December 7, 2012Patentanticipation, Claim ConstructionDennis Crouch

By Dennis Crouch

FTC v. Watson Pharmaceuticals, 12-416 (SCOTUS 2012)

The Supreme Court has granted certiorari in the pharmaceutical reverse-payment case.

Issue presented:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

Justice Alito has recused himself. This means that only four justices are required to maintain the per se lawful standard.

= = = = =

Other pending petitions include:

Upsher-Smith Laboratories v. Louisiana Wholesale Drug Company – Whether the Third Circuit erred by holding, contrary to the Second, Eleventh, and Federal Circuits, that an agreement settling patent litigation that does not restrict competition outside the scope of the exclusionary right granted by the patent itself may presumptively violate the antitrust laws.

Merck & Co. v. Louisiana Wholesale Drug Company – Whether the federal antitrust laws permit a brand-name manufacturer that holds the patent for a drug to enter into a settlement of patent litigation with a prospective generic manufacturer, where the settlement includes a payment from the brand manufacturer to the generic manufacturer but does not exclude competition beyond the scope of the patent.

Montgomery v. Kappos – Whether a research proposal which was never in fact performed can, as a matter of law, inherently anticipate a patent claim under Tilghman v. Proctor.

Retractable Technologies v. Becton, Dickinson and Co. – (1) Whether a court may depart from the plain and ordinary meaning of a term in a patent claim based on language in the patent specification, where the patentee has neither expressly disavowed the plain meaning of the claim term nor expressly defined the term in a way that differs from its plain meaning; and (2) whether claim construction, including underlying factual issues that are integral to claim construction, is a purely legal question subject to de novo review on appeal.

GlaxoSmithKline v. Classen Immunotherapies – Whether the Federal Circuit’s interpretation of 35 U.S.C. § 271(e)(1)’s safe harbor from patent infringement liability for drugs – an interpretation which arbitrarily restricts the safe harbor to pre-marketing approval of generic counterparts – is faithful to statutory text that contains no such limitation and decisions of this Court rejecting similar efforts to impose extra-textual limitations on the statute.

Ninestar Technology Co. v. US International Trade Commission – Whether the initial authorized sale outside the United States of a patented item terminates all patent rights to that item.

W.L. Gore v. C.R. Bard – Whether it is consistent with Section 116 to deny joint-inventor status to the maker of the successful material, and instead deem the experimenter the sole inventor, on the ground that the maker did not communicate to the experimenter the exact property that turned out to be key.”

Maintaining Uncertainty in the Standard of Review for Exceptional Cases

December 7, 2012PatentDamages, Federal Circuit En BancJason Rantanen

By Jason Rantanen

Highmark, Inc. v. Allcare Health Management Systems, Inc. (Fed. Cir. 2012) (Order Denying Rehearing En Banc) Download 11-1219 order
Concurring opinion by Judge Dyk, joined by Judge Newman
Dissenting opinion by Judge Moore, joined by Judges Rader, O'Malley, Reyna, and Wallach
Dissenting opinion by Judge Reyna, joined by Judge Moore, O'Malley, and Wallach, and Chief Judge Rader in part

Earlier this year, a divided panel of the Federal Circuit held that the element of objective baselessness in an exceptional case determination is subject to de novo review as opposed to a more deferential form of review in Highmark v. Allcare. Yesterday, the Federal Circuit declined to grant en banc review of that holding, a decision that spawned two dissents signed by what now constitutes half the court. (Judge Linn assumed senior status shortly after participating the decision). As discussed below, in declining to grant en banc review the court preserved—and arguably increased—the uncertainty about which standard of review applies.

David Hricik previously wrote an extensive discussion of the panel decision in Highmark; background details are available there. Following that decision, Highmark filed a petition for rehearing en banc challenging the majority's application of a de novo standard when reviewing the issue of whether the litigation was objectively baseless in connection with an exceptional case determination under 35 U.S.C. § 285. The full court declined to rehear the appeal en banc.

The Dissenting Judges: Objective Baselessness is Reviewed for Clear Error. In an act that speaks volumes about the strength of the views of the dissenting judges, two separate judges, Judge Moore and Judge Reyna, each wrote dissents and also signed on to each other's opinions. Both dissents essentially contain the same themes: that the majority's holding regarding the standard of review in Highmark is (1) contrary to the court's own precedent; (2) inconsistent with the Supreme Court's prior rulings; (3) inconsistent with other court's approaches to similar issues in the Rule 11 and Equal Access to Justice Act context; and (4) fundamentally unsound. There are nuanced differences between the opinions; for example, Judge Reyna sharply criticizes the panel majority's over-reliance on developments in the willful infringement context, a part of the opinion that Judge Rader does not join, while Judge Moore offers a milder disagreement. The overarching point of the dissenting judges, however, is that all elements of the exceptional case determination, including that of objective baselessness, are reviewed for clear error, with deference given to the district court judge on factual determinations.

The Concurring Judges: Objective Baselessness is Reviewed De Novo. Writing in support of the decision not to grant rehearing en banc, Judge Dyk joined by Judge Newman argued that (1) the prior opinions did not involve a dispute between the litigants as to whether objective baselessness is a question of law to be reviewed de novo on appeal; (2) that Supreme Court precedent requires objective baselessness to be treated as a question of law; (3) that sections 284 (willful infringement) and section 285 (exceptional case) should be read as involving the same inquiry with the same standard of review; and (4) that policy supports de novo review of the issue of objective baselessness. Judge Dyk further pointed out that the court is in agreement on most of the legal issues in exceptional case determinations — just not this one.

Substantial Implications. The opinions of the dissenting judges raise two substantial implications. The first is the enhanced uncertainty surrounding the standard of review for exceptional case determinations. I read the dissenting judges as saying that not only do they it think the decision not to grant a rehearing en banc was wrong, but that they view the Highmark holding as invalid. Both dissents stress the point that the Highmark holding is inconsistent with the court's prior precedent. Judge Reyna also points out the well-established rule that to the extent a panel's decision on a point of law is inconsistent with an earlier panel's decision on that point, the earlier holding controls. See Reyna Dissent at 4-5. While the court acting en banc can overrule the first panel's holding, a decision not to grant en banc review of the second panel would seem not to be the same as the en banc court actually adopting the second panel's holding. As a result, it may be that the dissenting judges, who now comprise half the voting judges for en banc purposes (and in a month will comprise a majority when Judge Bryson assumes senior status), may not believe themselves bound by the Highmark holding. If this is the case, the split will continue until it is eventually resolved by the en banc Federal Circuit or the Supreme Court.

A second implication is that both Judge Moore and Judge Reyna appear to be skeptical of the court's recent holding in Bard Peripheral Vascular v. W.L. Gore that objective recklessness in a wilfulness determination is subject to de novo review, and are joined by at least two other judges in their skepticism. See, e.g., Moore dissent at 3, n. 1 ("For reasons simlar to those discussed below, this court should also revisit Bard en banc.).

Patenting Animals Produced through Selective Breeding

December 7, 2012PatentAffirmed Without Opinion, anticipationDennis Crouch

By Dennis Crouch

In re Ditto (Fed. Cir. 2012)

In a non-precedential opinion, the Federal Circuit has done it again (ditto) and affirmed the PTO Patent Board decision rejecting patentability. Here, the court affirmed that Mr. Ditto’s claimed cross between a bobcat and a domestic cat is anticipated by the prior art. In particular, the Pixie-Bob has been around for some time.

In the appeal, the USPTO solicitor also argued that the cat claims were all “patent-ineligible because they encompass a product of nature.” Here, the “product of nature” argument is based upon the fact that a domestic cat and bobcat can and will “naturally” mate without further human intervention. However, the Solicitor did distinguish this case from the patenting of animals with particular traits developed through a selective breeding process. An example of this is U.S. Patent No. 5,602,302 (Mikami) that claims a bronchial hypersensitive guinea pig created by brother-sister mating of guinea pigs identified as hypersensitive. In distinguishing the ‘302 patent, the Solicitor wrote that:

the claims of the Ditto application do not demonstrate how the claimed cat breed is a product of human intervention. The claims include no detail regarding how the cats are bred, what traits are desired for breeding, or what results are expected. All that is required is that a “purebred cat” is produced by mating a bobcat, lynx, or bobcat lynx with a domestic cat. Id. Moreover, … the specification fails to provide detail regarding what kind of characteristics or traits are required in the claimed “purebred” cat. While Ditto argues that there is no difference between the [patented] guinea pig … and Ditto’s cat, the Mikami patent is different from Ditto’s application in significant ways: Mikami discloses a specific breeding process used to prepare guinea pigs with a particular trait, while the Ditto application requires “[n]o specific amount or type of breeding” and “the breeding program may terminate upon identification of any desired effect.” In short, unlike Ditto’s application, Mikami’s claims recite a specific desired trait and Mikami’s patent discloses a specific method of breeding used to obtain that trait, distinguishing Mikami’s claimed guinea pigs from those in nature.

In its decision, the Federal Circuit refused to decide the subject matter eligibility question and instead affirmed on grounds of anticipation. The court simply wrote that ” we do not reach its section 101 rejection.” In this case, the court followed the course that Professor Merges and I suggested in or 2010 article on the avoidance doctrine. Some on the court have argued instead that Section 101 questions should be treated as antecedent questions that cannot be avoided.

Patents Encompassing a Human Organism

Suing the USPTO for Issuing Bad Patents

December 7, 2012PatentDennis Crouch

Pregis v. Kappos and Free-Flow Packaging (Fed. Cir. 2012)

Pregis was bothered by its competitor Free-Flow's air-packaging patents and so, in 2009, Pregis sued Free-Flow for declaratory judgment of invalidity and non-infringement. In the same lawsuit, Pregis also sued the USPTO in order to prevent the agency from issuing two of Free-Flow's pending applications. When those two patents issued, Pregis amended its complaint to allege that the PTO's action in issuing the patents was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." Under the Administrative Procedures Act (APA), Pregis argued, such an action should be nullified by the court.

The district court rejected those claims for lack of subject matter jurisdiction – holding that "the Patent Act and its own scheme clearly expresses Congress' intent to preclude putative third party infringers from seeking judicial review" under the APA of PTO decisions to issue patents.

On appeal, the Federal Circuit affirmed the dismissal – noting that its own prior precedent already holds "that apotential infringer cannot sue the PTO under the APA to attack the validity of an issued patent." See Syntex (U.S.A.) Inc. v. United States Patent & Trademark Office, 882 F.2d 1570 (Fed. Cir. 1989) and Animal Legal Defense Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991).

We affirm the district court's dismissal of Pregis' APA claims and hold that a third party cannot sue the PTO under the APA to challenge a PTO decision to issue a patent. The comprehensive legislative scheme of the Patent Act "preclude[s] judicial review" of the reasoning of PTO decisions to issue patents after examination under 35 U.S.C. § 131, and competitors have an "adequate remedy in a court" for the issuance of invalid patents. 5 U.S.C. §§ 701(a)(1), 704.

It is not surprising that this creative lawyering was orchestrated by the pair of James Dabney and Professor John Duffy who previously orchestrated the KSR decision. Although the opinion by Judge Reyna is well written it leaves the court open to the argument that this is a patent law specific and protectionist decision that should instead be based on a broader look at how when and where APA challenges are allowed. I suspect that we can look forward to a petition for a writ of certiori in the upcoming months.

Request for Comments on Request for Continued Examination (RCE) Practice

December 6, 2012PatentUSPTO DirectorDennis Crouch

By Dennis Crouch

USPTO Deputy Director Teresa Stanek Rea recently published a notice and RFC on the future of Requests for Continued Examination (RCEs). In my view, RCEs are not particularly a problem per se, but instead RCEs are a symptom of a troubled application-examination complex that typically requires multiple rounds of negotiation before the applicant and examiner agree on the appropriate scope of protection. That said, RCEs serve as a good breakpoint for discussion because they are filed after at least two formal rounds of rejection. Reducing the number of rounds of formal negotiation is an important key reaching the PTO's stated goals of pendency reduction. RCEs also win the attention of applicants (because of the fees due) and PTO management (because of the credits owed to examiners). Importantly, the current user fee charged for an RCE does not cover the expected cost of two additional rounds of examination.

In 2007 the USPTO unsuccessfully pushed a set of rules that would have limited the number of RCEs that could be filed in a given application. Upon taking office as USPTO Director in 2009, David Kappos withdrew those publicly maligned rules. That decision returned us to our current baseline that allows a patent applicant the right to file an unlimited number of RCEs. If the recent PTA case of Exelixis holds, a patent's term will be generously extended based on a guarantee patenting within three-years – even when multiple RCEs are filed by the patent applicant.

Over the past three years, RCE filings have remained fairly steady – around 155,000 per year. However, because of a strategic decision to preferentially focus on unexamined applications, the backlog of RCE applications has grown to over 90,000 pending applications. Deputy Director Rea writes that the RCE backlog "diverts resources away from the examination of new applications." Part of limited growth of RCE filings is likely due to some efforts by the PTO such as the Quick Path Information Disclosure Statement (QPIDS) pilot program and the After Final Consideration Pilot (AFCP). However, the PTO does not see these programs as sufficient.

The PTO has identified that there is a problem, but is asking for input from the patent law community in order to identify appropriate solutions. As guidance, the PTO has generated the following questions, noting that "the Office is particularly interested in receiving information that facilitates an understanding of filing strategies related to RCEs."

If within your practice you file a higher or lower number of RCEs for certain clients or areas of technology as compared to others, what factor(s) can you identify for the difference in filings?
What change(s), if any, in Office procedure(s) or regulation(s) would reduce your need to file RCEs?
What effect(s), if any, does the Office's interview practice have on your decision to file an RCE?
If, on average, interviews with examiners lead you to file fewer RCEs, at what point during prosecution do interviews most regularly produce this effect?
What actions could be taken by either the Office or applicants to reduce the need to file evidence (not including an IDS) after a final rejection?
When considering how to respond to a final rejection, what factor(s) cause you to favor the filing of an RCE?
When considering how to respond to a final rejection, what factor(s) cause you to favor the filing of an amendment after final (37 CFR 1.116)?
Was your after final practice impacted by the Office's change to the order of examination of RCEs in November 2009? If so, how?
How does client preference drive your decision to file an RCE or other response after final?
What strategy/strategies do you employ to avoid RCEs?
Do you have other reasons for filing an RCE that you would like to share?

In addition to the normal written comment submission process, the PTO is also accepting comment through a collaborative tool known as IdeaScale that allows for comments on comments. See http://www.uspto.gov/patents/init_events/rce_outreach.jsp.

Patent Application Outcomes: Rising Allowances and Falling Abandonments

December 6, 2012PatentAIA Trials, PGR, USPTO DirectorDennis Crouch

By Dennis Crouch

The USPTO patent allowance rate has seen a steady rise since David Kappos took the helm as Director in 2009. Early-on Kappos announced that his version of patent quality meant that bad patents should not issue and that right-sized inventions should be allowed. That statement was a shift from the prior administration that publicly focused solely on the side of avoiding the issuance of bad patents. Kappos' ideas and theories have permeated the USPTO, both in its culture and in performance reviews.

The first chart below shows a monthly time series of the USPTO allowance rate.

The allowance rate is calculated based solely upon the number of applications that either (1) receiving a notice-of-allowance or (2) being abandoned within a single month. The allowance rate is calculated as the percentage of allowances within that that total number of disposals. Allowance-Rate = Number-Allowed / (Number-Allowed + Number-Abandoned).

I should note that, although data includes utility, plant, and reissue applications, there are not enough plant or reissue applications to shift the results. At times the USPTO reports count RCE filings as abandonments. For the figure above I ignored RCE filings – meaning that they do not directly impact the allowance rate shown below. Because RCEs are filed in so many applications, counting RCEs as abandonments would dramatically push-down the allowance rate. Conversely, there is also a credible argument that the allowance rate shown above is unduly low because a substantial percentage of abandoned applications are re-filed in the form of a continuation or divisional application. If the allowance rate is calculated as the percentage of US patent families stemming from a non-provisional application that include at least one issued patent, then the allowance rate would likely be closer to 80%.

In several recent posts, I have written about the reality that the USPTO is issuing more patents than ever – a historical high. Up to now, my working hypothesis has been that the increased allowance rate represents only a minor explanation for the increase in the number of issued patents. Rather, my hypothesis has been that there has generally been an increased throughput that means both more allowances and more abandonments. However, my thoughts have shifted in the process of rethinking the substantial increase in allowance rates demonstrated above.

The chart below shows the number of allowances compared with the number of abandoned applications for each fiscal year.

As is apparent, increase in throughput at the USPTO is entirely accounted-for by an increase in the number of allowances. The chart below divides the data on a monthly basis (but uses a six-month average because of a large amount of monthly variance).

I like to think of patent prosecution as a negotiation between the patent applicant and the USPTO over the proper claim scope and patent coverage. As with any negotiation, changes in the practice of one party will normally result in changes to the practice of the other party. We have public statements from Director Kappos suggesting intention to move toward a higher allowance rate, but it is unclear whether part of the shift is also due to changes in practice by patent attorneys. One change in practice that I suggested earlier is the general increase in the number of provisional patent applications as well as foreign applications. I have a working hypothesis that applicants have increased their reliance on those tools as mechanisms to self-select the best applications for filing and abandoning the patent even before filing a non-provisional. Still, it is cognitively difficult for me to separate the clear shift in the data in 2010 from the cotemporaneous statements and managerial moves by Director Kappos.

It will be interesting to see how this chart develops over the next two years as the next PTO director takes over and provides her own imprimatur.

Guest Post:Claim Construction Catch-22: Why the Supreme Court Should Grant Certiorari in Retractable Technologies

December 5, 2012PatentAIA Trials, Claim Construction, Federal Circuit En Banc, PGR, Supreme CourtJason Rantanen

Guest Post by Peter S. Menell (UC Berkeley School of Law) and Jonas Anderson (American University Washington College of Law).

After nearly two decades of lower court confusion, there was a glimmer of hope that the Supreme Court might intervene to clarify the standard of appellate review of claim constructions determinations. Following strongly worded dissents from denial of rehearing en banc, the Supreme Court invited the Solicitor General’s views on the certiorari petition in Retractable Technologies, Inc. v. Becton, Dickinson and Co., 653 F.3d 1296 (Fed. Cir. 2011), denial of rehearing en banc, 659 F.3d 1369 (2012).

In its filing last week, the Solicitor General has unfortunately recommended against Supreme Court review principally on the ground that Retractable Technologies is not an “appropriate vehicle” because the district court did not specifically rely upon factual findings. Therein lies the Catch-22. No district court since at least the Federal Circuit’s 1998 en banc Cybor ruling has been willing to make factual findings in construing patent claims for the pragmatic, logical, and legal reason that to do so would contradict Federal Circuit law that claim construction is a pure question of law.

As we have chronicled at length elsewhere, see Anderson & Menell, From De Novo Review to Informal Deference: An Historical, Empirical, and Normative Analysis of the Standard of Appellate Review for Patent Claim Construction (2012) available at <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2150360>, Anderson & Menell, Appellate Review of Patent Claim Construction: The Reality and Wisdom of a “Mongrel” Standard the Federal Circuit, the Federal Circuit has struggled mightily over the standard of appellate review since the Markman case. A slim majority adheres to de novo review notwithstanding the Supreme Court’s recognition of the “mongrel” character of claim construction. The confusion has contributed to a high, variable, panel-dependent reversal rate of claim construction determinations. Fearing reversal for relying upon expert testimony, district judges avoid and/or mask use of experts in determining how skilled artisans interpret patent claims. Numerous studies indicate — and district court and several Federal Circuit jurists believe — that the de novo standard has significantly increased the uncertainty and costs of patent litigation, reduced settlement rates, and misapplied the Supreme Court’s Markman ruling.

The SG’s rationale overlooks a critical and unique structural feature of the federal patent system: the Federal Circuit’s exclusive jurisdiction over patent appeals. Circuit splits are not possible on patent issues and district courts throughout the land are bound by the Federal Circuit’s interpretation of patent law. Under the SG’s logic, therefore, the standard of appellate review will not be ripe for Supreme Court review unless a district court defies the Federal Circuit. Such logic nearly guarantees that there will never be an “appropriate vehicle” for considering this issue, notwithstanding the vehement cries for help from Chief Judge Rader, Judge Moore, and Judge O’Malley.

It is possible that the Federal Circuit will eventually revisit this standard on its own, although the historical record does not inspire confidence. As we chronicle in our article, members of the Federal Circuit have repeatedly sought to revisit the de novo standard since the Markman decision to no avail. Meanwhile, district courts and the patent system have endured a doubtful application of the Supreme Court’s Markman ruling, causing substantial disruption and wasted resources.

To avoid the Catch-22, the Supreme Court should view dissents from rehearing en banc in the Federal Circuit as a proxy for a circuit split. Furthermore, the fact that a “split” has festered since the time of Markman strongly indicates that the standard of appellate review is ripe for Supreme Court consideration. The SG has missed these critical points in its assessment of the Retractable Technologies certiorari petition.

The Fox Group v. Cree: Expanding Section 102(g) Prior Art

December 5, 2012PatentJason Rantanen

By Jason Rantanen

The Fox Group, Inc. v. Cree, Inc. (Fed. Cir. 2012) Download 11-1576
Panel: Newman, O'Malley (dissenting-in-part) and Wallach (author)

In The Fox Group, the Federal Circuit substantially expands the scope of prior art under 35 U.S.C. § 102(g). There are two main components of this expansion: the panel's unanimous interpretation of the reduction to practice requirement as not necessitating repeatability and the majority's sharp narrowing of what constitutes abandonment, suppression or concealment.

While Section 102(g) will be eliminated as a category of prior art for patents based on applications filed on or after March 16, 2012, it will continue to apply to a large number of patents for many years to come.

Background: In 1995, Cree grew a low defect silicon carbide (SiC) crystal and sent a sample to a university scientist for analysis. The scientist advised Cree that there was an exceptionally low defect area in this sample. That same year, a Cree researcher showed a cropped image of the sample and described its low defect nature, stating that it had an area with less than 1,000 dislocations per square centimeter and no micropipes. The researcher also described the high quality of the sample in an article published in 1996 that included an image of an X-ray topograph of the crystal. The article did not describe how the crystal was created and there was no evidence in the record that Cree took any steps towards commercialization prior to 2004.

Fox is the assignee of Patent No. 6,562,130, filed on May 4, 2001. The '130 patent claims a low defect SiC crystal having, among other properties, a density of dislocations per square centimeter of less than 10⁴ and a density of micropipes of less than 10 per square centimter. Fox sued Cree for infringement of the '130 patent in 2010 and Cree responded by arguing that its prior invention rendered the '130 patent invalid under 102(g). The district court granted summary judgment in favor of Cree and Fox appealed.

Under 35 U.S.C. § 102(g)(2), a person is not entitled to a patent if:

before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

There are two core requirement for 102(g) prior art. First, the challenger must establish that the alleged prior inventor reduced its invention to practice first or, alternately, was the first party to conceive of the invention and then exercised reasonable diligence in reducing that invention to practice. Second, the prior inventor must not have abandonned, suppressed, or concealed the invention. The court's opinion addresses both.

Reduction to Practice: The court found that Cree satisfied the first element of prior inventorship by reducing the invention to practice in 1995 by (1) creating the crystal sample (which met all the limitations of the asserted claims of the '130 patent) and (2) recognizing that it was a low-defect crystal. In reaching this conclusion, the CAFC rejected Fox's argument that reduction to practice of a product invention requires that the the prior inventor "must prove repeatabliity to prove that it had reduced the invention to practice." Slip Op. at 9. In other words, it was sufficient that Cree had created the crystal once; there was no requirement for it to prove that it could be done again.

Suppresssion or Concealment: The more significant aspect of the opinion relates to the issue of suppression or concealment. Here, Fox argued that Cree suppressed or concealed its invention because it (1) did not file a patent application for its Kyoto Wafer, (2) did not present proof of commercialization that would allow for reverse engineering, and (3) did not otherwise provide adequate disclosure because it failed to reveal the details of the growth conditions under which boule G0259 was made." Slip Op. at 10.

In rejecting Fox's argument, Judges Wallach and Newman concluded that disclosure of an product invention to the public requires only that the inventor make the existence of its invention known to the public. (Note: the majority does not actually use the word "existence of"; however, in my view that's the only logical way to read the opinion, given that this is the only information that Cree disclosed). Provided that general details about the invention are given to the public, it is irrelevant whether or not an invention is commercialized or a patent is filed. "Filing a patent application and commercializing a product are only two convenient ways of proving an invention has been disclosed to the public." Slip Op. at 11. Here, it was sufficient that Cree sent samples of its boule for testing by Dr. Dudley, an outside evaluator, the product itself (though not the process used to make it) was described in a published paper, and knowledge of the product was disseminated outside of the company in the Kyoto presentation." Id. The crux of the majority's reasoning:

The purpose of § 102(g) is to bar an inventor from receiving a patent on an invention that has already been invented and was not abandoned, suppressed, or concealed. Apotex, 254 F.3d at 1038-39. If the patent claimed a process, then a prior inventor would have to prove prior invention of the process which had not been abandoned, suppressed, or concealed, to invalidate the patent under § 102(g). “Cree promptly and publicly disclosed its findings concerning the low defect properties of the SiC material from which the [Kyoto Wafer] was cut through a presentation at the 1995 International Conference and a published paper on the subject.” Fox Group, 819 F. Supp. 2d at 535. Accordingly, Cree promptly made its invention, a SiC material with low defect densities, known to the public. Fox has not produced sufficient evidence raising any genuine issues of material fact to show that Cree suppressed or concealed its invention.

Writing in dissent, Judge O'Malley emphatically disagreed with the majority on this issue:

Because Cree made the fact of its invention known to the public, the majority, like the district court before it, concludes that Fox can never establish abandonment, suppression, or concealment. Under the majority’s approach, an inventor could publicly announce that it made a product, with no explanation as to how it did so, and then hide it away in a closet indefinitely. As long as the inventor describes a product in general terms, the inventor cannot, according to the majority, be accused of abandoning, suppressing, or concealing the invention.

The majority’s approach cannot be the law. If a prior inventor could disclose the mere existence of a product and take no further action for nine years, the concept of abandonment, suppression, or concealment would be rendered meaningless. Consistent with our prior case law, where there is no enabling written disclosure, there must be evidence that the prior inventor timely made its
invention available to the public in some other way – e.g., through public use, commercialization, or filing a patent application claiming the invention. Such a requirement is consistent with § 102(g)’s general goal of giving the public the benefit of the invention. See Checkpoint, 54 F.3d at
761 (Section 102(g) “encourages prompt public disclosure of an invention by penalizing the unexcused delay or failure of a first inventor to share the ‘benefit of the knowledge of [the] invention’ with the public after the invention has been completed.” (citation omitted)).

Judge O'Malley further pointed out that this case was before the court on a grant of summary judgment of invalidity; in light of this posture, it was especially inappropriate to hold that Cree had not suppressed or concealed the invention. In particular, Judge O'Malley pointed to evidence indicating that Cree had a broad policy of concealing its production methods, and in light of that policy took specific steps to avoid enabling its competitors to make the invention.

Comment: In my view, the majority erred in concluding that merely disclosing general information about the invention suffices to preclude any subsequent inventor from obtaining a patent. In addition to Judge O'Malley's reasoning why this cannot be correct (including an analysis of why it is inconsistent with the CAFC's precedent), the effect of the majority's holding is to cause 102(g)(2) to swallow much of the remainder of Section 102. Under the majority's reasoning, any disclosure about an invention, no matter how superficial or non-enabling, becomes potential prior art as long as there is secret information about a reduction to practice of the invention. The effect of the court's opinion is to incentivize lower quality, non-enabling disclosures of information as, in the near term at least, this is all that is apparently necessary to defeat patentability.

Patent Law Treaties Implementation Act of 2012

December 5, 2012PatentDennis Crouch

By Dennis Crouch

It appears that the Patent Law Treaties Implementation Act of 2012 will soon become law. The U.S. Senate passed the bill earlier this year (S. 3486) by a unanimous vote and this morning the House passed the identical version in a voice vote. President Obama is expected to sign the bill into law within the next two weeks.

The Bill provides the domestic legislation required to implement both: (1) The Hague Agreement Concerning International Registration of Industrial Designs ("Hague Agreement") and (2) The Patent Law Treaty ("PLT"). Both treaties were ratified by the Senate in 2007.

In discussing the pending bill last week, I wrote that the USPTO has lobbied for passage of this bill and provided the original draft legislation.

On the industrial design front, substantive elements of the changed law include (1) an extension of the design patent term by an additional year with the resulting term being fifteen years from issuance; (2) allowing applicants to include up to 100 different design inventions within a single international design application; and (3) creation of provisional rights as of the publication date of the international application. About 45 countries, including virtually all of Europe have signed-on to the Hague Agreement (Geneva Act).

A major change with regard to the patent law treaty is that the law would now allow for revival of unintentionally abandoned international applications.

Rader: Reviving the Doctrine of Equivalents

December 5, 2012PatentClaim ConstructionDennis Crouch

By Dennis Crouch

John Deere v. Bush Hog (Fed. Cir. 2012)

When I was a kid, we had a “John Deere Bush Hog” for mowing pasture land (AKA “bush hogging”). Several years later I learned that we really had a John Deere brand rotary cutter. The Bush Hog company also sells its own brand of rotary cutter. In this case, Deere sued Bush Hog for infringing its U.S. Patent No. 6,052,980. That patent claims a deck for a rotary cutter that is more easily cleanable.

One claim limitation required that an upper deck wall be sloped “rearwardly from said central portion into engagement with, and being secured to, said lower deck wall.” Apparently in the accused Bush Hog device, the upper deck wall does not directly contact the lower deck wall. As per usual, that infringement issue was posed as a claim construction question determined by the judge as a matter of law. Here, the district court judge ruled that the “into engagement with” limitation required direct contact and that there could therefore be no literal infringement of the claim. When pressed on the doctrine of equivalents, the district court revived the vitiation exception to the DOE and ruled that the claims could not be extend to cover no direct contact when they claim the exact opposite of direct contact.

On appeal, the Federal Circuit doubly rejected the district court opinion.

On claim construction, the court ruled that “engagement” between two metal sheets does not require direct contact, but may instead be facilitated through indirect contact. The court demonstrated this conclusion with reference to a drawing from the Deere patent where a filler plate (shown in blue) provides the engagement between the upper deck (yellow) and the lower deck (red).

On Vitiation of the Doctrine of Equivalents: Although dicta, Judge Rader continued his opinion a repudiation of the district court’s mistreatment of the vitiation doctrine. Of course, the doctrine is regularly mistreated because it is lacking in logical sense. The doctrine of equivalents allows a patentee to capture some amount of scope that goes beyond the literal scope of the claims as written. As a matter of course, this always involves rejecting the literal bounds created by one or more claim limitation. However, the doctrine of vitiation rises to stop a patentee from applying the DOE in a way that negates the meaning of one or more claim term. In his opinion, Chief Judge Rader attempts to cut through this knot and cautions against the programmatic use of the vitiation doctrine:

Courts should be cautious not to shortcut this inquiry by identifying a “binary” choice in which an element is either present or “not present.” Stated otherwise, the vitiation test cannot be satisfied by simply noting that an element is missing from the claimed structure or process because the doctrine of equivalents, by definition, recognizes that an element is missing that must be supplied by the equivalent substitute. If mere observation of a missing element could satisfy the vitiation requirement, this “exception” would swallow the rule. . . . [P]reserving the doctrine in its proper narrowed context requires a court to examine the fundamental question of whether there is a genuine factual issue that the accused device, while literally omitting a claim element, nonetheless incorporates an equivalent structure.

Chief Judge Rader goes on to explain how the suggested use of the DOE in this case likely does not vitiate the relevant claim terms.

In this case, the district court construed “contact” to require “direct contact,” and thus found that allowing “no direct contact” would vitiate the court’s construction. Yet, a reasonable jury could find that a small spacer connecting the upper and lower deck walls represents an insubstantial difference from direct contact. See TurboCare Div. of Demag Delaval Turbomachinery Corp. v. Gen. Elec. Co., 264 F.3d 1111, 1124 (Fed. Cir. 2001) (construing claim term “contact” to require “touching” but remanding question of whether “indirect contact” could be equivalent). Thus, the trial court erred by invoking the vitiation

Rader’s basic idea here an attempt to move away from the technical limitations that have pushed the DOE toward obscurity over the past several years. In his view, vitiation should not be seen as a technical doctrine but instead simply a tool for district courts to use when the claim language is so far from the asserted equivalent that no reasonable jury would find infringement.

On remand, the new claim construction breathes new life into Deere’s infringement case.

Solicitor General to the Supreme Court: Deny Cert. in Retractable Technologies

December 5, 2012PatentAIA Trials, Claim Construction, Federal Circuit En Banc, PGR, Supreme Court, Written DescriptionDennis Crouch

Guest Post by Andrew Dhuey

The U.S. Solicitor General has recommended that the Supreme Court deny certiorari in Retractable Technologies, Inc. v. Becton, Dickinson and Co. The key issues in Retractable concern i) the role of the specification in interpreting patent claim language and ii) the level of deference, if any, the Federal Circuit should give to trial court claim constructions. The SG's recommendation is a setback for those who hope the Court will address these two fundamental questions of patent law and procedure. In recent years, the Court has followed about 80% of the SG's recommendations that certiorari be denied. See, e.g., p. 276 of this 2009 George Mason Law Review article.

A Supreme Court decision in Retractable could fundamentally alter the way trial courts construe patent claims and how the Federal Circuit reviews claim constructions. If the Court decides to review the case, it might limit or overrule the Federal Circuit's en banc decisions in both Phillips v. AWH Corp. and Cybor Corp. v. FAS Techs., Inc. Or the Court might deny review and leave the status quo intact.

Pertinent Facts and Procedural History

Retractable Technologies, Inc. ("RTI") and Becton, Dickinson ("BD") manufacture retractable medical syringes that are designed to reduce the risk of needlestick injuries and infections to health care workers. RTI accuses BD of infringing U.S. Patents 5,632,733 and 7,351,224. The disputed issue of greatest precedential importance concerns the meaning of the claim term "body" as it is used in both patents to describe the structure of RTI's claimed retractable syringe. BD's accused syringe has a two-piece body, so the question of literal infringement hinges largely on whether "body" is limited to a one-piece structure.

Judge David Folsom (E.D. Tex.) sided with RTI on the construction of "body" as not being limited to a single-piece structure. Judge Folsom gave the construction short treatment in his claim construction order, adopting the reasoning and conclusion of his fellow Eastern District of Texas jurist, Leonard Davis, who construed the same term in related patents in earlier litigation RTI brought against New Medical Technologies.

In the earlier case, Judge Davis observed that the specifications of the patents-in-suit did suggest a one-piece structure limitation. Still, he opined, the claims themselves pointed in the opposite direction:

In sum, the Court finds that "body" . . . simply means "hollow outer structure that houses the syringe's components." . . . The only construction of "body" that is consistent with the . . . claim language is a structure that may be one or more pieces. This reading is consistent with the specification, despite some indications to the contrary.

A divided Federal Circuit panel reversed based on the district court's claim construction of "body". Circuit Judge Alan Lourie wrote the Court's opinion, joined by Senior Circuit Judge S. Jay Plager. The majority "agree[d] with BD that the claimed 'body' is limited to a one-piece structure in light of the specifications." Chief Judge Randall Rader dissented: "Because the language of the claims make clear that 'body' does not contain [a one-piece structural] limitation, and it is improper to import limitations from the specification into the claims, I respectfully dissent."

Judge Plager wrote a short concurrence to underscore the majority's position that claims must not be interpreted in ways that go beyond what the inventor disclosed:

However much desired by the claim drafters, who want claims that serve as business weapons and litigation threats … the claims cannot go beyond the actual invention that entitles the inventor to a patent. For that we look to the written description.

RTI petitioned for rehearing en banc, which the Court denied. Circuit Judge Kimberly Moore, joined by Chief Judge Rader, dissented from the denial of the petition. Judge Moore opined that the panel majority "attempt[ed] to rewrite the claims to better conform to what it discerns is the 'invention' of the patent instead of construing the language of the claim." This ran afoul of proper claim construction under Phillips, she contended, and it has happened with such frequency to warrant en banc review.

Judge Moore also suggested that the Court should reconsider Cybor en banc.

We have waited five years (since Amgen Inc. v. Hoechst Marion Roussel, Inc., 469 F.3d 1039 (Fed. Cir. 2006), where six judges claimed a willingness to review Cybor) for that ever-elusive perfect vehicle to review the issue of deference to the district court's claim construction. The Supreme Court held that claim construction was a "mongrel practice." Markman v. Westview Instruments, Inc., 517 U.S. 370, 378 (1996). As such it is clearly a mixed question of law and fact and deference should be given to the factual parts.

Circuit Judge Kathleen O'Malley also dissented from the denial of RTI's petition, but her concern was limited to the de novo standard of review mandated by Cybor.

The SG's Denial Recommendation

In response to RTI's petition for a writ of certiorari, the Supreme Court solicited the SG's views on whether to review the case. The SG recommended a denial of the petition, opining that "[n]either of the questions set forth in the petition for a writ of certiorari warrants review in this case."

On the first question concerning the role of the specification in interpreting patent claim language, the SG contends that there is general doctrinal agreement among Federal Circuit judges:

There is broad agreement among the judges on the Federal Circuit about the principles of law that govern that inquiry, and the Federal Circuit's claim-construction jurisprudence is fully consistent with this Court's precedents. Although different judges sometimes disagree about the proper interpretation of particular claim terms, that is simply the inevitable result of case-by-case adjudication, not a reason for this Court's intervention.

Regarding the second question about the standard of appellate review for claim constructions, the SG agreed that the issue might warrant review in a future case, but not this one:

In an appropriate case, this Court's intervention might be warranted to determine the appropriate standard of review when a district court makes subsidiary factual findings in the course of construing a disputed patent claim. The district court in this case, however, did not make any factual findings about the meaning of the term "body," the state of the relevant art, or any other matter…. Nor did the court consider any expert testimony, make any credibility determinations, or receive any documentary evidence. Rather, the district court's hearing consisted entirely of the oral argument of counsel regarding the claim language, the specification, and pertinent legal authorities…. Because the district court's claim-construction ruling did not depend on the resolution of any questions of fact, this case does not present the question whether a claim-construction ruling that is predicated on factual determinations should nevertheless be subject entirely to de novo appellate review.

RTI may now file a brief responding to the SG's recommendation. The Court will likely decide whether to grant or deny RTI's petition in one of its January conferences.

Andrew Dhuey is an appellate lawyer in Berkeley, California.

December 4, 2012PatentobviousnessDennis Crouch

I can now say with almost complete confidence that the USPTO will grant over 250,000 utility patents in calendar year 2012. This will obviously be a record. The prior record was set in 2011 with just under 225,000 utility patents.

Patent Exhaustion for GM Seeds

December 4, 2012PatentDennis Crouch

By Dennis Crouch

Bowman v. Monsanto (SCOTUS 2012) Download 11-796 ts

The farmer Vernon Bowman has filed his opening merits brief explaining his exhaustion defense against Monsanto's patent infringement charges. The case involves Monsanto's patented soybeans that have been genetically modified to be resistant to the broadleaf herbicide glyphosate, i.e., RoundUp Ready. U.S. Patent Nos. 5,352,605 and RE 39,247.

According to the statement of facts, Bowman purchased genetically modified soybeans on the commodity markets from a third party vender. It is assumed for the case that those seeds were grown and sold by farmers pursuant to a contract with Monsanto. As such, under traditional patent exhaustion principles, Monsanto's patents conferred no more control over the use, destruction, or distribution of those soybeans. This would have allowed Bowman to use the soybeans as feed or for biodiesel. However, Bowman chose to use the soybeans as seeds to grow a second generation of soybeans. Because soybeans self-fertilize, beans from the second and subsequent generations are genetically identical to the first generation and thus fit within the scope of Monsanto's patents. Although perhaps irrelevant to this case, Bowman admittedly purchased the commodity seeds with the hope that they were glyphosate resistant and then relied upon glyphosate resistance in the growing process. At the same time, he took pains to ensure that he was not violating any contract with Monsanto or pushing the grain dealer to violate such a contract.

Monsanto sued Bowman for patent infringement and won.

Exhaustion: Both the district court and the Court of Appeals for the Federal Circuit held that the exhaustion doctrine does not apply to new copies of a patented product created by the accused infringer. Monsanto sees its seed patents as akin to a book covered by copyright. When the publisher sells copies of the book, the copyright in those copies is exhausted — allowing the purchaser to resell or distribute the copies without reprisal. However, there is a major limitation to the exhaustion doctrine — copyright still protects against using the legitimate copy to make further unauthorized copies. For Monsanto, the fact that the patent is exhausted vis-à-vis a first generation of seeds says nothing about whether the patent is exhausted for the second or subsequent generation. Unlike the copyright laws, the patent law of exhaustion has not been codified, but the two doctrines are largely in step. The Supreme Court is currently considering a copyright exhaustion case, Kirtsaeng v. John Wiley & Sons, Inc. However, the outcome of that case is unlikely to impact Bowman's.

Monsanto also relies upon a property-law defense that limitations-on-use placed on the sale of patented goods operate as conditions that also bind subsequent purchasers. Here the original farmers were bound by contract not to replant the soybeans. Following the rule of derivative title, Monsanto argued (and the lower courts agreed) that "farmers could not convey to the grain dealers what they did not possess themselves." And further, that the grain dealers could only transfer to Bowman as much right as they possessed — that right being ownership of the soybeans without the right to use them as seed.

Pathway to Victory: Bowman's pathway to a Supreme Court victory seems to rest on two necessary holdings: (1) that the patent rights were fully exhausted in the seeds Bowman purchased and (2) that the exhaustion applies to subsequent generations of seeds. In my view, the first principle is will be easier to accomplish. The second is more difficult.

In Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), the Supreme Court confirmed that "[t]he longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item." The correct view is here is that a condition on use does not bind subsequent purchasers of personalty unless those buyers agree by contract to be so bound. This is the ordinary rule that courts follow involving personal property and I see no reason to change that rule based upon the fact that the personal property happens to be covered by a patent.

Subsequent Copies: The fact that a patented product is the subject of a legitimate sale that exhausts the patent rights does not give the purchaser the right to use that original as the source for generating subsequent copies. Rather, the creation of those additional copies will be deemed counterfeit and infringing. Bowman does not challenge these basic principles. Rather, Bowman argues that soybeans are different because they are self-replicating seeds. Bowman writes:

If patent rights in seeds sold in an authorized sale are exhausted, patent rights in seeds grown by lawful planting must be exhausted as well. Due to the self-replicating nature of the invention, subsequent generations of seeds are embodied in previous generations . . . because seeds will self-replicate by normal use.

The farmers that I know largely side with Bowman on the issues, but they would quarrel with the idea of self-replication. In fact, farmers do an incredible about of work to grow a commercially viable crop. At a minimum for a good crop, the seeds need to be planted in sufficiently fertilized soil, watered (hopefully by rain), weeded (perhaps with glyphosate), and harvested. The timing must be right to ensure sufficient light and heat, and the fields must be protected from invading wildlife. In this sense, Bowman's statement that "Roundup Ready® seeds have been engineered to include everything one needs to practice the invention" is disingenuous. In any event, it takes much more outside input to grow a second generation of soybeans than it does to distribute electronic copies of my copyrighted writings or deliver electronic copies of non-patent prior art to the USPTO. In fact, we teach in law school that the ease of replication is an important factor in understanding the role of intellectual property rights. In an e-mail, David Snively, executive vice president and general counsel for Monsanto agrees with this point, writing that the "patent system protects – and should protect – the rights to easily replicated technologies like herbicide-tolerant seeds, just as it does for those who invent computers or life-saving medicines."

Perhaps the self-replication difference is not about energy input, but more about the nature of the product (a living organism in the form of a seed) and the fact that living organisms reproduce as part of their natural life cycle. Monsanto added an important element to its soybeans (glyphosate resistance), but Monsanto started with an incredible life form with the ability to reproduce in our natural world. Monsanto did not change or enhance any of those reproductive abilities and its attempt to control reproduction is could be seen as akin to the improper tying arguments. The fact that Monsanto made a big claim (the seed itself) doesn't change the fact that its contribution is far less than 1% of the genetic material important for a soybean's life cycle.

Finally, the hook on the argument may be that self-replication is the "normal use" of a product. This market expectation is important and could win the day. In the brief, Bowman takes pains to establish that replanting is an important normal use of commodity seeds. It is unclear to me whether the court will buy this factual argument and would be an important gap that could be filled by an amicus filing.

Growing not Making: Bowman also suggests an interesting additional argument – that growing the seeds does not constitute "making" seeds under 35 U.S.C. § 271(a). Bowman writes:

The seeds at issue here will self-replicate or "sprout" unless stored in a controlled manner to prevent this natural occurrence. Humans can (and most often do) assist in the process of self-replication. For instance, Bowman planted Roundup Ready® seeds and treated them with glyphosate. This activity led in part to the creation of new soybeans having the patented Roundup Ready® trait. But it was the planted soybean, not Bowman, that "physically connected" all elements of the claimed invention into an "operable whole."

Referencing and quoting Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). While important, this argument seemingly would not offer a complete win for Bowman because he may also be liable for using or selling the second generation.

One interesting rhetorical element of Bowman's brief is the way that it claims the middle ground by arguing that the court "should not create an exception to the traditional exhaustion doctrine for self-replicating technologies." (Bold in original). The starting point depends upon your perspective and I suspect that Monsanto will have a similar statement arguing that Bowman is asking for the exception.

Monsanto's brief of the merits is due January 16, 2013. Oral arguments and a decision will follow.

H.R. 6621: Proposed Modifications to the America Invents Act of 2011

December 3, 2012PatentAIA Trials, IPR, PGR, Trade SecretsDennis Crouch

On November 30, Rep. Lamar Smith introduced H.R. 6621, a Bill titled "To correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code". Because of its late introduction, the Bill would need to be passed and enacted before the new Congressional session begins in early January. The most likely outcome is that no action will be taken and the Bill will be reintroduced in 2013. A second viable alternative is that the language of the Bill will be included as part of a massive fiscal cliff resolution Bill. The Bill includes a number of interesting elements. In that case, there would be virtually no official debate on the Bill or its contents.

Killing pre-GATT applications: There are currently around 200 applications pending that were filed prior to the 1995 patent term changeover. Once issued, those applications will have a patent term of 17 years from the issuance date. If issued as patents, these applications will likely be disruptive to settled interests in various industries. H.R. 6621 would alter the rules for calculating patent term for any application still pending 1-year from the Bill's implementation date. For those applications, the patent term would be 20 years from filing — meaning that those patents will likely be expired. Because of their pre-URAA filing date, those applications would not be eligible for patent term adjustment. At this point, I am unsure how the change would impact applications whose issuance was delayed due to a US Government secrecy order. On 2012, the USPTO has issued 24 applications with pre-URAA filing dates. Of those, five were delayed due to secrecy orders. One example is Patent No US8,278,099 is interesting in that it claims a monoclonal antibody to human thrombopoietin and is owned by Genentech. Prosecution of that application was delayed for 10 years pending the outcome of an interference in a related case. The application makes clear that the claimed antibody could be either isolated from a human or else prepared by recombinant or synthetic methods. This breadth brings the claimed antibody within the ambit of the Myriad gene patent challenge. If isolated human genes are not patentable what about isolated human antibodies? But I digress.

Post-Grant Dead Zone: Once the AIA is fully implemented, an issued patent will be immediately challengeable through a post-grant review. Then, after a nine-month window, challenges will be available through inter partes review. However, the AIA has bit of an implementation issued because (1) post-grant reviews will only be available for patents issued on applications filed on or after March 16, 2013; (2) inter partes reviews are available for all patents, but only those that have been issued for at least 9-months; and (3) the old inter partes reexaminations are no longer available. This creates something of a dead zone in that for the next couple of years patents will not be challengeable through some inter partes system for the first 9-months. H.R. 6621 would eliminate that 9-month dead zone by allowing inter partes reviews to be filed at any time for applications with an effective filing date before March 16, 2013.

Delaying Inventor's Oath: Section 115(f) of the AIA indicates that an either an oath, substitute statement, or sufficient assignment must be submitted prior to the notice of allowance of a patent application. The amendment would push that deadline back to be "no later than the date on which the issue fee for the patent is paid."

Less Patent Term Adjustment: The current language of Section 154(b) suggests an applicant may begin accumulating PTA as of the filing date of an international PCT application that is later followed by a US national stage application. The proposed amendment would eliminate that option by clarifying that the PTA calculations only begin "commencement of the national stage under section 371 in an international application." The change also provides that the PTO calculate PTA with the issuance rather than at the notice of allowance. The amendment would also clarify that PTA challenges may only be filed in the Eastern District of Virginia.

US as International PCT Office: H.R. 6621 would eliminate 35 U.S.C. 373. That section currently limits who may file international PCT applications at the USPTO. Under current rules, at least one of the inventors or the assignee must be a resident or national of the United States of America.

Sharing Fees Between the Patent and Trademark Side: The AIA requires that, for the most part, fees collected on patents be used to cover "administrative costs of the Office relating to patents" while fees collected on the trademark side be used to cover "administrative costs of the Office relating to trademarks." H.R. 6621 would eliminate that restriction and thus allow patent fees to pay for trademark operations and vice versa.

Derivation Proceedings: The AIA eliminated the ongoing viability of interference proceedings (although some will be pending for years) but created a new beast known as a derivation proceeding. H.R. 6621 would clean up the language for initiated a derivation proceeding under 35 U.S.C. §135(a). I need to think some about the language to understand the substance. I have created a rough mark-up of this language. (/media/docs/2012/12/CompareNewOldDerivation.docx).

Noticeably absent from this bill are changes to clarify the new section 102 or to modify the estoppel provisions of post-grant oppositions. Still pending is the Patent Law Treaties Implementation Act of 2012 and the Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012. In my estimation, the first still has a good chance of passing this term while the second does not.

Myriad at SCOTUS: Early Reaction

December 3, 2012PatentAIA Trials, PGRDennis Crouch

Eileen Kane: "There is a fair chance that the Court could side with the 2010 district court opinion, which found that the "claimed isolated DNA is not markedly different from native DNA as it exists in nature."
Kevin Noonan: "The decision [granting cert] is unsurprising in view of the (relative) specificity of the question presented and the overwhelmingly one-sided nature of the amicus briefing."
Rob Harrison: "It was a bit of a roller coaster day for US biotech Myriad Genetics as it share price plunged 9% on news that the US Supreme Court would be reviewing it '782 patent directed towards the BRACA1 and BRCA2 genes."
Julie Samuels: Myriad's Dangerous Patents and their Negative Impact on Women's Health
John Conley and Dan Vorhaus: "[A]ll we know for certain is that four justices (the minimum number needed to grant certiorari in any case) have something that they want to say about the matter."

Patents Encompassing a Human Organism

December 2, 2012PatentClaim Construction, Licenses, obviousness, USPTO DirectorDennis Crouch

by Dennis Crouch

Ex Parte Kamrava (PTAB 2012), APN 10/080,177 Download 10080177

Most Section 101 subject matter eligibility problems can be cured by integrating the ineligible subject matter with subject matter that is patent eligible. This works because the fact that an invention encompassing some ineligible material does not preclude patentability – as long as the invention also includes sufficient eligible subject matter. Following this theory, the Supreme Court in Diamond v. Diehr, 450 U.S. 175 (1981), agreed that a practical use of a mathematical formula was patentable even though the formula on its own would not have been subject matter eligible.

One exception to the cured-by-integration rule involves the patenting of human organisms. Generally speaking, a patent clam cannot encompasses a human organism and likewise, a claim encompassing an otherwise unpatentable human organism will not become patentable by integrating elements that are subject matter eligible. Following this rule, applicants typically carve-out offending portions of their claims. Thus, recently issued U.S. Patent No. 8,283,517 claims a "transgenic non-human animal" with certain genetic properties that result in alzheimer's-like brain plaques. Likewise, U.S. Patent No. 8,247,644 claims a "method for manufacturing a non-human animal" that is likely to develop a pulmonary tumor. The PTO sees these as subject matter eligible because they have disclaimed any coverage for human animals.

In Kamrava, the patent is generally directed toward a uterine catheter that can be used to deposit a fertilized embryo. Some of the claims also include the embryo as an element of the claim itself with "the catheter … further comprising an embryo in the distal portion." In its November 26, 2012 decision, the Patent Trials and Appeals Board (PTAB) concluded that those claims could not be patentable.

Focusing first on Section 101, the board noted that an embryo is subject matter ineligible because it is a part of the human body. Further, the combination of the ineligible subject matter with the eligible subject matter catheter offers no cure. "To allow one to sidestep 35 U.S.C. §101 by simply pairing in combination patent-ineligible subject matter with patent-eligible subject matter would impermissibly exalt claim strategy (form) over claimed subject matter (substance)." As a second ground of rejection, the Board raised the new Section 33(a) of the Leahy-Smith America Invents Act. That section prohibits the patenting of "a claim directed to or encompassing a human organism."

The PTAB's form-over-substance statement loses significant weight because, in the same paragraph, the Board note that the claims may become eligible by a simple amendment. As the Board notes, on remand to the examiner, applicant can rather easily cure the defect by claiming a catheter "adapted to hold the embryo" rather than claiming a catheter that includes the embryo. The U.S. does grant patents on non-human organisms, such as a genetically modified mouse, soybean, or bacterium. Canada denies patentability on multi-cellular organisms.

The issues presented here have obvious potential ties to the Myriad gene patent case. However, while most practitioners would agree with the idea that human organisms should not be patentable, the bar is much more divided on the question of the patentability of chemical compounds isolated from a human body, and almost all practitioners agree that methods of treating diseases in humans should be patentable. This case is likely most helpful for those supporting Myriad because it indicates that congress and the PTO have both considered the issue and have drawn a line that prohibits certain patents too closely tied to the core of humanity but allows for the patenting of genes.

The language of Section 33(a) was initially pushed by Representative Dave Weldon as a measure to support the sanctity of life. Although Weldon was out of Congress by the time the AIA passed, he spoke on the issue several times. Most poignantly, Weldon spoke on the issues in 2003 after receiving some initial criticism for his proposal.

[S]ome have continued to misrepresent my amendment by claiming it would also prohibit patent claims directed to methods to produce human organisms. Moreover, some incorrectly claim that my amendment would prohibit patents on claims directed to subject matter other than human organisms. This is simply untrue.

What I want to point out is that the U.S. Patent Office has already issued patents on genes, stem cells, animals with human genes, and a host of non-biologic products used by humans, but it has not issued patents on claims directed to human organisms, including human embryos and fetuses. My amendment would not affect the former, but would simply affirm the latter.

At the time, PTO Director James Rogan also submitted a letter to Congress indicating that the language was already "fully consistent with [current PTO] policy." (Note, parallel language has been regularly included in PTO appropriations bills that prohibit the PTO from spending money on issuing patents directed-to or encompassing human organisms.)

These issues will be interesting as we move forward with the gene patent debate. However, the history of patentability limitations suggest that, unless the Supreme Court takes a radical step in its decision, skilled patent attorneys will continue to be able to protect innovations through the patent system.

There is unlikely to be any successful appeal of this case to the Federal Circuit. Importantly, the applicant had not challenged the notion that an embryo is a human organism. Rather, the applicant argued that the examiner had erred in the claim construction and that the proper claim scope did not include the embryo. In addition, the applicant's patent attorneys at Blakeley Sokolof have withrdawn from the representation and Dr. Kamrava's medical license has been revoked.

Can the 271(e)(1) Safe Harbor Help DuPont Escape its $1 Billion Verdict?

December 1, 2012PatentLicensesDennis Crouch

Professor Holman has an interesting new post on his blog involving the ongoing battle between Monsanto, E.I. DuPont, and Pioneer HI-Bred. Earlier this year, a jury concluded that DuPont owed Monsanto $1 billion in reasonable royalty even though DuPont had only done research on its potential product and had never brought it to market.

In post verdict briefing, DuPont is raising an important question of the scope of the Hatch-Waxman Safe Harbor (271(e)(1)). That statute might be called a “fair use” statute in the way that it identifies a class of unauthorized uses of a patented invention and excuses those uses from infringement liability. In particular, the statute allows unlicensed use of a patented invention for purposes “reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

Holman notes that the district court has issued a judgment rejecting the safe harbor for these GM foods. However, certain food additives do count as drugs under FDA rules. The interesting thought is that a greater regulatory scheme monitoring the use of genetically modified organisms would likely result in a broader safe harbor. In my view, the safe harbor is unlikely to apply because GMO foods have been classified in the GRAS category – Generally Regarded as Safe. Holman sees some potential that the Federal Circuit would arrive at the opposite conclusion.

Read: Holman, District Court Rejects Argument that Hatch-Waxman Safe Harbor Applies to Genetically Modified Crops at http://holmansbiotechipblog.blogspot.com/2012/11/district-court-rejects-argument-that.html.

Supreme Court has Granted Cert in the Myriad Case, Question: Are Human Genes Patentable

November 30, 2012PatentSupreme CourtDennis Crouch

by Dennis Crouch

From the get-go, case of AMP v. Myriad appeared to be on its way to the Supreme Court. That fate was furthered by District Court Judge Sweet’s sweeping 2010 ruling in the case. As written, that ruling would have invalidated essentially all gene patents. As predicted, the Federal Circuit reversed and followed its own prior precedent that isolated genes are patentable.

Now, the Supreme Court has granted the petition for writ of certiorari and will hear the case — limited to the single question: “Are human genes patentable?”

I’m sure there will be significant amicus support on both sides. A decision will probably not arrive until the end of the spring term.

Read more on the case.

Update on Supplemental Examination

November 30, 2012Patent, ReexaminationDennis Crouch

by Dennis Crouch

Supplemental Examination has been available as a post-grant option since September 16, 2012. I just received confirmation from the USPTO between Sept 16, 2012 and November 18, 2012, a total of four (4) request for Supplemental Examination have been filed, serial numbers 96/000,004 through 96/000,007.

I discussed the ‘007 application earlier. The remaining applications were apparently defective and thus have not yet been given a filing date.

Tags: Supplemental+Examination

Patent Prosecutors Licensing of Copyrights for Prior Art Submissions

November 29, 2012PatentCopyright, Damages, LicensesDennis Crouch

By Dennis Crouch

CCC v. Oblon Spivak (license agreement)

The Copyright Clearance Center (CCC) is a collective agent for many copyright holders and serves as a one-stop-shop for folks to license copyrights for use. CCC offers licenses to many (perhaps most) of the academic publications (non-patent literature) submitted to the USPTO under the Rule 56 duty of disclosure. In recent years, CCC has implemented a buffet license approach that allows a business to use their entire catalog for a fixed negotiated price.

Until recently, few patent law firms have seen any copyright infringement risk associated non-patent prior art because the copies are most typically obtained from a licensed database and the submission to the PTO and file-copies are both likely fair use and therefore would not constitute copyright infringement. Thus, most firms have developed their its patent prosecution practices with an implicit belief that its prosecution related uses of scientific journal articles are noninfringing uses of the articles. In the spring of 2012, the publisher John Wiley began suing patent law firms – taking the contrary view that (1) making file copies; (2) sharing copies with clients; and (3) submitting copies to the USPTO each constitute actionable copyright infringement. These lawsuits are ongoing.

The CCC license would allow both internal copying and submitting copies to the USPTO, although it does not allow the sharing copies with clients. Of course, these actions were all previously thought to be fair use. Professor Jamie Boyle has an interesting essay from 2007 discussing the problems with this license. His main point is that once we start paying for fair use material it stops being fair use going forward and moves toward a “culture of permission” that, in his view, is normatively bad.

I contacted the CCC folks and received some information from CCC’s General Counsel Frederic Haber. The first point is that the Wiley articles that are the subject of the lawsuits are included within the license (still, the blanket license still does not include sharing articles outside of the firm). The second point is costs. CCC uses a model of basically charging on a per-professional-employee basis. For patent law firms, their current negotiated going rate is around $300 per year per registered attorney. The third point is that the form license includes a waiver of any unasserted claims of past infringement (with the caveat that the waiver only takes effect after one-year of license coverage). The fourth point is that the downside of losing a lawsuit is statutory damages.

Oblon is in a special case because the firm has the highest patent throughput of any firm in the country. Because of that, the firm would have likely been part of any upcoming second round of lawsuits. On that note, Oblon’s Managing Partner Brad Lytle writes that the “license allows us to go about our business and focus our efforts on protecting the intellectual property of our clients.” In other words, the license allows the firm to avoid the annoyance of a lawsuit. The question for firms and attorneys moving forward is (1) whether the fair use argument is sufficient and (2) whether your firm is small enough to fly under-the-radar. And, of course, there is the remaining problem that the license does not allow for the sharing of the articles with folks outside of the firm.

Update: A further communication from the folks at CCC indicates that, although “the repertory license is specifically designed for the internal use of the licensed organization”, “one exception to that general rule is that the licensee may provide individual copies (paper or electronic) to prospects, clients or customers of the licensee in response to requests from those outside people.”