We having a small flower-bulb fundraiser for my son Charly’s preschool. Plant the bulbs this fall and be surprised as they emerge in the spring. 50% goes to the school. Follow the link below. Thanks! Dennis
http://www.flowerpowerfundraising.com/campaign?campaign_id=12365
Over 23,000 plants have been patented under the US plant patent regime. Most of these are varieties of asexually reproduced flowers.
Guest Post by Professor Tun-Jen Chiang of George Mason University.
Patent litigators are all familiar with the Eastern District of Texas. The reason that this otherwise-unexceptional district is able to dominate patent litigation comes down to a little known case, VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), which created nationwide venue for virtually every patent case.
Some background is in order. 28 U.S.C. § 1400(b) allows a patent infringement action to be brought, inter alia, where the defendant "resides." Intuitively, one would think that residence refers to the state of incorporation or principal place of business, and under that version few defendants reside in East Texas.
28 U.S.C. § 1391(c) adds a wrinkle. It states: "For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction." By the plain language of the statute, a corporation that makes any sales in East Texas is then deemed to reside there. This is the basic analysis of VE Holdings.
But the Supreme Court decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957) is very much to the contrary. Fourco dealt with the prior version of § 1391(c), which stated: "A corporation may be sued in any judicial district in which it . . . is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." The respondent in Fourco specifically argued that old § 1391(c) was clear and deemed a corporation to "reside" wherever it did business. The Supreme Court nonetheless held it did not apply to § 1400(b):
We think it is clear that § 1391 (c) is a general corporation venue statute, whereas § 1400(b) is a special venue statute applicable, specifically, to all defendants in a particular type of actions, i.e., patent infringement actions. In these circumstances the law is settled that [h]owever inclusive may be the general language of a statute, it will not be held to apply to a matter specifically dealt with in another part of the same enactment. . . .
We hold that 28 U.S.C. § 1400 (b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).
The Federal Circuit in VE Holdings distinguished Fourco because the statutory language had changed. See 917 F.2d at 1579. But the change in language was immaterial to the underlying rationale of Fourco: the new § 1391(c) was and is still a "general corporation venue statute," and § 1400(b) was and is still a "special venue statute applicable, specifically, to . . . patent infringement actions."
What we have is the familiar situation where the Federal Circuit tosses aside a Supreme Court decision by invoking a slim excuse. See KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007). Until very recently the Supreme Court indulged this. But the Court seems to have changed, and this would be a good time to revisit VE Holdings.
I should add one thing, which is that one can very much question whether Fourco itself is correctly decided. But this is, of course, not a question the Federal Circuit should arrogate upon itself to decide.
By Dennis Crouch
In patent litigation, the patent holder ordinarily bears the burden of proving infringement. This case creates a limited exception for licensees in good standing who file declaratory judgment actions. In those cases, the burden shifts to the licensee to prove non-infringement.
Medtronic, Inc. v. Boston Scientific Corp. (Fed. Cir. 2012)(Linn, J.)
Standing: In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Supreme Court rejected the Federal Circuit’s “reasonable apprehension” test for declaratory judgment jurisdiction in patent cases. MedImmune has been seen as opening the door to declaratory judgment actions even when the patentee could not have actually sued the DJ plaintiff. The most common situation involves a patent licensee who identifies evidence of invalidity. Sever contractual consequences could flow from a licensee simply ceasing royalty payemnts. Under MedImmune, the current licensee can file for a declaratory judgment of invalidity while continuing to pay the license. Under the old rule, that the court would of rejected DJ jurisdiction in that case under a reciprocal-right analysis since the patentee could not have sued the current licensee for infringement. In Lear v. Adkins, 395 U.S. 653 (1969) the Supreme Court announced its general policy of encouraging licensees to challenge patent rights.
Still, even under the expanded DJ jurisdiction of MedImmune, there must be an actual case or controversy between the parties that can be resolved by the court. Courts see the case and controversy language of the U.S. Constitution as creating a dividing line between its domain of resolving disputes and the no-no land of issuing “advisory opinions.” The primary justification given for this distinction was given in a letter by Chief Justice John Jay in response to a request from then president George Washington. The Chief Justice suggested that the court’s refusal to provide advisory opinions is an important element of maintaining the U.S. governmental structure of separation of powers. After MedImmune, however, the threshold for having an actual case became a bit fuzzy- at least in the patent law arena.
In Medtronic, the dispute is over a patent covering an implantable cardioverter defibrillator (ICD). In 1991, Medtronic sub-licensed the patent and has become the largest seller of ICD’s in the country. The license agreement allowed Medtronic to challenge the patent while continuing to pay royalties into an escrow account. Because Medtronic’s activities fell within the license, it cannot be considered an infringer and thus, the patentee had no standing to sue the company for infringement. Still, under MedImmune, the DJ action is clearly has standing.
Proving Non-Infringement in a Declaratory Judgment Action: In ordinary patent infringement litigation, the patentee bears the burden of proving – with a preponderance of the evidence – that the accused products infringe the asserted patent claims. In declaratory judgment patent cases where the patentee has a compulsory counterclaim of patent infringement, the courts essentially treat the case as an infringement action and, as such, require that the patentee prove infringement in order to win the case. In Medtronic, the situation is different because 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:
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 the litigation, the patentee did not assert any infringement contentions or attempt to prove infringement. Based upon that failure, the district court held the patent not-infringed. Now, on remand, the district court will need to begin with a presumption of infringement and then consider whether the licensee can prove otherwise.
USPTO Encourages Third Parties to Participate in Review of Pending Patent Applications
Crowdsourcing Initiative with Stack Exchange Enables Experts to Introduce Prior Art and Improve Quality of
Examination Process
WASHINGTON — The U.S. Department of Commerce's United States Patent and Trademark Office (USPTO) encourages subject-matter experts to take advantage of a new rule implemented under the Leahy-Smith America Invents Act (AIA) that—for the first time in the history of U.S. patent law—allows third parties to submit relevant materials to patent examiners in any given examination. Submission of proposed prior art helps examiners determine whether the innovation in the application is patentable. The new provision, 35 U.S.C. 122(e), was implemented by the USPTO on Sunday, Sept. 16, and applies to any pending application.
Today, efforts are already underway in the private sector to crowdsource the identification of prior art. One such initiative, utilizing input from the USPTO, is a newly launched social network known as Ask Patents by Stack Exchange, in which subject-matter experts volunteer to suggest prior art for given applications, as well as to offer their input on the proposed value of those suggestions from others.
"By introducing third party input into the examination process for the first time since the inception of our nation's intellectual property system, we're able to expand the scope of access to prior art in key areas like software patents. This will improve the examination process and advance the Administration's ongoing commitment to transparency and open government," said Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. "We encourage our nation's innovators to follow Stack Exchange's example and assist us as we improve the examination process and resulting patent quality that will drive our economy and create jobs and exports."
The submission by third parties of prior art—the library of published patents, applications, or other publications in a specific technology area—allows the USPTO to tap directly into the U.S. innovation community. Submissions provide a fuller, more exhaustive scope of materials for examiners to review in determining the novelty of a given application. This new mechanism will help ensure that truly novel, useful, and non-obvious innovations obtain the intellectual property protection they deserve.
Stay current with the USPTO by subscribing to receive email updates. Visit our Subscription Center atwww.uspto.gov/subscribe.
By Dennis Crouch
Two weeks ago I posted a list of issues to consider prior to the September 16, 2012 post grant changeover. Two big changes were that (1) the relatively inexpensive inter partes reexamination is no longer available; and (2) the fee for filing an ex parte reexamination has risen 7-fold from $2,500 to $17,750. In the days leading up to the changeover, several hundred reexaminations were filed –almost an entire year’s worth of reexamination requests. See the chart below for inter partes reexaminations and note that the September filings are only for the first half of September (no filings accepted after September 15).
The Central Reexamination Unit (CRU) may be working quite hard for the next three months to meet the 90–day deadline for determining whether or not to grant the petitions.
This suggests that many potential patent challengers are not happy with the new system.
By Dennis Crouch
Two weeks ago I posted a list of issues to consider prior to the September 16, 2012 post grant changeover. Two big changes were that (1) the relatively inexpensive inter partes reexamination is no longer available; and (2) the fee for filing an ex parte reexamination has risen 7-fold from $2,500 to $17,750. In the days leading up to the changeover, several hundred reexaminations were filed –almost an entire year’s worth of reexamination requests. See the chart below for inter partes reexaminations and note that the September filings are only for the first half of September (no filings accepted after September 15).
The Central Reexamination Unit (CRU) may be working quite hard for the next three months to meet the 90–day deadline for determining whether or not to grant the petitions.
This suggests that many potential patent challengers are not happy with the new system.
By Dennis Crouch
Two weeks ago I posted a list of issues to consider prior to the September 16, 2012 post grant changeover. Two big changes were that (1) the relatively inexpensive inter partes reexamination is no longer available; and (2) the fee for filing an ex parte reexamination has risen 7-fold from $2,500 to $17,750. In the days leading up to the changeover, several hundred reexaminations were filed –almost an entire year’s worth of reexamination requests. See the chart below for inter partes reexaminations and note that the September filings are only for the first half of September (no filings accepted after September 15).
The Central Reexamination Unit (CRU) may be working quite hard for the next three months to meet the 90–day deadline for determining whether or not to grant the petitions.
This suggests that many potential patent challengers are not happy with the new system.
by Dennis Crouch
Matt Kreeger (MoFo) and I just participated in the Lawyer2Lawyer radio show hosted by Bob Ambrogi. Our conversation focused on the new post-grant reforms but bled into a broader discussion of patent reform.
Listen here: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/09/key-changes-to-patent-law/
By Dennis Crouch
Apple v. Samsung, App. No. 12-1600 (Fed. Cir. 2012)
Despite their many disputes, there is one thing that both Apple and Samsung agree upon – that the trial and motion exhibits filed under seal with district court Judge Koh should remain under seal. Earlier this summer, Judge Koh ordered the unsealing of many of those up-to-now secret exhibits.
In an emergency appeal, the Federal Circuit has temporarily reversed Judge Koh’s decision and ordered that the exhibits remain sealed until the conclusion of the appeal relating to unsealing of the records. It is an odd appeal in that both parties want the court to seal the documents. Our adversarial appellate system does not work that well when the parties agree with each other but disagree with the judge. At the district court, Reuters News Service intervened to ask the court to unseal the records. However, Reuters has announced that it will not participate in the appeal. The First Amendment Coalition attempted to intervene in the appeal, but that attempt has been denied by the Federal Circuit. Thus, it appears that no one will be arguing the other side.
I have not yet located the merits briefs for the appeal. Perhaps after reading those briefs I will understand how the Federal Circuit has Appellate Jurisdiction over the case. The vast majority of appeals from district court patent decisions can be classified in one of three boxes:
In the first two situations, an appellant has an immediate right to bring the appeal. Before the court will grant writ of mandamus, the appellant must provide sufficient justification for hearing the case immediately rather than waiting for all the issues in the case to be decided. This is obviously not an exhaustive list of potential avenues for appellate jurisdiction, but it does not appear that this appeal fits any of these three major avenues.
So, as it stands, the Federal Circuit has granted a temporary stay that will keep the documents under seal for the duration of this particular appeal. In the upcoming weeks, more complete briefing will take place and then the court will issue a final decision on whether or not Judge Koh’s order releasing the documents somehow violates her judicial discretion. The stay was decided in a per curium opinion by what is likely the three-member panel that will eventually decide the appeal. However, the court did not release the names of the three appellate judges who participated in the decision.
Notes:
The chart above shows the results of ex parte appeals grouped by the fiscal year of the appeal decision. In the data, I eliminated administrative dismissals and other non-merits actions from consideration. At this point, I don't have a good explanation for the gradual shift in outcomes. It may be driven by the underlying patentability of the claims; the selection of cases for appeal; shifts in the law; and also changes in Board decisionmaking. 2012 figures presented here are only through July 2012.
By Dennis Crouch
Harvard College v. Kappos, 12-cv-1034 (E.D.Va. 2012)
Harvard’s patented OncoMouse has been a bestseller for cancer research here in the US. Two Harvard researchers took an available laboratory mouse and inserted a heritable cancer-causing gene into the creature’s DNA. In the US, Harvard owns three patents covering aspects of the mouse and its creation that are exclusively licensed to Du Pont. U.S. Patent Nos. 4,736,866, 5,087,571, and 5,925,803. The patents were filed pre-1995 and thus have a term that lasts for 17 years from the patent issuance. The first two 17-year terms have expired, but the third could last until 2016 – except for the terminal disclaimer discussed below.
In 2010, an anonymous third party requestor (TPR) filed a reexamination request for the ‘803 patent. Last June, the USPTO confirmed the patentability of the challenged claims. However, the USPTO agreed with the TPR that a broadly worded terminal disclaimer filed in the parent ‘571 application meant that the’803 patent also expired in 2005. Thus, it doesn’t matter whether the claims are valid over the prior art because they are expired. Because the patent had expired, the USPTO refused to allow Harvard to add additional claims to the patent during reexamination.
In the terminal disclaimer filed in the parent case, the patentee agreed to disclaim the term of the parent patent as well as any patent claiming benefit of the patent under 35 U.S.C. §120. Since the ‘803 patent claims priority to the parent under §120, that disclaimer seems to be effective to limit the ‘803’s term as well. However, the disclaimer was never particularly filed in the ‘803 case (only its parent). Further, nothing in the record indicates that the examiner acknowledged receipt of the disclaimer in the parent case and there is no evidence that the terminal disclaimer fee was actually paid. The examiner did, however, remove the double patenting rejection had been blocking the issuance of the parent case and the filed terminal disclaimer authorized payment of the fee.
In the reexamination, the USPTO gave full support the examiner’s decision that the terminal disclaimer limited the ‘803 patent term – finding that Harvard could have corrected the problems with the filing back when the patents were pending but that it is too late now.
It is only now that the non-standard disclaimer language of the terminal disclaimer filed in 1989 has an effect … [that] the patent owner [is] attempting to argue that ther terminal disclaimer had no legal effect. . . . [B]ecaues patent owner did not timely seek withdrawal of the terminal disclaimer from the parent patent as per the procedures in MPEP [at the time], patent owner cannot seek now to nullify the effect of the terminal disclaimer after the issued patent has reached its expiry date.
In response, Harvard has now filed a civil action in the Eastern District of Virginia asking the court to overturn the USPTO decision. For now, however, it appears that the mice are finally free although their title (OncoMouse) is still a registered trademark owned by DuPont.
By Dennis Crouch
American Institute of Physics and John Wiley & Sons v. Schwegman Ludberg (D.Minn)
Publishers John Wiley & Sons and American Institute of Physics have asked the Minnesota District Court for leave to amend and narrow their complaint against the Schwegman law firm. The amendment would drop any allegation that submitting copies of copyright works to the USPTO constitute copyright infringement. The plaintiffs write that the amended complaint
does not allege that this unauthorized copying includes (i) making such copies of a copyrighted work for submission to the PTO as may be required by the rules and regulations of the PTO, (ii) transmitting such copies to the PTO, or (iii) making an archival copy of that work transmitted to the PTO for Defendants’ internal file to document what has been transmitted.
To be clear, however, the plaintiffs have not dropped their case, but continue to allege that other copies and transmission do constitute copyright infringement. Further, because Wiley does not have any proof of those other activities, it argues that the now unchallenged submission to the PTO serves as “evidence of broader use and circulation” sufficient to permit the complaint to move forward.
The newly amended complaint thus recites no factual basis other than the fact that Schwegman is a law firm that prosecutes patents and that, because Schwegman submitted copies of certain articles to the USPTO that it must have also made unauthorized copies. The complaint:
14. Upon information and belief, Defendants have engaged in Unauthorized Copying with respect to the copyrighted articles from Plaintiffs’ journals, including but limited to the articles identified on Schedule A.
15. Plaintiffs cannot know the full extent of Defendants’ Unauthorized Copying without discovery.
The amended complaint also adds a further list of obscure scientific articles that were submitted to the PTO by Schwegman and were allegedly copied internally in an unauthorized manner. The plaintiffs have not yet filed any proposed amendments in the MBHB case.
The USPTO intervened in these cases supporting the law firms. It appears that this amendment is meant to appease the USPTO so that it will fall out of the case – making the defendants look much less sympathetic.
Notes:
By Dennis Crouch
A few days ago, I posted an essay entitled Does the Entire Market Value Rule Make Sense when Applied to Apportionment Analyses? In the essay, I discussed contemporary changes in the entire market value rule that apply the rule even in the context of damage apportionment analysis. In relation to that, I'm enjoying Michael Greene's recent student note where he suggests a new naming convention that focuses the entire market value rule to its traditional role in limiting the equitable relief of lost profits. In the apportionment context, Greene would use a different name – the entire market base rule – for the doctrine limiting the use of the entire market as the base for calculating a reasonable royalty. In the second context, any limit on the evidence would be governed by Federal Rule of Evidence 403. See Michael A. Greene, All Your Base Are Belong to Us: Towards an Appropriate Usage and Definition of the 'Entire Market Value' Rule in Reasonable Royalties Calculations, 53 Boston College Law Review 233 (2012). Mark Lemley's 2009 article also provides an excellent introduction to the issue. Mark A. Lemley, Distinguishing Lost Profits from Reasonable Royalties, 51 Wm. & Mary L. Rev. 655 (2009). Funny tidbit – the Lemley article criticizes the Federal Circuit Lucent decision and, at the same time, the Lucent decision criticizes the Lemley article. Michael Greene tells the story:
Amusingly, [the] Federal Circuit in Lucent cites to and gently criticizes the very Lemley article which itself criticizes the Lucent opinion as confused. Despite lacking access to a time machine, Chief Judge Paul Michel had in fact obtained access to a draft of Professor Lemley's forthcoming article that then turned around [in the final version] and criticized Judge Michel's opinion criticizing it.
Sounds a bit like some blog comments I've seen.
The USPTO has released a new version of the Manual of Patent Examination Procedure (MPEP) along with a reworking of the MPEP website to allow for better facilitate online access to the rules and regulations. The new site can be found at http://mpep.uspto.gov. The new style is also designed to allow the USPTO to quickly modify various sections so that the MPEP “can be updated within hours, rather than months.” A new version of the TMEP is also available for trademark prosecution at http://tmep.uspto.gov.
By Dennis Crouch
Kinetic Concepts and Wake Forest University v. Smith & Nephew (Fed. Cir. 2012)
Wake Forest’s asserted patents cover a medical technique that uses suction to close a gaping wound. In certain situations, the suction method – also called Negative Pressure Wound Therapy – is apparently better than stitches or – my personal favorite – super glue. Smith & Nephew’s product has become popular – thus the lawsuit. My wife is an MD, so my usual wound therapy involves me saying “go see your momma.”
The issue in the Kinetic appeal involves the question of obviousness and whether the ultimate question of obviousness should be decided by a judge or by the jury. The Supreme Court has repeatedly stated that obviousness is a question of law based upon a set of underlying facts. However, most district court judges allow the jury to decide the legal question of obvious. Further, few judges pose interrogatory questions to the jury regarding the factual underpinnings of their legal determination.
Here, S&N proposed that the jury only be asked to resolve the disputed questions of fact outlined in the Supreme Court’s landmark 1966 decision Graham v. John Deere — questions such as the level of skill in the art and the scope and content of the prior art. Under S&N’s proposal, the judge would then take those answers and form a conclusion on the ultimate legal question of obviousness. The patentees responsive brief identified this process as “one of the worst suggestions of all time.” Here, the district court took a somewhat middle ground – deciding to give the legal issue to the jury, but also ask the jury to identify the underlying factual Graham factors. In addition, the district court indicated that it would see the jury’s obviousness conclusion “as advisory.”
The court wanted some factual guidance from the jury, but was also wary of asking the jury to write its response in narrative form. (Why?) In the end, the jury was asked several yes/no questions about the scope of the prior art; the differences between the prior art and the claimed invention; and whether secondary indicia of non-obviousness existed. After eight days of deliberation, the jury returned its verdict. Samples from the verdict form are shown below.
In its verdict, the jury concluded that the defendant had failed to prove the asserted claims to be obvious.
On JMOL, the district court rejected the jury verdict and held instead that the differences between the prior art and the claimed invention were so minimal as to be obvious to anyone of skill in the art. This holding thus left the asserted claims invalid. On appeal, the Federal Circuit has reinstated the jury verdict upholding the patent and held that the “district court committed error by failing to defer to the jury’s factual findings and granting JMOL on obviousness.” Professor Jason Rantanen wrote on this earlier:
Wake Forest, the patent holder, appealed a district court grant of JMOL of invalidity for obviousness of a claimed invention for treating difficult-to-heal wounds by applying suction (negative pressure). The CAFC reversed, holding that (1) the jury’s “advisory” opinion on the ultimate issue obviousness gave rise to implied findings of facts that the district court was required to accept provided that they were supported by substantial evidence, despite the presence of special interrogatories on the verdict form; (2) the jury’s implied findings of facts on the Graham factors were supported by substantial evidence; and (3) the ultimate conclusion of obviousness was that the claims were not obvious.
In arriving at the ultimate (legal) conclusion of nonobvious, the Federal Circuit focused its discussion on the lack of a reason to combine the prior art references (itself a factual finding), referencing concerns about hindsight reconstruction. In a statement suggesting a technology-based limitation on the use of common sense, the court held that “although expert testimony regarding motivation to combine is not always required, the technology at issue here is not the type of technology where common sense would provide the motivation to combine these references.”
The court’s usual approach to jury obviousness decisions typically begins with the jury’s ultimate conclusion of obviousness/nonobviousness and then works back to the factual determinations necessary to reach that conclusion. In the absence of a special verdict spelling out the factual determinations, the court presumes that the jury made those necessary factual determinations and will affirm the jury verdict so long as those facts were supported by substantial evidence at the trial. In Kinetic, there was a special verdict where the jury particularly identified some of its factual conclusions. However, even here, there were a number of factual determinations necessary to reach the nonobviousness verdict – and those are typically implied into the jury verdict. The basic conclusion of the Federal Circuit in this case was that Smith & Nephew’s obviousness argument was – at base – an attempt to challenge those underlying assumed factual determinations and, that challenge must fail because those determinations were supported by substantial evidence presented at trial.
Smith & Nephew challenged this working-back approach as wrong on (at least) two levels. First, since obviousness is a conclusion of law, the adjudged infringer argued that it couldn’t be the basis for presuming particular factual conclusions that were not expressly decided by the jury. This is even further bolstered by the fact that the district court judge identified the jury’s conclusion on obviousness as ‘advisory.’ The appellate court rejected those arguments by relying on its own precedent supporting the working-back approach and by determining that the district court’s reference to the ‘advisory’ nature of the jury verdict had no meaning.
The court went on to specifically indicate that it is proper to submit legal arguments to a jury:
[I]t is neither error nor dangerous to justice to submit legal issues to juries, the submission being accompanied by appropriate instructions on the law from the trial judge. The rules relating to interrogatories, jury instructions, motions for directed verdict, JNOV, and new trial, and the rules governing appeals following jury trials, are fully adequate to provide for interposition of the judge as guardian of the law at the proper point and when necessary. There is no question that the judge must remain the ultimate arbiter on the question of obviousness. He or she exercises that role first in exercising the judge’s duty of giving proper instructions on the law to the jury before it considers its verdict. The judge exercises control on the question again when presented with a motion for JNOV or new trial. In no sense need the judge abdicate the guardianship role.
R.R. Dynamics, Inc. v. A. Stucki Co., 727 F.2d 1506 (Fed. Cir. 1984).
En Banc Rehearing: Now, Smith & Nephew is preparing to ask the Court of Appeals for the Federal Circuit to rehear the case en banc asking the Federal Circuit to give meaning to the legal nature of an obviousness conclusion and ensure that an accused infringer has a right to an independent determination by a judge on the ultimate question of obviousness.
Notes
By Dennis Crouch
Introduction to Supplemental Examination: The new supplemental examination procedure is a creation of the America Invents Act (AIA) and is effective as of September 16, 2012. At its most basic, the new procedure allows a patent owner to seek a low-level review of an issued patent to make sure that it was properly issued based upon some newly submitted information. If – on initial review – PTO agrees that the patent is still viable despite the new information the USPTO will conclude the review and issue a certificate indicating that the information presented in the request does not raise a substantial new question of patentability. On the other hand, if the USPTO finds a substantial new question of patentability, then the USPTO will order a full (ex parte) reexamination.
Inoculating Against Inequitable Conduct: Supplemental examination is often tied to inequitable conduct because the new statute indicates that a patent cannot be held unenforceable for failure-to-disclose (or mis-disclosure of) information during a prior examination once that information is considered in a supplemental examination. Professors Jason Rantanen and Lee Petherbridge have identified supplemental examination as an "amnesty program." They write in the Michigan Law Review that:
New § 257 is thus a patent amnesty program. It encourages patent applicants to use any number of strategies that would never have been countenanced under pre-AIA law to obtain patents, and it offers to cure all but the most extreme through filing a supplemental examination request. For example, potential descriptions of a claimed invention in a prior art printed publication, or possible instances of prior patenting of the claimed invention by another, that are known to a patent applicant, and that might have a high probability of barring a patent or limiting claim scope, may not be disclosed during the initial examination. Similarly, sales and public uses that are known to a patent applicant and that may have a high probability of barring the patentability of a claimed invention may be withheld at least until supplemental examination if the applicant likes (and perhaps longer depending on an applicant's risk tolerance). Even the use of false data to obtain the patent in the initial examination can be exonerated by filing a supplemental examination request, which by the statutorily required process can be expected to produce a director's certificate within three months.
Jason Rantanen and Lee Petherbridge, Toward a System of Invention Registration: The Leahy-Smith America Invents Act, 110 Mich. L. Rev. First Impressions 24 (2011).
To be clear, the strategies identified by Rantanen and Petherbridge would violate the professional ethics of a patent attorney or patent agent who deliberately chose that strategy. The argument here is that the supplemental examination rules (coupled with Theresense, Excergen, and their progeny) provide a marginal incentive to applicants to avoid fully complying with the duties of candor and good faith in all dealings with the USPTO. They write "the analysis provided here relates to the marginal effects of a supplemental examination system." In the end, however, it is unclear whether the new incentive will actually change any behavior. I.e., will the availability of supplemental examination mean that some important evidence will now be buried that would have otherwise been disclosed?
There are two statutory exceptions to the inoculation and both relate to times where the patentee waited too long to request the supplemental examination. The statute labels these prior enforcement allegations and prior allegations. Basically, the supplemental examination (and any subsequent reexamination) must be completed prior to the filing of a lawsuit where inequitable conduct may be raised as a defense. In addition, the supplemental examination must be filed prior to the inequitable conduct being alleged in a pleading or Paragraph IV certification. If the patentee fails either prong then the amnesty fails and a court will have power to adjudge the inequitable conduct.
Timing of Declaratory Judgment Actions: The distinction between the two exceptions can be seen in the context of declaratory judgment (DJ) actions. DJ actions are regularly filed in cases where would-be accused infringers take the preemptive measure of asking a court to declare a patent not-infringed, invalid, or unenforceable. Most (but certainly not all) DJ actions filed in the past few years are primarily venue contests and are filed shortly after the original complementary infringement action.
In thinking about supplemental examination amnesty in the context of DJ actions, it is easiest to begin with the understanding that, with two exceptions, the patent cannot be held unenforceable due to inequitable conduct once the patent properly passes through the supplemental examination amnesty program. In the ordinary infringement litigation filed by the patentee, one of the exceptions block the inoculation in cases where the litigation if filed prior to completion of the supplemental examination. This conclusion is based upon the statutory provision explaining that the inoculation "shall not apply to any defense raised [in infringement litigation] unless the supplemental examination, and any reexamination ordered pursuant to the request, are concluded before the date on which the action is brought." Notice here that the exception to inoculation specifically applies to "any defense." In the declaratory judgment context, the inequitable conduct allegation is not filed as a "defense" but rather as part of the complaint. This means that the § 257(c)(2)(B) exception does not apply to declaratory judgment actions. However, the § 257(c)(2)(A) exception will apply to declaratory judgment actions – leading to the conclusion that supplemental examination will provide amnesty against DJ inequitable conduct actions so long as the request for supplemental examination is filed prior to the filing of a DJ pleading that particularly alleges the inequitable conduct. Here, it appears that to satisfy the filing trigger, the request must meet the requirements set forth in the USPTO's implementation regulations. The USPTO will not grant a filing date to applications that fail to follow those guidelines.
Timing of Supplemental Examinations. In the paragraphs above, I identified instances where the inequitable conduct amnesty is triggered by either the filing of a supplemental examination request or else the completing of the supplemental examination. In many cases, the difference between those two will be minimal. The USPTO has announced its intention to complete all supplemental examination reviews within three months. That interpretation follows the statutory guidance that "Within 3 months after the date a request for supplemental examination meeting the requirements of this section is received, the Director shall conduct the supplemental examination and shall conclude such examination by issuing a certificate indicating whether the information presented in the request raises a substantial new question of patentability." This three-month deadline means that the USPTO will likely be sticklers for the filing requirements and may also mean that the USPTO will frequently order reexamination. The major exception to this quick timeline is that the supplemental examination will not be considered complete for amnesty purposes if a SNQ is raised in a way that triggers the automatic reexamination.
Statutory Provision Section 257: The new supplemental exam procedure is codified at 35 U.S.C. § 257 and reads as follows:
§ 257. Supplemental examinations to consider, reconsider, or correct information
(a) REQUEST FOR SUPPLEMENTAL EXAMINATION.—A patent owner may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent, in accordance with such requirements as the Director may establish. Within 3 months after the date a request for supplemental examination meeting the requirements of this section is received, the Director shall conduct the supplemental examination and shall conclude such examination by issuing a certificate indicating whether the information presented in the request raises a substantial new question of patentability.
(b) REEXAMINATION ORDERED.—If the certificate issued under subsection (a) indicates that a substantial new question of patentability is raised by 1 or more items of information in the request, the Director shall order reexamination of the patent. The reexamination shall be conducted according to procedures established by chapter 30, except that the patent owner shall not have the right to file a statement pursuant to section 304. During the reexamination, the Director shall address each substantial new question of patentability identified during the supplemental examination, notwithstanding the limitations in chapter 30 relating to patents and printed publication or any other provision of such chapter.
(c) EFFECT.—
(1) IN GENERAL.—A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent. The making of a request under subsection (a), or the absence thereof, shall not be relevant to enforceability of the patent under section 282.
(2) EXCEPTIONS.—
(A) PRIOR ALLEGATIONS.—Paragraph (1) shall not apply to an allegation pled with particularity in a civil action, or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the date of a supplemental examination request under subsection (a) to consider, reconsider, or correct information forming the basis for the allegation.
(B) PATENT ENFORCEMENT ACTIONS.—In an action brought under section 337(a) of the Tariff Act of 1930 (19 U.S.C. 1337(a)), or section 281 of this title, paragraph (1) shall not apply to any defense raised in the action that is based upon information that was considered, reconsidered, or corrected pursuant to a supplemental examination request under subsection (a), unless the supplemental examination, and any reexamination ordered pursuant to the request, are concluded before the date on which the action is brought.
(d) FEES AND REGULATIONS.—
(1) FEES.—The Director shall, by regulation, establish fees for the submission of a request for supplemental examination of a patent, and to consider each item of information submitted in the request. If reexamination is ordered under subsection (b), fees established and applicable to ex parte reexamination proceedings under chapter 30 shall be paid, in addition to fees applicable to supplemental examination.
(2) REGULATIONS.—The Director shall issue regulations governing the form, content, and other requirements of requests for supplemental examination, and establishing procedures for reviewing information submitted in such requests.
(e) FRAUD.—If the Director becomes aware, during the course of a supplemental examination or reexamination proceeding ordered under this section, that a material fraud on the Office may have been committed in connection with the patent that is the subject of the supplemental examination, then in addition to any other actions the Director is authorized to take, including the cancellation of any claims found to be invalid under section 307 as a result of a reexamination ordered under this section, the Director shall also refer the matter to the Attorney General for such further action as the Attorney General may deem appropriate. Any such referral shall be treated as confidential, shall not be included in the file of the patent, and shall not be disclosed to the public unless the United States charges a person with a criminal offense in connection with such referral.
(f) RULE OF CONSTRUCTION.—Nothing in this section shall be construed—
(1) to preclude the imposition of sanctions based upon criminal or antitrust laws (including section 1001(a) of title 18, the first section of the Clayton Act, and section 5 of the Federal Trade Commission Act to the extent that section relates to unfair methods of competition);
(2) to limit the authority of the Director to investigate issues of possible misconduct and impose sanctions for misconduct in connection with matters or proceedings before the Office; or
(3) to limit the authority of the Director to issue regulations under chapter 3 relating to sanctions for misconduct by representatives practicing before the Office.
As mentioned above, the effective date of the new supplementary examination procedure is September 16, 2012 and applies to all patents.
Costs and Fees for Supplemental Examination: The USPTO has indicated that its plans are to – for the most part – charge a fee for supplemental examination that is roughly equivalent to its expected cost for conducting the supplemental examination. In a prior post, Professor Rantanen explained: "The cost for filing a supplemental examination request remains steep: $5,140 for the initial request plus $16,120 for the ex parte re-examination fee. Both must be paid at the time of initial request, and the $16,120 will be refunded if no re-examination is ordered." In a proposed change in the fee structure, the USPTO has suggested that it lower the costs by a small amount and also allow for a 50% and 75% reduction in fees for small-entity and micro-entity patent owners. Those new fees will not be effective until early 2013.
Regulatory Process: As instructed by the statute, the USPTO has promulgated a set of rules that more fully govern the process of supplemental examination.
Other Purposes of Supplemental Examination: There are strong suggestions that supplemental examination may be useful outside of the inequitable conduct situation. In particular, patentees may want to ensure that defendants can't argue in court that the best references were never seen by the USPTO. Other patentees may rely on supplemental examination as a mechanism for entering reexamination without having to first admit that something is wrong with the patent. I'll save consideration of these strategies for a later post.
Drew Curtis is the founder and administrator of Fark.com and recently gave a TED Talk where he expressly identifies patent trolls as “terrorists.” His solution – “don’t negotiate with terrorists.” According to Curtis, “patent trolls have done more damage to the United States economy than any domestic or foreign terrorist organization in history, every year.” The pejorative name calling needed to shift because it turns out that every kid wants to grow up to be a pirate.
Today, the USPTO’s board of administrative patent judges changes its name from the Board of Patent Appeals and Interferences (BPAI) to the Patent Trial and Appeal Board (PTAB). This transformation is required by the America Invents Act (AIA) and represents a further step in implementation of the new post-grant review trials as well as (eventual) elimination of intereference proceedings.
I received a few e-mails from parties concerned about the how the transformation impacts already pending appeals. The new name has no direct impact on the thousands of ex parte appeals pending before the Board. For these cases, the transformation really is simply a name change and there is no need for applicants to take any responsive action.
Ex Parte Patent Prosecution: Most of the American legal system is designed to operate in an adversarial environment. Each side presents their arguments and pokes holes in opposing arguments. A disinterested judge then considers these arguments and makes a ruling. The system works well because a financial award is typically associated with winning the argument – this aligning of incentives encourages each party to identify and present the best possible arguments to the judge. Patent prosecution does not follow this model – especially at the initial examination stage. Patent prosecution follows an ex parte model where one party (the patent applicant) has a strong interest in receiving a patent but where there is no interested party on the other side. Instead, the patent examiner is tasked with both seeking to identify arguments against patentability and then also determining whether those arguments are sufficient. Interestingly, patentees often argue that this system is problematic because of the potential bias associated with an examiner judging the quality of her own arguments. Third parties who may suffer under the patent rights also argue that the system is problematic – though for a different reason. They argue that the non-adversarial nature of the system means results in insufficient push-back on patentability questions and thus that many patents issue that should not have issued.
Third Party Intervention in the Prosecution Process in the Form of Preissuance Submissions: Up until now, there has been essentially no mechanism for a third party to participate in the original examination of a patent – that is changing (in a minor way) with the availability of third-party pre-grant submissions for pending patent applications. As of September 16, 2012, anyone has standing to submit documents to the USPTO that relate to pending patent applications.
Allowing for the Submission of Any Printed Publication of Potential Relevance: Most commonly, I suspect that applicants will submit prior art that they have identified as relevant to the pending application. However, the new rules allow the submission of any printed publication. In particular, the statute provides that “Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application.” 35 U.S.C. § 122(e)(1). Thus, the printed publication is not limited prior art documents, but could relevant to other questions. Thus, for instance, a dictionary definition could be submitted for the question of indefiniteness; a court decision could be submitted for the question of patentable subject matter; a portion of the MPEP could be submitted on the question of improper revival; etc. The USPTO has suggested in its implementation regulations that documents prepared and published solely for the purpose of a pre-grant submission will not be accepted. I would argue, however, that restriction would violate the law passed by Congress and codified in 35 U.S.C. § 122(e) that only requires the document be a “printed publication of potential relevance to the examination of the application.”
Guiding the Examiner with a Brief on the Merits: An important element of the new provision is that the preissuance submission must be accompanied by a brief explanation of why the various documents have been submitted. This is essentially a brief on the merits or skeleton argument akin to what would be filed by opposing counsel in litigation. As written, the law requires this submission in the form of “a concise description of the asserted relevance of each submitted document.” Thus, the brief might include a table that shows how the prior art relates directly to the invention claimed; explain how a particular term is unduly ambiguous; how already recognized prior art fits the claims; or how a claim as drafted improperly claims an abstract idea or product of nature. Now, to be clear, this is not litigation and is not an inter partes action. Once the documents and brief is filed, the third party no longer has standing to make any statements or arguments on the record. And, attempts to do so will lead to disciplinary action by the OED. That said, it appears that the USPTO is ready and willing to consider briefs that are accurate and get to the point – especially if done in a way that saves examiner time.
Timeline for Submissions: There are some strict guidelines on the timing of preissuance submissions as goverened by §122(e)(1). That statute indicates that the submission must be:
made in writing before the earlier of—(A) the date a notice of allowance under section 151 is [mailed]; or (B) the later of— (i) 6 months after the date on which the application for patent is first published … or (ii) the date of the first rejection under section 132 …
35 U.S.C. § 122(e)(1). Thus, a submission may only be filed after an application is publication and cannot be filed in non-published cases. Unless a patent is issued very quickly, third parties have at least six months from publication to file a preissuance submission. In areas suffering under a long backlog delay, the submission could be filed much later – so long as it is filed before the first action on the merits. Under the USPTO’s implementation regulations, a restriction requirement on its own will not trigger the deadline.
The best practices approach is to identify problematic applications as soon as possible following publication and create conservative docket for filing preissuance submission. Because of the statutory deadline, the PTO has indicated that it is unwilling to grant any extensions of time for delays in filing.
Are you afraid?: Attorneys at Williams Mullen have urged caution to their clients – indicating that:
[I]ssues remain as to whether it is advisable to prepare such submissions due to the deference that can be given to USPTO examination and the potential prejudice to raising the same prior art in a later proceeding. Third party submissions at this stage will require caution and careful consideration before filing. Moreover, it remains unclear as to what effect these submissions will have on the examination of existing applications.
Williams Mullen is correct to urge caution, although I believe it is overstated. My view is that well written briefs submitted with the documentation will likely impact the prosecution by limiting the scope of the claim that eventually issues. This is a free submission that can be done anonymously (although your name would come out in litigation discovery) or through an organization. The most likely potential reward is that the claims will be narrowed before being attached with a presumption of validity that can only be overcome with clear and convincing evidence.
The short statute governing preissuance submissions reads as follows:
§ 122(e) PREISSUANCE SUBMISSIONS BY THIRD PARTIES.—
(1) IN GENERAL.—Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of—
(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or
(B) the later of— (i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or (ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.
(2) OTHER REQUIREMENTS.—Any submission under paragraph (1) shall—
(A) set forth a concise description of the asserted relevance of each submitted document;
(B) be accompanied by such fee as the Director may prescribe; and
(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.
In house attorneys will likely want to try-out a few to test the effect before an important case comes again. Richoh’s App. No. 13/042,288 (Pub. No. 2012-0233658) offers a good place to start. The published application claims:
- A method for generating a log of stroke data, comprising:
capturing stroke data from a user that inputs the stroke data into a portable computing device;
identifying a location of the user;
identifying acceleration of the user;
generating a log of stroke data that includes a time of input; and
generating a log of location and accelerometer history.
By Dennis Crouch
Sunday, September 16, 2012 marks day-one for the new Patent Trial and Appeal Board (PTAB) that replaces the Board of Patent Appeals and Interferences (BPAI). Before moving forward, I would like everyone on board with the correct pronunciation is P-T-A-B and not P-Tab.
James D. Smith is Chief Judge of the BPAI and appears to be posed to instantly become Chief Judge of the PTAB as part of the transition. Judge Smith recently offered the following remarks on USPTO Director Kappos' Blog:
September 16, 2012 marks a momentous occasion for the Board of Patent Appeals and Interferences. On that day, we become the Patent Trial and Appeal Board (PTAB). In keeping with that change, the Board will open for business to accept petitions for some of the new America Invents Act (AIA) post grant proceedings using the Patent Review Processing System (PRPS), our new, web-based e-filing tool. We are extremely excited to take part in this historic transition.
To commemorate the transition to the new Patent Trial and Appeal Board and as a demonstration of our desire to serve, the Board will be staffed during the entire 24-hour period of that first day. From early Sunday morning at 12:01 a.m., until late Sunday evening at 12:00 p.m., Board personnel will be available to assist the public with filing new cases. After opening day, Board personnel will be available during normal business hours, 8:30 a.m. to 5:00 p.m. Questions may be submitted by phoning 571-272-PTAB (7822) or by emailing Trials@uspto.gov. Feedback on the PRPS system is also welcome, and we have established a separate email box for receiving such feedback at PRPS-Suggestions@uspto.gov.
As Chief of the Board, I am extremely happy of the many accomplishments made by the Board team toward meeting our AIA responsibilities. Many team members have worked tirelessly, preparing for the big day – September 16th, 2012. I would like to thank all those people involved, both internally and externally, for making September 16th a reality.