Reviewing PTO Claim Construction: Calls for De Novo Review of Proper Standard

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By Dennis Crouch

Flo Healthcare v. Kappos and Rioux Vision (Fed. Cir. 2012), Inter Partes Reexamination No. 95/000,251.

In an interesting three-way opinion, the Federal Circuit has affirmed the USPTO’s rejection of Flo’s reexamined patent claims. In the process, however, the court provided significant additional guidance for the PTO on when claim elements that do not include the magical word “means” should nevertheless be interpreted as means-plus-function elements. See 35 U.S.C. 112(6). Here, the court found that the claim term “height adjustment mechanism” as used in the context of the patent specification should not be interpreted as a means-plus-function element.

Senior Judge Plager wrote the unanimous majority opinion and also filed a concurring opinion with “additional views” regarding appellate review of PTO claim construction Judge Plager argued that Federal Circuit precedent is unclear:

[W]e now appear to have two contradictory lines of authority on the question of how this court reviews Board claim constructions—a deferential “reasonable” (arbitrary/capricious-type) review, and a no-deference “pure” law type review. [Compare In re Morris, 127 F.3d 1048 (Fed. Cir. 1997) with In re Baker Hughes, 215 F.3d 1297 (Fed. Cir. 2000).] The fact that the APA now governs our review of PTO decisions does not provide guidance on which is the right standard. This is because the APA itself provides one standard for “pure” questions of law—which are reviewed without deference—and different, more deferential, standards for questions of fact and for mixed questions of fact and law.

The question then becomes whether claim construction by the Board is to be considered a question of “pure” law—the way this court treats claim construction in district court litigation under Cybor—and thus to be reviewed without deference; or whether it is something else, a blend of law and fact and judgment—as the Supreme Court said in Markman, a “mongrel practice”—in which case it is at least arguably subject to the “arbitrary and capricious” standard of APA § 706. Interestingly, none of the cases applying the Baker Hughes no-deference standard has paused to explain why that is the preferable standard as a matter of law or policy, or how it relates to the review standard that the Board uses.

Three additional factors weigh relatively in favor of deference toward PTO claim construction decisions even if court claim construction decisions continue to be reviewed de novo. First, claim construction at the PTO is decided initially by technical fact finders (patent examiners) and then by mixed fact/law specialists (PTAB judges). Second, the PTO’s form of claim construction “broadest reasonable construction” is a factual standard as is (virtually) any reasonableness judgment. Finally, the Supreme Court’s placement of decision making authority with a judge rather than a jury (Markman) that led to the Cybor no deference standard is tangential to the PTO’s role in claim construction. The decision makers in patent prosecution are defined by statute and codified rules rather than by the Supreme Court.

Judge Plager does not here suggest that one approach is correct, but does argue in favor of en banc rehearing to provide clear guidance to patentees and others concerned with patent rights. Judge Plager also offers an apology for the confusion since he authored the Morris opinion and was on the Baker Hughes panel.

This case involves a direct challenge to PTO claim construction decisions. The next step removed will involve collateral challenges during infringement litigation. In that case, what deference should be given to PTO conclusions at the time of the patent grant?

Judge Newman also agreed with the majority decision and provided her own additional views on the topic of the “broadest reasonable interpretation” standard used in patent prosecution. Judge Newman argues that the PTO should conduct claim construction applying the same standard as a court would later in litigation. The problem, according to Judge Newman is that the “broadest reasonable interpretation” is being applied as a standard of claim construction whereas it is actually merely an “examination protocol, not a rule of law.”

In its implementation, the examiner starts with a blank slate on which the applicant has described the subject matter he wishes to patent. The examiner is charged with searching the entire world knowledge, and to decide what the applicant is entitled to claim, as a matter of law. See Manual of Patent Examining Procedure §706 (“After the application has been read and the claimed invention understood, a prior art search for the claimed invention is made.”). In this demanding process, the examiner views the applicant’s presentation broadly, in order to assure that all possibly relevant prior art is explored. That is the role of “broadest reasonable interpretation”: it is an examination tool whereby the applicant and the examiner work together to determine and define the “invention” to be claimed.

Regardless of the path used to get there, Judge Newman argues, the claim construction is either correct or it is incorrect and it is the Federal Circuit’s role to make that determination accurately and uniformly. Thus, Judge Newman sees an acute problem in situations such as this case “where the same issue can be finally adjudicated to different appellate outcomes, depending on the tribunal from which it came.” An en banc hearing is also requested to remedy this “pernicious” conflict.

Notes:

  • The infringement lawsuit between these parties was filed in 2007 (the same year as the inter partes reexamination request). That litigation settled in 2010, but there is not a clear mechanism for settling inter partes reexaminations once they get rolling. The new inter partes reviews can be settled.

Citing References at the PTO

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So far in 2012, the USPTO has issued just about 200,000 utility patents. As part of the application process, patent applicants have a duty to identify prior art references that are material to patentability. About 13% of applicants submit no prior art. The median submission is 8 references. However, the data is highly skewed. While most entities submit a relatively small number of references, there are a few entities that submit a large number of references for consideration at the USPTO. Amazingly, the top ten percent of patents (in terms of references cited) are associated with over two-thirds of the seven million prior art citations in this set. Although the median number of references cited by applicants is 8, this skew shifts the average way up to 36 references. The submission of four or five references can be quite helpful. The submission of forty references is unlikely to be helpful (absent a second level search tool). In the past, this has prompted the USPTO to consider mechanisms to place additional burden on applicants who feel the need to submit such a large number of documents for consideration.

Citation also varies by country of origin. The chart below shows average applicant citation count according to assignee home country.

Two recent 101 Cases at the PTAB

Patent, ,

By Dennis Crouch

Ex parte Thomsen (PTAB 2012) (App S.N. 11/314,709)

SAP’s patent claims are directed to a “method to determine statistics for a field of a database table.” In the appeal, the claim in question has three particular steps:

  • determining that the field of the table is associated with a field of a check table;
  • determining a relationship between a number of distinct values of the field in the table and a number of distinct values of the field in the check table; and
  • determining the number of distinct values of the field in the table based on the relationship and on the number of distinct values of the field in the check table.

In its recent decision, the PTAB affirmed the examiner rejection of this claim on statutory subject matter grounds. The panel wrote:

Considering the language of independent claim 1 as a whole, we agree with the Examiner that the process of claim 1 does not meet Bilski‘s “machine or transformation test” and could be performed within the human mind or by a human writing on a piece of paper. The claim recites a number of steps that are not tied to a particular machine — the claim does not recite any machine performing the functions of the steps, e.g., a processor. Nor do these steps transform data into a different state — the claim simply recites: (1) “determining that the field of the table is associated with a field of a check table;” (2) “determining a relationship between a number of distinct values of the field in the table and a number of distinct values of the field in the check table;” and (3) “determining the number of distinct values of the field in the table based on the relationship and on the number of distinct values of the field in the check table. See In re Bilski, 545 F.3d 943, 962-63 (Fed. Cir. 2008) (en banc), aff’d sub nom. Bilski v. Kappos, 130 S.Ct. 3218 (2010).

Here, to the extent any transformation takes place, the transformation is of one type of data into another type of data — (a) determining an association, (b) determining a relationship, and (c) determining a number. This is not a “transformation or reduction of an article into a different state or thing constituting patent-eligible subject matter.” In re Bilski, at 962; see id. at 963-64 (discussing patent-eligible data transformations). More importantly, the claim is entirely devoid of any mention of a “machine.” While Appellant urges that “[t]he claimed database tables, fields and values necessarily involve the use of a computer or machine” in actuality the “determining” steps could be accomplished within one’s mind or utilizing a pen and paper.

Our reviewing court guides that “a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.” CyberSource, 654 F.3d at 1373. Because we conclude that the scope of claim 1’s method steps covers functions that can be performed in the human mind, or by a human using a pen and paper, we conclude that unpatentable abstract mental processes fall within the subject matter of claim 1.

In the past year, the BPAI has similarly cited CyberSource in several dozen cases.

=====

Ex parte Battles (PTAB 2012) (App. S.N. 10/859,029)

HP’s patent application is directed to a “computer-readable medium that stores a program that, when executed by a digital camera causes the camera to perform” various functions associated with a histogram of light information from a photo-sensor on the camera.

The PTAB has affirmed the examiner’s Section 101 rejection – finding that the claim unduly includes patentable subject matter because the computer-readable medium might be a signal.

Appellant contends that the “computer readable medium,” as recited in claim 21, is drawn to statutory subject matter because the computer readable medium is further recited to store programs, and that transitory, propagating signals cannot store programs. We agree with the Examiner that the “computer readable medium,” as recited in claim 21 and as construed in light of the disclosure is drawn to non-statutory subject matter.

In the originally filed disclosure, Appellant discloses, “a ‘computer readable medium’ can be any means that can store, communicate, propagate, or transport the data … [and it] can be, for example, but not limited to … infrared… or propagation medium now known or later developed.” Per the originally filed disclosure, the claimed “computer readable medium” can be a transitory, propagating signal and transitory, propagating signals are ineligible. In re Nuijten, 500 F.3d 1346, 1357 (Fed. Cir. 2007).

Nuijten continues to be regularly cited by the PTAB – with almost 500 citations in the past five years.

Patent Pro Bono

Patent

By Dennis Crouch

We have begun the week designated as “National Pro Bono Week.” Most state attorney ethics rules indicate that “every lawyer has a professional responsibility to provide legal services unable to pay.” See ABA Model Rule 6.1. In its proposed ethics rules, the USPTO suggested no need to adopt the ABA Model Rules regarding public service.

The USPTO recognizes that every practitioner, regardless of professional prominence or professional workload, has a responsibility to provide legal services to those unable to pay and that every practitioner should support all proper efforts to meet this need for legal services. However, attorney practitioners’ individual state ethical rules should provide guidance and regulations regarding their respective duties to provide voluntary pro bono service, accept court appointed representation, and serve as members of legal service and legal reform organizations. The USPTO is declining to add an increased regulatory requirement on attorney practitioners.

Unfortunately, this statement by the PTO neglects the reality that a large number of PTO practitioners are not lawyers but are patent agents.

The America Invents Act (AIA) does include a directive requiring the USPTO to help establish patent pro bono programs. In their recent article, Amy Salmela and Mark Privratski go through one approach to a patent prosecution pro bono program that they helped to create in Minneapolis. See Patent Law Pro Bono: A Best Practices Handbook. The Federal Circuit Bar Association (FCBA) has also announced its new role as the “National Clearinghouse” for receiving information from individuals and businesses interested in receiving pro bono assistance in the Virginia and Maryland area. See www.fedcirbar.org/ptoprobono. Other regional patent pro bono operations are beginning around the country.

En Banc Question: Who Proves (Non)Infringement When Licensee Challenges Patent

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by Dennis Crouch

Medtronic v. Boston Scientific & Mirowski Family Ventures (Fed. Cir. 2012) on request for rehearing [Download Medtronic_Petition_Rehearing_EnBanc]

Medtronic has filed an interesting request for rehearing en banc following its recent loss to Boston Scientific. In my post on that panel decision I wrote "Good-Standing Licensee Must Prove Non-Infringement in DJ Action."

During patent litigation, it is normally the patentee that has the burden of proving infringement. In this case, however, the Federal Circuit flipped the burden and instead began with a presumption of infringement. The court recognized that its decision went against the weight of precedent, but based its conclusion upon the special circumstances in this case and the Supreme Court's holding in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).

Now, this case is different from typical patent litigation because the plaintiff who filed the case (Medtronic) is not the patentee seeking to enforce a patent. Rather, Medtronic has asked the court to issue a declaratory judgment that its operation does not infringe the Mirowski patent. U.S. Patent No. 4,928,688. Further, unlike the ordinary declaratory judgment case, Medtronic has signed the contract and given its word to pay ongoing royalties. The key holding in MedImmune is that a current patent licensee has standing to seek a declaratory judgment "that the underlying patent is invalid, unenforceable, or not infringed." Thus, under MedImmune, a licensee is not required to breach its contract before seeking declaratory relief. Prior to that case, the Federal Circuit had repeatedly ruled that a licensee in good standing could not challenge a patent because it had no apprehension of suit.

The present case falls squarely within the MedImmune expansion of declaratory judgment jurisdiction. The situation is interesting because the patentee would likely have no standing to sue for infringement even though the licensee now has standing. This situation, although unique, falls within the Supreme Court's general policy of encouraging licensees to challenge patent rights that it announced in Lear v. Adkins, 395 U.S. 653 (1969).

Because of this special factual background of the case, the patentee could not file an infringement counterclaim and therefore asked the court to place the burden of proving non-infringement onto the DJ plaintiff. Considering this issue, the Federal Circuit agreed – holding that the licensee had the burden of proving non-infringement in this situation. Writing for a unanimous panel, Judge Linn wrote:

This case requires us to determine the proper allocation of the burden of persuasion in the post-MedImmune world, under circumstances in which a declaratory judgment plaintiff licensee seeks a judicial decree absolving it of its responsibilities under its license while at the same time the declaratory judgment defendant is foreclosed from counterclaiming for infringement by the continued existence of that license. . . . [I]n the limited circumstance when an infringement counterclaim by a patentee is foreclosed by the continued existence of a license, a licensee seeking a declaratory judgment of noninfringement and of no consequent liability under the license bears the burden of persuasion. . . .

In its petition for rehearing, Medtronic directly challenges this holding. The question presented is:

Whether a legal presumption of patent infringement should exist such that in a declaratory judgment action brought by a licensee seeking a declaration of noninfringement the burden of proof is shifted to the declaratory judgment plaintiff to prove non-infringement.

In my view, it is a bit of an overstatement to say that the court applied a presumption of patent infringement. While we usually think of a simple dichotomy between infringement and non-infringement, it is fair to say that this case presents a potential third option. Because the patentee has not alleged infringement. If the patentee wins the ultimate lawsuit, the final holding should not be that of infringement but rather should merely be a denial of the request for declaratory relief.

For its part, the challenger makes a strong case that the holding here (if overstated) still goes against the weight of Federal Circuit precedent and more than 100 years of Supreme Court precedent.

Judges Linn, Lourie, and Prost were on the original panel. It will be interesting to see how the other eight judges respond.

PTAB Backlog: Over the Hump!

Patent

By Dennis Crouch

The new Patent Trial and Appeal Board has cause to celebrate!

In 2008, the Board’s backlog of pending ex parte appeals began to rise at an alarming rate. Being a government body, the alarms did not really begin to sound until 2010 and the fire trucks only recently arrived. Since 2008, the number of pending cases has risen almost ten-fold to its current height of more than 26,000 pending appeals. During this period, the backlog rose each and every month without a single decrease.

Now, for the first time in more than four years, the monthly backlog figure has dropped. The Board’s numbers for September 2012 show that the body disposed of 311 more cases than it received for the month. The chart below shows the PTAB/BPAI backlog over the past several years. The last data point on the right hand side of the chart shows this happy decrease. Congratulations!

This transformation is due to the large number of new administrative judges at the PTAB. Although there may be a few bobbles, I expect that the backlog will begin a serious and steady decline by January 2013.

Patently-O Bits and Bytes

Patent

By Dennis Crouch

  • Germany’s Max Planck Institute for Intellectual Property and Competition Law has released a paper detailing “Twelve Reasons for Concern” with the proposed European Unitary Patent Court. Their concerns are categorized within the themes of (1) complexity of the regime, (2) imbalances in the system, and (3) lack of legal certainty for investments in innovation. /media/docs/2012/10/MPI-IP_Twelve-Reasons_2012-10-17_final3.pdf. The tone here is more of constructive criticism of the approach rather than an outright rejection of the idea. The photo of Max Planck (shown to the right) was taken just after he learned of the unitary patent system. Annsley Merelle Ward has more about the UK perspective on Unitary Patent Enforcement as part of her regular excellent IPKat coverage.
  • Malibu Media v. John Doe 16, 2:12-cv-02078 (E.D. Pa. 2012). There is a tremendous amount of unauthorized distribution of pornographic videos through various internet channels such as BitTorrent. In recent years, porn copyright holders have been fairly successful in convincing many file-sharers to settle cases. Unauthorized file sharing is much more likely to be seen as deviant behavior if the files being shared are pornographic. And so the settlements are largely for the purpose of keeping that activity hidden from public view. In this case, various anonymous Johns in Eastern Pennsylvania were sued for using BitTorrent to share the motion picture known as “Anneli Leila Menage a Trois.” It is a fairly easy process these days to identify the IP addresses of BitTorrent users. Malibu has opted to pursue its case against just one defendant who is still labeled John Doe 16 in what the court is calling a “Bellweather trial.” Trial is scheduled for early next spring.
  • “Copyright troll” stories are being chronicled by dietrolldie
  • Missouri is known for many things, including the South Butt parody apparel. In 2010 the company seemingly won the trademark lawsuit brought by the North Face. However, as part of the settlement, South Butt agreed to get permission for further parodies of North Face. Thus, when they started a new Butt Face line of clothing, the North Face filed and has won a contempt motion. In the consented court order, South But has agreed to stop its further attempts to bully the classy apparel company. Yes, you can sign away your fair use rights.

USPTO Reopens the First-Inventor-to-File Comment Period

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From Janet Gongola, Patent Reform Coordinator:

On July 26, 2012, the USPTO published a notice of proposed rulemaking and a notice of proposed examination guidelines to implement the first-inventor-to-file (FITF) provisions of the AIA. The notices set a comment deadline date of October 5, 2012. The USPTO has received several requests for additional time to submit comments. Therefore, the USPTO is reopening the comment period to provide interested members of the public with an additional opportunity to submit comments to the USPTO.

The new deadline for receipt of written comments in response to both the notice of proposed rulemaking and the notice of proposed examination guidelines to implement the first-inventor-to-file provisions of the AIA is November 5, 2012.

The proposed rules along with already-submitted commentary can be found here: http://www.uspto.gov/patents/law/comments/fitf_guidance.jsp. Discussion of whether the AIA eliminates Secret Prior Art is here.

Technology Patents LLC. v. T-Mobile (UK) Ltd.

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By Jason Rantanen

Technology Patents LLC. v. T-Mobile (UK) Ltd. (Fed. Cir. 2012) Download 11-1581
Panel: Bryson (author), Prost, Reyna

This case involves a suit brought by prolific inventor Aris Mardirossian's company Technology Patents LLC against more than 100 domestic and foreign defendants that TPL accused of infringing US Reissue Patent No. RE39870.  While the primary subjects addressed by the court are those of claim construction and infringement , there are several additional noteworthy issues discussed at the end of the post.

The '870 patent relates to a global paging system.  According to the patent, the prior art was deficient because "it did not fulfill the need for a cheap and efficient global paging system that allows users who expect to receive messages or pages abroad to 'remotely input country designations in which they are to be paged.'"  Slip Op. at 13, quoting '870 patent.  The '870 patent sought to cure the deficiencies of the prior art: "The ’870 Patent solved this problem by claiming a system which allows for paging of the receiving user (“RU”) in countries where the RU “may be located,” as per a list input by the RU." Id., quoting district court.  Claim 4, the primary claim addressed on appeal, recites  (claim terms at issue in the appeal are in bold):

4. A system for paging a receiving user in a country-selective paging system, comprising:

a paging system spanning a plurality of different countries of the world, the paging system including a plurality of servers, and wireless transmitters in different countries for transmitting paging messages to receiving users;

interconnecting servers so as to permit digital communication of signals between the plurality of servers via at least the packet-switched digital data network;

a first website or server located in a first country for allowing an originating user to page the receiving user who may be located in a second country different from the first country, the originating user not necessarily knowing what country the receiving user is located in;

wherein the paging system determines if the second country is currently designated by the receiving user as a designated country in which the paging system is to attempt to page the receiving user;

when the paging system determines that the second country has been designated by the receiving user, means for sending a paging communication via at least the packet-switched digital data network to a second website or server, the second website or server being in communication with a wireless transmitter located in the second country, and wherein the paging communication causes the second website or server to initiate paging the receiving user via the wireless transmitter in the second country; and

when the paging system determines that the second country has not been designated by the receiving user, the paging system initiates paging operations in another country in a predetermined order in an attempt to page the receiving user.

The over 100 companies companies that TPL sued roughly fell into three categories: (1) domestic carriers and handset companies, (2) software providers, and (3) foreign carriers.  Following claim construction, the district court granted summary judgment of noninfringement to the domestic carriers.  On appeal, TPL challenged the district court's claim construction and noninfringement rulings. 

Claim Construction: Much of the claim construction dispute revolved around the meaning of "receiving user."  The district court construed this term to mean a "person or party," while TPL contended that it means "the combination of the person and the handset."

Applying what has often been described as a holistic approach to claim construction, the Federal Circuit affirmed the district court's construction.  In other words, the court applied a flexible, relatively unstructured approach to construing the claim terms as opposed to a rigid rules-based approach.  In this particular case, that meant looking closely at the intrinsic evidence.  "The text of the patent makes clear that the term “receiving user” does not refer to a person-pager combination."  Slip Op. at 19. The court applied a similar approach to the two remaining claim terms.

Holistic Infringement Analysis: TPL also argued that, even if the CAFC affirmed the district court's claim constructions, it nevertheless erred in its grant of summary judgment of noninfringement.  On this point, too, the Federal Circuit affirmed.  While much of the CAFC's conclusion was based on the "receiving user" limitation, the court's overall approach bore many similarities to its holistic claim construction: the court made frequent reference back to the specification even as it assessed the question of infringement, rather than rigidly applying its claim construction. 

For example, in responding to TPL's argument that because the accused systems permitted users to select the carrier when traveling abroad, some of which contained country information (see below figure), the court pointed out that "The specification and the claims make clear that the invention is concerned with the country in which the receiving user is located, not with the receiving user’s carrier." Slip Op. at 29.  This carried through to the assessment of infringement under the doctrine of equivalents, as the court concluded that "the distinction betwen selecting a carrier and selecting a country is not insignificant in the context of the patent….That is a fundamental difference between the accused systems and the claimed invention that goes to the heart of the claimed invention."  Slip Op. at 34.  Figure 1

 

Additional notes:

  • This lawsuit was filed in 2007 – well before the September 16, 2011 enactment of the America Invents Act, which substantially altered the rules for joining multiple unrelated defendants within a single infringement lawsuit. 
  • The district court granted summary judgment of noninfringement to the software providers as well, in part on the ground that it concluded that certain claims required mutiple actors and TPL failed to show that the defendants have discretion or control over the end users.  The Federal Circuit concluded that it was unnecessary to consider the recent en banc decision in Akamai Technologies v. Limelight addressing divided infringement because the claimed software system could be "used" by a single actor even if the user did not have physical control over all elements of a system. Slip Op. at 36 (citing Centillion Data Sys. v. Qwest Communications, 631 F.3d 1279, 1284 (Fed. Cir. 2011).
  • The district court found that it lacked jurisdiction over the foreign carriers.  On appeal, the Federal Circuit did not address the jurisdictional question, instead concluding that "Our ruling sustaining the district court’s decision in favor of the domestic carriers thus dooms TPL’s claim of infringement against the foreign carriers as well. For that reason, it is unnecessary for us to decide whether the district court was correct in dismissing the case against the foreign carriers for lack of personal jurisdiction."  Slip Op. at 39.

UK Appellate Court Confirms Pan-European Win for Samsung on iPad Community Design Charges

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By Dennis Crouch

Samsung Electronics v. Apple, [2012] EWCA Civ 1339

The English (and Wales) court of appeals has issued a new decision in the ongoing global intellectual property battle between smartphone competitors Apple and Samsung. This case focused on Apple's Community Design No. 000181607-0001 and affirms the trial court ruling by the High Court Judge Colin Birss that the three accused Samsung Galaxy models do not infringe. The court has also affirmed Judge Birss's equitable order forcing Apple to advertise its loss (in order to partially correct damage done to Samsung's reputation).

Apple's iPad registered community design being asserted here is the simple design shown below.

A registered European Community Design is roughly equivalent to a US Design Patent. However, the Europeans have done away with the examination process and replaced it with registration without considering whether the design is actually novel. Thus, while the European law requires that a registered community design be novel (a lower standard than nonobvious), that issue is not raised in the initial registration process. The US continues to examine design patents for novelty and nonobviousness. However, the USPTO's examination of design patent novelty can best be described as a farce. In a 2010 study, I found that the vast majority of design patent applications do not receive even a single rejection during the examination process and only 1.2% are the subject of an obviousness or novelty rejection. In that essay I identified our system as that of de facto registration. Because of the in-expense and ease of registration, Community Designs have been quite popular.

Up to now, the process of obtaining Community Designs has been largely separate from that of US design patent rights. This will change, however, if the US finalizes legislation implementing the Hague Agreement. Earlier this year the US Senate passed the "Patent Law Treaties Implementation Act of 2012" (S. 3486) that would implement the Hague Agreement (as well as the procedural Patent Law Treaty PLT). If there is no major objection, the House of Representatives is likely to pass its version of the Act in the lame duck session of Congress following the November presidential election.

The opinion in the present case is written by Lord Justice Robin Jacob who has retired from the bench but is regularly called back to hear intellectual property cases. As you will find with virtually all of Lord Justice Jacob's decisions, the case is well written, layered, and informative. Lord Justice David Kitchin (another IP focused jurist) joined the panel. In addition to the related design patent litigation in the U.S., this particular community design is being litigated in Germany, the Netherlands, and Spain.

Infringement of a community design is defined in Article 10 of the Community Design Regulation EC 6/2002 and asks whether the accused design "does not produce on the informed user a different overall impression" after taking into consideration "the degree of freedom of the designer in developing his design." Although worded somewhat differently, this standard is on track with U.S. design patent infringement law that considers whether an "ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design." In both situations, the "most important things [to be considered for infringement] are the registered design, the accused object and the prior art and the most important thing about each of these is what they look like."

Jacob, LJ, begins his opinion with a statement about copying—notably that copying is irrelevant to the infringement analysis:

3. Because this case (and parallel cases in other countries) has generated much publicity, it will avoid confusion to say what this case is about and not about. It is not about whether Samsung copied Apple's iPad. Infringement of a registered design does not involve any question of whether there was copying: the issue is simply whether the accused design is too close to the registered design according to the tests laid down in the law. Whether or not Apple could have sued in England and Wales for copying is utterly irrelevant to this case. If they could, they did not. Likewise there is no issue about infringement of any patent for an invention.

4. So this case is all about, and only about, Apple's registered design and the Samsung products. The registered design is not the same as the design of the iPad. It is quite a lot different. For instance the iPad is a lot thinner, and has noticeably different curves on its sides. There may be other differences – even though I own one, I have not made a detailed comparison. Whether the iPad would fall within the scope of protection of the registered design is completely irrelevant. We are not deciding that one way or the other. This case must be decided as if the iPad never existed.

The appellate opinion fully supported Judge Birss's initial determination that substantial differences led to a rejection of the infringement contention. In particular, when compared with the registered design, Samsung devices are thinner and have substantial surface ornamentation. Other features – such as a flat rectangular screen – the court found to so "banal" as to not contribute to the infringement analysis. The court found the rounded corners also unremarkable and of obvious function for a handheld device. Normally, an accused infringer cannot avoid infringement with use of its distinctive trademark on the product. In this case, however, the court found that Samsung's trademark name on its device helped to distinguish the device from the Apple registered design because of the label was additional ornamentation that contradicted Apple's approach of substantially lacking surface ornamentation.

Taking all this as a whole, Judge Birss could not see any infringement. In the appeal, Jacob, LJ, agreed noting that "Overall I cannot begin to see any material error by the Judge."

54.    I would add that even if I were forming my own view of the matter, I would have come to the same conclusion and for the same reasons. If the registered design has a scope as wide as Apple contends it would foreclose much of the market for tablet computers. Alterations in thickness, curvature of the sides, embellishment and so on would not escape its grasp. Legitimate competition by different designs would be stifled.

European-wide declaration of non-infringement affirmed. Now, in all likelihood Apple will take its appeal to the EU Court of Justice (CJEU) who is the final arbiter of EU community design law.

Parallel Pan-European Preliminary Injunction by German Courts: Prior to Judge Birss's final decision, Apple applied ex parte for a preliminary injunction in a German court that was granted "without Samsung having an opportunity of being heard." In July 2012 (a few weeks after Judge Birss's decision) the German Court of Appeal (Oberlandesgericht) granted a pan-European preliminary injunction (interim injunction) against the Galaxy 7.7. Under community design litigation rules, Judge Birss's decision takes precedent and lifts that preliminary injunction. In his opinion, Lord Justice Jacob was highly critical of the German courts for taking that approach while the case was pending before Judge Birss sitting as a community design judge.

56. Firstly I cannot understand on what basis the [German] Court thought it had jurisdiction to grant interim relief. I do not think it did [have jurisdiction] for several reasons.

At minimum, a national court associated where interim relief is sought loses jurisdiction as soon as the court seized of the substance of the case (according to community design law) issues its decision.

In addition to wrongly hearing the case, Jacob, LJ also argues that the German Court wrongly decided the case.

61. … I regret to say that I find the Oberlandesgericht's reasoning on the merits sparse in the extreme….

62. What the Oberlandesgericht did not do was to consider Judge Birss's decision in detail. It gave only meagre reasons for saying "The Court cannot concur with the interpretation of the High Court". I regret that. …

63. … If courts around Europe simply say they do not agree with each other and give inconsistent decisions, Europe will be the poorer.

There are probably three ways to see this conflict: (1) as a lack of effort on the German court's part (unlikely); (2) as a lack of respect for UK courts (more likely); or (3) as an indication that German's support stronger design rights than do the UK courts (most likely).

The decision also suggests that the German court should force Apple to compensate Samsung for the trouble it has caused with its approach to obtaining a preliminary injunction:

Whether or not Samsung has any claim in the German courts for all the losses it has suffered as a result of preliminary measures which proved to be unjustified is obviously not a matter for us. I hope it does. If the position were the other way round, that the unjustified preliminary measures had been granted by the English and Welsh courts, the "injured" party would have a remedy under the cross-undertaking in damages which the English court normally requires as a condition of granting a preliminary measure which is not ultimately vindicated in a main trial.

At paragraph 78.

Ghost Lines in Design Patents: Although minor in the context of this appeal, Lord Justice Jacob has an interesting comment on the dotted "ghost" lines that have become common in US design patent drafting. According to the MPEP, those lines are allowed as "Environmental structure" so long as "clearly designated as environment in the specification." MPEP § 1503. The Apple registration included a dotted line frame showing the boundary of the operational portion of its screen. Samsung unsuccessfully argued that dotted line should not be given any patentable weight based upon what Jacob, LJ calls "a complicated point based on the guidelines for examination."

21. There is one other point about how the informed user would assess the registered design, a point decided by the Judge adversely to Samsung. Views 0001.1 and 0001.3 show the front of the tablet. There is a rectangular dotted line shown. Apple submitted, and the Judge accepted, that the dotted line indicated a frame below a glass face – of the kind now familiar on all sorts of touch-screen devices. Samsung ran a complicated point based on the guidelines for examination. It submitted these would lead the informed user to conclude that the dotted lines were there to indicate that a feature was not protected: thus the fact that the Samsung device does have a "frame" is to be disregarded.

22. This is faintly absurd: a bit like the notice-board reading "Ignore this notice." For if there were no dotted rectangular line, the front face of the design as registered would be entirely plain. So it would then be for the informed user to form a judgment as to whether a tablet with a frame created a different overall impression. In short, on Samsung's contention if there were no dotted lines the position would the same as if they were there.

This development if applied broadly could actually become a major source of contention and difficulty in implementing the global design rights system suggested by the Hague Agreement.

As an aside on the ghost line point, I briefly reviewed the prosecution history file of the US design patent that serves as the priority filing for the community design in this case. See U.S. Design Patent D504,889. In my review, I did not find any applicant remarks indicating that the dotted line in the frame is merely an environmental structure or indicating that the dotted line should not be considered as an element of the design patent. Judge Koh considered this issue during the US litigation of the '889 patent and agreed in dicta that "A reasonable interpretation of the dotted lines in the D′889 patent … is that the dotted lines are intended to show the inset screen below the glass-like surface. At this point, without the aid of prosecution history, evidence regarding drafting principles, or argument from the parties, the Court considers the dotted lines to most likely indicate an inset screen and are likely part of the claimed design." Apple, Inc. v. Samsung Electronics Co., Ltd., 2011 WL 7036077 (N.D.Cal. December 02, 2011). For its decision, the court cited Bernardo Footwear, L.L.C. v. Fortune Dynamics, Inc., 2007 WL 4561476 (S.D.Tex. Dec.24, 2007). In that case the court held that broken lines in a design patent were part of the claimed design because the drafter had failed to explain the significance (or significance) of the broken lines.

Notes:

Design Patent Damages: When is proof of copying required for profit disgorgement?

Patent, ,

By Dennis Crouch

In this post, I question whether copying is a required element for profit disgorgement under the design patent remedy provision of 35 U.S.C. § 289.

An important element of design patent protection is the special damages provision found in 35 U.S.C. § 289. According to the statute, design patent owners have an optional remedy available of disgorging the “total profit” of an infringer. It was this profit disgorgement that likely drove the bulk of Apple’s $1 billion award in the recent Apple v. Samsung jury decision. When the adjudged infringer is profitable, the disgorgement provision can lead to an enormous award.

Section 289 is titled “Additional remedy for infringement of design patent” and is written as follows:

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

In patent cases, copying is normally not an element of proving infringement. And, although proof of copying will be important in determining punitive damages, it is also not normally an element in determining the underlying damages. In the design patent cases, copying has not traditionally been seen as required in order to seek profit disgorgement. However, in my view, a plain reading of the old statute suggests that copying may in fact be required when the infringing product does not embody the identical design found in the patent. The key phrase repeated in the statute is “colorable imitation.”

The “colorable imitation” language was included in the original 1887 legislation. By that time, however, the term was already in frequent use in trade-mark cases and implied copying.* The suggestion here is that, when the infringement falls under the “colorable imitation” prong, that a disgorgement damage award should only occur when a plaintiff offers some proof of copying. A more aggressive position (and probably less defendable position) could also argue that the statute always requires some proof of copying because “appl[ying] the patented design” implies that knowledge learned from the original is being used to create the new article of manufacture.

Assuming that the distinction for the copying requirement is between whether the infringer “applies the patented design” or “applies … any colorable imitation thereof,” it will be important moving forward to understand how to differentiate between these two.

Notes:

IP in the US Presidential Debates

Patent

There was one reference to patents in this week’s debate between President Obama and his challenger Governor Romney:

CROWLEY: iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here?

ROMNEY: The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China’s been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents, our technology. There’s even an Apple store in China that’s a counterfeit Apple store, selling counterfeit goods. They hack into our computers. We will have to have people play on a fair basis, that’s number one.

Guest Post: New USPTO Proposed Ethics Rules, Part I

Patent,

Guest Post by Professor Lisa Dolak.

On October 18, 2012, U.S. Patent and Trademark Office issued a Notice of proposed rulemaking relating to "Changes to Representation of Others Before The United States Patent and Trademark Office." The essence of the proposal is to replace the current ABA Model Code-based USPTO ethics rules with a version of the ABA Model Rules, versions of which have been adopted in 50 jurisdictions (49 states and the District of Columbia).

In the Notice, the USPTO indicates that its goal is to modernize its ethics rules and to harmonize them with those that already govern most of the registered and non-registered practitioners who represent others before the USPTO, "while addressing circumstances particular to practice before the office". The Notice references several sources that may provide useful interpretative guidance regarding the proposed rules, including existing USPTO-specific precedent, "the Comments and Annotations to the ABA Model Rules", and "opinions issued by State bars and disciplinary decisions based on similar professional conduct rules in the States." Significantly, however, the Notice expressly disclaims the imposition of significantly new standards on those who are subject to USPTO enrollment and discipline oversight, stating "any change is not a significant deviation from rules of professional conduct for practitioners that are already required by the Office."

For the most part, the USPTO seeks to conform its rules governing professional conduct to the ABA Model Rules, with certain specific language tailored to the specialized nature of practice before the USPTO. The Notice also highlights, however, the ways in which the USPTO's new rules would deviate from the ABA Model Rules. And it proposes revisions to certain provisions of the rules governing the conduct of disciplinary investigations, which rules were adopted in 2008.

The first thing to note is the proposed numbering scheme for the new USPTO Rules of Professional Conduct. For example, proposed USPTO Rule of Professional Conduct 11.107 corresponds to ABA Model Rule 1.7. USPTO Rule 11.302 would parallel Model Rule 3.2, and USPTO Rule 11.804 – the proposed new USPTO rule relating to "misconduct" – corresponds to Model Rule 8.4. It appears, in fact, that the USPTO has endeavored to match up its proposed rules to the Model Rules by subsection, where appropriate. Thus, proposed "Sections 11.804(a) – (f) correspond to the ABA Model Rules of Professional Conduct 8.4(a) – (f), respectively."

Some examples of the many instances where the USPTO indicates an intent to conform with the corresponding ABA Model Rule include proposed sections:

  • 11.107, relating to concurrent conflicts of interest (see ABA Model Rule 1.7);
  • 11.109, relating to conflicts of interest and duties to former clients (see ABA Model Rule 1.9);
  • 11.110, relating to the imputation of conflicts within law firms (see ABA Model Rule 1.10);
  • 11.116, relating to a practitioner's obligations in declining or terminating client representations (see ABA Model Rule 1.16);
  • 11.401, relating to a practitioner's obligation to be truthful when dealing with third parties on a client's behalf (see ABA Model Rule 4.1); and
  • 11.501 and 11.502, relating to the responsibilities, respectively, of a supervisory practitioner and a subordinate practitioner (see ABA Model Rules 5.1 and 5.2).

In other respects, the proposed rules would be tailored to account for particularized aspects of USPTO practice. For example,

  • with regard to proposed Section 11.105 relating to a practitioner's responsibilities regarding fees, the Notice states that "[n]othing in paragraph (c) should be construed to prohibit practitioners gaining proprietary interests in patents" in accordance with USPTO rules.

In addition, there are several proposed rules that are modified to reinforce or accommodate the duty of disclosure or the inequitable conduct doctrine. The proposed rule (Section 11.106) relating to confidentiality obligations "includes exceptions in the case of inequitable conduct before the Office in addition to crimes and frauds". A subsection of this rule would permit a practitioner to reveal information relating to a representation to the extent the practitioner reasonably believes necessary "[t]o prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from . . . inequitable conduct before the Office." Significantly, another subsection of Section 11.106 would expressly reinforce a practitioner's duty of disclosure, notwithstanding his or her confidentiality obligations ("A practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions.").

Similarly, proposed Section 11.303(e) provides: "In a proceeding before the Office, a practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions." According to the USPTO, "[t]he practitioner's responsibility to present the client's case with persuasive force is qualified by the practitioner's duty of candor to the tribunal. See Lipman v. Dickinson, 174 F.3d 1363, 50 USPQ2d 1490 (Fed. Cir. 1999)."

Another manifestation of the USPTO's efforts to implement specialized patent-related policy is found in proposed Section 11.303(a)(2), which extends the practitioner's duty to disclose adverse controlling legal authority beyond inter partes situations to ex parte proceedings (where the authority is not otherwise disclosed). In the Notice of proposed rulemaking, the USPTO indicates that this rule is justified by the effect that USPTO decisions have on the public interest.

In other notable aspects of the Notice, the USPTO:

  • notes that it has not incorporated into the proposed rules any of the recently(August 2012)-adopted changes to the Model Rules, "since the states have not adopted those changes at this time";
  • reminds practitioners that "[f]ailure to comply with [state professional conduct] rules may lead to . . . possible reciprocal action against the practitioner by the USPTO"; and
  • proposes to remove the practitioner maintenance fee currently set forth in 37 C.F.R. § 11. 8(b), because "the Office has suspended collection of those fees".

Finally, proposed section 11.1 would provide definitions of terms used in the proposed professional conduct rules, including "practitioner" (which would include registered attorneys and agents as well as persons authorized to represent persons before the USPTO in trademark and non-patent matters and persons given limited recognition in patent matters), "informed consent", "reasonable belief"/"reasonably believes", "screened", "writing", and "written". One of the more notable subsections would define "[f]raud" and "fraudulent", as follows:

Fraud or fraudulent means conduct that involves a misrepresentation of material fact made with intent to deceive or a state of mind so reckless respecting consequences as to be the equivalent of intent, where there is justifiable reliance on the misrepresentation by the party deceived, inducing the party to act thereon, and where there is injury to the party deceived resulting from reliance on the misrepresentation. Fraud also may be established by a purposeful omission or failure to state a material fact, which omission or failure to state makes other statements misleading, and where the other elements of justifiable reliance and injury are established.

With regard to fraud and fraudulent behavior, the Notice expressly acknowledges the USPTO's decision not to adopt the corresponding ABA Model Rules definitions. "Instead, the Office believes a uniform definition based on common law should apply to all individuals subject to the USPTO Rules of Professional Conduct." "Accordingly," the Notice states, the proposed rules adopt "the definition of common law fraud . . . discussed by the United States Court of Appeals for the Federal Circuit." The proposed adoption of a specific definition of "fraud" is notable, given the USPTO's obligations under the AIA to report instances of detected "material fraud" in the context of supplemental examination to the Attorney General, and its decision not to include a definition of "material fraud" in the final rules governing supplemental examination.

Other aspects of the Notice, including key ways in which the proposed rules deviate from the Model Rules, and how the USPTO proposes to modify existing rules relating to disciplinary investigations, will be highlighted in subsequent posts.

Comments relating to the proposed rules are due 60 days after their publication in the Federal Register. Based on the anticipated publication of the proposed rules on Thursday, October 18, the deadline for comments will be Monday, December 17, 2012.

Apple v. Samsung: Adding Elements to Avoid Infringement

Patent, , ,

By Dennis Crouch

Apple Inc. v. Samsung Electronics Co., Ltd., — F.3d —, 2012 WL 4820601, App. No. 2012-1507 (Fed. Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This is my second post on the appellate decision that I term Apple II. [Read the First Apple II Post.] In Apple II, the Court of Appeals for the Federal Circuit vacated N.D. California District Court Judge Koh’s preliminary injunction order that would have forced Samsung’s Galaxy Nexus smartphone off the market pending conclusion of the infringement lawsuit. The appellate court provided two independent reasons for vacating the preliminary injunction order: (1) that Apple had failed to provide proof of irreparable harm due to Samsung’s continued use of the particular invention covered by the patent; and (2) that a finding of infringement is unlikely based upon the claim construction as corrected by the Federal Circuit. This post focuses on the claim construction issue.

The patent at issue in this case is U.S. Patent No. 8,086,604. That patent issued in December 2011 but stems from upon an application originally filed in January 2000 and appears to be largely directed to aspects of Apple’s Siri application (although the original invention is not tied to a mobile device). After construing claim 6 of the patent, the district court found that Samsung’s product likely infringes. On appeal, the Federal Circuit has reversed that claim construction in a way that substantially narrows claim scope and thus negates any likelihood that Samsung infringes. Although the claim-at-issue uses open-ended “comprising” language, the appellate panel held that an apparatus that includes additional similar (but non-infringing) elements would not be covered by the patent.

Claim 6 is directed to an “apparatus for locating information in a network” comprising various software elements. The basic idea is that the system has a set of heuristic modules corresponding to different search areas. We all use heuristics for searching. For example, if you want to find prior art relating to a chemical compound, you might hire an expert chemistry searcher. On the other hand, if your search area is airplane seat design, you might hire someone else. Under the language of the patent, these search strategies could be defined as two different heuristic modules each corresponding to their respective search area. In the lawsuit itself, Apple identified the three heuristic modules as (1) a Google Search Module; (2) a Module that allows for Search of Internet Browsing History; and (3) a Search of a user’s Contacts List. One difficulty with considering this case is that this invention appears in hindsight to be ridiculously obvious. However, obviousness is not the topic of the appeal.

The patent claim requires “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm corresponding to said respective area.” Samsung’s product allegedly uses a plurality of heuristic modules corresponding to different search areas. However, the accused product does not use “different, predetermined heuristic algorithm” for each and every different search area. I have modeled this below with a diagram of the Galaxy Nexus Search System associated with five different Search Areas (A,B,C,D,E) but only three different Heuristic Modules (X,Y,Z). Although some of the Heuristic Modules are re-used by the system, Apple argues that the system still infringes under standard patent law that would find the addition of non-infringing elements to an infringing core does not negate infringement. See CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 1356, 1360 (Fed. Cir. 2007) (infringing device may include additional, unrecited elements).

Writing for the unanimous panel, Judge Prost (joined by Judge Moore and Reyna) rejected Apple’s argument and instead agreed with Samsung that the claim “requires that [each and] every heuristic module within the accused device use a unique heuristic algorithm.”

[D]espite the use of “comprising,” claim 6 is not amenable to the addition of other modules that do not use different heuristic algorithms because such addition would impermissibly wipe out the express limitation that requires every module to have a unique heuristic algorithm.

It appears from the court’s remarks that a simple claim amendment might have saved Apple’s case:

  • Original: “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”
  • Proposed: “a plurality of heuristic modules … wherein: each of the plurality of heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”

However, Apple might not have been able to obtain patent protection if it had clarified that the system might use the same heuristic algorithm for a variety of search areas. In particular, during prosecution Apple used the limitation in question to avoid prior art. The company argued “Andreoli does not describe … that each of the local and remote search operations employs a different heuristic algorithm.” Although the appellate panel based its decision on what I see as odd linguistics, this prosecution history argument is probably the most damning evidence.

Apple has at least one continuation application pending and thus has the opportunity to further shape its claims in a way that captures the market while avoiding prior art. See U.S. Patent Application Pub. No. 2012-0166477. The USPTO is also in the early stages of conducting an inter partes reexamination that was filed in August 2012 by Motorola Mobility (Google). See Inter Partes Reexamination No. 95/000,685.

THOSITA: Obvious to a Team Having Ordinary Skill in the Art

Patent, ,

By Dennis Crouch

Inventors Per Patent: The number of inventors per patent has risen fairly steadily for the past 40 years. Today, most patents are directed toward inventions created by teams of two or more inventors working in a collaborative environment. When done well, teamwork can add tremendous value to the creative process and can also provide a combined depth of knowledge beyond most individuals.

Individual PHOSITA: From its inception, the 1952 Patent Act allowed for joint inventors. However, the question of obviousness focuses on a single hypothetical individual: "a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103. The AIA slightly amends this portion of Section 103 to clarify that the "said subject matter" is "the claimed invention." This is a change made throughout the statute and puts-to-rest ongoing arguments for identification of a "core" invention for each patent.

PHOSITA as a Team: In its most recent decision, the UK Royal Court of Justice appellate panel took a different path – finding that question of obviousness should be judged from the viewpoint of a "skilled team." MedImmune v. Novartis, [2012] EWCA Civ 1234 (Kitchen, LJ). For the case in question, the court found that the "patent is addressed to a team of scientists with differing backgrounds in areas such as immunology, in particular antibody structural biology, molecular biology and protein chemistry, but with a common interest in antibody engineering."

The skilled team construct is not entirely new to UK case law. See, for example, Schlumberger Holdings Ltd v Electromagnetic Geoservices AS, [2010] EWCA Civ 819 (Jacob LJ), and Halliburton Energy Services, Inc. v. Smith International (North Sea) Limited, [2006] EWCA Civ 1715 (Jacob LJ). The starting point for these UK courts is essentially identical to that of US courts. In particular, the UK Patents Act 1977 defines "inventive step" as being "not obvious to a person skilled in the art." The corresponding language is found in Article 56 of the European Patent Convention (defining inventive step with reference to being obvious to a person skilled in the art). In building the notional teams, the UK courts have been somewhat careful to avoid hindsight bias in the process. Dyson Appliances Ltd v Hoover Ltd [2001] EWCA Civ 1440. Despite the progress, it is clear to me that the UK courts are still working out what it means to be obvious to a team as opposed to obvious to an individual person.

What is added by a Team Analysis?: In 2011, I questioned whether obviousness analysis should reflect some nuances of teamwork:

As compared to a solo worker, teams often have an overall broader depth of knowledge, but are often plagued by communication difficulties. In the obviousness analysis, this shift could be reflected in a broader scope of potential prior art but a more rigorous analysis of whether the ordinary team would make leaps of analysis necessary to combine disparate prior art.

Despite providing arguments on both-sides, I suspect that a notional team would tend to make an obviousness conclusion more likely. The knowledge of those of skill in the art is considered in other areas of patent law such as claim construction, enablement, and definiteness.

THOSITA under US Law: One statutory question moving forward is whether a section 103 "person" can be interpreted to encompass a team of persons. The answer is almost certainly yes. Perhaps the greatest driving factor for this conclusion is found in Section 102 that begins with the statement that "A person shall be entitled to a patent unless…" For that statute, the term person certainly apply to teams of joint inventors.

One major problem with my starting point of increased-team-size is the reality that the obviousness question is not designed around a "skilled inventor" threshold but that of a skilled craftsman of "ordinary skill." This means that there is not really any statutory hook for pushing the obviousness analysis to track the culture of innovation and creative experimentation. Rather, the focus is merely on ordinary craftsmen and what would have been common sense at the time. By design, this creates a low inventiveness threshold intentionally does not consider the particular inventive path taken. "Patentability shall not be negated by the manner in which the invention was made." 35 U.C.C. 103 (post-AIA).

See:

  • Dennis Crouch, Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?, Patently-O (2011)
  • Jonathan J. Darrow, The Neglected Dimension of Patent Law's PHOSITA Standard, 23 Harvard JOLT 227 (2009)

Federal Circuit Rejects Galaxy Nexus Preliminary Injunction Finding No Irreparable Harm Despite a Market Shift in Samsung’s Favor.

Patent,

By Dennis Crouch

Apple v. Samsung, — F.3d —, App. No. 2012-1507 (Fed.Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This case is important because it further reduces the chances that the owner of a component patent will obtain injunctive relief.

Patent litigation is fairly slow and often takes years for a case to proceed through trial and appeal. One shortcut to action is a motion for preliminary injunction. Such a motion asks a court to exert its equitable power to immediately stop the harm of ongoing infringement – even before ultimately concluding that the patent is valid, enforceable and infringed. Following an extension of eBay v. MercExchange, courts require a patentee to satisfy a four-factor test before granting injunctive relief.

A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

Generally, these preliminary injunction factors can be thought of as being identical to the eBay permanent injunction factors with the addition of having to prove the likelihood of success on the merits. (In a permanent injunction scenario, the merits have already been decided.) An important aspect of preliminary injunctions in patent cases is that they are immediately appealable as a matter of right. This right of immediate appeal is different from almost every other district court decision except for the ultimate dismissal of the case.

In this case, Judge Koh issued a preliminary injunction ordering Samsung to stop sales of its Galaxy Nexus smartphone based upon the likelihood of its infringement of Apple’s Patent No. 8,086,604. I should pause for a moment to note that this case is different from the parallel Apple v. Samsung case that resulted in a $1b jury verdict for Apple that is currently being challenged by Samsung. The patent in the case-at-hand is related to Google’s Siri system that uses a set of heuristic modules for searching various types of information.

On appeal, the Federal Circuit has vacated Judge Koh’s decision – finding that the district court “abused its discretion” in issuing the injunctive order favoring Apple. The court found two basic problems: (1) that Apple had failed to prove irreparable particularly linked to Samsung’s use of this particular invention; (2) that the district court had construed the asserted claims too broadly with the result being that Apple probably cannot prove infringement. Either of these issues would be sufficient to reject the preliminary injunction.

In discussions of injunctive relief, this opinion will likely be termed Apple II in order to distinguish it from the federal circuit Apple v. Samsung decision issued earlier this year in Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012) (hereinafter Apple I). Both decisions build on the nexus analysis that links the patented invention to the alleged irreparable harm – “that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.”

This nexus analysis for irreparable harm is parallel to that employed in other areas of patent law such as consideration of secondary factors of non-obviousness and in proving lost profits. This development obviously makes it much more difficult to obtain injunctive relief in the typical high-tech scenario where a retail product includes thousands of small innovations that each contribute incrementally to the ultimate value of a product.

In Apple I, the court described the law as follows:

To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.

In Apple II the court continues:

In other words, it may very well be that the accused product would sell almost as well without incorporating the patented feature. And in that case, even if the competitive injury that results from selling the accused device is substantial, the harm that flows from the alleged infringement (the only harm that should count) is not. Thus, the causal nexus inquiry is indeed part of the irreparable harm calculus: it informs whether the patentee’s allegations of irreparable harm are pertinent to the injunctive relief analysis, or whether the patentee seeks to leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant.

It only follows that the causal nexus analysis is not a true or false inquiry. The relevant question is not whether there is some causal relationship between the asserted injury and the infringing conduct, but to what extent the harm resulting from selling the accused product can be ascribed to the infringement. It is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement and check the causal nexus requirement off the list. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Only viewed through the prism of the causal nexus analysis will the irreparable harm allegations reflect a realistic sense of what the patentee has at stake.

Here, Apple proved that its Siri application (also covered by the patent) is popular and also that demand for the Galaxy Nexus had come at the expense of iPhone purchases. However, the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature. Without proving that link, the court could not find that the (alleged) infringement caused irreparable harm.

Apple I was decided by Judges Bryson and Prost with a partial dissent by Judge O’Malley (concurring on this issue). This case, Apple II was decided by Judges Prost, Moore, and Reyna acting unanimously.

Taken as a pair, Apple I and Apple II are important because they further reduce the chances that the owner of a component patent will obtain injunctive relief. Before eBay, irreparably harm was hardly a consideration. Since eBay, the irreparable harm factor has largely focused on whether the patentee has a product or potential product being harmed by ongoing infringement. Now, the question will move to the next level of granularity in a way that will be difficult for patentees to prove.

Software Patents: 50 Years of Circuitous Artifices

Patent

By Dennis Crouch

I recently asked the courts for a decision on whether software is patentable. In my short essay, I argued that we have a de facto system that allows the issuance of software patents, but only after the innovative software elements are "hidden by innuendo and obfuscation." This makes software patents "harder to find, harder to examine, harder to understand, and thus much more problematic than they need to be."

In response, I received a nice note from longtime patent attorney Michael Rackman of Gottlieb Rackman in NYC. Rackman highlighted his 50-year-old article on the topic published as a student note in the 1963 volume of New York University Law Review. It turns out that my suggestions are simply a refrain echoing his thoughts from so long ago. Rackman's 1963 article concluded:

It is theoretically and practically possible to secure effective patent protection for computer programs. The patents issuing as a result of first attempts probably will obscure, or already have obscured, the true nature of the claimed inventions.

Perhaps naïve at the time, Rackman was hopeful that the intentional obfuscation would end soon. He wrote:

Perhaps in the future it will be common practice to seek and secure program patent protection without resort to circuitous artifices.

I guess that future is still ahead of us.

Notes:

  • Michael Rakman, Note, The Patentability of Computer Programs, 38 N.Y.U. L. Rev. 891 (1963).
  • See also, Orin Kerr, Computers and the Patent System: The Problem of the Second Step, 28 Rutgers Computer and Technology Law Journal 47 (2002) ("After almost forty years of debate and case law development, we seem no closer to a consensus than when we started.").