By Jason Rantanen

The USPTO recently released the data on the number of patent applications filed in Fiscal Year 2015 via its Data Visualization Center (i.e.: the Dashboard) page.

Based on this data, the number of patent applications hasn’t taken a nosedive.  Instead, applications have remained at the same level as the preceding year.  The number of UPR (Utility, Plant and Reissue) applications did drop by about 0.5% as compared with Fiscal Year 2014, but that’s a very small change, especially when compared with the growth in UPR filings over the past several years.  In addition, when Requests for Continued Examination are broken out (the PTO includes RCEs in its numbers of UPR filings on the Dashboard spreadsheet), the number of applications actually rose by about 1%.

Figure 1 depicts the numbers of UPR applications filed per fiscal year, with and without RCEs.  (Additional note: these numbers do not distinguish between applications that do not claim the benefit of an earlier U.S. application and those that do, such as continuations and continuations in part.  Also, historically plant and reissue applications have made up a de minimus proportion of the UPR applications (about a thousand of each per year).)

To check whether there might have been a sudden drop at the end of the year that affected these results, I also plotted the cumulative numbers of applications filed on a monthly basis for each fiscal year from 2009-2015. Fiscal year 2015 really doesn’t look all that different from Fiscal Year 2014 when viewed on a monthly basis and there’s no sudden unexpected dropoff at the end.

Finally, I graphed the numbers of design patent applications filed each fiscal year.  I was a bit surprised that design patent applications were essentially flat as compared to FY 2014, indicating that – so far at least – there hasn’t been a huge surge in these applications.

In Life Technologies Corp. v. Promega Corp., the Supreme Court has asked for the views of the Solicitor General — greatly raising the likelihood that the high court will take the case.  The kicker will be how the US Gov’t responds.

The case centers around Life Technologies’ international sales of genetic testing kits.  A portion of the kit included Taq polymerase that was manufactured in the US and sent to the UK where it was combined with additional components to produce the infringing kit.  Of course, the UK manufactured kit isn’t infringing under ordinary U.S. patent law because it is being manufactured, sold, and used outside of the US.  However, Section 271(f) of the Patent Act provides a cause of action for infringement based upon export of components of a patented invention to be combined abroad.

This case focuses on Section 271(f)(1) that provides:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

The elements of infringement under Section 271(f)(1) appear to be:

• Supply or cause to supply in or from the US;
• A substantial portion of the components of a patented invention in uncombined form; and
• In a way that actively induces the combination outside of the US in a manner that would infringe the patent if it had been combined within the US.

In finding for the patentee, the Federal Circuit made two interesting decisions:

1. The exporter can induce itself to combine the components abroad.
2. A single component (here the Taq polymerase) can serve as “a substantial portion of the components.”

In his essay on the decision, Jason Rantanen wrote that these holdings are “probably erroneous—doctrinal developments.”

Now, in its petition for certiorari, the adjudged infringer has followed Prof. Rantanen’s lead and asks the following questions:

1. Whether the Federal Circuit erred in holding that a single entity can “actively induce” itself to infringe a patent under 35 U.S.C. § 271(f)(1).
2. Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.

The basic arguments here stem from the Supreme Court’s prior statements that 271(f) should be interpreted narrowly.  In his amicus brief supporting the petition, Dean Tim Holbrook argues that the Federal Circuit “consistently fails to consider the presumption against extraterritoriality” and that important interpretive doctrine leads to the conclusion that the court went too far here.

Next step in the case will be a brief submitted by the US Government staking out its position as to whether export should count as infringement. Although I am sympathetic to Holbrook’s position, the US administration is active enough in patent cases so that it can be the one making the argument if the case so warrants.

• Life.Petition
• Life.Opposition

In re Steed (Fed. Cir. 2015)

This decision offers an example of failures of the first-to-invent regime. Basically, Steed (acting pro-se in a pre-AIA application) attempted to swear behind a 102(e) prior art reference.  However, prior conception, diligence, and reduction-to-practice all must be proven with documentary evidence. Here, the applicant submitted a Section 131 declaration attempting to show prior conception, diligence, and reduction to practice, but the evidence submitted was ultimately found lacking.

Through a series of cases, the courts have defined invention more as a process than a point in time.  This process is triggered and begins with an inventor’s (or inventors’) conception of the invention that includes a “definite and permanent idea of the complete and operative invention,” including all of the elements of the eventually claimed invention.  Although conception seemingly occurs in the mind of inventors, the evidentiary requirements demand written proof of conception.  Although invention is triggered by conception the process is not deemed complete until the idea has been actually reduced to practice (RTP).  Today, few patent applicants actually reduce their idea to practice prior to filing (certainly not covering all of the claimed arrangements), however, the the courts have deemed the filing of a patent application satisfying the patentability requirements to be a constructive reduction to practice.   In essence, the courts have noted that the elements of invention were not actually completed, but we will close our eyes and simply assume the legal fiction.

Here, the patent applicants had a number of documents showing that they were working on a variety of ideas. However, nothing submitted was sufficient to show that the applicants had conceived of the whole idea (with the claim limitations being sought) prior to the critical prior-art date.

The point here is that it is hard to prove a prior invention date unless you have kept very good records enough to prove an early conception date of the invention that you are now claiming.

= = = = =

An odd aspect of the case involved the PTO’s argument that the pro-se inventors had waived their arguments associated with proving an early date of actual reduction to practice. Basically, in briefing the applicants had stated that their evidence showed a prior constructive reduction to practice even though it was clear that the applicants were attempting to prove prior actual reduction to practice.  Since the applicants had used the wrong word, the PTO solicitor argued that the applicant waived their right to argue actual reduction to practice. On appeal, the Federal Circuit rejected the waiver argument, but ultimately found that the applicants had not proven actual reduction to practice.

= = = = =

One take-away from this case is the importance of relying upon highly qualified patent counsel. Although the AIA has largely eliminated the particular issues in this case, a large number of pitfalls remain to trap the unwary.

The chart below shows the relative distribution of new patent lawsuit filings (complaints) over the past decade.  I included the top four most popular jurisdictions (E.D.Tex., D.Del., C.D.Cal., and N.D.Cal.) and also a catch-all category for the sum of the other 90 or so districts in the country.  

You’ll note that E.D.Tex. has been the leading district almost every year for the past decade, but that growth has increased since the AIA (2011) and even further increased in 2014 and 2015.  Part of ramp-up comes from the fact that the E.D.Tex. cases already had more defendants-per-patent and the joinder provisions of the AIA could be seen as a natural expression of that phenomenon.  However, the rise in 2015 can’t be so easily explained.

If you calculate the HHI, this now looks like a very concentrated market.

The Trans-Pacific-Partnership is now much closer to reality with substantive agreement between the 12 member nations that include the US, Canada, Mexico, Japan, Australia, et al. (but not China).  The new multilateral trade agreement has not been made public, but reportedly includes a number of intellectual property elements with special protections against copyright theft for the US entertainment industry and generic competition for the branded pharmaceuticals.  Congress will need to approve the agreement to make it effective in the US, but is likely to do so if Republicans get their act together.

A final version of the text should be available in November.

• Joseph Herndon: In re Steed
• Steve Brachmann: A Lax Attitude Towards Data Security Could Leave Law Firms In The Lurch 
• Nina Zipkin: 4 Intellectual Property Myths That You Should Avoid
• Sean Farrell: Lindt Wins Legal Battle After Court Rules Haribo Claim Does Not Bear Up
• Kevin Bercimuelle-Chamot: Gucci May Be One Nail Away From A New Legal Battle
• Ankit Gupta: Google And Microsoft End Their War Over Intellectual Property

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D’Arcy v. Myriad, [2015] HCA 35

The High Court of Australia (HCA) has determined that Myriad’s claims to isolated DNA are not patent eligible — finding that the creation of this category of important rights is best left to “legislative determination.”

Australia’ patent statute is still keyed to the 1624 English Statute of Monopolies that allows for patents on “any manner of new Manufactures.”  Australia takes those “ancient” words and then applies a common law approach to determine its scope.  In general, Australian patent rights can only be granted on “something brought about by human action.”

The court here writes:

Although it may be said in a formal sense that the invention as claimed, referring to isolated nucleic acids, embodies a product created by human action, that is not sufficient to support its characterisation as a manner of manufacture. The substance of the invention as claimed and the considerations flowing from its substance militate against that characterisation. To include it within the scope of a “manner of manufacture” involves an extension of that concept, which is not appropriate for judicial determination. Further, to include this class of claim within that concept would not contribute to coherence in the law. . . Nor do Australia’s international obligations and the differently framed patent laws of other jurisdictions, which were referred to earlier in these reasons, support the conclusion that this class of claim should fall within the concept.

In reaching its decision, the court reviewed US, UK, Korean, Japanese, and Chinese patent law to consider where beneficial harmonization may occur.

D’Arcy v Myriad Genetics Inc (S28-2015) [2015] HCA 35.

John Martin and his team at Innography have released their bi-annual update on the patent market. LINK. Their primary finding: Alice v. CLS Bank “hasn’t affected the volume of US patent sales, which continues its roughly 10% per year increase over the last several years.”  The short report hits a number of highlights, including recent deals by Porsche, Google, LinkedIn, and others. Although the report does delve into particularly technological issues, its tracking remains in terms of quantities rather than valuation.