Judge Richard Taranto was sworn-in today as the 10th member of the Court of Appeals for the Federal Circuit. Welcome!
In a unanimous vote, the Senate has confirmed President Obama’s nomination of Judge Evan Wallach as Circuit Judge on the Court of Appeals for the Federal Circuit. In the mid-1990’s Wallach was appointed by President Clinton as an Article III judge on the U.S. Court of International Trade (CIT) – handling disputes regarding import transactions and federal statutes affecting international trade. Although the court has limited subject matter jurisdiction, the CIT otherwise has general legal and equitable powers. Judge Wallach is already familiar with Federal Circuit judges and Federal Circuit practice because CIT decisions are appealed to the Federal Circuit. In addition to his work in international trade, Judge Wallach is recognized as a leading expert on the international law of war. During a decade of private practice, Wallach represented business and media interests at the Las Vegas firm of Lionel Sawyer. He is a Vietnam War veteran (army) and later served as a Judge Advocate General. In the 1980’s Wallach also served as counsel for Senator Harry Reid. He holds degrees from Arizona (Journalism), Berkeley (JD), and Cambridge (LLB).
While Judge Wallach does not have extensive experience handling patent law issues. He did preside over a two-week patent infringement jury trial in Nevada. Mikohn Gaming Corp. v. Acres Gaming Inc., No. CV-S-97-1383 (D. Nev. Aug. 2, 2001). In that case, the jury found the patent infringed and awarded $1.5 million in damages.
In his responses to questions from the Senate, Judge Wallach indicated his view that the “most important attribute of a judge” is: “Commitment to fundamental rule of law principles, including predictability, uniformity, transparency, neutrality and stare decisis.”
H.R. 1249, the Leahy-Smith America Invents Act, passed the House today with broad bipartisan support. The Senate passed its version of the bill (S. 23) on March 8th by a vote of 95 to 5.
The House and Senate will now conference to attempt to work out differences between the bills and then a final vote on a compromise bill will have to take place (likely in the Senate). The final version will include a first-to-file regime but will not likely provide the USPTO with any guarantee of full funding.
The litigation involving the interpretation of the many new provisions of the Bill will occupy Patently-O posts for at least the next decade.
By Jason Rantanen
iLOR, LLC v. Google, Inc. (Fed. Cir. 2011)
Panel: Rader, Linn, Dyk (author)
This case involved a district court exceptional case determination based a finding that the suit was objectively baseless and brought in bad faith. iLOR, the assignee of Patent No. 7,206,839, sued Google for infringement of the '839 patent by Google's Notebook product. In denying iLOR's request for a preliminary injunction, the district court rejected iLOR's proposed construction of the only claim term in dispute, subsequently granting summary judgment of noninfringement. The Federal Circuit affirmed the district court's denial of the preliminary injunction, agreeing that the language of the claim, the specification and the prosecution history supported the district court's construction. See iLOR, LLC v. Google, Inc., 550 F.3d 1067 (Fed. Cir. 2008). Following the Federal Circuit's disposition of that appeal, the district court granted Google's request to recover its attorneys' fees and costs and expenses, finding the case exceptional on the ground that it was "not close" on the merits (i.e.: ("objectively baseless") and iLOR had acted in subjective bad faith. iLOR appealed.
In reversing the district court, the CAFC first likened the exceptional case standard for a suit brought by a patent plaintiff (absent misconduct during patent prosecution or litigation) to that of willful infringement. "The objective baselessness standard for enhanced damages and attorneys’ fees against a non-prevailing plaintiff under Brooks Furniture is identical to the objective recklessness standard for enhanced damages and attorneys’ fees against an accused infringer for § 284 willful infringement actions under In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc)." Slip Op. at 8-9. Thus, just as willfulness requires an assessment of both objective and "subjective" (i.e.: known or so obvious that it should have been known) prongs, so too does the exceptional case determination. And just as for willfulness, the objective assessment "is to be determined based on the record ultimately made in the infringement proceedings." Id. at 10.
Comment: At some points, the Federal Circuit's opinion is confusingly imprecise in its usage of "objective baselessness." Although in some instances it refers to the "objective baselessness" standard as being identical to the overall objective recklessness standard for willfulness (which includes, according to the court, both objective and subjective elements), at other times it treats it as being identical to only the "objective" prong of the analysis. The only reading that makes sense is that when the court indicates that "objective baselessness" is identical to the willfulness "objective recklessness" standard, what it is really referring to is the overall standard for an exceptional case determination based on a meritless case theory, while when it compares it to the "objective" prong of the willfulness analysis, it really is referring to "objective baselessness."
Applying this framework, the CAFC concluded that iLOR's claim construction was not objectively baseless, and thus it was unnecessary to consider the issue of subjective bad faith. The CAFC pointed to iLOR's arguments supporting its proposed construction, which – although the court disagreed with them – had some merit. The CAFC also commented on the difficulty of claim construction, "in which the issues are often complex and the resolutions not always predictable." Id. at 13. And the court noted that the fact that it "held oral argument and issued a precedential written opinion in the first appeal suggests that we did not regard the case as frivolous." Id. at 13-14. In short, "simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless." Id. at 14.
By Jason Rantanen
In re Glatt Air Techniques, Inc. (Fed. Cir. 2011)
Panel: Newman, Prost (author), Moore
Glatt Air Techniques involves the reexamination of Patent No. 5,236,503, relating to an improvement to an apparatus known as a Wurster coater used to coat particles such as pharmaceutical ingredients. The improvement comprises a shield means, such as a physical shield or air wall, positioned adjacent the spray nozzle that prevents particles from prematurely entering the stream of the coating spray before the spray pattern has fully developed, thus causing blockages in the apparatus. During reexamination, the examiner rejected the claim at issue as obvious in light of the prior art, a determination that was upheld by the Board of Patent Appeals and Interferences. In reaching its conclusion, the Board also rejected Glatt's commercial success evidence because it related only to a single embodiment – a physical shield – and the claim also covered the use of an air wall. Thus, the Board concluded, the evidence was not commensurate in scope with the claim.
On appeal, the CAFC first found that the Board had failed to establish a prima facie case of obviousness. It also disagreed with the Board's rejection of Glatt's evidence of commercial success, expanding on its past holding that "commensurate" does not mean "every" embodiment. "The fact that Glatt’s commercial products only contain one type of shielding means does not make its commercial success evidence irrelevant. Under the PTO’s logic, there would never be commercial success evidence for a claim that covers more than one embodiment." Slip Op. at 10. Citing past precedent, the CAFC went on to state that "we have consistently held that a patent applicant “need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success.” Id. (quoting In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008). Thus, "commercial success evidence should be considered should be considered 'so long as what was sold was within the scope of the claims.'” Id.
Comment: Note that simply being commensurate with the scope of the claim does not necessarily satisfy the nexus requirement, as illustrated by the outcome of In re DBC.
Update: PharmaPatents Blog provides a detailed discussion of the CAFC's reversal of the Board's prima facie case of obviusness, asking whether there was anything else the applicant could have done to avoid a rejection by the examiner and Board.
By Jason Rantanen
The Ohio Willow Wood Company v. Thermo-Ply, Inc. (Fed. Cir. Order 2011)
Panel: Rader (author), Newman (additional views), Moore (concurrence)
When a patentee is faced with an judgment of invalidity or inequitable conduct, it is a relatively common tactic to settle with the accused infringer who, as a condition of the settlement agreement, then joins the patentee in a joint motion for vacatur of the adverse decision. Although vacatur requires exceptional circumstances, it is sometimes granted by the district court. See e.g., Gracenote, Inc. v. MusicMatch, Inc.; Block Financial v. LendingTree; New Medium v. Barco.
The situation becomes more complex, however, when settlement occurs while the case is on appeal. Willow Wood involves an appeal of an Eastern District of Texas judgment invalidating the asserted claims of Patent No. 7,291,182. While the appeal was pending, the parties settled and filed a motion for remand to the district court for consideration of a motion for vacatur. In July 2010, the CAFC issued an order pointing out the high standard for vacatur and ordered the parties to explain what extraordinary circumstances would be presented to the district court that would justify vacatur. Ohio Willow Wood Co. v. Thermo-Ply, Inc., (Fed. Cir. Order July 29, 2010) (nonprecedential).
After considering the parties' response, along with an intervention request by a third party also being sued for infringement of the patent, the panel granted the request for "the limited purpose of the district court's consideration of the parties' motion for vacatur." Ohio Willow Wood Co. v. Thermo-Play, Inc. (Fed. Cir. Order 2011) (Willow Wood II). The CAFC retained jurisdiction, however, "so that any of the parties may seek appellate review by notifying the Clerk of the Court within thirty days of entry of the district court’s decision on remand." Id. at 3.
Concerned about the remand's potential imprimatur on the joint vacatur motion, Judge Moore, writing in concurrence, expressed the opinion that vacatur of existing invalidity opinions should be a rare and disfavored event, particularly in the patent context. Citing U.S. Bancorp Mortgate Co. v. Bonner Mall Partnership, 513 U.S. 18, 29 (1994), the judge reiterated the high threshold for justifying vacatur following settlement: "[o]nly in 'exceptional circumstances' should a district court grant vacatur at the request of the litigants." Willow Wood II concurrence at 2. This is particularly true with respect to patents:
In this case, for example, the patentee has already sued another party on the patent in question. If the decision that invalidated the patent at issue is not vacated, then the patentee will be collaterally estopped from asserting this patent in this and other suits, thereby saving courts and litigants the time and money it takes to proceed with patent litigation. Patent litigations are among the longest, most time-consuming types of civil actions. As of 2009, 384 patent cases had been pending in the district courts for three years or more. 2009 Admin. Off. U.S. Cts. Ann. Rep., at Table S-11. Moreover, the costs of patent litigation are enormous with an average patent case costing upwards of $3 million for each side. See American Intellectual Property Law Association, Report of the Economic Survey 2009 I-129 (2009). If the district court vacates its invalidity judgment then other defendants and other district courts will be forced to proceed with infringement suits, as there would likely be no collateral estoppel. Even if there were no other suits pending, these concerns should still weigh heavily against vacatur, as the only reason the patentee would want an invalidity judgment vacated is to potentially enforce the patent against others.
Concurrence at 3-4.
Judge Moore's decision to weigh in on the merits of the vacatur issue was criticized by Judge Newman, however, who wrote separately "to point out that the views of our colleague in separate concurrence are not the court’s remand order." Willow Wood II, additional views at 2. Although favoring the remand on the basis that the district court is in the better position to rule on the issue of vacatur, Judge Newman declined to endorse Judge Moore's proffer of judicial advice, commenting that "[o]ur remand should be unencumbered by even the appearance of prejudgment or of the weight to be given to various considerations. Indeed, the issues on which our colleague in concurrence offers judicial advice are more complex than is here recognized." Id.
By Jason Rantanen
In re Microsoft Corporation (Fed. Cir. Order 2011)
Panel: Newman, Friedman, Laurie (per curium)
The Federal Circuit's decision in In re Microsoft, which granted Microsoft's request for a writ of mandamus ordering the Eastern District of Texas to transfer the case to Washington State, originally issued as a nonprecedential order in early November; the CAFC reissued it as precedential today. The order adds another piece to the now fairly substantial body of law surrounding review of denials of requests to transfer venue. Allvoice Develop-ments, a company operated from the United Kingdom, sued Microsoft in the Eastern District of Texas for infringing Patent No. 5,799,273. Microsoft, which is headquartered in the Western District of Washington (where a substantial portion of its employees and operations are located), requested a transfer of venue to Washington State.
In denying Microsoft's motion to transfer venue, the district court relied on the existence of a local Allvoice office in Tyler, as well as Allvoice's incorporation under the laws of Texas. The court also weighed the witness factor against transfer because Allvoice had identified potential non-party witnesses in New York, Massachusetts and Florida who, the court found, would find Texas more convenient for trial. Although the court found that the sources of proof factor weighed in favor of transfer, it did so only slightly because Allvoice said that its documents were maintained in its office in the E.D. Texas.
On appeal, the Federal Circuit granted Microsoft's request for a writ, likening this case to In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009), and concluding that the district court abused its discretion by denying transfer. The CAFC first noted that there was a vast disparity with respect to the convenience of witnesses: all individuals identified by Microsoft as having material information relating to the patents reside within 100 miles of the W.D. Wash.; all but two of the witnesses identified by Allvoice reside outside Texas, and even those two witnesses appear to be relatively peripheral.
Particularly notable, however, was the CAFC's refusal to consider Allvoice's presence in the E.D. Texas. "Allvoice’s argument … rests on a fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose of making that forum appear convenient." Slip Op. at 5. Thus, just as transferring thousands of pages of relevant documents to the offices of litigation counsel in Texas in order to assert that the location of those documents favored non-transfer was entitled to no weight in In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009), so too is the existence of an office created solely for the purpose of manipulating venue a meaningless fact for the venue analysis. Nor did the CAFC ascribe any weight to extra step of incorporating under the laws of Texas, noting that it was done sixteen days before filing suit.
By Jason Rantanen
On Wednesday, the Senate confirmed Kathleen McDonald O'Malley to fill the vacancy left by Judge Schall when he took senior status. Judge O'Malley currently serves as a U.S. District Judge for the Northern District of Ohio, and will be the only sitting Federal Circuit judge to have previously served as a district court judge. She was nominated for her first judgeship by President Clinton in 1994, prior to which she served in government and private practice. An earlier Patently-O discussion of Judge O'Malley is available here.
By Jason Rantanen
Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)
Panel: Rader, Lourie (author), Bryson
Last Friday, the Federal Circuit released its second noteworthy post-Bilski decision (the first being Research Corp v. Microsoft). The opinion, Prometheus v. Mayo, issued following a grant-vacate-remand order from the Supreme Court instructing the CAFC to revisit its original decision in light of Bilski. Despite this procedural posture, however, the new opinion is quite similar to the old, arriving at the same conclusion through essentially the same reasoning.
Prometheus initially came to the Federal Circuit following a district court grant of summary judgment of invalidity under § 101 (lack of patentable subject matter). After the CAFC reversed the ruling of invalidity using its "machine-or-transformation" test, Mayo sought review by the Supreme Court. The Court granted certiorari, vacated the CAFC decision, and remanded for consideration in light of its Bilski opinion. Earlier Patently-O commentary includes a summary of the original Federal Circuit opinion and a discussion of the remand.
The patents-in-suit claim a method for determining whether a patient has received a therapeutically efficacious amount of drugs such as 6-mercaptopurine ("6-MP") and azthiopurine ("AZA"), which are used to treat inflammatory bowel diseases but can produce toxic side effects. In the human body, these drugs metabolize into 6-MP metabolites, including 6-methylmercaptopurine ("6-MMP") and 6-thioguanine ("6-TG"). By administering the drug, measuring the subject's levels of 6-MMP and 6-TG and comparing them to pre-determined levels, toxicity can be minimized and efficacy maximized.
Claim 1 of Patent No. 6,355,623 is representative:
1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
(a) administering a drug providing 6-thioguanine to a subject having said im-mune-mediated gastrointestinal disorder; and
(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.
Although similar in most respects, some claims of the second patent-in-suit, No. 6,680,302, dispense with the "administering" step.
The Patents Do Not Claim a Physical Phenomena
On remand, the CAFC again rejected Mayo's argument that the '623 and '302 patents claim a "natural phenomenon." In seeking a judgment of invalidity under Section 101, Mayo contended (and the district court agreed) that the "administering" and "determining" steps are merely necessary data-gathering steps for the use of the correlations between 6-TG and 6-MMP and therapeutic efficacy or toxicity in patients. Because these correlations are simply natural phenomena, Mayo reasoned, they were unpatentable.
As before, the Federal Circuit disagreed, noting that Bilski provides a broad – although not unlimited – scope for patent protection, and “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” Slip. Op. at 12, quoting Bilski, 130 S.Ct. at 3230. Furthermore, the court stated, neither the Supreme Court's order to vacate and remand the original Prometheus decision nor Bilski dictates a wholly different analysis or different result.
The crux of the CAFC's determination that the asserted claims recite a patent-eligible application of naturally occurring correlations between metabolite levels and efficacy or toxicity as opposed to the natural correlation itself rests on the specific treatment steps recited by the claims: the "administering" step and the "determining" step. "The inventive nature of the claimed methods stems not from preemption of all use of these natural processes, but from the application of a natural phenomenon in a series of steps comprising particular methods of treatment." Slip. Op. at 15-16.
In support of its conclusion, the court reiterated its earlier determination that the treatment methods in Prometheus's patents satisfy the "machine-or-transformation test. Although this is not the exclusive test, post-Bilski, it nevertheless provides important clues to subject matter patentabilty. In applying the machine-or-transformation framework, the court specifically rejected Mayo's argument that the disputed claims simply claim natural correlations and the associated data-gathering steps, broadly stating that the asserted claims are "claims to methods of treatment, which are always transformative when one of a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition." Slip Op. at 17. Even leaving out the administration step does not make the claims unpatentable, as the CAFC also found the "determining" step to be transformative because it involves "[s]ome form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or some other modification of the substances to be measured, [which] is necessary to extract the metabolites from a bodily sample and determine their concentration." Id. at 18.
In reaching this conclusion, however, the court was forced to distinguish its earlier decision In re Grams, 888 F.2d 835 (Fed. Cir. 1989), which similarly claimed a process that involved "(1) performing a clinical test on individuals and (2) based on the data from that test, determining if an abnormality existed and determining possible causes of any abnormality by using an algorithm." Id. at 20. Unlike the claims in Grams – which the CAFC found unpatentable "because the tests were just to 'obtain data'" (Slip Op. at 20) – the claims of the Prometheus patents "require the performing of clinical tests on individuals that were transformative."
In addition to its overarching analysis of the subject matter issue, the opinion also includes an interesting discussion of the use of mental steps in patent claims. Although the CAFC agreed that the final "wherein" clauses are mental steps, "A subsequent mental step does not, by itself, negate the transformative nature of prior steps. Thus, when viewed in the proper context, the final step of providing a warning based on the results of the prior steps does not detract from the patentability of Prometheus’s claimed methods as a whole." Slip Op. at 21. Because no claim in the Prometheus patents claims only mental steps, "contrary to Mayo’s assertions, a physician who only evaluates the result of the claimed methods, without carrying out the administering and/or determining steps that are present in all the claims, cannot infringe any claim that requires such steps." Id.
In addition to an extensive discussion about the decision in response to Dennis's post on Sunday, other sites commenting on the decision include:
- Patent Docs
- IP Watchdog
- Chris Holman's IP Blog
- Hal Weger of Foley has suggested that another grant of certiorari may be down the road, given the opinion's refusal to discuss a three-Justice dissent from the dismissal of certiorari in Lab. Corp., 548 U.S. 124, that was cited with approval by five Justices in two concurrences in Bilski.
By Jason Rantanen
Professors Lee Petherbridge and David Schwartz have released a draft of their new study on the use of legal scholarship by the Federal Circuit. In the paper, the authors question the conventional wisdom that the Federal Circuit is less likely than other circuit courts of appeals to use legal scholarship in its decision making, and conclude that this oft-repeated claim is contrary to the empirical evidence.
Methodology and Dataset: The authors conducted a search of all the reported opinions for the United States circuit courts of appeals for the years 1990-2008 using a mechanical approach to identify each opinion citing to legal scholarship at least once, followed by a custom-made computer program that identified individual citations to legal scholarship.
Findings: Contrary to result expected under the conventional wisdom, the authors found that the Federal Circuit's use of legal scholarship is similar to that of the regional circuits. Although it falls on the lower end of the spectrum of judicial citations, the overall frequency with which the CAFC cites legal scholarship is within the range expressed by the regional circuits, and the median frequency of citations per judge falls around the middle of the regional circuits.
The authors also discovered that, unlike some of the high-frequency-of-citation regional circuits, the Federal Circuit lacks any legal scholarship "super citers," such as Judges Posner, Easterbrook, Calibresi, Becker, and Kozinski, which may explain why its overall citation frequency falls on the lower end of the regional circuits.
Implications: Based on their empirical analysis, the authors conclude that the "claim that the Federal Circuit does not use legal scholarship as much as it should because it does not use it as often as the regional circuit courts of appeals is essentially eviscerated." Thus, the authors recommend that future scholarship should focus on the merits of the Federal Circuit's use of scholarship, asking questions about when and how the court uses legal scholarship.
The authors also suggest that adding or encouraging an existing judge to become a "super citer" might be beneficial. They reason that having a small number of judges who regularly study and use legal scholarship allows that scholarship to make its way into the jurisprudence at a measured rate, where it can be considered by the remaining judges who rely on more traditional tools for developing the law. This mechanism encourages jurisprudential innovation while preventing sudden dramatic shifts.
Read the Paper: Download here.
By Jason Rantanen
In re Vistaprint Ltd. (Fed. Cir. 2010)
Panel: Gajarsa, Schall (author), and Moore
In a counterpoint to its recent decision in In re Acer, this morning the Federal Circuit denied a request for a writ of mandamus seeking transfer of venue out of the Eastern District of Texas. The underlying action was bought by ColorQuick, LLC, which holds a patent relating to the preparation of production data for printing, against Vistaprint Limited and OfficeMax Incorporated. As in Acer, none of the parties resided in Texas: Vistaprint, a foreign corporation, has a wholly-owned subsidiary in Massachusetts; OfficeMax is a Delaware corporation with its principal place of business in Illinois; and ColorQuick is a New Jersey corporation. Both the panel and author in this appeal were identical to the panel and author that granted the writ in In re Acer.
In denying the request for a writ, the CAFC acknowledged the lack of residency, but ruled that the district court did not abuse its discretion in denying transfer. The panel first noted that although a trial court has broad discretion in transfer decisions pursuant to 28 U.S.C. § 1404(a), "that is not the same as saying that it may accord weight simply as it pleases." Slip Op. at 4. Applying that standard, the panel concluded the district court's weighing of factors in this case did not amount to a "patently erroneous result." Id. (quoting In re Volkswagen of Am., Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc)). Specifically, the CAFC concluded that the district court had not abused its discretion in weighing two factors relating to judicial economy: that the trial court had gained substantial experience in construing the claims of the same patent during a prior litigation and that there was a related case currently pending before the same court.
The CAFC also rejected the petitioners' argument that it is always improper for a district court to deny transfer based on judicial economy when all of the convenience factors clearly favor transfer. While the court noted the importance of the convenience factors, it also recognized that "§ 1404(a) commits the balancing determination to the sound discretion of the trial court based not on per se rules but rather on an 'individualized, case-by-case consideration of convenience and fairness.'" Slip Op. at 6-7 (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). In this specific case, the CAFC could not conclude that "the trial court's balancing was so unreasonable as to warrant the extraordinary relief of mandamus." Id. at 8.
Note: The opinion's final footnote appears to summarize the panel's overarching view on mandamus petitions directed to the venue transfer issue. It states:
Our holding today does not mean that, once a patent is litigated in a particular venue the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that venue. However, where, as here, the trial court performed a detailed analysis explaining that it is very familiar with the only asserted patent and the related technology, and where there is a co-pending litigation before the trial court involving the same patent-in-suit, and pertaining to the same underly-ing technology and accusing similar services, we cannot say the trial court clearly abused its discretion in denying transfer.
Guest Post by Professor Jeffrey Lefstin (U.C. Hastings)
Microsoft’s petition for certiorari in the i4i case challenges the Federal Circuit’s rule that patent invalidity must be proven by “clear and convincing evidence,” even when the defense rests on prior art not considered by the PTO. Nearly all of the briefs filed in the case, and nearly all academic commentary as well, assume that the rule was devised by the Federal Circuit early in its history. For example, one brief asserts that the “position of the Federal Circuit traces to dicta in a 1983 Federal Circuit panel decision [Connell v. Sears, Roebuck & Co.] that gave no reasoning and cited no authority whatsoever.”
The actual history of the rule challenged in i4i is rather different. The rule was not a creature of the Federal Circuit, but rather of its predecessor court, the Court of Customs and Patent Appeals. The CCPA held in Astra-Sjuco v. ITC, 629 F.2d 682 (CCPA 1980) that patents must be proven invalid by clear and convincing evidence. It had already held, in Solder Removal Co. v. ITC, 582 F.2d 628 (CCPA 1978), that the statutory presumption of validity is not weakened when a challenger introduces prior art not considered by the PTO.
In its first decision, South Corp. v. United States, 690 F.2d 1368 (Fed. Cir. 1982), the Federal Circuit adopted the CCPA’s case law as controlling precedent. The Federal Circuit’s early cases were quite clear: in holding that the presumption of validity was unaffected by prior art not before the PTO, the court was following the binding precedent of the CCPA, rather than creating a new rule of law.
How did the CCPA, which ordinarily heard appeals from the PTO, come to create a rule governing patent litigation? Under the Trade Act of 1974, the International Trade Commission was given the power to bar importation of articles that would infringe U.S. patents. In its final years, the CCPA heard a handful of appeals – Astra-Sjuco and Solder Removal among them – from infringement complaints decided by the ITC.
It is probably not coincidental that the CCPA devised a patentee-friendly rule. For most of its history, the CCPA heard only appeals from the PTO. From this perspective it saw only the benefits of the patent system: inventors bringing their inventions to the PTO. Even in the ITC infringement cases, the CCPA saw only domestic patentees who might be injured by foreign competition.
In contrast, the regional Circuit Courts of Appeals, in their many years’ experience with infringement cases, routinely saw the costs of the patent system: infringers, perhaps even innocent infringers, who were nonetheless forced to pay heavy damages and abandon otherwise legitimate and productive activity. Given that perspective, it is not surprising that prior to 1982, several of the Circuit Courts of Appeals had held that the presumption of validity should be weakened when a challenger presents prior art not considered by the PTO. But intentionally or not, when the Federal Circuit adopted the CCPA’s precedent in South Corp., it instantly consigned any conflicting precedent from the Circuit Courts to the dustbin of history.
However, the precedent from the CCPA is not the end of the story. In South Corp., the Federal Circuit adopted not only the precedent of the CCPA, but also of its other predecessor court: the United States Court of Claims. The Court of Claims heard patent infringement actions brought against the United States government under 28 U.S.C. § 1498, and the Federal Circuit has repeatedly held that the patent jurisprudence of the Court of Claims is binding upon it. (Most notably, the Federal Circuit maintained that the Court of Claims’ decision in Pitcairn v. United States compelled its narrow view of the experimental use defense in Roche, Embrex, and Madey.)
There was a long line of precedent from the Court of Claims holding unequivocally that the presumption of validity was weakened when a challenger introduced prior art not considered by the PTO: General Elec. Co. v. United States, 572 F2d 745, 761 (Ct. Cl. 1978); Douglas v. United States, 510 F.2d 364, 369 (Ct. Cl. 1975); Nossen v. United States, 416 F.2d 1362, 1371 (Ct. Cl. 1969); Ellicott Mach. Corp. v. United States, 405 F.2d 1385, 1392 (Ct. Cl. 1969); Martin-Marietta Corp. v. United States, 373 F.2d 972, 977 (Ct. Cl. 1967). As far as I can determine, the Federal Circuit has never taken note of these decisions. But under the Federal Circuit’s own case law, the line of authority descending from the Court of Claims is just as binding as that of the CCPA.
Note: Prof Lefstin discusses the how the CCPA’s unique perspective shaped the law it bequeathed to the Federal Circuit in a paper forthcoming in the Loyola of Los Angeles Law Review, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1565818.
 See, e.g., D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147 n.2 (Fed. Cir. 1983).
By Jason Rantanen
Yesterday, I discussed our conclusion that the Federal Circuit applies a stricter standard than the lower tribunals it reviews and that this preference for patentee success manifests through the intent to deceive component of the inequitable conduct analysis. In this post, I raise some broad ideas about inequitable conduct jurisprudence. The paper raises others as well, but the ones that follow offer a good perspective into what we believe may be going on.
The first idea is that the Federal Circuit might be applying a standard for intent to deceive that is higher than that required by its own caselaw. In other words, the Federal Circuit’s articulated standard – intent greater than gross negligence – might be lower then the court’s normative perspectives on inequitable conduct. At least some circuit judges might be applying a requirement more akin to knowledge or purpose. This idea finds some support in the empirical evidence. Our data indicate that patentee win rates can vary dramatically (from 40% to 100%) depending on the judge authoring the opinion, as the below graph of 14 judges who sat on the bench during the past decade illustrates.
Following closely from this first idea, and also suggested by the Figure, is the notion that when it comes to inequitable conduct the Federal Circuit might be having trouble communicating its standard – particularly with respect to intent – because it is not speaking with one voice. If the mental state standard applied at the appellate level differs between judges, lower tribunals might have a difficult time “locking on” to the Federal Circuit’s standard. This problem could be amplified by the fact that, as we have shown, the Federal Circuit does not seem to have balancing jurisprudence, which theoretically would address mental state standards above the threshold. Thus, rather than having a single standard for intent to deceive that is further refined through the balancing inquiry, Federal Circuit jurisprudence might have at least two distinct (and somewhat bipolar) mental state requirements, one higher than the other. This state of affairs might produce jurisprudential variation (and perhaps confusion among district courts), and might concentrate (as we have observed) inequitable conduct’s focus on intent to deceive.
Another idea the paper raises is that uncertainty around the standard might reflect jurisprudential design (albeit, probably unintentional jurisprudential design). For example, perhaps the Federal Circuit believes inequitable conduct doctrine is necessary to protect the integrity of the patent system, but is strongly biased against successful (for the patent challenger) inequitable conduct claims. Thus, the court might desire to maintain the threat of inequitable conduct so as to encourage patent applicants to take appropriate care in dealing with the public. Yet allowing too many findings of inequitable conduct might be equally bad, as it could lead the public to question the validity of the patent system altogether, and moreover might invite the “plague” of overasserting inequitable conduct so frequently warned about. An obfuscated standard for intent to deceive might be just right for balancing these concerns, because it provides a structural context that allows the Federal Circuit to maintain the threat of inequitable conduct – and keep the patent bar in line – but rarely find inequitable conduct. In effect, this structure encourages patentees to police themselves, and also creates a mechanism by which private parties are responsible for ensuring that patent applicants do not misbehave towards the government, i.e., the law sets up a system that mostly enforces itself.
The entire paper, which also includes additional observations, ideas, and recommendations, can be downloaded here, and we welcome all comments. In addition to responding below, comments can be sent to us directly at email@example.com. If the download link does not work for you, and you would like a copy of the paper, please email the above address and I will be happy to send you a PDF.
By Jason Rantanen
Part II of this series describes the methodology used in our working paper The Federal Circuit and Inequitable Conduct: An Empirical Analysis, and summarizes some of the key findings. You can download the entire paper here. In addition to responding below, comments can be sent either directly to us or to firstname.lastname@example.org.
The study uses the technique of “content analysis,” which permits researchers to systematically read and empirically analyze the text of judicial opinions. In broad terms, we first screened all Federal Circuit opinions that contained the term “inequitable conduct” to identify cases that analyzed the issue. We read all of these cases, coding pertinent information from each independent analysis of inequitable conduct.1 Overall, we coded information from 361 inequitable conduct analyses between the years 1983 and 2010. The coded information constitutes the empirical data, and the paper reports these data using a variety of statistical presentations and arguments.
We first examined patent applicants’ success before the Federal Circuit as opposed to lower tribunals. Our analysis reveals that patentees are quite likely to succeed before the Federal Circuit, winning 76% of the time, a rate of success higher than that observed in the lower tribunal judgments the court is analyzing. Overall, the Federal Circuit affirms lower tribunal findings of no inequitable conduct 91% of the time, but affirms findings of inequitable conduct only 45% of the time, as illustrated by the below graphs. This suggests to us that the Federal Circuit is applying a stricter standard than in the lower tribunal opinions it reviews.
We next looked at the analytical structure of the inequitable conduct doctrine, which consists of three components: a materiality inquiry, an intent to deceive inquiry, and a discretionary judicial balancing of materiality and intent undertaken with a view toward deciding whether a patent applicant acted inequitably toward the public.
Examining the data in this light revealed two key findings. First, when the Federal Circuit gives a single reason for patentee success, that reason is nearly two and a half times more likely to be lack of intent to deceive than it is to be lack of materiality. Second, balancing is expressly discussed only 8% of the time and forms the basis for a reversal only 2% of the time. We think this means that the balancing inquiry does not play much of a substantive role in Federal Circuit inequitable conduct jurisprudence. To be clear, while it looks like lower tribunals need to engage in this step of the analysis, the Federal Circuit does not seem to have any jurisprudence that guides or constrains how lower tribunals actually apply this step. Instead, balancing at the Federal Circuit looks like a formality, such as checking a box or touching a base, as opposed to a meaningful guide to determining whether a patent applicant engaged in equitable conduct.
1In other words, if a case involved a claim that four patents were procured by inequitable conduct and the court’s analysis addressed all of the patents in a single textual analysis or rationale, then a single record entry was made in the dataset. By contrast, if the court used one textual analysis or rationale to find, perhaps, that one of the patents was procured inequitably, and then used a single textual analysis or rationale to find that the other three were not, then two record entries were made in the dataset.
By Jason Rantanen
Professor Lee Petherbridge, Ali Mojibi and myself are circulating a draft of our paper Inequitable Conduct and the Federal Circuit: An Empirical Analysis for comment. The underlying study examines the content of the entire body of Federal Circuit inequitable conduct jurisprudence, and the paper offers several interpretations of the reported data.
Among the most interesting are: that the Federal Circuit seems to apply a stricter standard for inequitable conduct than a substantial number of the tribunals it reviews; that the Federal Circuit’s inequitable conduct standard is applied primarily through the intent to deceive component of the analysis; and that while the apparent lack of clarity in the inequitable conduct standard may be a result of judicial variation on the court, it may also represent a preference by the Federal Circuit to effect a jurisprudential design, the purpose of which is to encourage good faith behavior on the part of patent applicants while only rarely finding inequitable conduct.
The abstract reads as follows:
Inequitable conduct is unique judicially created doctrine designed to punish patent applicants who behave inequitably toward the public in the course of patent acquisition. Its name alone strikes fear into the hearts of patent prosecutors, and justly so – for when successfully asserted, inequitable conduct can have devastating consequences that reach far beyond a patentee’s case. The need for a systematic empirical study of inequitable conduct jurisprudence has become especially pressing now that the Federal Circuit is reviewing inequitable conduct en banc – in terms so broad as to be unprecedented in the history of the doctrine. This Article reports such a study.
The study reported here provides evidence, inter alia, that the Federal Circuit applies an inequitable conduct standard stricter than that applied by a substantial number of the tribunals it reviews. The Federal Circuit’s stricter standard manifests primarily through the intent to deceive component of inequitable conduct doctrine. For all intents and purposes the Federal Circuit has no substantive jurisprudence around the balancing component, and the materiality component is comparatively less impactful then intent to deceive. The court appears to have trouble communicating its stricter standard to lower tribunals. We offer some explanations for why this might be so, and offer some modest suggestions that might advance inequitable conduct doctrine.
The complete Article can be downloaded here. As this is a work in progress, we are particularly interested in any comments, including alternate explanations for the results we discuss. In addition to responding below, comments can be sent to us directly or to email@example.com.
President Obama has announced the nomination of Jimmie V. Reyna to fill the open slot on the Court of Appeals for the Federal Circuit that was created when Judge Mayer moved to Senior Status in June 2010. The Spring 2010 nominations of Kathleen O'Malley and Ed DuMont are still pending Senate confirmation. Federal Circuit Judges Newman, Lourie, Gajarsa, Dyk, and Bryson are all eligible to take senior status.
Reyna has an all-star reputation as head of the International Trade practice of the Williams Mullen firm. His professional focus fits well within the Federal Circuit's jurisprudence over international trade decisions by the Court of International Trade (CIT) and the International Trade Commission (ITC). Reyna has also been an active member of Hispanic legal community and the majority of his work appears to involve US-Mexico trade. His third book on international trade will be published later this year.
By Andrew Dhuey
When patent litigators hear the term “rocket docket”, they usually think of the U.S. District Court for the Eastern District of Virginia, long-known for its dedication to accelerated justice. The term doesn’t usually call to mind the U.S. Court of Appeals for the Federal Circuit, though its docketing-to-disposition time has averaged a reasonable 9-10 months. The recent case of Beer v. United States, however, shows that it is possible to have the Federal Circuit decide your appeal on the merits and rule on your en banc hearing petition in a mere 85 days, docketing to disposition.
Beer concerns a newsworthy issue dear to the hearts of federal judges: their pay. Eight current and former federal judges seek to recover cost-of-living adjustments Congress promised federal judges in 1989, but failed to deliver in 1995-97, 1999 and 2007. While the Beer parties disagreed on whether this deprivation of COLAs was an unconstitutional diminishing of judicial pay, they all agreed that the Federal Circuit rejected this exact position in Williams v. United States (Fed. Cir. 2001). In 2002, the Supreme Court denied cert. in Williams over the dissent of Justice Breyer, joined by Justices Scalia and Kennedy.
With the issue resolved in Williams, why did these federal judges raise the same pay issue again in a 2009 U.S. Court of Federal Claims case? The answer rests not with any changes in the law, but instead with changes in the makeup of the Supreme Court. All four justices who joined the court since 2002 (Chief Justice Roberts and Justices Alito, Sotomayor and Kagan) replaced justices who voted to deny cert. in Williams. Assuming the Beer judges still have the three Williams dissenters on their side, they can win on the merits with two of the four newest justices.
Of course, before they could even file their cert. petition, the Beer judges needed to work their way through the Claims and Federal Circuit courts. To expedite that process, the judges conceded that both the Claims court and the Federal Circuit panel were bound to follow Williams. Their purpose was to overturn Williams, which could only be done by the Federal Circuit sitting en banc, or by the Supreme Court.
On Nov. 3, 2009, thirteen days after filing their notice of appeal at the Federal Circuit, the Beer appellants filed a Petition for Initial Hearing En Banc or, in the Alternative, Motion for Summary Affirmance. Alas, the clerk’s office rejected this filing since the appellants included a copy of their trial court complaint, and that apparently is not okay. [Side note to Judge Beer, et al: none of your court clerks can hold a candle to Federal Circuit clerks when it comes to finding a way to reject a filing]. Appellants’ counsel, Christopher Landau of Kirkland & Ellis resolved this problem the following day, and the case was then before all 12 active Federal Circuit Judges.
On Jan. 15, 2010, the court denied the petition for initial hearing en banc over the dissent of then-Chief Judge Michel, joined by Judges Lourie and Moore, and the separate dissent of Judge Newman. With that denial of the en banc petition, a three-judge panel granted the Beer appellants’ motion for summary affirmance, with a concurrence by Judge Mayer, who reiterated his previous view that Williams was wrongly decided, but that “neither Congress nor the Supreme Court has done anything in the interim that would warrant this court taking the matter up again.” The Federal Circuit had thus resolved Beer on the merits, en banc, only 85 days after docketing.
So what, you ask? How could this possibly be of interest to you, a patent litigator? Well, you have a point – you probably won’t have occasion to stipulate at the district court or the BPIA, and on appeal, that your client is toast due to applicable, binding Federal Circuit case law. But some patent litigants are out to make a big, precedential splash (e.g. ,the ACLU in its challenges to the BRCA gene patents). Perhaps in some of these “big picture” cases, a litigant has no realistic hope on the merits, absent the overruling of a Federal Circuit panel decision. [This was not the case for the ACLU, which actually won at the district court]. Or perhaps obliterating a binding precedent would be so valuable to a litigant (e.g., a “frequent defendant”) that it would be willing to concede away weak but non-frivolous arguments on the merits in order to directly attack the harmful precedent, post haste.
Maybe you’ll never have a Beer, but in the right, highly-exceptional patent case, you might want to use the Beer strategy.
Andrew Dhuey is an appellate lawyer last seen being chased by a flower-carrying guy in a dress.
Telcordia Technologies, Inc. v. Cisco Systems (Fed. Cir. 2010)
Chief Judge Rader and Judge Prost sparred over the level of explanation necessary to ensure that a means plus function (MPF) claim is found definite. The Patent Act (35 U.S.C. 112 p6) permits claim limitations written as a "means or step for performing a specified function." The statute provides that an MPF "claim [limitation] shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof." However, the claim will be found indefinite and therefore invalid if the specification fails to include at least some structure that is clearly linked or associated with the claimed function. “The question is not whether one of skill in the art would be capable of implementing a structure to perform the function, but whether that person would understand the written description itself to disclose such a structure.” (Quoting Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1338 (Fed. Cir. 2008)).
Telcordia's patent in this case is directed to a double-ring network that is designed to withstand either a line-cut or a failed node. One element of the claim requires a "monitoring means, associated with the first ring and the second ring, for evaluating the integrity of the multiplexed subrate communications on the first ring and the second ring."
Writing for the majority, Chief Judge Rader (joined by Judge Lourie) held that the claimed "monitoring means" had been properly described in the specification. The dissent cited the same precedent but could not find anything in the specification that links disclosed structures to the claimed function. In discussing the opinion, Foley's Hal Wegner described the opinion as "pitting the leader of the older generation [of Federal Circuit Judges] against a contender from the next generation."
Stats: About 15% of newly issued patent included at least one claim having an MPF limitation. And, of those patents that include an MPF limitation, about half recite fewer than five such limitations. It appears that attorneys are using MPF claim language primarily as a back-up. Longer claim-sets are more likely to include means-plus function language. Thus 21% of patents with above-average-sized claimsets (by character count) include a means-plus-function limitation while only 11% of patents with below-average-sized claimsets include an MPF limitation. Looking claim-by-claim, I found that only 3% of the recently issued patents include means-plus-function limitations in every independent claim. Patents with MPF terms are more frequently associated with non-assigned patents (usually individual inventors). Patents arising from certain countries are much more likely to include MPF limitations. The chart below looks at the most common foreign filing jurisdiction for priority claims and reports the percentage of US patents arising from those foreign filings that include MPF limitations. [More Data]
The 1998 Federal Circuit decision in State Street Bank opened the door to patent protection on a wider variety of innovations — especially in the fields of business methods and software. State Street held that an invention should be patent eligible under 35 U.S.C. §101 if it involves some practical application and “it produces a useful, concrete and tangible result.”
Although not rejected by the majority opinion, it is clear that the broad “useful, concrete, and tangible result” test is dead. That test is conclusively rejected by what I term the Anti-State-Street Majority — a majority created by the combining the two concurring opinions in Bilski and their five-justice majority. The result is that the scope of patentable subject matter is certainly narrowed from its 1998 high-water-mark.
* * * * *
In Bilski v. Kappos (2010), the majority opinion neither endorses nor rejects State Street — writing instead that “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357.”
The two concurring opinions in Bilski (2010) both explicitly reject the Useful-Concrete-And-Tangible-Result test of State Street. Justice Stevens writes that “it would be a grave mistake to assume that anything with a ‘useful, concrete and tangible result,’ may be patented. (Justice Stevens concurrence at FN 1). Justice Breyer reiterated his prior statement that “if taken literally, the statement [that anything which produces a useful, concrete, and tangible result, is patentable] would cover instances where this court has held the contrary.” (Justice Breyer concurrence). The two concurrences are in agreement on this point and are signed by five Supreme Court Justices — leading to a second majority on that particular point.
Of course, in its In re Bilksi decision, the Federal Circuit already repudiated State Street as inadequate and "insufficient to determine whether a claim is patent-eligible under § 101."
Cumulatively, this means that the broadest notion of patentable subject matter as represented by State Street is not the law. Although not "the test" it appears that the USPTO will continue to use the machine-or-transformation test as a "tool" for determining whether particular process claims fit within Section 101. A recent Post-Bilski notice to examiners indicated as much:
Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.
I'm sure that our notion of the law will continue to develop as the Bilski decision makes its way into daily practice.
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.
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).