Guest Post by Prof. Burstein: Ethicon v. Covidien — Some key design patent issues

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In this post, Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law, examines the design patent components of the Federal Circuit’s recent Ethicon decision.  Dennis’s discussion of the utility patent’s indefiniteness issue is here.

Ethicon Endo-Surgery, Inc. v. Covidien, Inc. (Fed. Cir. Aug. 7, 2015) Download opinion
Panel:  Chen (author), Lourie, Bryson

Ethicon alleged that Covidien’s Sonicision cordless ultrasonic dissection device infringed various utility and design patents. Each of the asserted design patents claimed a portion (or portions) of a design for a surgical device. A representative image from each patent is shown below:

patents_in_suit

All of the asserted design patents claimed at least some portion of the design of the u-shaped trigger. Three of them also claimed the design of the torque knob and/or activation button.

The district court granted summary judgment that the design patents were invalid for lack of ornamentality and not infringed. Ethicon appealed.

Validity

The Federal Circuit reversed the grant of summary judgment of invalidity. A patentable design must be, among other things, “ornamental.” The Federal Circuit has interpreted this as, essentially, a type of non-functionality requirement.

In deciding that the designs were invalid as functional, the district court relied on a number of factors from Berry Sterling Corp. v. Pescor Plastics, Inc. In Berry Sterling, the Federal Circuit stated that, in addition to the existence of alternative designs:

Other appropriate considerations might include: whether the protected design represents the best design; whether alternative designs would adversely affect the utility of the specified article; whether there are any concomitant utility patents; whether the advertising touts particular features of the design as having specific utility; and whether there are any elements in the design or an overall appearance clearly not dictated by function.

In their appellate briefs, the parties disputed the relevance and relative weight of these factors. Ethicon noted the significant tension between Berry Sterling and other controlling precedents, arguing that “[b]efore and after Berry Sterling, this Court has treated the presence or absence of alternative designs that work as well as the claimed design as a dispositive factor in analyzing functionality.” Covidien, on the other hand, argued that the availability of alternative designs was not a dispositive factor.

In its decision, the panel attempted to harmonize the conflicting precedents by stating that the Federal Circuit had not, in fact, previously “mandated applying any particular test for determining whether a claimed design is dictated by its function and therefore impermissibly functional.”

The panel noted, however, that the Federal Circuit had “often focused . . . on the availability of alternative designs as an important—if not dispositive—factor in evaluating the legal functionality of a claimed design.” The panel then recast the Berry Sterling factors as only being applicable “where the existence of alternative designs is not dispositive of the invalidity inquiry.” The panel did not explain how or when the existence of alternatives would—or would not be—dispositive as to validity. However, it did make it clear that “an inquiry into whether a claimed design is primarily functional should begin with an inquiry into the existence of alternative designs.”

Although Ethicon had submitted evidence of alternative designs, Covidien argued they were not “true alternatives because, as the district court found, they did not work ‘equally well’ as the claimed designs.” The Federal Circuit disagreed with Covidien for two main reasons:

First, the district court’s determination that the designs did not work “equally well” apparently describes the preferences of surgeons for certain basic design concepts, not differences in functionality of the differently designed ultrasonic shears. . . . Second, to be considered an alternative, the alternative design must simply provide “the same or similar functional capabilities.”

The Federal Circuit also decided that, in finding the claimed designs to be functional, the district court “used too high a level of abstraction,” focusing on general design concepts—for example, on the concept of an open trigger—instead of “the particular appearance and shape” of the claimed design elements. The Federal Circuit therefore reversed the district court’s summary judgment of invalidity.

Infringement

This decision also provided some useful clarification about how to apply the design patent infringement test, as formulated by the en banc Federal Circuit in Egyptian Goddess, Inc. v. Swisa, Inc. In the wake of Egyptian Goddess, some lawyers have argued that: (1) a court must (almost) always consider the prior art when analyzing design patent infringement; and (2) in certain circumstances, the prior art can be used to broaden the scope of a patented design.

In Ethicon, the panel helpfully—and accurately—clarifies the rule of Egyptian Goddess, noting that:

Where the claimed and accused designs are “sufficiently distinct” and “plainly dissimilar,” the patentee fails to meet its burden of proving infringement as a matter of law. If the claimed and accused designs are not plainly dissimilar, the inquiry may benefit from comparing the claimed and accused designs with prior art to identify differences that are not noticeable in the abstract but would be significant to the hypothetical ordinary observer familiar with the prior art. (Citations omitted.)

In this case, the district court engaged in a “side by side comparison between the claimed designs and the design of Covidien’s accused shears” and determined that they were plainly dissimilar and, therefore, the design patents were not infringed. The Federal Circuit provided these images as a representative example:

infringementEthicon argued that they were not plainly dissimilar and that the district court erred in not considering the prior art, “which Ethicon characterizes as predominantly featuring thumb-ring and loop-shaped triggers.” Essentially, Ethicon sought to broaden the scope of its patent by showing some significant visual “distance” from the prior art.

The Federal Circuit disagreed with Ethicon, finding no genuine dispute of fact on the issue of infringement. According to the court, the designs were only similar “[o]n a general conceptual level.” And because the designs were plainly dissimilar, the court “did not need to compare the claimed and accused designs with the prior art.” The court therefore affirmed the grant of summary judgment of non-infringement.

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En Banc Federal Circuit: USITC Has power to Stop Non-Infringing Imports if used to Induce Infringement in the US

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by Dennis Crouch

In Suprema, Inc. v. USITC  (en banc), the Federal Circuit sitting en banc has overturned the prior-panel decision – now holding that the US International Trade Commission (USITC) has the power to issue an exclusion order to block importation based upon an inducement theory of infringement — even though the imported products themselves are not infringing.

Here, the patents at issue belongs to Cross Match and a fingerprint-scan methodology that uses both hardware and software components. (See U.S. Patent Nos. 7,203,344). The hardware is manufactured abroad and imported by Suprema.  Once in the US, the hardware is loaded with software by another company (Mentalix) with the software to make a product used to infringe the claimed methods. Of importance, the imported hardware does not – by itself – directly infringe the patent. However, the USITC found that Suprema was liable for inducing infringement under 35 U.S.C. 271(b).

The original panel rejected the USITC analysis — finding that the government agency’s power extends only to block importation of articles that are infringing at the point of importation. In that case, inducement doesn’t work because it requires an additional step (the underlying infringement) before infringement is complete.

In the en banc rehearing, the Federal Circuit found the statute lacking — finding that the USITC’s enabling statute “Section 337 does not answer the question before us”  but instead simply states that the agency can take action against “articles that . . . infringe” a US patent.  This provision appears to favor the panel’s opinion – because it focuses on whether the good being imported infringes, but that is less true when considering the goal here is “curbing unfair trade practices that involve the entry of goods into the U.S. market via importation.”

At this point, most patent law readers would expect for the Federal Circuit to weigh the statutory language and consider which of the argued interpretations is correct.  Somewhat surprisingly, that is not the approach taken.

Unlike the USPTO, the USITC was given (by Congress) substantive authority to interpret its governing statute – the Tariff Act.  This means that the USITC’s interpretations of its power are given deference (here Chevron deference) and as such, a reasonably interpretation by the agency (even if not what the court would have decided) will not be overturned on appeal.  Here, the court found that the interpretation is reasonable and consistent with Section 337 and the Congressional mandate “to safeguard United States commercial interests at the border.”  Result here is the potential of a significant expansion of USITC power over patents focused on novel methods of use.

This decision effectively reinstates the USITC opinion.  I expect a petition for writ of certiorari on this issue.  In the original panel, Judge Reyna wrote in dissent. Here, he authored the 6-4 majority opinion.  Both Judges O’Malley and Prost wrote in dissent.  Decision could have gone the other way if Judges Moore and Stoll had participated (and sided with the dissent).

 

USPTO Allowance Rate

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The chart below provides a new look at the USPTO Allowance rate and is calculated by dividing the number of issued patents  in a given month by the number completed cases (where the application either issues as a patent or is abandoned).  Those who have been practicing for several years will recognize the Dudas-Drop in the second-half of the last decade and the subsequent Kappos-Climb. AllowanceRate

Notes: For readability, I used a 4-month rolling average that smoothed the contours (and also made discontinuous jumps appear more gradual). The report here relates to abandonment and issuance of serialized applications.  Quasi-abandonments such as RCE filings are not considered abandonments for this data.  Continuations and divisional application filings are included — Thus, the issuance/abandonment outcome of the original application will be counted as well as that of any follow-on serialized application. The data comes from USPTO Historical Files released by the PTO’s Chief Economist Alan Marco.

Ethicon v. Covidien: Cut to the Marrow on Indefiniteness

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Tomorrow I’ll write about the design patent functionality questions in Ethicon Endo-Surgery v. Covidien, Appeal No. 14-1370 (Fed. Cir. 2015) (medical shears).  Today, the focus is on the Federal Circuit’s reversal on indefiniteness.   Here, the appellate court held that  the district court had improperly invalidated the asserted surgical shear claims of Ethicon’s Patent No. 8,182,501.

Before getting into the legal details, I wanted to write about the legal posture.  This case involves Ethicon’s infringement allegations against its market competitor Covidien.  In a parallel case, Covidien (Tyco Healthcare) sued Ethicon for infringing its shear patents. In that case, Covidien originally won a $177 million judgment that was then vacated by the Federal Circuit who found that the district court erred in its nonobviousness decision.  In a recent filing, Covidien has filed a petition for writ of certiorari on the question of whether evidence of prior invention (“102(g)(2) evidence”) is available for the obviousness analysis as the Federal Circuit held?  More subtly, the question is actually phrased: “whether a mere conception that was neither known to the public nor reduced to practice at the time a patented invention was made is “prior art” to that invention under the pre-2013 version of 35 U.S.C. § 103.” [102(g) SCOTUS Petition.]  This is an interesting if purely historic question since prior-invention are no longer be a legitimate claim against AIA-patents.

PatentlyO300

Back to the new indefiniteness decision: The ‘501 patented shears at issue claim an ultrasonic blade and a clamping arm that squeezes blood-vessels against the blade.  The pad at the end of the clamping arm is designed with a blade-contact-area (“clamping surface area”) “so that the applied clamp force does not exceed a clamping pressure of 210 psi at the clamping surface area.”  Finally, the claims also include a “means for limiting a user applied clamping force on the clamping arm creating an average predetermined clamping pressure between and including 60 psi and 210 psi on tissue disposed between the tissue pad and the blade.”  In the specification, the patentee does identify a structure for limiting the pressure as a “torque wrench.” So, the indefiniteness problem here is not the ordinary Donaldson no-structure-for-MPF-element problem.

The district court found the claim invalid as indefinite because the specification did not spell-out how the pressure should be calculated.  In particular, the district court identified four different ways to calculate the pressure (averaging / non-averaging / location on pad / angle considerations / etc.) that would each render a different pressure reading.  And, without knowing how to calculate the “psi limits”, the claim scope lacked definiteness.

In Nautilus (2014) , the Supreme Court lowered-the-bar on indefiniteness — ending the difficult to prove insolubly ambiguous test and replacing it with a broader question of whether the claims provide a skilled artisan with “reasonable certainty” as to the scope of legal right claimed.   Although the district court decided its case under the old standard, it still found the claims invalid as indefinite.

On appeal though, the Federal Circuit has reversed that finding — holding that the district court improperly ignored the intrinsic evidence and misinterpreted the expert testimony.  Somewhat oddly, on the intrinsic evidence, the appellate panel found that the the pressure calculation limitation in the patent claims all require consideration of the average pressure across the pad — even though only some of the claims include the “average” limitation.  Once that bit of claim construction is done (and once you decide to measure the pressure when the blade closed (~0 degree angle), then the various mechanisms of measuring/calculating average pressure all converge because of linearity involved (assuming a straight blade).

Of interest to litigators, it appears here that the Federal Circuit did give deference to the district court’s factual conclusions regarding expert testimony on indefiniteness – still finding that the district court “arrived at several clearly erroneous factual conclusions.”

On remand, the trial court will next need to interpret the scope of the ‘501 means claim terms and determine whether there is any infringement (or some other reason to invalidate) the claims.

As alluded to above, the lawsuit also involves a set of design patents covering the shears.  The district court held them invalid as too functional. On appeal, the Federal Circuit also reversed that holding – finding instead that the district court evaluated the design patent claims “using too high a level of abstraction, focusing on the unclaimed utilitarian aspects . . . instead of the claimed ornamental designs.

 

 

 

Republican Debate: Removing Roadblocks more Important than Incentives

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The first Republican Presidential Debate was enjoyable, if also scary. No mention of patents or invention other than Dr. Carson’s remarks about how American became great:

America became a great nation early on not because it was flooded with politicians, but because it was flooded with people who understood the value of personal responsibility, hard work, creativity, innovation, and that’s what will get us on the right track now, as well.

Patents are configured as a mechanism to encourage R&D and commercial activities. The business related discussion focused instead on undoing regulations that the candidates argue hampers economic activity: Dodd-Frank; EPA Regs; Obamacare; and an “unfair” tax code.   The following is from Marco Rubio:

The first thing we need to do is we need to even out the tax code for small businesses so that we lower their tax rate to 25 percent, just as we need to lower it for all businesses.

We need to have a regulatory budget in America that limits the amount of regulations on our economy. We need to repeal and replace Obamacare and we need to improve higher education so that people can have access to the skills they need for 21st century jobs.

And last but not least, we need to repeal Dodd-Frank. It is eviscerating small businesses and small banks.

At Mizzou, our new Center for Intellectual Property and Entrepreneurship is focusing on the role of regulation (including intellectual property rights) on the business environment for small and start-up businesses.  Looking forward to more substantive discussion on this topic.

The Economist: Time to Fix Patents

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In its newest issue, the Economist is coming out strongly against the patent system – based upon the argument that “patent-lawyers are masters of obfuscation” and that patents are being used both by established incumbents and patent trolls to stifle further innovation.

The system has created a parasitic ecology of trolls and defensive patent-holders, who aim to block innovation, or at least to stand in its way unless they can grab a share of the spoils. An early study found that newcomers to the semiconductor business had to buy licences from incumbents for as much as $200m. Patents should spur bursts of innovation; instead, they are used to lock in incumbents’ advantages.

The patent system is expensive. A decade-old study reckons that in 2005, without the temporary monopoly patents bestow, America might have saved three-quarters of its $210 billion bill for prescription drugs. The expense would be worth it if patents brought innovation and prosperity. They don’t.

The Economist has a longstanding pro-competition anti-patent bent.  In the 1800’s The Economist proposed full abolition of the patent system. The paper’s stance is no longer opposition, but does come with the interesting statement that “government should force the owners of intellectual property to share.”

Their proposals:

1) Patent Use Requirement – the patent should only be enforceable if the patentee uses it in the marketplace.

2) Patent Opposition – patents should be easier to challenge without going to court and the burden of proof should be lower.

3) The standard for non-obviousness should be raised so that patents are only granted to those “who work hard on big, fresh ideas, rather than those who file the paperwork on a tiddler.”

4) Patent term should be reduced – especially in fast-moving technology areas.

http://www.economist.com/news/leaders/21660522-ideas-fuel-economy-todays-patent-systems-are-rotten-way-rewarding-them-time-fix.

 

 

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International Intellectual Property Law Updates

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Ripped in the UK: UK Copyright Law includes a limited fair-use exception – known as “fair dealing.”  In 2014, the UKIPO announced a broadening of the exceptions to include private copying of your own copies (e.g., cd-ripping), quotations, and parody set to take effect in October 2014.  However, the High Court quashed the regulations prior to their taking effect — finding that the Government must should consider a compensation scheme for copyright holders whose works would be copied. As it must, the UKIPO is also falling in line, its spokesman is reported as saying: “It is now unlawful to make private copies of copyright works you own, without permission from the copyright holder – this includes format shifting from one medium to another.”   I don’t use iTunes, but this apparently means that the iTunes ripping function is illegal to use in the UK.

The Trans Pacific Partnership continues to be negotiated between the US and other pacific nations.  A recent version of the IP-related text has been published by Knowledge Ecology International (KEI) here: http://keionline.org/tpp/11may2015-ip-text. For the most part, the agreement appears to be focused on ensuring that our pacific trading-partners offer US-style intellectual property rights. However, it is interesting to study the patent chapter and consider potential differences with U.S. law.  More from TechDirt.

 

 

 

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Marvell v. Carnegie Mellon: $300 million is a lot, but not $1.5 billion

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The Federal Circuit has greatly reduced the $1.5 Billion award to Carnegie Mellon University — leaving a still healthy $278 million to be paid by chip manufacturer Marvell Technology (plus interest) with the potential of additional receipts from a new trial on whether foreign sales are actually US sales. [Read the Decision]

1. Willful Infringement: A portion of the original damage award (~20%) in this case came from enhanced damages.  The statute provides that “the court may increase the damages up to three times the amount found or assessed.”  Although seemingly open-ended, the court has restricted enhanced damages only to the situations involving willful infringement — and further requiring “clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” and “this objectively-defined risk . . . was either known or so obvious that it should have been known.” (quoting Seagate).

The Federal Circuit has ruled that an adjudged infringer who presents an objectively reasonable (though ultimately deficient) defense at trial cannot be held liable for enhanced damages.  Here, the court found that Marvell’s invalidity defense had some merit and was not ‘objectively unreasonable.’

2. Foreign Infringement: The original verdict included damages for all of the chips that resulted from Marvell’s use of the infringing methods sold worldwide – including chips that were manufactured abroad and never imported into the US.  On remand, the Federal Circuit asked the lower court to reconsider particularly whether those chips made and used outside of the US could be considered as “sold” in the U.S. since, at times, the “place of inking” can be the location of the sale even if delivery is at a different location.

3. Laches: Under the equitable doctrine of laches, a patentee who has unreasonably and prejudicially delayed the filing of an infringement lawsuit will be barred from collecting damages for pre-filing infringement.  The non-statutory (and potentially defunct) doctrine of Laches sits atop the statutory limit on collecting back damages that accrued more than six years before the filing of the infringement action.  Here, the district court found that CMU’s six-year delay in filing suit after noticing the infringement was “unreasonable and inexcusable” and that Marvell had suffered some amount of evidentiary prejudice.  However, the district court found that Marvell did not suffer economic prejudice due to the delay because, “Marvell . . . would have gone ahead with its infringement regardless, accepting the risk of liability.”

Patent and Trade Secret Legislation Updates

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There are a number of patent and trade secret related bills pending in Congress. Here are a few updates:

INNOVATION ACT: Rep. Goodlatte’s Innovation Act (H.R. 9) proposes a set of changes to our “patent-enforcement system.”  A newly released 200-page report from the Judiciary Committee explains the proposed legislation and its purposes.  The report also includes dissenting views from a group of seven Democratic members who argue that the proposal goes too far in diminishing patent rights. That said, the dissenters agree that “Congress must respond to the problems of abusive patent litigation in the courts and the gaming of the patent process at the USPTO.” [LINK].

In July, the Defend Trade Secrets Act of 2015 was introduced in both the House and Senate.  The proposal would create a federal civil cause of action for trade secret misappropriation that would run in parallel to the state causes of action already available. [DTSA2015][Dave Levine explains his Opposition]

The Innovation Promotion Act of 2015 is a tax-bill that would cut the corporate income tax rate on profits from the use of innovations and intellectual property.(Down to 10% from ~30%). The amount of qualifying profits is reduced by the percent of corporate expenses from the past five years spent on U.S. R&D.  The way that the bill is designed is that it basically serves as an additional incentive to conduct R&D within the U.S.  R&D activities are already deductible as business expenses, but the proposal here would allow those to be double-counted (more particularly, counted 1.71 times).

 

 

RAND Agreement Proving Powerful Limit on Patentee Action: Microsoft v. Motorola

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Microsoft v. Motorola and Google (9th Cir. 2015)

In a well written decision, the 9th Circuit has affirmed the lower court ruling that Motorola/Google owes $14 million to Microsoft for failing to live-up to its RAND commitments.   Although Motorola (now Google) committed several WiFi-essential patents to Reasonable and Non-Discriminatory (RAND) licensing, it later demanded that Microsoft pay a hefty royalty rate lest it be blocked from using WiFi.  Those demands from Motorola should more properly be seen as a counter-offensive  prompted by Microsoft’s demands for royalties on every Android implementation.

The basic rulings: (1) affirming that Motorola had breached its RAND good faith and fair dealing obligations in its dealings with the third-party-beneficiary Microsoft – resulting in $14.5 million in damages; (2) affirming that the district court had not erred in determining the RAND royalty rate at a few cents per device (rather than the few dollars per device requested by Motorola).  The court previously agreed to hear the case (rather than the Federal Circuit) and that prior finding was left undisturbed based upon the “law of the case.”

The damages here are interesting.

Motorola had challenged the district court’s RAND royalty determination as failing to follow Federal Circuit damages precedent.  On appeal, the 9th Circuit held that neither Federal Circuit precedent nor the Patent Act requirement of “a reasonable royalty” floor control because the RAND rate is a contract obligation rather than a patent damage.  That said, the 9th Circuit did agree that the Georgia-Pacific factors are helpful in guiding the analysis.

The $14 million breach-of-contract damages actually stemmed from Motorola’s infringement action filed in Germany.  When that lawsuit was filed, Microsoft quickly relocated its infringing European distribution center to the Netherlands (at a cost of several million dollars).  The German court did grant an injunction against Microsoft’s ongoing infringement in Germany.  Back in the U.S. the district court determined that the German action (and demand for injunctive relief) was a breach of Motorola’s RAND agreement and awarded Microsoft $11 million to compensate for moving its distribution center and $3 million in attorney fees for having to fight the legal battle in Germany.  Those findings have now been affirmed by the 9th Circuit.

Motorola  argued that the U.S. policy of open access to the courts should bar liability for consequential damages associated with filing a lawsuit.  That argument is embodied by the Noerr-Pennington doctrine that shields parties from liability for simply engaging in litigation.  Here, however, the 9th Circuit found the doctrine inapplicable when contractual obligations bar certain litigation strategies — here, in particular, the RAND agreement was seen as barring any request for injunctive relief.

Overall, the outcome provides power to RAND/FRAND agreements – proving that they provide significant assurances to third parties on a global scale.

 

 

 

 

Commissioner of Patents: Drew Hirshfeld

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Drew Hirshfeld has now taken-on the role as Commissioner of Patents at the USPTO after being appointed by Secretary of Commerce Penny Pritzker.  Hirshfeld is filling the office left by Peggy Focarino’s recent retirement.  Earlier this year I suggested that Hirshfeld was a likely appointee.

Commissioner Hirshfeld has been with the USPTO for more than 20-years.  He originally joined as an examiner but moved up through the ranks by proving himself to be smart, reliable, and reasonable.  Hirshfeld was David Kappos Chief of Staff and has been the Deputy Commissioner for Patent Examination Policy under Director Lee. Prior to that, he served as a group director for TC2100.

Congratulations on an excellent appointment.

 

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Circuit Check v. QXQ, Inc.: Analogous Art Doctrine

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By Jason Rantanen

Circuit Check Inc. v. QXQ Inc. (Fed. Cir. 2015) Download Opinion
Panel: Louie, Dyk, Moore (author)

Although it shows up only occasionally in the Federal Circuit’s opinions, the analogous arts doctrine can play an important role in structuring and limiting obviousness determinations.  Here, it is a key component of the Federal Circuit’s reversal of the district judge’s grant of Judgment as a Matter of Law that the patents-in-suit were obvious.  An important limitation of this decision, of course, is that the consequence is to reinstate the jury verdict that the patent was not obvious.  Put another way, although the Federal Circuit uses the analogous arts doctrine to restrict the scope of obviousness here, the procedural posture of its review maintains   some degree of indeterminacy.

While obviousness determinations often invoke the hypothetical person having ordinary skill in the art sitting at a lab bench on which is arrayed every existing prior art reference, the analogous art doctrine functions to limit those references.   The basic elements are well established:

To be considered within the prior art for purposes of the obviousness analysis, a
reference must be analogous. Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 864 (Fed. Cir. 1993). Whether a reference is analogous art is a question of fact. Wyers v. Master Lock Co., 616 F.3d 1231, 1237 (Fed. Cir. 2010). Prior art is analogous if it is from the same field of endeavor or if it is reasonably pertinent to the particular problem the inventor is trying to solve. Id.

Here, there was no question that “the disputed prior art—rock carvings, engraved signage, and Prussian Blue—is not part of the field of circuit board testers and test figures.”  Slip Op. at 6.  Thus, the issue was whether the prior art “is reasonably pertinent to the particular problem solved by the inventor.”  The Federal Circuit concluded that a reasonable jury could  have found that it was not:

Although “familiar items may have obvious uses beyond their primary purposes,” KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 420 (2007), a reference is only reasonably pertinent when it “logically would have commended itself to an inventor’s attention in considering his problem,” In re Clay, 966 F.2d 656, 659 (Fed. Cir. 1992). The jury heard testimony that a person of ordinary skill in the art would not have thought about rock carvings, engraved signage, or Prussian Blue in considering how to mark interface plates. J.A. 1387–88, 1397, 1430–32, 1434, 1443–44, 1447. The jury was entitled to weigh this testimony, find that an ordinarily skilled artisan would not find that the disputed prior art “logically would have commended itself to an inventor’s attention,” and thus find the disputed prior art not analogous. See In re Clay, 966 F.2d at 659.

The district judge’s opinion also referenced the idea of keying a car, noting that “any vandal who has ‘keyed’ a car knows that stripping the paint with a key will result in
the underlying metal color showing through.”  Slip Op. at 4 (quoting district court).  But

Just because keying a car, for example, is within the common knowledge of humankind does not mean that keying a car is analogous art. An alleged infringer should not be able to transform all systems and methods within the common knowledge into analogous prior art simply by stating that anyone would have known of such a system or method. The question is not whether simple concepts such as rock carvings, engraved signage, or Prussian Blue dye are within the knowledge of lay people or even within the knowledge of a person of ordinary skill in the art. Rather, the question is whether an inventor would look to this particular art to solve the particular problem at hand. Here, Circuit Check put forward evidence that an inventor would not have considered the disputed prior art when trying to improve marking. It is not hard to arrive at that conclusion. Even though an inventor may be aware of rock carvings, it is not surprising that the inventor would not have looked to rock carvings to improve the process of painting small dots on interface plates for expensive circuit board testers. And, even though an inventor may work in an office with engraved signage, the inventor would not necessarily have considered using the techniques disclosed in engraved signage to solve the problem of marking circuit board tester interface plates.

The Federal Circuit also found substantial evidence to support the jury’s presumed finding of substantial differences between the prior art and the claims, and in support that objective considerations support nonobviousness.

Read This: USPTO’s New Examination Guidelines Subject Matter Eligibility Provide “Pathways to Eligibility”

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By Dennis Crouch

The Supreme Court’s decisions in Alice Corp v. CLS Bank and Mayo v. Prometheus serve as dramatic turning points in the conventional wisdom of subject matter eligibility.  Inventions that were previously thought to be patent eligible are no longer; and we continue to re-calibrate toward this new normal. The USPTO has found some amount of understandable difficulty in implementing the two step Alice/Mayo eligibility test.  In a chicken-and-egg problem, the test has major gaps in its structure, but the USPTO lacks substantive rulemaking authority to fill those gaps. 

The USPTO’s Office of Patent Examination Policy (under Mr. Drew Hirshfeld) has released a new set of Eligibility Examination Guidelines intended to supplement those released in 2014 with the intent of both educating examiners on best practices and also informing applicants of the agency’s approach. I spoke with Hirshfeld who reiterated that these guidelines are incremental and that the USPTO continues to welcome input from the patent law community.

The July 2015 update builds upon Federal Circuit eligibility decisions made during interim and also responds to user comments.  The guidelines major thrust, however, appears to be its attempt to offer a counterweight against those announcing that “nothing is patentable.” In the words of the notice, the idea is to provide “pathways to eligibility.”  To be clear, the update does not cancel the prior guidance but only serves as a supplement.

Identifying Abstract Ideas and Laws of Nature: “Don’t Get Creative.” Although we know that “abstract ideas” are not patent eligible, the courts have chosen not to provide any crisp definition or description of that set of concepts. As I mentioned earlier, the USPTO also lacks authority to further define that question of law. Rather than guessing at the vast gray areas, the agency is instructing examiners to only find an abstract idea when the concept in question parallels one found to be abstract in a court decision.

“These associations define the judicial descriptors in a manner that stays within the confines of the judicial precedent . . . a claimed concept [should] not [be] identified as an abstract idea unless it is similar to at least one concept that the courts have identified as an abstract idea.”

Here, it also appears that the “court decisions” to be followed are primarily those of the Federal Circuit or Supreme Court rather than district courts.

The examples provided in the most recent guidelines include a further focus on business methods and human-mind-activities. , graphical user interface (GUI), and software areas. (This update does not include the most recent decisions such as Versata, Intellectual Ventures, Webb, Internet Patents, Sequenom, and OIP Tech.) The on its guidelines page, the PTO continues to maintain a list of the court decisions.

One way to think about an abstract idea is a concept defined at a high level of abstraction and likely in functional form – here, the PTO does not take that approach but rather continues to define “abstract” as something akin to a category of subject matter that is excluded from eligibility.

The PTO’s Streamlined Analysis: The guidelines continue to promote its “streamlined analysis” for eligibility – essentially a shortcut for examiners when an abstract idea or law of nature is clearly only tangential to the thrust of the claim and therefore that eligibility is self-evident.

Requirement of “Evidence” for Eligibility Rejections:  The most controversial aspect of the guidelines will likely turn out to be the PTO’s decision that evidence is not needed as a prerequisite to an eligibility rejection. “For subject matter eligibility, the examiner’s burden is met by clearly articulating the reason(s) why the claimed invention is not eligible.” The PTO’s reasoning makes sense – eligibility has been repeatedly seen as a pure question of law adjudged without reliance upon any ‘evidence’ beyond that intrinsic to the patent documents themselves. “[C]ourts do not rely on evidence that a claimed concept is a judicial exception, and in most cases resolve the ultimate legal conclusion on eligibility without making any factual findings.”

To be clear, the PTO is requiring a “clear articulation” of an examiner’s reasons for rejection, but nothing more is required. Here, of course, the devil will be in the details of what is sufficient to constitute such clarity. To help settle that debate, the PTO has provided a further set of examples and reasoning seen sufficient. Interestingly, however, a “clear articulation” does not necessarily include determining the type of exception (abstract idea, law of nature, product of nature) that is being highlighted – “examiners are not required to distinguish between exceptions which can prove to be difficult.” This approach makes some sense in that the “law of nature” vs “abstract idea” distinction is likely merely philosophical. The one major difference is that both the Supreme Court and the USPTO appear to treat “products of nature” somewhat different. For products of nature only, the PTO includes a “markedly different characteristics” (MDC) shortcut to eligibility.

For further consideration of sufficient evidence, the PTO has also provides a set of worksheets (esp. Worksheets 5-8) that give explanations that satisfy the clear articulation burden. Although not “law,” these worksheets and examples are designed to carry weight with examiners and I would expect applicants to cite them directly in office action responses.

Preemption: I have mentioned this oddity before – although the eligibility test is designed to prevent a single entity from privatizing/preempting an abstract idea or law of nature, the eligibility test does not actually ask whether the invention as claimed accomplishes the prohibited preemption. Here, the PTO repeats that approach – noting that “the absence of complete preemption does not guarantee that a claim is eligible.”

Training: Examiners have apparently not yet been trained on the new guidance, and so someone immediately relying upon the guidance may need to self-educate the examiner. If I had a pending eligibility rejection that does not fit within the guidelines, I would talk through the situation with the examiner in an interview with the hope of having the rejection withdrawn.

Seeking the AntiCommons

Patent,

Interesting historical look at patent-pools and ‘transaction entrepreneurs’ by USC law professor Jonathan Barnet leads him to the conclusion that the “anti-commons” concerns in the patent context don’t hold weight in practice.

IP scholars and policymakers often maintain that [anti-commons] effects are endemic in IP-governed markets and therefore tend to endorse the view that IP rights should be reduced to mitigate those effects. The descriptive component of that proposition cannot be reconciled with the clear weight of contemporary and historical evidence—covering more than a century’s worth of experience—that AC effects are repeatedly mitigated through independent market action by affected constituencies or transactional entrepreneurs. This is true both in concentrated markets, in which repeat-players have incentives and capacities to converge on a knowledge-sharing arrangement, and dispersed markets, in which intermediaries commonly enter to supply transactional solutions that ameliorate AC frictions. Remarkably, recent historical research shows that this proposition holds true even in “easy” cases that have long been assumed to provide clear illustrations of AC effects. Recognizing the shortcomings of the AC thesis as a descriptive proposition rebuts normative intuitions that intensive levels of IP acquisition and enforcement trap markets in a transaction-cost web that depresses innovation. This sophisticated view of AC effects as a potential but rarely realized outcome provides the basis for a more nuanced appreciation of the role of IP rights in creative and technology markets.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2633695

 

 

Patent Office Issues Updated “Interim Guidance” on Patent Subject Matter Eligibility

Patent, ,

By Jason Rantanen

This morning, the USPTO issued a substantial update to its December 2014 “Interim Guidance” on patent subject matter eligibility.  The update addresses comments on the 2014 Guidance and includes several new examples of eligible and ineligible claims.  The update is available here: http://www.uspto.gov/patent/laws-and-regulations/examination-policy/2014-interim-guidance-subject-matter-eligibility-0  (The title says 2014 Interim Guidance, but the contents include the 2015 update.)

The new examples are directed to abstract ideas rather than biotechnology based inventions, although the commentary notes that the office is working on additional biotech-based examples.  According to the update,

These examples provide additional eligible claims in various technologies, as well as sample analyses applying the Supreme Court and Federal Circuit’s considerations for determining whether a claim with additional elements amounts to significantly more than the judicialexception itself. The examples, along with the case law precedent identified in the training materials as pertinent to the considerations,3 will assist examiners in evaluating claim elements that can lead to eligibility (i.e., by amounting to significantly more) in a consistent manner across the corps.

While these examples will likely be welcomed by attorneys practicing in this area, a substantial limitation is that the only recent Federal Circuit opinion finding an abstract idea-based claim eligible is DDR Holdings v. Hotels.com.  Thus, while there are several other examples of claims that the PTO would find eligible, those examples are based on either (1) PTO (as opposed to Federal Circuit) precedent; (2) hypothetical situations; or (3) pre-Mayo/Alice decisions (such as Diamond v. Diehr).

A particularly interesting part of the examples are two directed to use of the “streamlined” patent eligible subject matter analysis.  Those examples analyze claims directed to an internal combustion engine and remote storage of BIOS.  For these claims, the examiner would conduct only a “streamlined” analysis that would not become part of a written rejection.

As with the earlier Interim Guidance, the PTO is seeking public feedback on the  update.  From the website:

Any member of the public may submit written comments by electronic mail message over the Internet addressed to 2014_interim_guidance@uspto.gov (link sends e-mail). Electronic comments submitted in plain text are preferred, but also may be submitted in ADOBE® portable document format or MICROSOFT WORD® format. The comments will be available for public inspection here at this Web page. Because comments will be available for public inspection, information that is not desired to be made public, such as an address or a phone number, should not be included in the comments. Comments will be accepted until October 28, 2015.