Monsanto wins $1b verdict on RoundUp Ready Seed Patent

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Dr. EvilBy Dennis Crouch

The PACER entry is compelling:

JURY VERDICT For: Plaintiffs Against: Defendants In the Amount of: One Billion Dollars. (Entered: 08/02/2012)

In his August 6 order, Judge Webber confirmed the jury verdict that DuPont/Pioneer willfully infringe Monsanto's GMO roundup-ready seed patent. The jury rejected the defendants' claims that the asserted patent was invalid; that the patent had been finally obtained through inequitable conduct; and that the reissue patent improperly expanded the scope of the original claims. The judge also confirmed the jury's reasonable royalty damage award of "One Billion Dollars ($1,000,000,000)."

The asserted patent was Monsanto's reissue No. RE 39,247 and the accused product was DuPont's Optimum GAT soybean line that has never been released to the public. Rather, thus far DuPont's use of the patent has been for research purposes. No matter – the US has only a de minimis research defense that certainly does not apply here. See Madey v. Duke. Thus, unlicensed use of the Monsanto genetically modified soybean seed counts as infringement, even if that use was only for the development of a commercial product.

There is no question that this innovation was groundbreaking and has transformed the landscape of American agriculture. The genetic modification makes crops tolerant to the herbicide glyphosate. Although far from organic, glyphosate (RoundUp) has a much smaller negative environmental impact than other herbicides. In addition, the use of glyphosate has allowed for no-till farming that greatly reduces topsoil runoff and energy demands. In his press release, Monsanto's General Counsel David Snively wrote that the verdict "highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued." Snively's remarks are perhaps overstated, but at least have some kernels of truth.

The damages theory was interesting. Since the accused product was not yet on the market, Monsanto did not seek any lost profit. Rather, Monsanto demanded a reasonable royalty for the research-use made by the defendants. Monsanto argued that the use of Monsanto's invention in DuPont's labs and Pioneer's test fields gave those companies an "improper head start" in making the GM seeds. The judge and jury agreed – if those companies wanted to build upon the invention then they should have first obtained a license. In the pharmaceutical world, 35 U.S.C. § 271(e) offers a research exemption for this type of activity. However, that exception does not apply here because of the low level of regulation over genetically modified food-products. The patent is set to expire in 2014. The patentee's right-to-exclusive-research supported by this case means that the 2014 date offers a starting-date for follow-on competitive research. Any actual products building directly upon the patented invention will arrive on the market sometime later.

I sat-in on one day of the jury trial that was held in St. Louis, Missouri. The eight-member jury were largely attentive as they listened to DuPont's technical expert explain DNA and problems with the patent. I smiled at seeing the jury members walk in wearing t-shirts and carrying notepads. Their attitude and attire was a severe contrast to the room full of two-dozen attorneys and experts (each charging hourly). Although I'm sure that Judge Webber could have ably decided the case himself, the jury of individual citizens gave me a bit more confidence in our system and, in my mind, offers the ultimate reality check for this type of case. At least some of the jury members appear to be fans of Dr. Evil.

The level of damages, claim construction, and other issues will be the subject of an appeal the Court of Appeals for the Federal Circuit.

Federal Circuit to Hear En Banc Appeal on Its Jurisdiction over All-But-Accounting Patent Decisions

Patent,

By Dennis Crouch

Robert Bosch LLC v. Pylon Mfg. Corp. (Fed. Cir. 2012)

In a sua sponte order, the Federal Circuit has announced that case to be heard en banc to determine whether the appellate court has jurisdiction over a judgment on patent infringement liability in a bifurcated case even before issues of damages and willfulness have been adjudged. The en banc order highlights 28 U.S.C. § 1292(c)(2) as likely governing the case. That statute provides the Federal Circuit with:

exclusive jurisdiction … (2) of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.

The question on appeal is thus, whether the district court case is “final except for an accounting.”

Current precedent is somewhat confused. In Majorette Toys (U.S.) Inc. v. Darda, Inc. U.S.A., 798 F.2d 1390 (Fed. Cir. 1996), the court arguably classified the calculation of attorney fees and court costs as “accounting” but did not place the principle damages award in that category. In a recent order, the Federal Circuit took a narrow interpretation of Majorette by refusing to hear an appeal of an attorney-sanction before the dollar value of the sanction had been set. Orenshteyn v. Citrix Systems, Inc., — F.3d —-, 2012 WL 3101666 (Fed. Cir. 2012). Judge Newman dissented in Orenshteyn – arguing that the sanction dollar value constituted “accounting” under the law. In Falana v. Kent State University, 669 F.3d 1349 (Fed. Cir. 2012), the court ruled that “the district court’s exceptional case finding and award of attorney fees” were not properly before the court because the dollar values had not been calculated and those values were more than “accounting” under the statute. Falana was decided by Judges Linn, Reyna and Prost.

The en banc order raises two particular questions:

  1. Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?
  2. Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when willfulness issues are outstanding and remain undecided.

Briefs of amici curae may be filed without consent of the parties or leave of the court.

 

Guest Post by Christal Sheppard: Solving a Knotty Problem: An Outrageous Call for Patent Reform Part Deux

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Dr. Sheppard is an Assistant Professor of Law at the University of Nebraska Lincoln College of Law.  Prior to joining the University of Nebraska, Dr. Sheppard was Chief Counsel on Patents and Trademarks and Courts and Competition policy for the United States House of Representatives Commmittee on the Judiciary. – Jason

By A. Christal Sheppard

Just over a week ago, Dennis Crouch stated on Patently-O that “[i]t is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.”  The confusion on what is and what is not patentable is not a new debate but has come to a head in the last few years with the Supreme Court taking on certiorari multiple cases on the matter of patentable subject matter and the Court of Appeals for the Federal Circuit, arguably, disregarding Supreme Court precedent.

We all understand the problem[1], but what is the solution?  The question of what should be patentable is fundamentally a public policy decision.  This public policy decision is one that the framers of the Constitution contemplated and specifically tasked one specific entity with balancing the equities.  The Constitution states “The Congress shall have Power…[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  Congress not the Courts was tasked to determine what should be eligible for the “embarrassment of a patent.”  However, the Courts, led by the Court of Appeals for the Federal Circuit, not the Congress, have driven the expansion of Patentable Subject Matter to “anything under the sun made by man.” 

Case law dictates that the intent of Congress was 1) that patentable subject matter is a requirement separate from that of the other requirements of the patent laws and 2) that Congress intended for anything under the sun made by man to be potentially patentable with the exception of laws of nature, natural phenomena and abstract ideas. Thus, the Courts have, by a stepwise expansion of patentable subject matter to software and business methods, created a situation whereby the high tech industry has been legally encouraged to tie itself into a Gordian knot.  A knot that, without overruling prior precedent, or creative interpretation of precedent, the Courts cannot resolve.

This blog post is to propose that the United States Congress immediately take an active role in the creation of the parameters for patentable subject matter.[2] Congress is the only entity that has the ability and the resources to resolve this conflict in a reasonable and responsible manner. It is also the entity charged by the Constitution with doing so.

I’m not unaware that using the terms “reasonable” and “responsible” in the same sentence with the United States Congress during an election year will globally elicit sound effects from chortles to foul language questioning my mental facilities.  However, below are a few points that are worth considering regarding who is best positioned to advance a solution to what most of the intellectual property community would consider a mess. 

  1. The Constitution does not require patents to be granted and while our international agreements do require minimum patent rights, software and business methods are not among them.[3]  Currently we have a Court created expansion of the definition of what is eligible for patent.  Congress has yet to wade into this morass of what should be eligible for a patent except to provide for exceptions to the Court-created expansion. Congress has created exceptions in piecemeal “fixes”, specific individual carve-outs, instead of addressing the broader issue head-on.[4]
  2. History shows that Congress once before stepped in when the Supreme Court and the predecessor to the Court of Appeals for the Federal Circuit were in discordance.  In the 1940s, the country was then also wrestling to establish a standard of invention.  The Administration appointed a Commission and the patent bar was up in arms.  As a result, section 103 – nonobviousness – was added to the statute by Congress in 1952 to inject a stabilizing effect that the Courts and general practice had not been able to accomplish over decades.  What is needed in the current situation is stabilization.  Today, the Courts are destabilizing the law of patentable subject matter rather than stabilizing it.
  3. Businesses need certainty to operate and to plan effectively. Only Congress can be prospective in its resolution.  For instance, if Congress decides that software and business methods are not patentable subject matter ONLY the Congress can make this prospective to not conflict with settled expectations.  If the Supreme Court narrows patentable subject matter, or patentability more generally, trillions of dollars of company valuation evaporate from the balance sheets with one Supreme Court decision.[5]  However, Congress can decide that starting on a date certain in the future that all patents granted or applications filed before that date are under the “old” common law rules and all patents post-implementation are under the new law.  Congress can provide finality on this issue without gutting company value.[6]  
  4. Only Congress can create an alternative method of protection, apart from patent, for items that they determine do not meet the test for “promoting the process of science.”  For example, concurrent with the delayed implementation of a narrower definition of patentable subject matter, Congress can provide sui generis protection for those fields they decide to carve-out.  Many such ideas have been proposed, such as shorter exclusivity duration and limited remedies.
  5. A Congress, unlike the Courts whose precedent binds future judges, cannot bind a future Congress.  Should the law of patentability need to expand for unknown advancements, Congress can do that in a way that is much less disingenuous than the Courts.   The framers of the Constitution contemplated this in their directive to Congress.  The language in the Constitutional defining  what should be eligible for the monopoly is malleable so that patent law can adjust as technology and the need for promotion for the advance of science changes over time. 

There are a multitude of very good reasons why calling on Congress is not a perfect solution.  But with Myriad and the patentability of gene sequences and genetic testing on the horizon, does the intellectual property community want the Courts or Congress to decide this public policy issue?  Businesses need certainty and only Congress can now provide that stabilizing influence without destabilizing entire industries.  Whether Congress will or not, ought not prevent the assertion that they should. 

Food for thought…

[1] The Supreme Court decisions have done nothing to clarify what is and what is not patentable.  At this juncture, not only is the Federal Circuit in rebellion against the Supreme Court; an influential judge from another circuit dismissed an entire high-tech case with prejudice and promptly penned an article entitled “Why There Are Too Many Patents in America”; the International Trade Commission is under siege from an explosion of technology cases and recently sought comment from the public as to whether certain patents should have limited remedies; the Administration (United States Patent and Trademark Office and the Department of Justice) have differing opinions regarding the patentability of genes and genetic tests; thermonuclear patent warfare between high tech companies is overloading our courts; market based solutions are spawning Fortune 500 companies as the new patent troll; and a patent valuation bubble reminiscent of the real estate market before the crash is driven ever forward as companies amass patents as a shield of paper armor not as an instrument of innovation. 

[2] One thing is certain, there will not be unanimous agreement on what should be patentable subject matter; however, someone should decide and should decide now.  Moreover, that decision should not negatively affect those who have relied upon the law as the Court defined and expanded it over the last 40 years only to now sound the horns of retreat. 

[3] I am not here advocating for any particular resolution, I am merely pointing out a fact.

[4] Prior user rights for business method patents in the 1999 American Inventors Protection Act; Human organisms, tax patents and creating a business method patent post-grant opposition procedure in the 2011 America Invents Act.  The Congress did not address the latter three as patentable subject matter issues, but in carving them out the Congress is showing that there are additional areas that they have determined should not be entitled to patents where the Courts have determined otherwise. 

[5] Of course patents are subject to case-by-case challenges but the Supreme Court seems to be signaling that whole categories of patents, while still technically eligible, would not meet the Courts inventiveness test as a practical matter.

[6] Congress can also provide some finality on the issue of whether patentable subject matter is a separate requirement from 102, 103 and 112.

Incentivizing Discovery (rather than invention)

Patent

by Dennis Crouch

In my patent classes, we talk about the distinction between invention and discovery (and even re-discovery).  The patent statute itself opens the door to patenting of discoveries in addition to inventions.  However, modern courts have largely ignored or rejected that possibility.  The following case is an interesting starting point for a discussion of the value of discovery (rather than invention) and the role of the patent system in providing an incentive for that activity.

+ + + + +

In re Beineke (Fed. Cir. 2012)

Professor Beineke loves the two white oak trees growing in his front yard. He loves them so much that he filed for patent protection. Specifically, Beineke filed two plant patent applications asserting that the trees qualified for protection under 35 U.S.C. 161.  That statute was last edited in 1954 and reads:

[w]hoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, may obtain a patent therefor, subject to the conditions and requirements of this title.

The USPTO rejected the applications — concluding that the trees did not qualify as patentable discoveries because, inter alia, they had been “found in an uncultivated state” in direct contradiction to the statute. 

On appeal, the Federal Circuit has affirmed the rejection. In doing so, the court has re-affirmed that the patent system requires human activity in the creation of the subject matter sought to be patented.  In particular, the court held that the patent applicant must have either (1) been “the result of plant breeding or other agricultural or horticultural efforts;” (2) been “created by the ‘inventor’;” or (3) been found as a seedling in a cultivated state.  Beineke was unable to qualify under any of the these three prongs and thus the court held his claims unpatentable.

+ + + + +

For those concerned with plant patents, there are several important doctrinal points in the case, including the court’s express recognition that it has not fully defined the scope of the “cultivated state” requirement.

+ + + + +

I’m sure that I’ll discuss footnote 8 next time that I teach the topic of “found property” in my 1L property law class.  In that note, the court makes clear that “the 1954 amendments … made seedlings found on other people’s land patentable.”  What if the discoverer was trespassing?

Director Kappos: Some Thoughts on Patentability

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The following is a reprint from USPTO Director Kappos’ recent statement on patentable subject matter:

+ + + + +

The recent Federal Circuit decision CLS Bank International v. Alice Corporation raises some important points that offer insight on advancing prosecution of patent applications. In CLS Bank, the claims to a computer-implemented invention were found to fall within an eligible category of invention and not to mere abstract ideas. In answering the question of eligibility under § 101, I found it interesting that the court looked at the different roles of the various statutory provisions, § 101, 102, 103, and 112. Sections 102, 103 and 112 do the substantive work of disqualifying those patent eligible inventions that are “not worthy of a patent”, while § 101 is a general statement of the type of subject matter eligible for patenting. The court notes that, while § 101 has been characterized as a threshold test and certainly can be addressed before other matters touching on patent validity, it need not always be addressed first, particularly when other sections might be discerned by a trial judge as having the promise to resolve a dispute more expeditiously or with more clarity or predictability. The court in CLS Bank also recognized that the exceptions to eligibility—laws of nature, natural phenomenon, and abstract ideas—should arise infrequently.

Based on my experience, I appreciate the wisdom of the court’s discussion relating to resolving disputed claims by focusing initially on patentability requirements of § 102, 103, and 112, rather than § 101. I have found that when claims are refined to distinguish over the prior art, recite definite boundaries, and be fully enabled based on a complete written description, they do not usually encounter issues of eligibility based on reciting mere abstract ideas or broad fundamental concepts. Put another way, every business looks for opportunities to sequence workflow so that the first issues addressed are the ones that can simplify or completely resolve other issues. This is good basic management for businesses, and for patent offices.

While courts can resolve patent disputes in the most expeditious manner given the facts of the case, the Office has the unique duty of ensuring that all patentability requirements are met before issuing a patent. Applications that are presented in the best possible condition for examination with clear and definite claims that are believed to distinguish over the prior art and are supported by a robust disclosure will most likely not encounter rejections based on eligibility. Avoiding issues under § 101 can have a very positive effect on pendency and help examiners focus on finding the closest prior art, leading to strong patent protection. Hopefully, the guidance supplied by the Federal Circuit in CLS Bank can help us as we continue to work on reducing pendency and enhancing quality of issued patents.

Federal Circuit Again Supports USITC Jurisdiction for Pure-Enforcement NPEs; Court Again Splits on Claim Construction

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by Dennis Crouch

InterDigital v. USITC and Nokia (Fed. Cir. 2012)

InterDigital is a publicly traded company whose primary revenue comes from patent licenses.  The majority of 3G mobile handset manufacturers pay royalties to the company.  After conducting its investigation, the US International Trade Commission (USITC) found that Nokia did not infringe InterDigital’s patents.  On appeal, the Federal Circuit has reversed based upon the USITC’s improper and unduly narrow construction of the claim terms “code” and “increased power level.”

The USITC was designed to protect US industry from “unfair” foreign competition.  Thus, the staute includes a “domestic industry” requirement that must be satisfied as a precondition of enforcing patent rights through the USITC.  In the appeal, Nokia argued that InterDigital could not satisfy the domestic industry requirement.  That argument was rejected by the USITC and on appeal as well.  The Federal Circuit held particularly that “patent licensing alone” can be sufficient to satisfy the US industry requirement and that the statute does not require that any actual articles covered by the patent be manufactured in this country. “That is, the domestic industry requirement is satisfied if there is a domestic industry based on substantial investment in the patent’s exploitation where the exploitation is achieved by various means, including licensing.” (internal formatting removed).

Writing in dissent, Judge Newman would have sided with the accused infringer and held the patent not-infringed.  Newman writes:

The panel majority’s enlargement beyond the invention described in the patents, in disregard of the protocols of claim construction, simply adds uncertainty to the patent grant. In today’s technology-based commerce, rational economics requires that the patent provide a reliable basis for investment. The patentee is in control of the specification that describes the invention. The panel majority’s theory that “the inventors’ failure to include a reference to the alternative embodiment in the specification does not justify excluding that embodiment from the coverage of the claims” is a departure from routine rules of the meaning of legal documents, and in negation of the notice purpose of the patent claim. From this unsound approach to claim construction, and its incorrect conclusion on the facts of this case, I respectfully dissent.

Judge Newman’s suggestion here is to give claim terms a narrow definition when the patentee uses an ambiguous term and does not provide any limiting definition to that term. 

New Statute of Limitations for Disciplinary Proceedings

Patent

by Dennis Crouch

The USPTO has issued its final rules relating to changes to the statute of limitations for initiating disciplinary proceedings against US patent attorneys and agents.  77 FR 45247. The change is required by the America Invents Act of 2011 (AIA) and will have an effective date of August 30, 2012.

Under the new law, any disciplinary proceeding before the USPTO must be commenced “not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an officer or employee of the Office.  The statute also authorizes the USPTO to regulate the process of informing USPTO officers. 

Here, the final rules identify two key points:

  • The one-year statute of limitations is triggered once the Office of Enrollment
    and Discipline (OED) Director receives a grievance forming the basis of
    the complaint.
  • The OED will accept a grievance from any source, but it must be in writing.

Prior to this change, disciplinary actions were generally understood to be subject to a five-year statute of limitations.

This final rule amends the rule that was proposed in January 2012.  In the original proposal, the one-year timeline would not have been triggered until the USPTO first completed a preliminary review of the case and received a “complete, written response” from the accused practitioner.”  At that time, I commented that the USPTO’s interpretation of the one-year deadline was in tension to the text of the new statute.

 

Prosecution Disclaimer: Another Reexamination Trap

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by Dennis Crouch

Grober v. Mako Products (Fed. Cir. 2012)

In 2006, David Grober won an academy award for the best technical achievement of the year for his “perfect horizon” camera stabilization head.  The camera head is designed to compensate for motion during land, air, and sea operations of a camera.  Grober’s patent No. 6,611,662 covers the camera head and is the subject of this appeal.

This case is like many that involve parallel legal proceedings.  Grober filed an infringement action in 2004, Mako then filed an inter partes reexamination request – asking the USPTO to take a fresh look at the patent.  The district court stayed the litigation until 2006. At that time, the court became antsy and reopened the case.  After claim construction, the district court ruled that the accused products did not infringe the asserted claims and dismissed. Later, during the course of the appeal, the USPTO finally decided the reexamination by confirming the patentability of the asserted claims.

The primary issue on appeal is the construction of the claim term “payload platform.”  The district court narrowly construed the term as limited to a “horizontal surface” and that consequently led to a non-infringement holding.   To reach its conclusion, the district court highlighted Grober’s statements made to the PTO in the pending reexamination.

In reviewing the claim construction de novo, the appellate panel agreed that statements made in an ongoing, pending reeexamination were relevant to the claim construction.  See Krippelz v. Ford (Fed. Cir. 2012). In this case, however, the Federal Circuit held that the reexamination statements were not direct enough to constitute prosecution disclaimer.

Grober’s statements were not an unambiguous disavowal that clearly and unmistakably disclaims claim scope or meaning. In this instance, the reexamination history did not define or limit, let alone clearly and unmistakably disclaim, claim scope.

The appellate court’s approach here looked particularly to the words used by to the patentee in the reexamination to identify any actual limitations or disclaimers and refused to read-between-the-lines to find implied disclaimers.  In this sense, the decision supports the long-held prosecution strategy of keeping the prosecution history file thin. 

The Federal Circuit then offered its own broader construction of the term and remanded the case for reconsideration.

Comment: Although Grober may have escaped, this case highlights one of many ways that a parallel reexamination can serve as a trap for a plaintiff-patentee.  These traps go well beyond the straightforward risk of having claims cancelled or narrowed.

 

 

Federal Circuit Upholds Sanctions Against Litigation Counsel

Patent

By Dennis Crouch

Rates Technology and James Hicks v. Mediatrix Telecom (Fed. Cir. 2012)

James Hicks represented Rates Technologies (RTI) in the litigation against the accused infringers (including Mediatrix) in the Eastern District of New York. During discovery, the court found that RTI had failed to adequately answer several interrogatory answers and, as a litigation sanction, dismissed the case and fined RTI and Hicks $43k each. RTI did not appeal. However RTI’s attorney Hicks did appeal – arguing that he should not be personally sanctioned because the information needed to answer the interrogatory was not within his personal possession and because the discovery orders were not directed personally toward him. The Federal Circuit rejected those arguments.

The primary contention interrogatory at issue is perhaps the most basic for any patent infringement case. The question is:

Separately for each claim of the Patents-in-suit that [RTI] contends is infringed, state the basis for that contention, including … identification on an element-by-element basis of the component … of each accused Mediatrix product that allegedly satisfies each element.

RTI apparently never answered this question.

Pre-Filing Information Insufficient: Before filing a patent infringement lawsuit, the plaintiff’s attorneys are required to conduct some amount of reasonable inquiry to comply with Rule 11 of the Federal Rules of Civil Procedure. This typically includes an element-by-element analysis to ensure that the accused products actually infringe the asserted patent. Of course, before filing, the scope of a plaintiff’s knowledge is often limited. The patentee likely lacks technical information associated with the accused products (as well as full knowledge of the defendants’ product lines). Thus, a full infringement contention normally requires some amount of discovery from the accused infringer. Further complicating this cat-and-mouse game of discovery is the fact that plaintiffs prefer to delay fully explaining their infringement contentions in order to maintain flexibility in the litigation and to keep opposing counsel guessing.

One solution proposed by Peter Menell, et al., in their newly updated Patent Case Management Judicial Guide is to require infringement and invalidity contentions be exchanged early in the case – certainly before claim construction. Most local patent rules follow that process and judges then use the contentions in thinking about the claim construction and also to limit discovery. The problem with this approach is that the claim construction tends to significantly alter the case and may well require amendments to the contentions.

Ongoing Debate: Is Software Patentable?

Patent

by Dennis Crouch

A pair of recent Federal Circuit decisions continue to highlight ongoing ambiguities and difficulties regarding the scope of patent subject matter eligibility for software related patents.

  • Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), — F.3d —-, 2012 WL 3037176 (Fed. Cir. 2012) (computer related financial claims are not patent eligible).
  • CLS Bank Intern. v. Alice Corp. Pty. Ltd., 103 U.S.P.Q.2d 1297 (Fed. Cir. 2012) (computerized stock trading platform claims are patent eligible).

Both decisions agree on several main points: that the mere inclusion of a computer limitation does not make a claim patent eligible and that the claim form (method, system, etc.) does not change the subject matter eligibility analysis. Although perhaps a revisionist history, Bancorp explains that the differing outcomes are based upon factual distinctions in the two cases:

In CLS, we reversed the district court and held that method, system, and medium claims directed to a specific application of exchanging obligations between parties using a computer were patent eligible under § 101. In faulting the district court for “ignoring claim limitations in order to abstract a process down to a fundamental truth,” we explained that the asserted claims in CLS were patent eligible because “it [wa]s difficult to conclude that the computer limitations … d[id] not play a significant part in the performance of the invention or that the claims [we]re not limited to a very specific application of the [inventive] concept.” Here, in contrast, the district court evaluated the limitations of the claims as a whole before concluding that they were invalid under § 101. As we explained above, the computer limitations do not play a “significant part” in the performance of the claimed invention. And unlike in CLS, the claims here are not directed to a “very specific application” of the inventive concept; as noted, Bancorp seeks to broadly claim the unpatentable abstract concept of managing a stable value protected life insurance policy.

Despite this attempted reconciliation, it is clear that the CLS majority has a different approach to subject matter eligibility questions. Perhaps the key difference is the question of how we think of “the invention.” In CLS, the invention is defined by the claim. In Bancorp and the CLS dissent, the court looks for the core inventive concept as the starting-point for its subject matter eligibility analysis.

It is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.

Prior Art Enablement: Burden on Patent Applicant to Prove Non-Enablement

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by Dennis Crouch

In re Antor Media Corp (Fed. Cir. 2012)(Lourie, J.)

As part of an ex parte reexamination process, the Board of Patent Appeals (BPAI) found Antor’s patent claims invalid as both anticipated and obvious based upon the combination of four prior art references.  The patent under reexamination – No. 5,734,961 – covers a fairly simple network-based data transfer method. 

On appeal to the Federal Circuit, Antor challenged the anticipation holding.  Its argument was that the examiner had not provided any evidence that the asserted prior art was sufficient to enable anyone to practice the Antor invention.  The Federal Circuit agreed that prior art must provide an enabling disclosure (for anticipation), but still rejected Antor’s argument by holding that the USPTO need not even consider the enablement question unless the applicant first presents prima facie evidence of non-enablement.

The court held

“that, during patent prosecution, an examiner is entitled to reject claims as anticipated by a prior art publication or patent without conducting an inquiry into whether or not that prior art reference is enabling.  As long as an examiner makes a proper prima facie case of anticipation by giving adequate notice under § 132, the burden shifts to the applicant to submit rebuttal evidence of nonenablement.”

Thus, prior art references are presumed to be sufficiently enabled. Here, the court affirmed that Antor had not rebutted this presumption of enablement because the patentee did “not show[] that undue experimentation would be needed to practice the claimed invention” based upon the disclosure in the prior art.  

Enablement is normally treated as a question of law. Here, however, enablement of the prior art is a subset of the factual inquiry into anticipation. As such, it appears that the court has treated enablement of the prior art as an underlying question of fact and applied the substantial evidence rule to its review of the BPAI decision. 

To be clear, the prior art enablement question looks to whether the arguably anticipatory prior art sufficiently enables the invention now being patented.  You’ll notice that the above discussion focused on anticipation rather than obviousness. The conclusion that a prior art reference lacks enablement does not exclude the reference from consideration during an obviousness challenge.  Thus, Antor mounted (and lost) a separate argument against the obviousness rejections that had been affirmed by the BPAI. See Amgen Inc. v. Hoechst Marion Roussel, Inc. (Fed. Cir. 2003) (“Under § 103 … a reference need not be enabled; it qualifies as a prior art, regardless, for whatever is disclosed therein”).

Introducing David Hricik

Patent

By Dennis Crouch

I am happy to introduce Professor David Hricik as a new Patently-O contributor. Hricik is likely the most well-known and well-respected expert on U.S. patent lawyer ethics and so it makes sense that his focus on Patently-O will also be on patent law ethics, patent lawyer malpractice, and inequitable conduct. His two-volume treatise on patent ethics (co-authored with Mercedes Meyer) is published by Oxford University Press and has become a required reference for patent attorneys dealing with our regularly arising ethical questions. Hricik has been working in patent law for almost 25 years: The first 14 as a (patent) litigator and the last ten as a law professor.

Hricik will be blogging at: www.patentlyo.com/hricik. We’ve added a new tab at the top of the page that links to Hricik’s site.

His first three posts are up, including Best Mode, the AIA, and Conflicts of Interest.

Welcome David Hricik.

Administrative Rules for Implementing a First-to-File System

Patent

On Monday, the USPTO is expected to publish a set of proposed administrative rules for implementing the new first-to-file regime codified by the Leahy-Smith America Invents Act (AIA). A pre-publication copy is attached. Changes to Implement the First Inventor to File Provisions of the Leahy-Smith America Invents Act. Once finalized, the rules should become effective by March 16, 2013. Comments on the rules are due by October 5, 2012.

The rules identify four primary areas of legal changes: (1) conversion of the United States patent system from a "first to invent" system to a "first inventor to file" system; (2) treating U.S. patents and U.S. patent application publications as prior art as of their earliest effective filing date, regardless of whether the earliest effective filing date is based upon an application filed in the U.S. or in another country; (3) eliminating the requirement that a prior public use or sale be "in this country" to be a prior art activity; and (4) treating commonly owned or joint research agreement patents and patent application publications as being by the same inventive entity for purposes of 35 U.S.C. 102, as well as 35 U.S.C. 103.

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Making Pre-Grant Submissions More Efffective

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by Dennis Crouch

The America Invents Act (AIA) expands the opportunity for third-party pre-issuance submissions in patent cases. Beginning September 16 of this year (2012), anyone will be permitted to submit published documents ('printed publications') that are relevant to the examination of a pending application along with a concise explanation of the importance of the documents submitted. 

In a recently issued set of final rules, the USPTO outlines the procedures that it has put in place to handle the new filings. Changes To Implement the Preissuance Submissions by Third Parties Provision of the Leahy-Smith America Invents Act, 77 F.R. 42150 (2012).

Targeted preissuance submissions offer an extremely inexpensive mechanism for limiting competitor patent scope. The process has little downside (in most cases) but does require additional competitor monitoring.  The effectiveness of the process has not been tested.  Although the process has major limitations, I believe that it will serve as an effective tool in the hands of skilled practitioners.  I have spoken with several attorneys who are already preparing their preissuance submissions to be filed in late September.

Key points: 

  • Implementation: Although the pre-grant submissions cannot be filed before September 16, once that date passes, they may be filed in applications that were already on file with the USPTO. I know of some individuals who are already preparing materials for pre-grant submissions against competitor applications. Presumably they will file those sometime on or after September 16, 2012. 
  • Deadlines: During the legislative process, the PTO supported these third-party submissions, but offered some concern that late-stage submissions could create problems for both patent applicants and for the USPTO examination process.  Thus, for most cases the preissuance submission must be filed before the first office action rejection is mailed.  In cases where there is no office action rejection or where the PTO works quickly, submissions will be allowed if within an alternative deadline of within six-months of publication.  The PTO will not consider any submissions submitted after the notice of allowance.
  • Requirements: Submissions may be done anonymously and electronically, but must include (1) A list identifying the items being submitted; (2) a concise description of the relevance of each item listed; (3) a legible copy of each non-U.S. patent document listed; (4) an English language translation of any non-English language item listed; (5) a statement by the party making the submission that the submission complies with the statute and the rule; and (6) the required fee ($0 if fewer than three-documents submitted).
  • Results: The patent examiner is required to consider compliant third-party submissions in preparation for the next office action.  The submitted documents will be listed on the face of the patent as considered.

How to make preissuance submissions more effective?: Some may have a more nuanced or longer-term strategy, but the usual realistic goal of a third-party submission is to limit the scope of a competitor's pending application.  Barring retaliatory competitor action, the only downside is that a broad patent may still issue with a prosecution history reflecting that the examiner considered the submitted documents.  No estoppel is created by the submissions.  The identical argument will not be available during a later post grant review and may be more difficult to prove at trial than it would have been if never considered at the USPTO.

  1. Quality Art: The best preissuance submissions will begin with on-point prior art.  Examiners will not likely be tolerant of submissions that lack prima facie credibility.
  2. Concise and Well Drafted: There is a large risk of examiners ignoring submissions that appear as a large stack of dense documents.  The concise explanation should be designed to quickly lead examiners to a rejection based upon the submitted documents.   
  3. Explaining Known Art: Rather than submitting new prior art, applicants may re-submit art already in the file along with an explanation of how the art should be applied.   
  4. Reputation: Certain practitioners and entities will earn reputations as filing credible/incredible. 
  5. Protect Potential Space: Remember that the patent applicant is still likely to receive a patent. The pre-issuance submission is useful for limiting and defining patent scope.  The record will reflect that the patent definitely does not cover X.  With the normal unpredictability of claim construction, this defining role result can be quite helpful down the road if the patent is ever litigated.  Practicing entities should use the process to clear a path for their own current and potential technology usage.  As discussed below, a third party may be satisfied with the applicant adding a definition to a claim term rather than actually amending the claim. 
  6. Internal Prior Art: Remember that e-mails and other correspondence can potentially serve as printed publications under the patent laws.  (See caselaw on 35 USC 102(a) & 102(b)).
  7. Other Questions of Patentability: The statute calls for the submission of documents “of potential relevance to the examination” and is certainly not restricted to issues of novelty and nonobviousness.  The rules do not allow an applicant to simply submit an argument without an underlying published document. For a definiteness issue, a dictionary definition may serve as the hook.  For a new-matter question, the document could be the related parent application. For a patentable subject matter issue, the document might be Mayo v. Prometheus.

Arguments Serving as Published Evidence: A third-party challenging enablement might want to hire an expert to study the application; publish an expert report; and then submit the report (along with a concise explanation) following these new procedures.  This approach appears to fit within the statute that allows the submission of “any … printed publication of potential relevance.”  However, in its notice of final rules, the USPTO has indicated that it will not accept materials created and published merely for the purpose of challenging the pending application in question.  The USPTO appears to understand that the statute is broadly written and thus does not directly prohibit the filing of such documents.  The Office instead concludes that the submission would be rejected because the required concise explanation of such a document “would likely be deemed an improper attempt by the third party to impermissibly participate in the examination of the application because the relevance of the document being described is its discussion of the patentability of the application.”  In this sense, the Office seems to be setting up a conflict between these new submission procedures found in 35 USC 122(e) and the prohibition on protests and pre-grant oppositions left unamended in 35 USC 122(c). 

I believe that the USPTO is probably wrong on its analysis of the law here — in many (if not most) cases, this type of evidence should be allowed under the law.  The statute does not provide a particular mechanism for challenging the PTO's refusal to consider these submissions, but the Office is unlikely be convinced on petition without resorting to the filing of a federal case. As an aside, the filing of a non-compliant submission will likely trigger the applicant's duty of disclosure.  In that case, the applicant will likely re-file the submission as part of an information disclosure statement.

Note: Some of these ideas came from reading Hal Wegner's useful report on Third Party Submissions: The Final Rule.

Patent

Next week I'll be speaking at the central region AUTM (Ass'n of University Technology Managers) meeting in Oklahoma City along with Terry Rea (USPTO Deputy Director) and Kevin Noonan (MBHB). The session is moderated by Angela Parsons (FR).  See you there.   I recently had some interesting discussions the new benefits of partnering with universities created by the AIA.  

 

I won't make it there, but the National Association of Patent Practitioners (NAPP) annual conference will be August 18-21 in DC. [Brochure].

More on the Death of the Best Mode Requirement

Patent

By Jason Rantanen

Despite (or more likely because of) the effective demise of the requirement that patent applicants disclose the invention's best mode at the time of filing the application, several academic commentaries on the subject have appeared recently, including two that I co-authored.  Below I summarize our most recent work along with two other notable recent articles on best mode.

  • In The Pseudo-Elimination of Best Mode: Worst Possible Choice?, a short essay recently published in the UCLA Law Review Discourse, we argue that by equivocating on the best mode requirement – eliminating it as an argument against validity during an infringement action while technically retaining it in section 112 – Congress may have not only failed to achieve the goal of leveling the playing field between U.S. and foreign applicants, but may have tilted it from uneven in one direct, if it ever was uneven, to uneven in the other.  The article can be downloaded here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2103278.  Our previous article, In Memoriam Best Mode is discussed here.
  • In Patent Reform and Best Mode: A Signal to the Patent Office or a Step Toward Elimination?,  Ryan Vacca provides a detailed history of the best mode requirement up through the America Invents Act, before examining whether the Patent and Trademark office has the ability to enforce the requirement itself.  Professor Vacca concludes that the PTO's methods are unlikely to be effective, and recommends that "if Congress believes it made the right decision in the AIA concerning best mode, then Congress should simply bite the bullet and formally eliminate best mode as a requirement for patentability."  The article can be downloaded here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1957768
  • In Best Mode Trade Secrets, Brian Love and Christopher Seaman conclude that it may become routine post-AIA for patentees to concurrently assert both patent rights and trade secret rights in certain types of cases.  The authors identify undesirable consequences of this change, and suggest an approach courts could consider in order to limit dual claims of trade secret and patent protection.  The article can be downloaded here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2056115