus, the tangibility test has gone “meta”: it is no longer the tangibility of jostling electrons that is of concern (as it was in the early days of patents on computer-executed information processing methods), but the tangibility of the stuff represented by those electrons-as-symbols. In the language of semiotics, the tangibility analysis has shifted from a concern about the tangibility of the signifier—the physical configuration of matter that forms a symbol—to a concern about the tangibility of the signified—the informational content of or the thing represented by the symbol.

There is in my opinion much that needs to be said about this move in Bilski that takes the long-standing concern about tangibility in the patent-eligibility analysis “meta,” transforming it from a concern about a signifier to a concern about a signified. Here, however, I limit myself to raising two initial, narrow questions.

First, the move raises a normative question: Why should we treat information about tangible things in a manner that is categorically different from the manner in which we treat information about intangible things? Having taken its cue from the Supreme Court, the Federal Circuit clearly wants to prevent patent-eligible method claims from pre-empting mathematical “fundamental principles.” Slip op. at 26. However, the most appropriate means to achieve this end would seem to be a focus on the specificity, not the intangibility, of what is meant. Why should the manipulation of data that represents my height (a presumptively physical property of my body) be patentable, yet the manipulation of data that represents my expected longevity (a property that is difficult to classify as a physical one) be unpatentable?

Second, the move raises concerns about administrability. Is data about my expected longevity about something physical, namely my body? If it is, then why isn’t the data at issue in Bilski also about something tangible? The data is after all about a property of lumps of coal, namely their expected future rate of consumption or the legal rights that individuals have with respect to them. Or, to formulate the administrability problem in a recursive manner, what about data that is about the structural qualities of electronic signals? To determine whether a method that manipulates such data is patent-eligible, it would seem again to be necessary to confront the tangibility of an electronic signal—the very question that patent doctrine has been trying to render irrelevant for several decades—but this time with the signal as a signified rather than as a signifier.

CLE: How to Draft Software Claims under Bilski

Articles and Publications, Claim Drafting Tips, Patent, Patent Cases 2008, Patentable Subject Matter

In Bilski, the Federal Circuit laid down the law of subject matter eligibility under Section 101 of the Patent Act. To be patent eligible, a claimed process must either: (1) be tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing. In all likelihood, claim limitations focused at general machines such as a “computer” will not be considered tying to “particular machine.” Bilski did not, however, decide that question – Bilski’s claims were admittedly divorced from any particular machine. On the transformation side, the court provided the example from Abele where graphically displaying “X-ray attenuation data produced in a two dimensional field by a computed tomography scanner” was sufficient transformation. Bilski’s claims were essentially knocked-out on the new mental steps doctrine – a process where all the claimed steps “may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing.”

Two additional points: Although the Federal Circuits points to the machine-or-transformation test as the sole test for Section 101 patentability, the court approved two ‘corollaries.’  First, field-of-use limitations continue to be “generally insufficient to render an otherwise ineligible process claim patent-eligible.” Second, “insignificant postsolution activity will not transform an unpatentable principle into a patentable process.” (quoting Diehr).  Thus, merely reciting a specific machine or particular transformation will not bring a claim into the realm of patentable subject matter unless the recitation is more than mere insignificant postolution or extra-solution activity.

Going forward, I do not believe that these limitations will have a significant impact on a skilled practitioner’s ability to patent software innovations. However, I would like community input on how you might properly claim computer software in a way that avoids § 101 rejections?

The Health Impact Fund

Articles and Publications, Bits and Bytes, Patent

Last week I spoke with Yale Professor Thomas Pogge about his proposal for a “Health Impact Fund.” The mission is to provide incentives to develop and distribute drugs that will achieve major global health impacts. Pogge sees the current patent system as valuable, but lacking. The problem is that the most innovative pharmaceutical companies find it very difficult to make money from treatments that are focused on the problems of the developing world. Although helpful, charity donations of drugs are typically insufficient and lead to the problem of parallel imports.

The solution proposed by Pogge is to form a global fund and pay innovator companies based on the global health impact of their new treatment. The more “quality adjusted life years” (QALYs) saved, the more money a company gets. The intent of this reward scheme is to focus the innovators on developing and distributing treatments that will have the greatest worldwide health impact.

The system is intended simply as an additional incentive layer. A drug developer may obtain patents as usual. However, in order to qualify for the program, the patentee would agree to sell its drugs at cost and guarantee access.

Pogge’s models suggest that the fund would have a major impact if funded with $6 billion annually.

Notes:

  • HIF Book is online
  • I like the idea of aligning economic interests of the innovators with a health impact. If structured correctly, innovators will like this program because it does not take away the option of simply using the traditional patent system. The problems are primarily logistical: who pays the $6b?; how do you measure health impact?; how do you prevent gaming the system (by, for example, only using the program when the patents are likely to be challenged)?; etc.
  • President Bush’s “Emergency Plan for AIDS Relief” is set to spend about $6 billion on global AIDS treatment this year. [Link]

The Trade Secret Value of Early Patent Filing

Academic Studies, Articles and Publications, Patent, Trade Secret, , , ,

Patent.Law168The patent laws promote an early filing doctrine.  Most directly, by filing patent application documents early, an applicant can avoid problems created by pre-filing disclosures that can negate patentability.[1]  Inter alia, early filing also provides a presumptive date of invention and reduction to practice that may have important evidentiary benefits for the applicant.[2]  Some doctrines push against early filing. Notably, earlier filed applications may be more likely to have inadequate disclosure.  A rushed disclosure could result in the patent application being rejected under the utility, written description, or enablement requirements of the Patent Act.[3] Alternatively, if the application is filed prior to gaining an understanding of the eventual market, an applicant may have insufficient disclosure to support the most valuable claims potential. 

Going unrecognized is another benefit of early filing – the ability to keep secret later developed innovations and parameters.  That secret information can then be protected and exploited as trade secret information.

At the time of filing, the applicant must provide a complete description including the best mode contemplated by the inventor. However, many if not most patent applications are filed well before the associated product or method is ready for public consumption – before the inventor knows the best commercially viable mode.  Post-application developments could take any number of forms, such as particularly operative formulations; ideal antibiotic manufacturing parameters; software code that implements a novel algorithm; a more durable circuit arrangement; etc. Commonly, these tweaks and advances may take the form of a specific species of a disclosed and claimed genus.  Of course, this later-stage developments could be incredibly important to anyone wanting to practice the invention or develop some follow-on technology.

Even though product development typically continues after the patent application is filed, the law allows the patent applicant to legitimately keep any later developed information as trade secret.  Patent applications are not allowed to add ‘new matter’ to a patent application during prosecution. Likewise, the applicant has no duty to otherwise inform the patent office or the public of ongoing development. Rather, the application is set at filing and ex post developments are generally irrelevant to patentability.[4]

In a later post, I’ll explore whether this potential overlap of patent and trade secret rights is good from a policy perspective.



[1] 35 U.S.C. §102(b).  This is especially critical if filing foreign applications.

[2] See, for example, 35 U.S.C. §102(g) and §102(a).

[3] See 35 U.S.C. §101 and §112¶1.

[4] There may be some exception here when arguing secondary factors of nonobviousness.

Tags:

Intellectual Property in a Public Health Crisis

Academic Studies, Articles and Publications, Patent

On Friday, I will be speaking at the Seton Hall Law Review’s Health Law Symposium. This year’s topic is focused: Preparing for a Pharmaceutical Response to Pandemic Influenza. [LINK] A portion of my talk will focus on how patent law may react during a public health crisis.

The reality is that in a pandemic situation, the patent rights covering important treatments will be ignored. Under TRIPS, during a national emergency would-be patent infringement becomes a legitimate unauthorized use. At some later point, the patent holder should receive payment based on “the economic value of the authorization.” In all likelihood, however, that ex-post payment will be a small fraction of the potential monopoly profits that could have been earned.

There are several legal avenues to allow “unauthorized use” in the US. One avenue is by denying injunctive relief. Even before eBay, no court would order an injunction in the face of a public health crisis that could be mitigated by allowing infringement. The test for injunctive relief specifically looks to the public interest. And here, easy access to treatments would weigh heavily in the public interest. Further, a patentee has no right to injunctive relief if the infringer is the US Government. 28 U.S.C. §1498. Thus, another avenue for unauthorized use is through direct government intervention. In 2001, Congress and the Administration were reported to have seriously considered “breaking” Bayer’s patent on Cipro in order to stockpile the drug against a potential anthrax attack. In the Cipro case, the Government apparently used the threat of breaking the patent to negotiate a long-term contract with Bayer at an unusually low price. This approach might be termed ‘bending’ the patent. Individual states within the US may also apply pressure and threat of unauthorized use while retaining immunity from suit under the 11th Amendment of the Constitution.

What Incentive?: We all understand that governments will not be able to avoid the temptation of breaking (or bending) patents covering important treatments that may be useful in some future crisis. Unfortunately, this prediction of the likely future greatly diminishes today’s incentives to innovate crisis-specific treatments. Many empirical questions remain: Will the ex post compensation be a sufficient incentive to innovate? Will the most valuable treatments have non-crisis uses where patent rights will operate more normally? Are the potential crises so well defined that a grant or prize system could work better?

Notes:

  • The tables below show patenting and patent application data for patents relating to influenza (search influenz$). For applications filed in 2001, almost 2,500 have been published. Less than 50% of those published applications have issued as patents in the seven year interim. Although we will never be sure, it looks like a little under 20% of the “influenza” applications filed in 2001 kept secret rather than publishing.

  • The next chart shows the average number of non-patent references cited in the influenza patents as compared to patents in general.

PatentLawPic533PatentLawPic532   

Does the Piracy Paradox apply for Patents?

Academic Studies, Articles and Publications, Patent

A 2006 paper by Kal Raustiala (UCLA) and Chris Sprigman (UVA) titled the Piracy Paradox discusses intellectual property and the fashion industry. The authors conclude that the legal ability of manufacturers to create knock-off versions of fashion designs actually promotes innovation and investment in that industry. Similar phenomena have been explained in other industries. In music, for instance, some studies have shown that peer-to-peer file sharing of copyrighted work actually increases sales because of the increased popularity of the artist. Since the dawn of radio, record companies have paid stations to broadcast their music – even though the broadcast would be considered infringement.

My question is whether there are patent specific examples of this process going on? Are there times when ‘piracy’ of a technology actually encourages further R&D?

Paul Cole, Patentability of Computer Software As Such

Articles and Publications, Patent, Patentable Subject Matter, Software

In Symbian Limited v. Comptroller General of Patents [2008] EWCA Civ 1066, the UK Court of Appeal recently took a broader approach to patentability of software. UK patent attorney and author Paul Cole has written a short article for the Patently-O Patent Law Journal discussing the case and its impact. [Paul Cole Article]. The opinion cites John Duffy’s recent “Death of Google’s Patents” article also published on Patently-O.

Sensitivity to USPTO Fees

Academic Studies, Articles and Publications, Patent

The graph below shows the average number of claims filed with each patent application. I used as my sample 400,000+ original published patent applications. “Original” means that these applications do not claim priority back to an earlier filing. The trend leading up to late 2004 was a very slight (but statistically significant) rise in the total number of claims being filed. Then, in late 2004, we see a sudden drop. Over a one-month time period, the average number of claims dropped from about twenty six claims per application to about twenty two claims per application.

The simple explanation for that change is that the Patent Office dramatically increased its prosecution fees. Instead of charging $18 for each additional claim (over 20), applicants who filed on or after December 8, 2004 were required to pay $50 per additional claim. At the same time, independent claim fees were also more than doubled from $86 per additional independent claim to $200. The PTO also began charging a hefty fee for patent applications that were exceedingly long. All these forces came together to give applicants a clear incentive to forgo potential claim scope in favor of reducing the up-front fees. Since January 2004, the number of claims has continued to fall slightly (but significantly).

This change is good. Applicants will tend to drop red-herring and worthless claims. That in-turn will hopefully lead to tighter prosecution times and more clarity of claim scope.

Information Disclosure: Less is More for PTO?

Academic Studies, Articles and Publications, Inequitable Conduct, Patent

The PTO hopes to change the disclosure requirement of Rule 56. The PTO does not want more references – it already has millions stored in its electronic databases. Rather, the PTO wants practitioners to perform a preliminary search and distinctly point out the closest features of the prior art. In tension with the PTO’s desires are the multiple cases finding patents unenforceable due to applicants failure to submit relevant prior art to the PTO. Based on those cases and on the increased potential value of patent rights, patent applicants have dramatically increased the number of references cited in each application. (See first chart on right showing rise of references over time). In my sample of 500,000+ patents issued 1971-2008, the average number of references cited on the face of patents rose five-fold – from fewer than five in 1971 to more than twenty-five in 2008. On the other hand, it seems that the increase of prior art is largely due to patent applicant activity. In particular, on their own, examiners only discover [cite] around six or seven references – even when the applicant submits no prior art at all.

This result is shown in the second chart which compares the number of references cited in issued patents from 2006-2007 where the applicant filed an information disclosure statement (IDS) versus those where no IDS was filed.

I don’t have the answer, but I do know that virtually no one reads all the references when more than thirty are submitted (except in litigation down the line).

Percentage of Patents Where Applicants Filed Disclosure Statements

Academic Studies, Articles and Publications, Inequitable Conduct, Patent

I looked at a sample of 100,000 patents that issued in 2006 and 2007 to see what proportion of them include at least one applicant filed information disclosure statement (IDS) in the electronic file wrapper found in PAIR. About 83% of these recently issued patents include an IDS. The graph below breaks-up results roughly according to Art Unit at the PTO and sorts results according to the percentage patents that include an IDS in the file wrapper.

Because most of these categories include well over 1000 patents, the difference between individual groups is statistically significant (.99 CI) whenever the actual difference between two groups is at least four percentage points.

Ron Slusky: Five Prescriptions for Broader Claims

Articles and Publications, Patent, Patent Prosecution,

Ron Slusky is back with more insight from his 2007 book Invention Analysis and Claiming: A Patent Lawyer’s Guide (ABA). This fall, Slusky will be hosting a series of two-day claim drafting seminars. See www.sluskyseminars.com. The following are five of Slusky’s “Prescriptions for Drafting Broader Claims.”

1. Define, Don’t Explain

Patent attorneys love to explain things. This is a valuable trait when writing the specification. But it can get in the way when drafting claims. It is hard to resist the urge to liven up a claim’s dull litany of elements by explaining that the claimed subject matter is an automobile floor mat; or an optical system with improved output efficiency…That urge to explain must be resisted nonetheless.

A claim’s function is to define the boundaries of the parcel of intellectual property being sought—not to explain or to help readers to understand something. An explanatory-type limitation may seem harmless enough, but every extra word in a claim is a potential loophole for infringers to exploit.

Limitations should be suspected of explaining rather than defining if they recite:

  • The advantage of the invention or what it is “good for;”
  • How the recited combination can integrate with the external environment;
  • Motivations (e.g., for doing a particular step or including a particular element);
  • How to carry out a recited function where the recitation of the function itself imbues the claim with patentability;
  • How inputs get generated;
  • The source of something that the claimed method or apparatus works on.

A limitation that meets any of these criteria should be scrutinized as a candidate for deletion. If the claim distinguishes over the prior art without the limitation, the claim is probably well rid of it.

2. Scrutinize Every Modifier

Beware the insidious modifier, particularly adjectives. Most of them are unnecessary in a broad claim, serving to explain rather than to define. Each modifier in a claim should be scrutinized to see if the claim will support patentability without it.

Here are some examples: automobile floor mat; very-large-scale integration; high-resolution filter; decoding a transmitted video signal by…; rapidly removable label; block copolymer. (As to the latter, see Phillips Petroleum Co. v. Huntsman Polymers Corp., 157 F.3d 866 (Fed. Cir. 1998) (affirmed summary judgment of non-infringement).)

Another potential problem with certain modifiers is their potential for being declared indefinite. The terms “very-large-scale,” “high-resolution” and “rapidly” in the above examples are problematic in this sense.

3. Assume That Input Signals and Data/Parameter Values Are Already In Hand—Don’t Generate Them in the Claim

A method or apparatus often operates on input signals and/or may use data values, parameters or counts of things. When claiming the broad invention, it is usually desirable to treat such things as already existing rather than explicitly generating them within the claim.

For example, suppose the invention is the idea of adjusting the output rate of a widget-manufacturing process once the number of widgets produced within the previous hour reaches a certain limit. The invention could be defined in two steps—a counting step and an adjusting step:

1. A method for use in a machine that manufactures widgets, the method comprising

counting the number of widgets manufactured in an hour’s time, and

adjusting the output rate of said machine when the count reaches a predefined limit.

However, it is irrelevant to the inventive concept how the number of widgets manufactured in an hour is determined. Indeed, the potential infringer might use the cumulative weight of an hour’s output to determine how many widgets were produced and, in so doing, avoid a literal infringement of this claim

By assuming that the widget count is already known—handed to us by a genie, perhaps—and available to the adjusting step, the entire counting step can be eliminated:

2. A method for use in a machine that manufactures widgets, the method comprising

adjusting the output rate of said machine when the number of widgets manufactured within an hour’s time reaches a predefined limit.

4. Write the Claim Out of Your Head, Not Off the Drawing

Looking at the drawings is useful when intermediate- or narrow-scope claims are being drafted since such claims intentionally incorporate certain embodiment details.

However, the drawings may interfere with the conceptual thinking that is so desirable when reaching for breadth. It is all too easy for the drawings to draw our attention away from the abstract, exposing us to the siren song of the embodiment and its tangible details—details that can unduly narrow a claim.

It is much harder to be attracted to embodiment details when they are not staring up at us from the drawing. Thus the broadest claims should be written directly out of the claim drafter’s head. The mind’s eye should be able to so clearly see those few functionalities and interrelationships that define the broad invention as to make it unnecessary to look at the drawings.

If we find ourselves unable to write the claim with the drawings put away, it may be time to stop and re-engage the invention conceptually, returning to the claim drafting only when a crystal-clear answer to the question What is the Invention? is fully in hand.

5. Strive for Simplicity

Simplicity is a key to clarity. Convoluted interrelationships or claim language that is difficult to read through can signal that the invention has not been captured at its essence. Often buried in such a claim are ambiguities or unduly limiting recitations that aren’t necessary to the invention.

The architectural philosophy of form follows function applies here. A claim whose form is clean and simple is more likely to serve the function of defining the invention cleanly and simply (read “broadly”). The hallmark of a well written claim is one that an inventor can understand without a lot of attorney explanation.

Once it becomes apparent that a claim-in-progress is evolving into an awkward mess, it is best to stop and rethink the approach. Often the culprit is that the limitations are introduced in a less-than-optimal order. Indeed, limitations that had seemed so necessary may fall away completely once the claim elements are rearranged. Or certain limitations in the preamble might be better put into the body of the claim or vice versa.

There is little point in fighting a recalcitrant claim. Better to look for some underlying assumption about the claim structure that is getting in the way and to start over. It can be hard to put on the brakes and abandon a claim in which a lot of time has already been invested. It’s good, then, to stay alert to the possibility that things are beginning to deteriorate and to regroup sooner rather than later.

Copyright © 2007-2008 American Bar Association. All rights reserved. Adapted with permission.

 

Evidence Based Prosecution: More Claims Filed Equates with Longer Time in Prosecution

Academic Studies, Articles and Publications, Patent, Patent Prosecution

I am looking generally at how the contents of a patent application may impact the prosecution process. In this study, I looked at a sample of 50,000 original patent applications (excluding continuations) that have issued as patents in the past few years. This first graph shows the average time in prosecution (filing to issue) as a function of the total number of claims in the original patent application. The result is that the claim count positively correlates with time in prosecution. This correlation is strongest when the claim count is less than 30. As an example, patent applications with 30 claims took about 33% longer to issue than those with only 2 claims. The correlation makes sense: more claims would generally mean more work for the PTO to reject each claim, and more work for the applicant to respond in kind.

The second graph shows a similar pattern for independent claims.

Reading Quanta Narrowly

Articles and Publications, First Sale / Exhaustion, Patent

David McGowan is a law professor at the University of San Diego School of Law. Much of his research involves the interplay between new technologies and antitrust law. I asked him to comments on the Supreme Court’s recent patent-antitrust decision: Quanta.

By David McGowan

To the extent possible, parties and not courts should set the terms for practicing inventions.  Parties have better information than courts; they are likely to set more efficient terms.  The Supreme Court’s opinion in Quanta Computer, Inc. v. LG Electronics, Inc, does not embrace this principle, though it may not reject it very broadly. The opinion may and should be narrowly construed.

PatentLawPic380I presume readers of this blog are generally familiar with the ruling. Intel took from LG electronics a license providing Intel a defense to infringement and immunity from contributory infringement by Intel’s customers, who knew Intel’s license did not extend to them.  The Court nevertheless held the Intel license exhausted LG’s rights insofar as Intel chips were concerned.

The Court’s analysis on the main point is too formal. Because the chips embodied substantially all the relevant LG inventions and had no substantial use unrelated to practicing those inventions, the Court thought it irrelevant that Intel customers knew their chips implied no LG license.

But an invention is an intellectual achievement distinct from its embodiment in a product.   There is no logical reason the sale of a product should exhaust rights in an invention.  There is a logical objection: Forcing patentees to load up initial sales with all the terms necessary to tailor rights to potential uses will tend to increase transaction costs of initial licenses and probably result in lumpier, less tailored contracting in general.  Better to let Intel buy its peace at a price that reflects its business and let its customers do the same. 

The statute does not compel the Court’s holding, which rests on history.  The Court should have limited rather than extended the cases it relied on.  These, such as Bauer and Motion Picture Patents, invoked exhaustion to defeat post-sale restrictions on use of a product.  But such restrictions may facilitate price discrimination or make sense for other business reasons.  Intel and LG, and firms like them, know better than courts when this is the case. 

Against this it might be argued that a robust exhaustion doctrine economizes on downstream transaction costs.  Conceptually that is true, and perhaps persuasive at the retail consumer level, but Quanta was not such a case.  Taken to its logical conclusion, this argument implies patentees are better off suing everyone and negotiating settlements than licensing anyone and giving up the ability to tailor terms.  That implication is perverse.

The Court’s devotion to history is odd because it has not shown much regard for history of late.  In eBay v. Mercexchange it was unimpressed by the long history of presumptive injunctive relief for infringement.  In the antitrust context, in Leegin Creative Leather it recently overruled the longstanding per se prohibition on minimum resale price maintenance.  And in Illinois Tool Works the Court reversed the relatively longstanding presumption that patents imply market power in tying cases. 

Quanta is at least in tension with Leegin and Tool Works.  Those cases recognize that post-sale restrictions may be efficient, a point Leegin makes directly and which is implicit in Section 271(d)(5) of the Patent Act, on which the Tool Works Court relied. In placing economic substance over transactional form, Leegin and Tool Works follow Continental TV, Inc. v. GTE Sylvania, which overruled the Court’s per se prohibition on vertical nonprice restraints.  Like exhaustion, that rule had been based on transactional formalism rather than economic analysis.

Both Leegin and Tool Works reject doctrines that trace to the same cluster of cases, such as Bauer and Motion Picture Patents, the Quanta Court cites favorably. Yet the Quanta Court said nothing to explain how its holding relates to antitrust precedents (or Section 271(d)(5)) recognizing that post-sale restrictions may be efficient.  One therefore might try to read Quanta as qualifying even its recent antitrust cases.

On this reading, at least insofar as pass-through restrictions are concerned Quanta implicitly qualifies the Federal Circuit’s Mallinckrodt precedent, which, in the misuse context, upholds patentees’ ability to impose lawful conditions on use.   Professor Ghosh has suggested (http://lawprofessors.typepad.com/antitrustprof_blog/2008/06/the-quandry-of.html) the Court’s footnote seven, which says exhaustion does not necessarily bar breach of contract claims, may point in this direction.

This reading of Quanta is neither compelled nor desirable.  It is possible to reconcile Quanta with the Court’s recent (and sensible) antitrust decisions by focusing on two things not at issue in Quanta. 

First, the initial license to Intel was not conditional.  The cases the Court cited also involved unconditional sales. Quanta therefore should not be read to extend to conditional licenses, and thus not to undercut Mallinckrodt directly.  Second,  Quanta presented no question regarding pass-through conditions and should not be held to govern them.  Intel merely bought immunity from suit for contributory infringement.  The Court did not stress this fact, but it is fair to repay the woodenness of its analysis with a strict reading of its holding.

A weakness of this reading is that it renders Quanta trivial.  One wonders why the Court would take a such a case.  Possibly the Court believes patent law and the Federal Circuit have got out of hand and must be reigned in.  But its majority opinions have not matched the robust commentary cert grants have prompted.  They are fairly narrow and unambitious.  So is Quanta, and it deserves to be read that way. 

What’s Sauce For the Private Goose…

Articles and Publications, Patent,

Ilya Shapiro is a Senior Fellow at the libertarian Cato Institute in DC. He was also my classmate in both college and law school. In a recent op-ed for the Legal Times, Shapiro supported BPMC’s contention that the state of California should not be immune from charges of patent infringement.

What’s Sauce For the Private Goose…

by Ilya Shapiro (This article appeared in the Legal Times on June 2, 2008.)

… In Biomedical Patent Management Corp. v. California Department of Health Services, the biotechnology company known as BPMC is suing the state of California for patent infringement—specifically, of the company’s patent on a form of prenatal screening for fetal abnormalities. Ignoring the merits of the suit, the federal district court in San Francisco dismissed it on the ground of “sovereign immunity”: Under the Supreme Court’s reading of the 11th Amendment, a state cannot be sued in federal court without its consent. The U.S. Court of Appeals for the Federal Circuit—which handles all appeals in patent litigation—affirmed the lower court decision.

So BPMC has turned to the Supreme Court, which in recent years has been increasingly willing to reverse the Federal Circuit. The company wants the Court to strip California’s immunity in this case because the state’s Department of Health Services previously waived immunity when it joined a suit brought by a state contractor about the same patented procedure. That is, after California actively litigated the earlier suit (which sought and failed to obtain a declaratory judgment that the contractor was not infringing BPMC’s patent), the state should be precluded from turning around to claim immunity when it gets sued over the same issue.

Moreover, as BPMC notes, the University of California (among other state agencies) routinely submits to federal court jurisdiction when it pursues claims for violations of its own patent rights. Given that California uses the patent system (and courts’ enforcement thereof), it has relinquished whatever sovereign immunity the state enjoys—immunity that is legally suspect in any event when the sovereign engages in commercial activities.

And, boy, does California use the patent system. The state universities alone own more than 3,300 patents that generate $210 million in annual revenue. California has filed 21 patent infringement suits since 1990 and won more than $900 million in judgments since 2000.

And yet the state has also wielded sovereign immunity arguments to get suits dismissed at least six times since 1987 (including suits by Genentech and Eli Lilly & Co.).

While the worst peddler of this double standard, California is by no means alone. At least 32 states have filed at least 173 patent suits since the mid-1990s.

UNFAIR ADVANTAGE

Business groups hope that the Supreme Court will remove what they see as a competitive advantage enjoyed by state entities: Private patent holders can’t seek recompense for a state’s unlicensed use of software or medical devices, while states can turn to the courts to protect their patents. Medical innovators and technological entrepreneurs in the private sector suffer.

“It’s audacious for a state to use the federal courts to sue for patent infringement, but to block infringement suits against it as a sovereign that cannot be sued,” says Robin Conrad of the National Chamber Litigation Center in a press release. The center has filed an amicus brief on behalf of the U.S. Chamber of Commerce in the case—only the second time the Chamber has ever filed in a Supreme Court patent case.

This hypocrisy should not even be in play any more, not since Congress passed the Patent Remedy Act of 1992. That legislation was intended to “clarify that states .?.?. are subject to suit in federal court by any person for infringement of patents.”

That sounds clear enough. But in 1999 the Supreme Court ruled in a trademark case, College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, that Congress’ legislative powers under Article I of the Constitution were insufficient to trump states’ sovereign immunity. Except in 2006 the Court held the opposite in a federal bankruptcy case, Central Virginia Community College v. Katz. The votes in these seemingly contradictory decisions were 5-4.

In fact, neither case should have been close: When a state repeatedly and voluntarily invokes federal court jurisdiction in a series of similar cases—under patent or any other law—it generally has waived immunity against suits brought by private parties under those same laws. And the precedent is well established that a state waives sovereign immunity when it seeks to adjudicate its rights in federal court. For example, the Supreme Court unanimously held in the 2002 case of Lapides v. Board of Regents of the University System of Georgia that a state loses its 11th Amendment immunity when it removes a case from state to federal court.

EASY CALL

So, as the solicitor general’s office collects agency views and mulls the administration’s position, it should recognize that Biomedical Patent Management Corp.—an unwieldy name for an important case—not only represents the chance to right the balance between a state and its citizens with respect to intellectual property. It also provides the perfect opportunity for the Court to clarify its jurisprudence on the relationship between Congress’ Article I powers and states’ 11th Amendment immunity.

Sovereign immunity is properly a shield against lawsuits challenging a state’s governmental action, not a sword with which to carve out economic advantage over private competitors. If the Supreme Court declines to hear this case, thereby letting the Federal Circuit ruling stand, it would reinforce that unfair advantage—and strike a blow against private sector innovation.

Whoever it is that replaces the outgoing Paul Clement should not agonize over this one. The next solicitor general should advise the Supreme Court to grant this petition for review. And the justices should take his advice.