On USPTO Oversight

Patent

by Dennis Crouch

I am generally in favor of additional Congressional oversight of the U.S. Patent & Trademark Office – this is especially true because members of the House and Senate Judiciary Committees tend to be smart, well informed, and act with intention to improve the patent system.* Although partisan politics do come into play, much of the focus tends to be on real issues and real solutions.  The oversight process forces additional USPTO transparency and is the standard mechanism for getting information from Executive Agencies.  On this point, I will note that the information exchange is often done in the background lead-up to the actual hearing — thus, although a hearing might not be too exciting or informative, the associated deadlines force the new communications.

The House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet has set its next oversight hearing for Tuesday, September 13 at 1:00 pm E.T.  Michelle Lee is expected to testify both about general USPTO operations as well as the recent Inspector General’s review of potential time and attendance fraud. Although the subcommittee chair – Rep Darryl Issa – is a bit combative and divisive, he is also always well informed and practically minded.   The hearing is also expected to address USPTO’s implementation of the America Invents Act (AIA); abusive patent litigation; and patent quality — all within the context of promoting innovation and creating American jobs.

USPTO Director Michelle Lee will testify at the hearing.  No other witnesses have been released (and it is likely that none-others will be present).

On the issue of the Inspector General’s report, I substantially agree with Matt Levy’s Washington Post Letter titled “Cries of ‘fraud’ at the patent office are overblown.”  Working out the numbers, Levy finds the average unaccounted-for hours are 6-minutes per day.  I would additionally add that most of us in the patent law industry are focused more on whether patent examiners are doing quality work in a timely manner — that was happening, but the examiners were essentially a bit too efficient as judged by the parallel time and examination-quota requirements. My largest caveat is that the unaccounted-for hours were not evenly distributed as implied by Levy’s letter. Rather, the IG report highlights the fact that a relatively small number of examiners claimed a large percentage of the total unaccounted-for hours (based purely on a computer database analysis). I would think that those particular examiners should be reviewed to ensure that there was no actual fraud.  The IG report suggested (but did not actually state) that such a review would be improper under the law, and I expect that one aspect of the hearing will focus on that question.

Levy’s also makes the important point that the fraud charges in the media are likely to shift attention away from the patent quality improvements that should be the agency’s major focus.

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* My position may well change if major control shifted to, for instance, the Energy & Commerce Committee.

 

 

Pending Supreme Court Eligibility Cases: Patenting Genetic Discovery

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by Dennis Crouch

Three eligibility cases are pending before the Supreme Court.  Of these, the most interesting is likely Genetic Tech v. Merial.  [GeneticTechPetition]

The 1989 priority date of Genetic Tech’s patent reaches back to the heyday of gene discovery and the claims are directed to a technique of detecting gene alleles.  U.S. Patent No. 5,612,179. The claimed method is based upon the insight that genes are typically associated non-coding regions of DNA — i.e., based upon a the phenomenon known as “linkage disequilibrirum”, someone who inherits a particular gene from a parent is also likely to inherit the nearby non-coding DNA regions from the same parent.  Using that insight, the method amplifies DNA segments containing non-coding region associated with the gene and then checks the sequence of the associated coding section (the gene) that is incidentally amplified – looking for alleles of a known gene.

Genetic Tech explains this process in its petition:

Dr. Malcolm Simons discovered that, in the DNA of unrelated individuals, a polymorphism in a non-coding DNA region and a coding region allele could be inherited together. This natural phenomenon is known as “linkage disequilibrium.” The discovery prompted Dr. Simons to invent a new and useful process for detecting a coding region allele of a multi-allelic genetic locus by interrogating a non-coding DNA sequence that is in linkage disequilibrium with that multi-allelic genetic locus. Dr. Simons’ invention, as reflected in claim 1 of the ‘179 patent, was advantageous for a number of reasons, including that it was more reliable and quicker than prior art identification processes that used direct identification of allelic variants.

A number of companies have licensed the patent, but Merial and Bristol-Myers refused.  In the resulting litigation, the district court dismissed the case on the pleadings — finding that the claimed invention lacks eligibility as an unpatentable law of nature under Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).  On appeal, the Federal Circuit affirmed — holding that the relationship between coding and non-coding sequences was a naturally occurring phenomenon and that the additionally claimed laboratory techniques were used in a routine and conventional manner known at the time.  Petitioner argues that patentability can be established by the fact that no one was “using the non-coding sequence as a surrogate marker for the coding region allele …” This novel feature survived both the original examination as well as reexamination.

Questions Presented:

  1. Whether the Federal Circuit properly concluded – in conflict with other decisions of the Federal Circuit and this Court – that the definition of a patent-ineligible concept under the Mayo/Alice framework may include both a natural phenomenon and an inventor’s ingenuity in applying that natural phenomenon to a new and useful purpose?
  2. Whether a Rule 12(b)(6) motion may be properly granted based on patent-ineligibility – as the Federal Circuit determined below in conflict with other Federal Circuit decisions – when the record plausibly demonstrates that the claimed process inventively applies a natural phenomenon for a new and useful purpose, the claimed process does not improperly preempt the natural phenomenon, and the claimed process is not routine and conventional?

The defendants in this case (Merial and Bristol-Myers) waived their right to respond to the petition.  That non-response has accelerated the case with a conference set for September 26.  If the case is to move forward, we could expect the court to call for a response (CFR).

I’ll pause here to write a moment about the call-for-response system.  The respondent to a Supreme Court petition for certiorari is not required to file a response but can instead waive her right to respond.  At that point, the Supreme Court may request that a response be filed.  Although the CFR comes from the Court, it is generally known that a single Justice can request the CFR – and that request is often triggered by questions raised by a single clerk.  CFRs almost always issue prior to the conference.  Bringing this back to the eligibility issue: We perhaps didn’t get the message from the Mayo/Alice Opinions and the Sequenom Denial. If it turns out that not even a single Justice (or Clerk) seeks a response in this case, we should understand that the Supreme Court believes it has sufficiently spoken on the issue of eligibility.

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The two additional eligibility cases pending are Jericho Systems Corporation v. Axiomatics, Inc., et al., No. 15-1502 (Eligibility of Patent No. 8,560,836 under Section 101) and Essociate, Inc. v. Clickbooth.com, LLC, et al., No. 16-195 (please clarify the meaning of ‘abstract idea’ and ‘inventive process’).

 

Supreme Court Patent Cases: Previewing the October Term 2016

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by Dennis Crouch

When the Supreme Court’s October 2016 Term begins in a few weeks, its first patent hearing will be the design patent damages case of Samsung v. Apple. In Samsung, the Court asks: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?  The statute at issue – 35 U.S.C. § 289 – indicates that, someone who (without license) “applies” the patented design (or colorable imitation thereof) to an article of manufacture, “shall be liable to the owner to the extent of his total profit.”  Up to now, courts have repeatedly held that the “profits” are profits associated with the product (i.e., the article of manufacture) being sold, but Samsung is asking that the profits be limited only to components of the product closely associated with the patented design.  Although Apple’s position is supported by both the text and history and is the approach easiest to calculate, I expect that many on the Court will be drawn to the potential unjust outcomes of that approach.  Apple wins in a 4-4 split.  Oral arguments are set for October 11, 2016.

The court has granted certiorari in two other cases for this October 2016 term with briefing ongoing. In Life Tech v. Promega, the court again takes up the issue of exporting components of a patented invention and the extraterritorial application of US law.  35 U.S.C. § 271(f)(2). The question here is whether export of one component can legally constitute the “substantial portion of the components” required by statute for liability to attach.  In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention. In SCA Hygiene v. First Quality, the Court asks whether the equitable defense of laches applies in patent cases.  The case is a follow-on to the Supreme Court’s 2014 holding in Petrella v. MGM that laches does not apply in copyright cases.  In its decision, the Federal Circuit distinguished Petrella based both upon statutory and policy arguments. Oral arguments in SCA are set for November 1, 2016.

The three pending petitions most likely to be granted certiorari are Impression Products (exhaustion); Amgen (BPCIA); and GlaxoSmithKline (antitrust reverse payments)   However, these cases are awaiting views of the Solicitor General — which likely will not be filed until well after the presidential election.

A substantial number of cases are set for the Supreme Court’s September 26 conference.  These include the constitutional challenges to IPR coming in MCM and Carl Cooper as well as the interesting eligibility case of Genetic Tech v. Merial.

It looks to be an interesting term.

The big list:

(more…)

Denial of PTAB Amendment: Arbitrary and Capricious

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Veritas Tech v. Veeam Software (Fed. Cir. 2016)

In an important decision, the Federal Circuit issued a limited rejection of Inter Partes Review amendment procedure — holding that the PTAB acted in an arbitrary and capricious manner by denying the patentee’s motion to amend its challenged claims.

Although claim amendments are officially allowed in IPR proceedings, the Patent Trial & Appeal board has a practice of only approving amendments after the patentee shows that the claims as amended are patentable over the references at issue in the case.  As part of this process, the PTAB requires that the patentee discuss each feature added to the claim and “whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim.” Toyota Motor Corp. v. American Vehicular Sciences LLC, IPR2013-00419, slip op. at 4–5 (Paper 32) (PTAB March 7, 2014).

Here, the patentee did not discuss each new feature individually but rather merely stated that the combination of new features were not described in the prior art. And, because the patentee failed to discuss each added feature separately, the PTAB found that the patentee “failed to meet its burden of showing that it is entitled to an award of a patent on a system having those features.”

On appeal, however, the Federal Circuit rejected that analysis — finding it “arbitrary and capricious.” In particular, the court wrote that the discussion of the combination  was not “meaningfully different” from the PTAB’s proposal.

In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.

This case may have some impact on the pending en banc appeal In re Aqua Products. That appeal addresses the following two questions:

(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

The Veritas court writes that the PTAB decision here is erroneous regardless of the outcome of Aqua.

 

IG Report: Examiner Time and Attendance Abuses

Patent

by Dennis Crouch

The Department of Commerce Inspector General has released an important investigative report concluding that a substantial number of patent examiners are involved in “time and attendance abuse” — working unsubstantiated hours.  The unsubstantiated hours peak just [before] after production quota.  In a PR response directed both internally and externally, the USPTO emphasized that the report showed only “approximately 2% of the total hours claimed by the patent examiners” were not explained by the computer-records used by the IG and that “there may be many reasons for the lack of a digital footprint” for that amount of time.  The PTO also reports that their new mechanisms for time recording have reduced the opportunity for mistakes.

This new investigative report is a follow-up to prior IG investigations regarding telework abuses. [IG Reports][Patently-O].

With 10,000 examiners, the 2% over-charge rapidly adds-up to $10 millions+ per year.  While most examiners had at least some unsupported time, the vast majority of the potential abuses were concentrated to a much smaller group of examiners.  About half of the unsupported hours were claimed by a limited group of ~5% of examiners.

In the background of all of this is that examiners must meet production goals as well as hours goals that are both standardized.  Examiners that are outside of the norm (either more or less efficient) will face an increased incentive to fudge the system.

An important question that is not addressed directly by either the Inspector General report or the USPTO statement is whether the examiners identified as potential egregious violators will be further investigated and sanctioned where appropriate.  Footnote 2 of the OIG report answers the question from its position:

The OIG has not conducted a criminal investigation (or referred this matter to the U.S. Department of Justice for further investigation) and is not recommending that USPTO pursue administrative action against any of the individual examiners analyzed in this review, due to possible implications of the Computer Matching and Privacy Protection Act of 1988 (CMPPA), Pub. L. No. 100-503, 102 Stat. 2507. In general, the CMPPA imposes certain restrictions on federal agencies’ comparison of multiple datasets to identify misconduct and pursue either criminal or administrative action. Out of an abundance of caution, the OIG designed this analysis to avoid implicating the CMPPA.

I expect that the IG is using this approach as an excuse to attack the PTO without directly attacking any particular examiners. For the IG, the point here is that the PTO needs to improve its systems and structures.

More to come on this.

Leveraging Electronic Resources To Retrieve Information From Applicant’s Other Applications and Streamline Patent Issuance

Patent

The USPTO has issued a Federal Register Request for Comments on the best use of the internet for communicating with applicants and streamlining patent issuance.  The Office will also hold a roundtable on September 28 (webcast).

Particular issues – best way to receive documents, and avoid duplicates in ways that improve examination “quality and efficiency” while also reducing any burden on applicants.  In addition, the USPTO is looking to modify the patent document and is asking “what should be included on the front page of the patent.”

Claiming: Special Care with Terms of Degree

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LibertyPatentedAmmoby Dennis Crouch

Liberty Ammo v. US (Fed. Cir. 2016)

The U.S. Government has waived its sovereign immunity against allegations of patent infringement. However, the infringement charges are not brought via Civil Action under the infringement definition of 35 U.S.C. 271.  Rather, 28 U.S.C. § 1498 spells out that the infringement claim against the U.S. must be brought in the Court of Federal Claims (CFC) and that the remedy is limited to the “reasonable and entire compensation for [the Govt’s] use and manufacture.”  The CFC does not allow for a jury nor will it award injunctive relief against the U.S.

Liberty sued the U.S. alleging that the ammunition rounds manufactured for and used by the Army are covered by Liberty’s U.S. Patent No. 7,748,325.  In the 1990s and 2000s, the U.S. military became concerned that lead-based ammunition might be a form of harmful pollution – the patented ammunition here follows that lead by eliminating lead from the round while remaining lethal to soft-tissue targets (such as humans).  According to the patent, the projectile (shown in the image above) separates into three portions upon striking a target.  The projectile also includes a reduced-size jacket that limits barrel heat build-up.

In 2005, Liberty provided the Army with a set of 50 prototype rounds for testing (subject to a NDA).  The Army decided not to take a license or purchase those rounds from Liberty, but did begin using substantially similar rounds.  In the subsequent CFC infringement case, the court sided with Liberty – finding the asserted claims infringed and enforceable. The court then awarded $15 million in damages to Liberty with an ongoing royalty of 1.4¢ per round.

Claim Construction a Loser: On appeal, the Federal Circuit reversed – finding that the lower court had erred in its interpretation of the claim term “reduced area of contact.”  The debate over the unstated reference point – reduced from what? The CFC used the reference of “traditional jacketed lead bullet of calibers .17 through .50 BMG” based upon the specification statement that the invention is designed for “all calibers generally ranging from .17 through .50.”  On appeal, however, the Federal Circuit found that the reference for the accused 5.56 mm should – in particular – be traditional M855 rounds – since that is “the specification’s only mention of a specific conventional projectile” and was the standard-issue round for the Army at the time.  This modification to the construction is important because the traditional M855 projectiles already had a rather small area of contact and the accused projectiles have an increased contact area — thus no infringement.

Almost Indefinite: “Reduced area of contact” is a problematic claim term because it is a term of degree that calls for comparison against some unstated baseline.  Reflecting that sentiment, the court here writes that “Terms of degree are problematic if their baseline is unclear to those of ordinary skill in the art.”  Although not ‘inherently indefinite’, terms of degree will be found indefinite if they fail to provide some ‘objective boundaries.’  In talking through this, the Federal Circuit wrote that the lower court’s construction would have left the claim as indefinite because there would be multiple ‘traditional’ bullets that could be used as the baseline.

Claim 1 would not be definite had the trial court’s construction been correct because there would not be a sufficient objective boundary around the term of degree “reduced area of contact.” It is true that the trial court did objectively limit the claim language by including the “.17 through .50 BMG caliber” guidepost in its construction. This standard is objective in the sense that it defines a set range of calibers from which the baseline projectile may be drawn. Yet, even after limiting the field of baseline projectiles according to the trial court’s construction, a multitude of candidates for the conventional baseline projectile would remain for each caliber within that range, making the claim indefinite under Interval.

Here, the Federal Circuit goes on to suggest that the difficulty in proving infringement may be indicative of indefiniteness. “[A] term of degree cannot be definite when construed in a manner that lends itself to this sort of scattershot infringement analysis.”

The Background of the Invention section first narrows the ambiguity by disclosing that the patent’s proposed projectile has “a reduced contact area as compared to conventional projectiles.”

NDA Not Enforceable against the Army: Although the patent portion of the case is most relevant for Patently-O readers, the most important business element may be the court’s disregard of the non disclosure agreement signed by Lt. Col. Glenn Dean.  When the inventor of the ‘325 patent approached the army, he was directed to the Chief of Small Arms for the army’s Infantry Combat Directorate (DCD), Lt. Col. Dean.  Prior to discussing the ammunition, Dean signed a non disclosure agreement (NDA).

The courts, however refused to enforce the agreement – finding that Lt. Col. Dean “did not have the requisite authority to enter the NDA on the Government’s behalf.”  In traditional contract law, an agent’s “apparent authority” can be sufficient to bind a principal.  However, several cases have held that the U.S. Government “is immune to actions of its agents who merely possess apparent authority.”  See CACI, Inc. v. Stone, 990 F.2d 1233, 1236 (Fed. Cir. 1993).

Bits and Bytes from the PPAC Meeting

Patent

Notes from PPAC:

  • Eligibility: Gene Quinn discusses the patent eligibility debate and Robert Bahr’s update at IPWatchDog.
  • China: 2015 the Chinese Patent Office (SIPO) received 2.8 million patent applications.  The country is looking to move from a “big” IP country to a “strong” IP country. [Link]
  • Designs: Design patent applications expected to reach 40,000 for FY2016 – up from under 30,000 in FY2010. The PTO is working to improve design patent prosecution speed – current wait of more than a year for a first office action. [Link]
  • Regional Patent Offices: Around 500 examiners are working in the regional patent offices. [Link]
  • PTAB: David Ruschke is now fully in charge as PTAB Chief. Scott Boalick continues as deputy. Ruschke was Chief Patent Counsel of Medtronic for many years. [Link]
  • PGR Filings: Although there are now tens of thousands of issued AIA patents, very few PGR petitions have been filed.
  • Ex Parte Appeals: The number of pending Ex Parte appeals continue to drop. Great work PTO.

ExParteAppeals

Finally, off topic – read Prof Holbrook’s essay on The Real Reason the EpiPen and other off-patents are so expensive at the conversation.

Plagiarism Actions

Patent

Drobetsky v. Chicago School of Prof. Psych. (Ill. App. 2016) [1152797_R23]

There is no general cause of action for ‘plagiarism’ – it comes up most often in student and employment cases.

Drobetsky was a masters degree student at the Chicago School of Professional Psychology.  In her assigned 5-page reflection paper of the Benjamin Button movie, she apparently copied from Wikipedia and a blog post by Richard Larson.   The allegations are “that a portion of one sentence in the reflection paper was copied word for word from the Wikipedia article, and portions of two other sentences were copied word for word from the Larson blog, without quotation marks, citation or attribution.”

The school dismissed Drobetsky for plagiarism in violation of school policy – she sued in Illinois state court for readmittance, recover of the $53,000 paid to the school, etc.

The trial court offered an interesting decision. On the one hand, it sided with Drobetsky that the school had breached its contract and acted in an arbitrary & capricious manner by: (1)  “failing to notify plaintiff in advance of … the names of the [campus hearing committee] members so that she could properly vet them”; (2) “failing to have Dr. Adames [the professor making the allegations] present at the hearing”; (3) “failing to consider Dr. Adames’ [own] plagiarism” (he had copied portions of his syllabus from another professor without attribution); and (4) “failing to inform plaintiff of the basis for her dismissal.”  Despite all these deficiencies, however, the court ruled in favor of the school because Drobetsky had failed to follow the internal appeal process and because the plaintiff had “failed to prove damages.”

On appeal, the Illinois court affirmed – but first rejected the finding that the school acted in an arbitrary & capricious manner in its hearing process. “[T]he trial court’s finding that plaintiff met her heavy burden of proving that defendant acted arbitrarily, capriciously, or in bad-faith by dismissing her without any discernible rational basis was against the manifest weight of the evidence.”

 

 

 

Defining OtterBox for Tariffs

Patent

by Dennis Crouch

A substantial portion of the Federal Circuit’s appellate involve customs disputes stemming from the Court of International Trade (CIT).  Usual disputes center on the proper tariff classification of goods being imported into the US.  The Harmonized Tariff Schedule of the United States (HTSUS) is the primary code-book that includes thousands of classifications  and a tariff rate (typically ad valorem).

In the new decision of Otter Producs  v. US (Fed. Cir. 2016), the Federal Circuit was simply asked the question of whether OtterBox phone cases being imported from China should be classified under HTSUS 4202.99.00 as “similar containers” or instead under 3926.90.9980 as “Other articles of plastics.”  The US Customs argued for the first classification – associated with a 20% ad valorem tax – while Otter preferred the second and its 5.3% rate.

As in patent law infringement analysis, the basic process is to look at the classification statements and determine whether the product in question fits within that description.  A major distinction, however, is the reality that every product must fit somewhere. That means that the process focused on the best fit rather than the yes/no analysis used in infringement cases.

The tariff schedule (HTSUS) was passed by congress and thus is interpreted as a statute.  And, as with patent claim construction, the court sees the tariff interpretation as the first step in Customs’ classification determinations and one that is a question of law reviewed de novo on appeal.  Once the tariff provision is interpreted, the court then goes to the second step of figuring out whether the product in question fits the interpreted tariff.  Of course, (as with claim construction) that process has to be somewhat iterative because needs of tariff interpretation (or claim interpretation) are driven by any unique features of the product.

In interpreting the statute, the Federal Circuit has taken the approach of construing HTSUS terms according to “common and commercial meanings, which we presume are the same.”  Although not required by the statute, the court has also taken to relying upon the explanatory notes in the World Customs Organization tariff schedule to aid its interpretation.

In OtterBox, the US proposes that that the the proper classification fit within the category 4202 that includes “Trunks, suitcases, … , binocular cases, camera cases, musical instrument cases … and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper … .”  OtterBox proposes a broader category of “3926 Other articles of plastics …”

In siding with OtterBox, the federal circuit stepped through Heading 4202 and found, inter alia, that the OtterBox cases would only fit as “similar containers,” but that they were not really similar.  The important distinction is that OtterBox cases are designed so that the device is fully functional while in the case – that is not true for any of the cases listed in the heading.

The case is a good one to read for those interested in the court’s jurisprudence beyond their usual patent cases.

DuPont v. MacDermid Printing: The importance of a Patentee’s Pre-Filing Statements

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by Dennis Crouch

A skilled patent attorney working with a qualified searcher could cobble together a colorable obviousness argument against the vast majority of issued patent claims.  Part of the difficulty for patentees stem from the the billions of prior art references available via increasingly effective search tools. Even when an invention results from a ‘flash of genius,’ patent law typically back-fills extensive knowledge for the obviousness analysis – even when that knowledge was not actually available at the time of the invention.  The larger difficulty though is likely the large number of hard-to-pin-down facts such as the motivations, common sense, and level of creativity of a person having ordinary skill in the art.

The “expansive and flexible” approach to nonobviousness is frustrating to many, but it is seen as a feature of the system fully supported by the Supreme Court.  In KSR, the court wrote:

Throughout this Court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach. . . . Rigid preventive rules that deny fact finders recourse to common sense… are neither necessary under our case law nor consistent with it.

KSR v. Teleflex (2007) [04-1350].  Conventional wisdom post-1980 has been that the factual inquiry makes summary judgment of obviousness difficult for a patent challenger.  Rather, obviousness goes to the jury.  Since KSR, that attitude has shifted somewhat.  (The even newer model is that obviousness goes to the PTO in an IPR proceeding – save that for a different essay).

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Summary Judgment of Obviousness: In DuPont v. MacDermid Printing (Fed. Cir. 2016) [15-1777], the NJ district court granted summary judgment of obviousness against the patentee DuPont – holding that the asserted claims of DuPont’s U.S. Patent 6,773,859 invalid under 35 U.S.C. 103.   The ‘859 patent relates to the manufacture of  a flexo plate for digital printing — a plate used to print digital images on flexible materials.   The claimed advance involves heating-up the plate to remove unpolymerized material (rather than using a harsh solvent).

The obviousness case combines two prior art references: “Martens [a 3M patent] teaches a process for developing an analog plate using heat” and “Fan [DuPont patent] teaches developing a digital plate using solvents.”   The inventor (Roxy Fan) is also the first named inventor of DuPont’s ‘859 patent being challenged in this case. The Fan prior-art patent, however, was filed a decade prior.  Reviewing these two references, the court found that the ‘859 patent uses “the same technology and processes pertaining to digital imaging” previously disclosed by Fan and the same thermal development process disclosed in Martens.  In finding a motivation-to-combine these references, the district court walked through several factors.

  • Limited set of potential combinations: The prior art only had two imaging styles (digital and analog) and four development techniques (thermal, etc.) – this makes the ‘859 combination more likely obvious to try.
  • Benefits of Moving to Digital: The prior art taught benefits of switching to digital (thus suggesting the substitution), including an article published by DuPont
  • Market Incentive: DuPont marketing material suggest a “strong incentive” to combine the thermal process with digital plates.

The district court also rejected DuPont’s evidence of commercial success, longfelt need, and industry praise – finding them insufficient to overcome the “strong showing of obviousness.”

On appeal of this summary judgment finding, DuPont focused on the standard-of-review – noting that the district court had failed to “draw reasonable inferences” in its favor.  In the process, DuPont pointed to a long list of factual disputes between the parties where it would be reasonable to draw different conclusions from the evidences.

The Federal Circuit affirmed – finding that the strong undisputed evidence of prior art and motivation to combine fully supported the summary judgment finding.

[T]he record contains strong evidence that a skilled artisan would have had a reason to combine two known technologies and would have had a reasonable expectation of success in doing so. Indeed, DuPont itself promoted the digital and thermal technologies as technological breakthroughs in prior art publications. Thus, in view of the record as a whole, even drawing all justifiable inferences in favor of DuPont, the objective evidence is insufficient to preclude summary judgment on the ultimate legal conclusion of obviousness.

Doomed by Its Own Prior Statements: The obviousness case against DuPont here is interesting because (1) one of the core prior art references was a DuPont reference and (2) DuPont’s own statements regarding its prior inventions led to the motivation-to-combine finding.  DuPont’s private case study will likely walk through and consider whether it should have taken a different pathway regarding the public disclosures.

Caveat: Although the patentee’s pre-filing disclosures are important – it is also important to remember that the question of obviousness is an objective analysis focusing on the hypothetical mind of a person having ordinary skill in the art.  What this means is that the patentee’s disclosures are should not be treated as “party admissions” and given special treatment in the obviousness analysis.  Rather, the disclosures are simply added to the body of knowledge available to the artisan.  Here, the Federal Circuit came dangerously close to crossing the line into giving information actually available to and created by DuPont special weight in the obviousness analysis.

 

USPTO Launches Cancer Moonshot Challenge

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The following was originally published on the USPTO Director’s Blog and is a guest post by USPTO Chief of Staff Vikrum Aiyer and Senior Advisor Thomas A. Beach

The USPTO is playing an important role in the National Cancer Moonshot, a Presidential initiative we blogged about earlier this summer, to speed up cancer advances, make more therapies available to more patients, and improve the ability to prevent cancer and detect it at an early stage. Today, we are launching the USPTO Cancer Moonshot Challenge to enlist the public’s help to leverage our intellectual property data, often an early indicator of meaningful research and development (R&D), and combine it with other economic and funding data (ie. U.S. Securities and Exchange Commission filings, Food and Drug Administration reporting, National Science Foundation grants vs. philanthropic investments, venture capital funding, etc.). This comes on the heels of our Patents 4 Patients program, which was launched in July and aims to cut in half the time it takes to review patent applications in cancer therapy.

The USPTO Cancer Moonshot Challenge will conclude on September 12 and winners will be announced on September 26. Learn more about the prizes.

Participants will have the opportunity to leverage USPTO Cancer Moonshot patent data to reveal new insights into investments around cancer therapy research and treatments. Some questions to address include: What are the peaks and valleys in the landscape of cancer treatment technologies? What new insights can be revealed by correlating R&D spending/funding to breakthrough technologies? What would trace studies of commercially successful treatments from patent to product tell us? With the data sets released through the USPTO Developer Hub, users will be able to use analytic tools, processes and complimentary data sets to build rich visualizations of intellectual property data, which will help illuminate trend lines for new treatments. During the three week challenge, the USPTO will hold a USPTO Cancer Moonshot Workshop to assist participants, on Thursday August 25.

After the challenge has concluded, the USPTO, in tandem with other Moonshot Task Force partners, will look at further ways to use the findings. By bringing together cancer experts, policymakers, and data scientists, we can explore and identify how intellectual property data can be better leveraged and combined with other data sets to support cancer research and the development of new commercialized therapies. This will empower the federal government—as well as the medical, research, and data communities—to make more precise funding and policy decisions based on the commercialization lifecycle of the most promising treatments, and maximize U.S. competitiveness in cancer investments.

 We recognize that by enlisting the public’s assistance through our USPTO Cancer Moonshot Challenge, we can identify new and creative ways to fight cancer and work towards breakthroughs in treatment.  And by harnessing the power of patent data, and accelerating the process for protecting the intellectual property undergirding cancer immunotherapy breakthroughs, the USPTO is standing up and doing its part to help bring potentially life-saving treatments to patients, faster. Are you up to the challenge?

Summary Judgment on Anticipation

Patent

Semcon Tech v. Micron (Fed. Cir. 2016) (non-precedential opinion)

One narrative of the decision here could focus on the difference between the expert appellate court willing to dig into the language of the patent documents themselves and the generalist trial court ready to rely upon expert testimony explaining the underlying documents.  It is also a reminder that, for the Federal Circuit, the underlying patent and prior art documents represent the most important evidence available in a patent validity dispute.

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Summary judgment is a mechanism for short-cutting a lawsuit prior to trial.  The basic jurisprudential approach asks whether there are any genuine disputes of any material fact and whether the moving-party is entitled to judgment as a matter of law.  Fed. R. Civ. Pro. 56.  When considering the evidence produced, all justifiable inferences must be drawn in the nonmovant’s favor.

Here, the district court ruled on summary judgments that Semcon’s asserted wafer finishing method patent claims are invalid as anticipated by a prior U.S. patent.  (Holding that the claim of Semcon’s U.S. Patent No. 7,156,717 is as anticipated by U.S. Patent No. 6,010,538 (“Sun”)).   On appeal, the Federal Circuit has vacated that judgment – finding that the prior art is not as clear as the district court concluded.

Anticipation is an area ripe for summary judgment because the doctrinal question is based primarily upon objective and verifiable facts — has a single prior art reference been identified that teaches the claimed invention – including “each and every element as set forth in the claim.”

The actual dispute focuses on whether the prior art Sun describes the claimed step of relying upon both “in-situ process information” and “tracked information” to modify control parameters during the finish cycle.  For its part, the district court adopted Micron’s expert’s conclusions that Sun disclosed that claimed process. Semcon did not present competing expert testimony that seemed to seal-the-deal for the district court.

On appeal, however, the Federal Circuit dug-into the patent documents and found (as suggested by Semcon) that the portions of Sun cited by Micron’s expert did not actually support the conclusions drawn. “In fact, however, the cited portions of Sun do not appear to support Dr. Dornfeld’s characterization.”  The court then pointed to several portions of Sun that suggested that the “tracked information” was not used as a finish cycle control parameter.

Addressing the lack of competing-expert, the Federal Circuit wrote that “textual arguments” regarding the prior art reference as well as identifying inconsistencies in the opposing expert’s testimony were sufficient to create a dispute of material fact as to what was disclosed by Sun.

Publication of the Patent Case Management Judicial Guide (3rd edition)

Patent,

District Court judges (and their clerks) across the country now rely heavily upon Patent Case Management Judicial Guide – that has now published in its third edition.  Professor Peter Menell (Berkeley) has lead the multi-party effort in cooperation with the Federal Judicial Center. Its popularity with judges means that it is also a necessary tool for patent litigators.

Get it:

The Third Edition ads substantial coverage of managing litigation to deal with parallel proceedings at the PTAB, pleading standards, patentable subject matter, claim construction, enhanced damages following Halo, and reasonable royalty disputes. The treatise also covers recent developments in ANDA and biologics litigation, design and plant patent litigation, and litigation at the Federal Court of Claims. The appendices provide case management checklists and exemplars of patent management filings.

Expanding the Scope of Ex Parte Reexaminations MidStream

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by Dennis Crouch

A new petition by Pactiv (a Reynolds Co.) asks the Supreme Court to consider whether the PTO can expand the scope of an ex parte reexamination beyond the “substantial new question of patentability” identified in the Director’s order granting the reexamination.   Basically, can the reexamination examiner rely upon prior art different from that in the petition.

Question as presented to the Supreme Court:

Whether, because [35 U.S.C. §] 304 requires the Director to issue an order for a reexamination “for resolution of the question,” the “substantial new question of patentability” included in the Director’s order delineates the scope of the ex parte reexamination.

[Pactiv v. Lee petition]  Pactiv argues that the scope of reexaminations were intended to be limited to avoid becoming an “unbridled review system [that] could impose enormous burden and undue harassment on patentees.” (Petition).

Section 304 explains that the PTO Director can order ex parte reexamination after finding that “a substantial new question of patentability affecting . . . is raised.”  The statute goes on to state flatly that the reexamination order should be “for resolution of the question” — i.e., for resolution of the substantial new question raised in the petition.  That part of the statute is clear, however, the statute does not flatly bar modification of the question during the substantive reexamination.

The PTO’s position that allows for shifting rejections appears to stem from Belkin Intl Inc. v. Kappos, 696 F.3d 1379 (Fed. Cir. 2012), a decision involving inter partes reexamination.  Belkin is something of a mixed-bag.  In its decision, the Federal Circuit wrote that the inter partes challenger could not raise new questions of patentability beyond those in the SNQ order.  At the same time, the court also wrote (in dicta) that the PTO may, on its own, raise other issues. The court wrote:

Inter partes reexamination is not totally limited to those issues suggested by the requester that present a substantial new question of patentability. Indeed, the PTO may make any new rejection, as long as that rejection also meets the substantial new question of patentability requirement. See 35 U.S.C. § 303(a) (“On his own initiative, and any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications discovered by him . . . .”). Thus, the scope of reexamination may encompass those issues that raise a substantial new question of patentability, whether proposed by the requester or the Director. . .

Belkin.  Pactiv challenges this dicta portion of Belkin – arguing that it is a misinterpretation of the statute and, in any event, does not apply to ex parte reexamination.  I would agree with Pactiv in its reading of this portion of the statute – if the USPTO wants to raise a new question on its own, the statute provides for a process of ordering reexamination rather than the implicit addition as done here.  At the same time, the availability of amendments and addition of new claims mean that new searches must be available in some form.  See 35 U.S.C. § 305.

For its part in the case, the Federal Circuit affirmed the PTAB determination without opinion (R.36 Affirmance).

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The patents at issue in the case are U.S. Patent No. 6,315,921 and U.S. Patent No. 6,395,195.  They relate to an oxygen absorber used in meat packaging.

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Obviousness of the New Mixture

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Apotex v. Wyeth[1] is a relatively simple and straightforward nonobviousness decision in the pharma space (albeit non-precedential).  The Wyeth patent at issue here claims the compound that includes tigecycline mixed together with an acid as well as lactose.[2]  Although not claimed, the specification indicates that the mixture is beneficial because it helps tigecycline avoid degradation.  At the time of the invention (2005) tigecycline was a known tetracycline known to act as a broad spectrum antibiotic that degrades rapidly at a neutral PH.

The key prior art in the obviousness case was a Chinese patent publication that discloses minocycline mixed with both lactose and an acid in order to avoid degradation.[3]  Minocycline is a closely related tetracycline that is both structurally similar and operates by similar action.  (Tigecycline is a derivative of minocycline).

In both the Inter Partes Review proceedings and the appeal, the courts found insufficient motivation to combine the cited references by substituting the tigecycline into the minocycline compound.  Importantly here, the courts made this determination as a factual finding that “a skilled artisan would [not] have had a reason to combine the references.”[4]

Apotex (the challenger) argued that the similarity between the two forms of tetracycline and the fact that tigecycline was “known to work where other antibiotics have failed” both pushed toward a finding of a motivation to combine.  The courts however rejected this argument – finding that the structural similarities did not create “a potential motivating factor for a skilled artisan to substitute tigecycline for minocycline.”

[W]hile tigecycline is closely related to minocycline structurally and in terms of benefit, the Board did not err in concluding that there was insufficient basis in the record to show that it would have been obvious to a skilled artisan to substitute tigecycline in the prior art minocycline composition.

Although not mentioned by the courts, I would think it would also be important motivation to consider that – at the time of the invention here – tigecycline was not just some random minocycline derivative – rather tigecycline was being considered as an important last-resort MRSA treatment and under consideration for fast-track FDA approval.

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A first thought that comes to my head in this case is whether the outcome here stems from the fact that this is a pharmaceutical case rather than one focusing on electronics or mechanical engineering.  Perhaps not, the court does explain here the lack of assurances (pre-invention) that the claimed mixture would substantially reduce degredation.  That factual-setup can be distinguished from a case like KSR where a good engineer could give pre-assurances that they could get the combination to work.

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One aspect of the decision involves underlying distinctions between the ultimate question of obviousness (an issue of law) and the factual underpinnings (such as  motivation to combine references).  Here, of course, once the facts were determined, the question of law was instantly answered.

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Notes:

[1] Apotex Inc. v. Wyeth LLC, App. No. 15-1871 (Fed. Cir. August 16, 2016).

[2] U.S. Patent No. 7,879,828, claim 1 taken as typical.

[3] Chinese Patent Pub. No. 139055A.

[4] See In re Hyon, 679 F.3d 1363 (Fed. Cir. 2012).

A Specification’s Focus on Particular Embodiment Not Limiting if Other Embodiments are also Expressly Contemplated

Patent

CollatingBottlesScriptPro v. Innovation Associates (Fed. Cir. 2016)

Very Slow Roller Coaster: This Kansas-based infringement lawsuit was filed back in 2006.  The case was stayed pending an inter partes reexamination.  Once re-opened, the district court held that ScriptPro’s asserted claims invalid for lack of written description under 35 U.S.C. § 112, ¶ 1.  In a 2014 appeal of that decision, the Federal Circuit reversed – finding genuine issues of material fact regarding whether a skilled artisan deem the patentee in possession of the invention upon reading the specification. On remand, the district court again held the claims invalid on written description grounds and citing the oft maligned ‘essential element’ cases of Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1988) and ICU Medical, Inc. v. Alaris Medical Systems, Inc., 558 F.3d 1368 (Fed. Cir. 2009).  On appeal, the Federal Circuit has now reversed again and remanded for trial.

The claim at issue is directed to a conveyor and “automatic” collating system for prescription containers. U.S. Patent No. 6,910,601, Claim 8.  The claim itself does not specify how the collation occurs, but throughout the specification the patentee indicates that the containers will be collated by patient name and storage space availability.  Seeing that distinction, the district court agreed with the challenger that the claims fail because they were not commensurate with the written description of the invention.

The District Court:

[O]ne of [the invention’s] central purposes is to collate and store prescriptions by patient. But the claims do not limit the ways in which the prescription containers are stored. They do not specify any type of collation or storage. . . .

These broad claims are not supported by the much-more-limited specification. They do not require that the control system organize containers based on patient name and space availability. During its appeal, ScriptPro repeatedly emphasized a central purpose of the ′601 patent: to “keep [ ] track of slot use by particular customers and slot availability.” [quoting Federal Circuit decision] This means that the use of any other method for automatic storage is outside this purpose. Based on the broad claim language that is outside a central purpose of the patent, the court determines that no reasonable jury could find the written-description requirement met. . . . ScriptPro argues, keeping track of slot use by particular customers and slot availability is only one of several goals. But ScriptPro does not identify any alternate goals.

The court finds ScriptPro’s argument unpersuasive. While every claim need not encompass every goal, here the claims do not address one of the invention’s central goals—one that ScriptPro repeatedly emphasized on appeal. It is disingenuous for ScriptPro to now downplay the significance of the goal. Without including a limitation to address the storage by patient name, the claims are simply too broad to be valid.

[District Court Decision]

On appeal, the Federal Circuit has reversed – holding that the patentee included a sufficient number of wobbly-words to avoid limiting the specification.

It is true, as Innovation argues, that much of the ’601 patent’s specification focuses on embodiments employing a sorting and storage scheme based on patient-identifying information. See, e.g., ’601 patent, 4:21–25 (“[t]he unit stores prescription containers according to a storage algorithm that is dependent on a patient name for whom a container is intended”), 5:40–47 (“a prescription for a patient is entered into the control system of the ADS along with identifying information for the prescription, such as the patient name . . . [t]he control system next determines in which holding area to store the container”), 6:36–37 (“[t]he collating unit is also operable to associate a stored container with a patient based on the patient’s name”). And it is also true that the specification explains that prior art automated control centers that store containers “based on a prescription number associated with the container, as opposed to storing the container based on a patient name” are “especially inconvenient for several reasons.” ’601 patent, 3:6–11. But a specification’s focus on one particular embodiment or purpose cannot limit the described invention where that specification expressly contemplates other embodiments or purposes.

[Appellate Decision]. (patent drafters consider the plural in of “other embodiments“)

An amazing aspect of this case is that the distinguishing feature for written description is the focus on whether a patient’s name is being used to sort bottles (vs some number).  On remand, the defendant’s next round involve Alice.

 

 

En Banc Query: Must the PTO Allow Amendments in IPR Proceedings?

Patent,

AquaImageby Dennis Crouch

In its original Aqua Products decision, the Federal Circuit upheld the USPTO’s tight limits on amendment practice in IPR proceedings. Under the rules, a patentee has one opportunity to propose amendments or substitute claims. However, the proposal will only be granted if the patentee also demonstrates in the motion that the proposed amendments would make the claims patentable over the known prior art.

In a new order, the Federal Circuit has now granted the appellant’s en banc rehearing request – asking the parties to focus solely on the following questions regarding the burdens:

(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

En Banc Order.  The court has invited views of amici curiae.  Those briefs will be due October 5, 2016 (unless supporting the PTO’s position and then you get an extra month).  Appellant’s brief will be filed by September 26, 2016. Oral argument are already scheduled for Friday, December 9, 2016 at 10:00 a.m.

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The underlying case involves Aqua Products’ self-propelled robotic pool cleaner that uses an internal pump both as a vacuum cleaner to power the propulsion system.   U.S. Patent No. 8,273,183.  Competitor Zodiac Pool Systems filed for IPR which the PTO instituted as to some of the challenged claims and ultimately issued a final decision that the claims were invalid as obvious over a combination of two prior-art references.

Motion to Amend: In a timely motion, Aqua moved to amend three of the claims to include the limitations found in the non-instituted claims. (In particular, the patentee asked to substitute claims 1, 8, and 20 with claims 22-24 respectively.  The PTAB agreed that these new claims satisfied the formal requirements of Section 316(d), but refused to enter the amendment – finding that the patentee’s motion had failed to show that the substitute claims were distinguishable over the prior art.

The parties (Aqua & Zodiac) settled the underlying infringement case in April 2015 and so Zodiac did not participate in the appeal. However, the USPTO intervened in the case to defend Aqua’s appeal of the PTAB invalidity holding.

The PTO’s position in the case remains defiant.  The Agency argues that its rules regarding amendments and its application of those rules are both reasonable and entitled to substantial deference.

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Documents:

 

 

 

 

 

GEA Process: Appealing IPR Termination Decision

Patent,

Following Cuozzo, I largely wrote-off GEA Process (“GPNA”) v. Steuben as having any chance for certiorari. However, the petitioner’s newly filed reply brief offers an opportunity for revival.

In its decision on an IPR appeal, the Federal Circuit held that it lacked jurisdiction to review claims that the PTAB exceeded the PTO’s statutory authority by “terminating and vacating five instituted and near-final IPR proceedings, without determining patentability vel non as Congress had intended.”  Thus, the question presented is:

Whether the Federal Circuit erred in holding that, even if the Patent Trial and Appeal Board exceeded its statutory authority by terminating an instituted IPR proceeding with a final written decision, the PTAB’s final decision is judicially non-reviewable.

Following the original petition filing, the Supreme Court decided Cuozzo v. Lee and held that the PTO’s decision to institute an inter partes review is not appealable.

GPNA distinguishes its petition from Cuozzo on the grounds that it “is seeking to appeal is a final written decision terminating GPNA’s IPR proceedings without deciding patentability, nine months after granting institution (“Termination Decision”).”

GPNA is not appealing or seeking to change those institution decisions. . . . The Termination Decision was based upon the panel’s legal error in assuming that 35 U.S.C. § 312(a)(2) stated a jurisdictional requirement, the failure of which nullified the validity of the proceeding. . .

[T]his Petition addresses an agency action that is not barred from review by § 314(d) and it presents a legal issue as to which the salutary “presumption of reviewability” should apply. The Federal Circuit erred in summarily refusing jurisdiction, both by appeal and writ of mandamus, and this Petition should be granted.

[GEA Petition; Steuben Brief in Opposition; GEA Process Reply]

The uphill battle for certiorari here begins with the fact that the PTAB has now changed its approach now interprets § 312(a)(2) as suggested by GPNA.  Going to the merits, the question is whether termination of an IPR because it never should-have-instituted is effectively a decision regarding institution.

The Supreme Court has scheduled its first conference on the case for September 26, 2016.