Guest Post: The February of FRAND

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Guest Post by Professor Jorge L. Contreras. 

For those of us who have been following the telecom patent battles, something remarkable happened a couple of weeks ago.  On February 7, the Wall St. Journal reported that, back in November, Apple sent a letter[1] to the European Telecommunications Standards Institute (ETSI) setting forth Apple’s position regarding its commitment to license patents essential to ETSI standards.  In particular, Apple’s letter clarified its interpretation of the so-called “FRAND” (fair, reasonable and non-discriminatory) licensing terms that ETSI participants are required to use when licensing standards-essential patents.  As one might imagine, the actual scope and contours of FRAND licenses have puzzled lawyers, regulators and courts for years, and past efforts at clarification have never been very successful.  The next day, on February 8, Google released a letter[2] that it sent to the Institute for Electrical and Electronics Engineers (IEEE), ETSI and several other standards organizations.  Like Apple, Google sought to clarify its position on FRAND licensing.  And just hours after Google’s announcement, Microsoft posted a statement of “Support for Industry Standards”[3] on its web site, laying out its own gloss on FRAND licensing.  For those who were left wondering what instigated this flurry of corporate “clarification”, the answer arrived a few days later when, on February 13, the Antitrust Division of the U.S. Department of Justice (DOJ) released its decision[4] to close the investigation of three significant patent-based transactions:  the acquisition of Motorola Mobility by Google, the acquisition of a large patent portfolio formerly held by Nortel Networks by “Rockstar Bidco” (a group including Microsoft, Apple, RIM and others), and the acquisition by Apple of certain Linux-related patents formerly held by Novell.  In its decision, the DOJ noted with approval the public statements by Apple and Microsoft, while expressing some concern with Google’s FRAND approach.  The European Commission approved Google’s acquisition of Motorola Mobility on the same day.

To understand the significance of the Apple, Microsoft and Google FRAND statements, some background is in order.  The technical standards that enable our computers, mobile phones and home entertainment gear to communicate and interoperate are developed by corps of “volunteers” who get together in person and virtually under the auspices of standards-development organizations (SDOs).  These SDOs include large, international bodies such as ETSI and IEEE, as well as smaller consortia and interest groups.  The engineers who do the bulk of the work, however, are not employees of the SDOs (which are usually thinly-staffed non-profits), but of the companies who plan to sell products that implement the standards: the Apples, Googles, Motorolas and Microsofts of the world.  Should such a company obtain a patent covering the implementation of a standard, it would be able to exert significant leverage over the market for products that implemented the standard.  In particular, if a patent holder were to obtain, or even threaten to obtain, an injunction against manufacturers of competing standards-compliant products, either the standard would become far less useful, or the market would experience significant unanticipated costs.  This phenomenon is what commentators have come to call “patent hold-up”.  Due to the possibility of hold-up, most SDOs today require that participants in the standards-development process disclose their patents that are necessary to implement the standard and/or commit to license those patents on FRAND terms. 

On its face, it is easy to see why a FRAND commitment might reassure implementers of a standard.  If a patent is essential to the standard, the patent holder must license the patent on terms that are fair, reasonable and non-discriminatory.  Unfortunately, the devil has proven to be in the details of FRAND, and no two companies seem to have the same view of what constitutes fair, reasonable or non-discriminatory licensing terms.  This lack of agreement has troubled regulators for some time and has led to an increasing number of litigation claims alleging that one party or another to a standards effort has failed to comply with its FRAND obligations. 

The February FRAND statements by Apple, Microsoft and Google are thus informative and potentially of great importance.  To understand the statements, and why the DOJ viewed them differently, it is helpful to compare them side-by-side.  The following table summarizes what Apple, Microsoft and Google said FRAND means to them.

 

Apple (relating to cellular telephony standards)

Microsoft

Google (limited to Motorola Mobility patents)

1. Prior Commitments.

Will the patent holder honor FRAND obligations of prior patent owners?

A party acquiring patents from someone who made FRAND commitments must abide by those commitments

n/a

G will honor Motorola’s existing FRAND commitments

2.  Onward Transfer.

Will the patent holder require future owners of the patent to comply with its FRAND obligations?

n/a

M will require transferees to abide by its FRAND commitments

G will use “best efforts” to ensure that transferees abide by its FRAND commitments

3. Reciprocity.

Will the patent holder require that the licensee grant a license back to the licensor?

n/a

M will only require a grant-back of the licensee’s patents that are essential to the same standard

G will only require a grant-back of the licensee’s patents that are essential to the same standard

4.  Royalty Rate.

Will the patent holder commit to a maximum royalty rate?

Standards-essential patents should be licensed at an “appropriate” royalty rate reflective of the licensor’s share of the overall number of patents essential to the standard

n/a

Maximum per-unit royalty of 2.25% of product net selling price

5. Injunctive Relief.

Will the patent holder seek injunctive relief against unlicensed implementers of the standard?

A party making a FRAND commitment must not seek injunctive relief on patents subject to the commitment

M will not seek an injunction … on the basis of [standards-] essential patents

G will not seek an injunction on the basis of standards-essential patents, during a reasonable negotiation period and if the other party makes a similar commitment

 

Despite their differences, the three FRAND statements exhibit some important similarities.  All three, for example, support the notion that FRAND commitments should “travel with the patent”.  This is an important acknowledgement, as such commitments typically lack the necessary elements of a bilateral contractual arrangement, and have been questioned in both corporate acquisitions and bankruptcy proceedings (see In re Nortel Networks Inc., Order – Case No. 09-10138(KG) (Bankruptcy Ct. D.Del., Jul. 11, 2011)).

The three statements also address the question of injunctive relief.  Numerous commentators have questioned whether injunctive relief is an appropriate remedy for holders of standards-essential patents, particularly in view of the Supreme Court’s four-part analysis under eBay v. MercExchange LLC, 547 U.S. 388 (2006). In 2011, the Federal Trade Commission suggested that injunctive relief might not be justified in the standards context, writing that “[a] prior [F]RAND commitment can provide strong evidence that denial of the injunction and ongoing royalties will not irreparably harm the patentee.”  Federal Trade Comm’n, The Evolving IP Marketplace – Aligning Patent Notice and Remedies with Competition 235 (2011).  In their February FRAND statements, Apple and Microsoft each commit not to seek injunctions on the basis of their standards-essential patents.  Google makes a similar commitment, but qualifies it in typically lawyerly fashion (Google’s letter is more than 3 single-spaced pages in length, while Microsoft’s simple statement occupies about a quarter of a page).  In this case, Google’s careful qualifications (injunctive relief might be possible if the potential licensee does not itself agree to refrain from seeking an injunction, if licensing negotiations extended beyond a reasonable period, and the like) worked against it.  While the DOJ applauds Apple’s and Microsoft’s statements “that they will not seek to prevent or exclude rivals’ products form the market”, it views Google’s commitments as “less clear”.  The DOJ thus “continues to have concerns about the potential inappropriate use of [standards-essential patents] to disrupt competition”. 

It is not clear whether the DOJ’s criticism of Google’s stance on injunctive relief, or its endorsement of Apple’s and Microsoft’s positions, is warranted.  After all, none of the February FRAND statements was made directly to the DOJ, formed part of a consent order, or even rose to the level of a contractual commitment.  But whatever their actual legal effect, it is certainly preferable to have such statements than not, and perhaps this recent wave of “clarifications” will help courts to interpret the array of FRAND-based claims that will inevitably be brought over the next several years.

Mr. Contreras is a Visiting Associate Professor at American University – Washington College of Law and will join the faculty as an Associate Professor this summer.  His research focuses on the impact of intellectual property rules on scientific and technological development, including in the area of technical standard-setting.  He is the editor of the ABA's Standards Development Patent Policy Manual and has written numerous articles and book chapters relating to intellectual property and standards.

 

Guest Post: It’s Time for a Reliable System to Determine Who Owns a U.S. Patent

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by Susan G. L. Glovsky of Hamilton Brooks Smith Reynolds

Patents are far more valuable than they ever have been. Yet, unlike real property, it can be difficult to determine patent ownership or accurately identify encumbrances even though patent value can exceed the value of a home or even an office building. Rights in real property are determined by legislation in each state, which provides for recordation of written transfers and security interests in real property. Legislation related to real property recordation provides a level of certainty in determining the true owner, provides protection for bona fide purchasers, and permits recordation of liens to satisfy debts owed by real estate owners.

This is not the case with patents. Because of an inadequate system for recordation, prospective purchasers, licensees, lenders, and even defendants in a lawsuit may have to take it on faith that the seller, licensor, borrower, or plaintiff truly owns, and has not previously encumbered, these patent rights.

Unless assigned, patent applications are owned by the inventor or inventors named in the application. The inventor(s) can assign ownership to another person or to a company. Thereafter, the assignee can further assign the application or, once issued, the patent. Any assignment must be in writing, and the assignment can be recorded with the United States Patent and Trademark Office. Recordation is voluntary. In the event of conflicting transfers of title to the same patent or application, the Patent Act gives the first purchaser a three month window in which to record, which takes priority over a subsequent purchase during the three month period, even though there was no constructive (through recordation) or actual notice of the assignment at the time the subsequent purchase was made. As a result, potential transfers that might have occurred in the three month period preceding an assignment that could trump that assignment may be unavailable when conducting any title search, leaving a potential purchaser with uncertainty and unacceptable risk.

Security interests in patents are to be recorded where UCC filings are made, based on state law. Unlike real estate, it is not always easy to determine the state in which a security interest in a patent has to be recorded. Once the state is determined, it is necessary to determine, under that state's law, whether recordation is made at the state or local level in order to search for any security interest that may be recorded. Lack of certainty concerning security interests can discourage lenders from providing needed loans.

The time has come to enact national legislation that provides clear record title to patent applications and patents. The value of patents is too great to continue with the present system. Moreover, patents are a federal right and should be addressed at a federal level. A national system would harmonize U.S. law with those of other countries, which generally have a national system for recordation of patent rights. Recently, the Patent Office proposed rules that would require disclosure of any assignee of patent rights. But these rules simply do not go far enough. Legislation is necessary in order to provide a comprehensive internationally recognized system that assures the recordation of patent title, security interests, and other encumbrances through filings solely in the Patent Office.

Taking the best from state systems for recording interests in real estate, at a minimum any legislation needs to:

  • Provide for recordation in the United States Patent and Trademark Office of transfers, security interests, exclusive licenses, corporate mergers, and liens that relate to rights in patent applications and patents as the sole location for recording those interests
  • Provide that a transfer is only effective against a bona fide purchaser once it is recorded
  • Determine priority among holders of transfers and security interests that are not recorded, including whether notice of unrecorded transfers is considered in determining priority
  • Provide a mechanism in Federal Court to remove a cloud on title to patent assets
  • Provide a mechanism (such as a lis pendens) that prevents transfer of the patent asset while a court action to determine rights in the patent asset is pending
  • Allow for dismissal of any lawsuit filed to enforce a patent, unless the record owner or record exclusive licensee is a party

The new rules proposed by the Patent Office have succeeded in focusing attention on recordation of patent rights, but the proposed rules do not go far enough. In order to provide a comprehensive system that addresses all the issues, Congress needs to enact legislation that solves all the problems in the current system.

Notes:

Microsoft and Nokia sue Apple for Patent Infringement (via a Holding Company)

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by Dennis Crouch

Luxembourg based Core Wireless Licensing S.a.r.l. has sued Apple for patent infringement in the Eastern District of Texas. The recently filed complaint alleges that Apple’s communication devices such as iPads and iPhones infringe eight different Core Wireless patents.  The Core Wireless family of patents focus primarily on communication protocols and the patent owner claims that the patents are infringed by any device that communicates using 2G, 3G, or 4G standards.

Core Wireless obtained its portfolio of 2,000 patents and pending applications from Nokia and (apparently) Microsoft. In 2011, the patent licensing entity MOSAID purchased Core Wireless.  MOSAID itself is owned by the US private equity firm Sterling Partners.

The reported purchase price for Core Wireless (including its patents) was just under $20,000 — seemingly a very low price.  However, there is a kicker, the sale requires that the new owner enforce the patents and 2/3 of any licensing revenue must be sent to Microsoft and Nokia. Further, the patent ownership rights are subject to a condition subsequent — if Core Wireless fails to meet minimum performance thresholds then the patent rights revert to the grantors (Nokia and Microsoft). The following comes from a 2011 press release by MOSAID:

Core Wireless will retain approximately one-third of gross royalties from future licensing and enforcement of the patents and will bear all of the costs associated with their administration, licensing, enforcement and monetization. Core Wireless’ ongoing ownership of the portfolio is subject to minimum future royalty milestones. The remaining 2/3 of gross royalties will be paid to Nokia and Microsoft Corporation (NASDAQ: MSFT).

One way to look at this is that MOSAID is essentially working as on a property management contract. With patents, title must shift in order to facilitate the necessary lawsuits. The complaint lists the following patents as infringed: 6,792,277, 7,606,910, 6,697,347, 7,447,181, 6,788,959, 7,529,271, 6,266,321, 6,978,143.

This case is also interesting in the context of Professor Schwartz’s article on Contingent Fee Patent Litigation.  In a round-about way, Nokia and Microsoft have hired MOSAID on contingency fee to enforce their patent rights.  The complaint itself was filed by Henry Bunsow of Dewey Leboeuf in San Francisco with Johnny Ward Jr. serving as local counsel in E.D. Texas. True to its role as hopeful licensor, the plaintiff has only asked for money damages and not injunctive relief to stop ongoing infringement.

Google Buys More Patents: Last fall, MOSAID sold a set of 18 patents and patent applications to Google for a reported $11 million. Recently, the pair recorded a new transaction of about 200 patents and applications from MOSAID to Google.  Those patents were previously owned by the Italian tire manufacturer Pirelli and a spinoff company PGT-Photonics.  Google also recently purchased one eCommerce patent from the tiny firm Alpine-in-Motion.

Contingent Fee Patent Litigation

Patent,

Review by Dennis Crouch

Dave Schwartz is a law professor these days. However, before joining Chicago-Kent he was litigator for more than a decade. Schwartz's most recent article is interesting study of the practice of contingent fee patent litigation. And, the article is appropriately named "Contingent Fee Patent Litigation." [Download the Article from SSRN] The meat of the article is based on Schwartz's interviews with a set of forty litigators who work on contingency fee basis and a privately collected set of contingency fee agreements.

From the abstract:

Drawing upon several sources of data, including in-depth interviews with over forty lawyers involved in contingent representation in patent litigation and examination of over forty contingent fee agreements, this Article provides the first comprehensive analysis of the rapid evolution of contingent representation in patent law. The development of contingent representation includes top-tier litigation firms recently transitioning to taking on high value contingent cases, small entrants representing plaintiffs in lower value cases, and numerous general practice firms experimenting with contingent patent litigation. These diverse players each select and litigate cases using varied methods, resulting in different levels of risk and reward. The Article uses the study of these players to discuss how and why attorney-client contingent relationships established in the nascent marketplace of patent contingent litigation differ from other types of contingent litigation, and what patent law can teach about contingent representation in general.

Schwartz particularly rejects the conclusions drawn by Texas Professors Ronen Avraham and John Golden that former medical malpractice and mass tort lawyers have moved into the contingency fee patent law arena. Rather, Schwartz concludes that "most lawyers whose practice consists of substantially all patent contingent litigation are primarily and historically patent litigators. They are not former medical malpractice, personal injury, or other tort lawyers."

I might quibble a bit with Schwartz's prognostication that the America Invents Act (AIA) is likely to reduce the filing of weak patent claims where the patentees are hoping to settle for the cost of defense. The basis for this is the AIA's new anti-joinder rule that "joining multiple defendants in many circumstances." Schwartz correctly writes that "this means that the practice of suing multiple unrelated defendants in one cause of action is prohibited going forward." However, in my own experience filing patent complaints, it is not much more difficult to file 20 separate actions as it is to file one action against 20 defendants. The primary difference is the $350 federal court filing fee and perhaps a need for a slightly better system of managing multiple cases. However, those fees are still small when compared with settlement figures.

One topic fascinating to me that is only lightly discussed by Schwartz is financing for the lawyers themselves and the rise of Wall Street hedge fund and bank financed patent litigation. Those underlying financing issues almost certainly drive elements of contingent fee patent litigation.

Download the Article from SSRN

Copyright: Lawfirms Sued for Submitting Prior Art to the USPTO

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  • John Wiley & Sons and American Institute of Physics v. McDonnell Boehnen Hulbert & Berghoff (MBHB) (N.D. Ill.) (Complaint)
  • American Institute of Physics and John Wiley & Sons v. Schwegman Ludberg (D.Minn) (Complaint)

The Hoboken publishing company (John Wiley) and the non-profit American Institute of Physics have continued their quest to pursue copyright infringement charges against US patent attorneys who submit copies of journal articles to the US Patent Office during the patent application process. The submission of those documents is required by law and attorneys who fail to submit known and relevant prior art can be subject to ethics charges and the associated patents held unenforceable. Earlier this year, the US Patent Office issued a memo indicating its belief that copying and submitting copyrighted documents should be considered a non-actionable fair use.  Firms already pay for access to the articles and the USPTO also has its own access to most of the articles. The issue is whether the patent applicants must pay an additional fee for making a copy for the USPTO and an additional copy for the in-house file.

The first two law suits were filed yesterday. The first against my former law firm MBHB LLP in Chicago and the second against the Schwegman firm in Minnesota.  These two firms are known for the high level of scientific and technical expertise of their attorneys.  (Full Disclosure – MBHB is the primary advertiser on Patently-O)

The complaints allege two particular infringing acts:

14. In connection with researching, filing and prosecuting certain patent applications, McDonnell made and/or distributed to the United States Patent and Trademark Office (“PTO”), and perhaps others, unauthorized copies of copyrighted articles from plaintiffs’ journals … Such unauthorized copies were used for the commercial benefit of defendants and their clients.

15. Upon information and belief, defendants made (a) additional copies of the copyrighted works that defendants included or cited in their patent applications to the PTO, including those identified on Schedule A, and (b) copies of plaintiffs’ copyrighted works that defendants considered in connection with those applications, but did not ultimately cite or provide to the PTO. Plaintiffs cannot know the full extent of defendants’ copying without discovery. Apart from the copying of plaintiffs’ works accompanying the patent filings described above, this internal copying infringes plaintiffs’ copyrights.

In his article for PaidContent, Jeff Roberts sees these two as “a test-run. . . . If the firms fold their cards and settle, John Wiley and the physicists may be emboldened.” (See also Zach Winnick at Law360).

In the complaint, Wiley identifies two articles that MBHB allegedly submitted to the USPTO:

  • Raznikov, V., et al., “A new approach to data reduction and evaluation in highresolution time-of-flight mass spectrometry using a time-to-digital convertor datarecording system,” Rapid Communications in Mass Spectrometry, vol. 15, No. 8, pp. 570-578 (2001); and
  • Erchak, A., et al., “Enhanced coupling to vertical radiation using a twodimensional photonic crystal in a semiconductor light-emitting diode,” Applied Physics Letters, vol. 78, No. 5, pp. 563-565 (2001).

The complaint in the Schwegman case are based upon these two articles:

  • McDonald S., et al., “Photoconductivity from PbS- nanocrystal/ semiconducting polymer composites for solution-processible, quantum-size tunable infrared photodetectors,” Applied Physics Letters, vol. 85, No. 11, XP012062554, ISSN: 0003-6951, pp. 2089-2091, (Sep. 13, 2004); and
  • Greenwald, et al., “Polymer-Polymer Rectifying Heterojunction Based on Poly(3,4-dicyanothiophene) and MEH-PPV,” J. Polym. Sci. A: Polym. Chem., vol. 36:17, pp. 3115-3120, (1998).

I have contacted the authors of each of these articles, but have not yet received any response. MBHB’s managing partner Marcus Thymian released a statement referring to the USPTO’s position on fair use. “We note that the United States Patent and Trademark Office has released its position — that it is a fair use for a patent applicant to submit a copy of non-patent art to the patent office to fulfill the disclosure requirement imposed by the patent regulations.”  It will also be easy for the law firms to obtain an opinion that internal copying also qualifies as a fair use under Section 107 of the Copyright Act. 

In a statement to Law360, the plaintiffs attorney Bill Dunnegan appears ready to admit – despite language in the complaint – that submissions to the USPTO are not actionable.  He is quoted as saying “The crux of what our case deals with is the internal copying by the law firms after they have one copy in their hand. . . . Those copies are not licensed, and the patent office didn’t take a position on whether or not fair use would apply to those copies.”  The copy-for-file issue seems to fall in line with the Supreme Court’s analysis in Sony v. Universal (1984). In that case, the court held that it was a fair use for home consumers to record television broadcasts so the consumers could view the shows at a later time. 

Notes:

  • Submitting Citations: Several years ago, the USPTO realized that it already had copies of all issued US patents within its in house databases and asked patent practitioners to stop sending-in copies of patents. Rather, the patent attorneys were asked to simply submit a list of US patent documents that materially related to the patent being examined.  To the extent that the USPTO already has access to many of the publications in question here, a similar solution could work that allows patent practitioners to simply submit the citation to articles within the USPTO databases.
  • Open Access: Depending upon pricing structure, access to a journal such as the Journal of Applied Physics costs as much as $15k per year.  Academic authors generally receive no compensation for publication and there is a growing movement amongst academia toward open access journals.  Almost all law reviews make their works freely available online.  This enforcement project may push the sciences in that direction as well.

GE Wins Wind Turbine Patent Appeal – USITC Must Now Determine Whether to Block Mitsubishi Wind Turbine Imports

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GE v.USITC and Mitsubishi (Fed. Cir. 2012)

Wind turbine technology is coming into its own. GE and Mitsubishi are both global leaders. Mitsubishi imports wind turbines into the US, and GE filed a complaint with the US International Trade Commission (USITC) alleging infringement of three patents. Patent Nos. 7,321,221, 6,921,985, and 5,083,039. The '039 patent expired in 2011 and, because the USITC's only remedy is injunctive relief to stop ongoing and future infringement, the court has dismissed all charges associated with that expired patent.

During its proceedings, the USITC Administrative Law Judge found the GE patents infringed, enforceable, and "not invalid." However, patents are only enforceable at the USITC if there is a "domestic industry" for the claimed invention. 19 U.S.C. § 1337(a). The statute specifically requires a US industry that can show "with respect to articles protected by the patent" significant investment in plant and equipment; employment; or investment in exploitation, "including engineering, research and development, or licensing." The ALJ found a domestic industry, but the full Commission rejected that finding and additionally held that Mitsubishi did not infringe the '221 patent.

Win for GE: In a decision penned by Judge Newman and joined by Chief Judge Rader and Judge Linn, the Federal Circuit has affirmed-in-part, vacated-in-part, reversed-in-part, and remanded. Overall, this is a win for GE because the appellate court ruled that a domestic industry exists in relation to the '985 patent and it appears that the USITC already agrees that the '985 patent is valid and infringed.

USITC Domestic industry jurisprudence is a mess. Here, the basic question boiled down to whether there is at least one claim – GE's wind turbines are would infringe the claims in its asserted patents. That decision obviously turned on claim construction and particularly whether GE's domestic turbines included a "converter controller coupled with the inverter … to shunt current from the inverter." The problem with GE's domestic turbines is that its controller is within the inverter and the Commission held that it could not therefore be "coupled to" or shunt current "from" the inverter. On appeal, the court rejected that analysis and instead held that the claim does not require that the controller be separate from the inverter.

A similar argument was rejected in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), where some of the claims recited a receiver "connected to" or "coupled to" a processor or that the receiver "transfers" information to the processor. The accused infringer in NTP had argued that "connected to," "coupled to," and "transfer from" each requires the receiver and the processor to be separate, but the court concluded that "the two components could be connected, joined, or linked together by wires or other electrical conductors and still be located in the same housing or even on the same circuit board." 418 F.3d at 1310-11. The court also held that the function that information is transferred between two entities does not require physical separation of the entities. Id. at 1310.

Based upon its corrected claim construction, the Federal Circuit was able to conclude that claim 15 of the '985 patent "covers the domestic industry turbines" and that GE therefore has a right to bring an action on the patent in the ITC.

Notes:

  • GE filed a parallel lawsuit requesting damages and injunctive relief against Mitsubishi in the Southern District of Texas That case has been stayed pending the outcome of the ITC action. In a separate case, GE is fighting with one of its former employees — Thomas Wilkins who is claiming joint inventorship rights to the patents. Wilkins has apparently assigned his rights to Mistubishi.

Richard Taranto: Next Federal Circuit Judge

Patent

In his blog, Bill Vobach reports on the recent Senate Judiciary Committee hearing on Federal Circuit nominee Richard Taranto. Vobach reports:

It appeared that the hearing was only attended by three senators — Senator Franken (Minnesota), Senator Grassley (Iowa), and Senator Lee (Utah). Questions were asked by all three senators. Senator Franken asked Mr. Taranto about his clerking for Justice Sandra Day O’Connor. Senator Grassley asked Mr. Taranto about the Defense of Marriage Act. Senator Lee questioned Mr. Taranto about judicial philosophy. No material, if any, questions were asked about patent law.

There do not appear to be any roadblocks in the way of Mr. Taranto’s confirmation and we can expect that he will be joining Chief Judge Rader and his colleagues in short order.

Mr. Taranto is an appellate and Supreme Court litigator at the small but well established DC firm of Farr & Taranto. He has participated in dozens of Federal Circuit patent appeals, including several Rambus cases, Verizon v. Cox, Lucent v. Gateway, Syngenta v. Monsanto, and others. Mr. Taranto has argued three IP cases before the U.S. Supreme Court: MGM v. Grokster (contributory copyright infringement), Warner Jenkinson v. Hilton Davis (patent law doctrine of equivalents), and Two Pesos v. Taco Cabana (trade dress infringement). He has taught a variety of classes as an adjunct professor, including patent law at Harvard in 2002. Taranto graduated from Yale Law School in 1981. He clerked for Judge Abraham Sofaer on the Southern District of New York; Judge Robert Bork on the D.C. Circuit; and Justice Sandra Day O’Connor on the Supreme Court.

During his discussion Mr. Taranto noted that both of his grandmothers are 100-years-old and still living. I suspect that actuaries would agree that this gives Mr. Taranto a good chance of living a long time as well. He is current 54 years old.

Taranto’s favorite non-living Supreme Court justice: Justice Harlan.

Taranto was nominated in November 2011.

* * * * *

The appellate court now consists of eleven circuit judges: Chief Judge Rader along with Judges Newman, Lourie, Bryson, Linn, Dyk, Prost, Moore, O’Malley, Reyna, and Wallach. Mr. Taranto will fill the bench as number twelve. Judges Mayer, Plager, Clevenger, Gajarsa and Schall all sit on the bench with senior status. Judges Newman, Lourie, Bryson, and Dyk are all eligible to elect senior status and Judge Linn will be eligible in April of this year. It is likely that at least two positions will open-up during the next year.

IBM’s Patent Abandonment Strategy

Patent

by Dennis Crouch

It is well known that IBM receives more US patents than any other company. The company also abandons more patents than any other company.   Once a patent issues, the patent holder must pay maintenance fees in order to avoid abandonment.  Fees are due at 3½, 7½, and 11½ years after issuance and each subsequent fee is substantially higher. Thus, under the current schedule, the first fee is $1,130, the second fee is $2,850, and the third fee is $4,730.  In recent years, IBM has abandoned thousands of patents for failure to pay the fee due at 3½ years from issuance.  IBM’s rate of abandonment is more than double that of other major patent holders. 

The chart below shows the percent of IBM-assigned patents that that were abandoned withn 4–years of issuance for failiure to pay the maintenance fee due.  The most recent available annual information is for patents issued in 2007. (Maintenance fees for patents issued in 2008 are due in the upcoming months).

PatentlyO130

A company like Apple is on the other extreme regarding payment of these renewal fees. Based on my records, Apple has not abandoned a single application issued in the past ten years based upon failure to pay the first fee. Canon rivals IBM in terms of sheer number of patents but typically abandons fewer than 1% of its issued patents at the four-year mark.

What’s going on here? Apple and Canon are certainly paying maintenance fees on patents that would be found invalid on reexamination and not-infringed in court. On the other side, IBM could have predicted at the time of issuance that it wouldn’t pay the maintenance fee — so why did it pay the $1,000 issue fee?

Patently-O in the Courts: Tropp v. Conair Corporation

Patent,

By Dennis Crouch

Tropp v. Conair Corporation (E.D.N.Y. February 28, 2012) Download TroppConair

A federal court in the Eastern District of New York recently justified its holding in a patent case based at least partially on a 2010 Patently-O posting. David Tropp's patent claim against Conair and others was denied based upon the joint patent infringement doctrines outlined in BMC Inc. v. Paymentech, 498 F.3d 1373, 1378 (Fed. Cir 2007) and Muniauction, Inc. v. Thompson Corp., 532 F.3d 1318, 1329 (Fed. Cir. 2008).

Conair then asked that the case be ruled "exceptional" to justify an award of attorney fees. In rejecting that claim, the court cited Patently-O for the proposition that the line of cases on joint infringement left some amount of wiggle room for courts to find joint infringement absent facts sufficient to support traditional vicarious liability. Based upon potential ambiguity in the law, the court found that the plaintiff's theory of the case had not been improperly pursued, even if ultimately unsuccessful.

Muniauction did not indisputably hold that vicarious liability is the only way to satisfy the control or direction standard. It only made clear that (I) mere "arms-length cooperation" is not sufficient; and (2) vicarious liability, if established, is sufficient. Muniauction, 532 F.3d at 1329-30. At the least, such a reading of BMC and Muniauction is not objectively baseless. See Global Patent Holdings, LLC v. Panthers BRHC LLC, 586 F. Supp.2d 133 I, I 334-35 (S.D. Fla. 2008) (finding it "appears that" vicarious liability is required to satisfy the direction or control test, while also acknowledging that the "Federal Circuit did not explain with any specificity what it meant by 'direction or control'"); Dennis Crouch, MUNIAUCTION: Joint Infringement Requires Mastermind, Patently-O (July 15, 2008) https://patentlyo.com/patent/2008/07 /muniauction-joi.html (opining that Muniauction "left some wiggle room," open space to be further developed by ligation, such that a "later case could still hold that it is not necessary to show facts sufficient to support traditional vicarious liability"). Accordingly, this argument in particular, and defendants' motion in general, depends on an exaggerated view of the certainty and static determinism of the law of divided infringement.

I communicated with Tropp's attorney (and fellow blogger and Princeton alum) Ron Coleman who noted that an appeal on the merits of the case has already been filed.

Of course, the joint infringement (aka divided infringement) issue is being discussed in the halls of Madison Place in the pending en banc case of Akamai Tech v Limelight Networks.

Intellectual Ventures Flexes Some Patent Muscle

Patent, , ,

The following is a guest post by Patrick Anderson of Patent Calls. Patrick originally published this on his own blog, GametimeIP.

Intellectual Ventures made a name for itself by (originally) negotiating patent licenses outside of litigation.  However, when those prospects started to run dry, IV launched a warning shot–which later appeared a bit underwhelming for a mass aggregator holding tens of thousands of patents.  This opening blow was followed by a series of targeted rifle shots, like their ITC enforcement action against Hynix and Elpida.  What these lawsuits collectively lacked was shock-and-awe, like Jay Walker's bold protestation against widespread, uncompensated use of his company's IP.  Until now, that is.

Intellectual Ventures has now sued AT&T, T-Mobile, and Sprint Nextel in a single lawsuit over fifteen different patents.  Breaking the news on its IV Insights Blog, the patent owner provided a copy of a complaint and a relatively simple statement noting that the aggregator "previously attempted to discuss licensing options with each of these companies, but none were responsive." The technology appears to mainly deal with techniques for managing cross-carrier text and multi-media messages, hence the combination of carriers in a single suit despite patent reform's partial ban on the practice.  Perhaps even more interesting are the various original sources of patents used in IV's most recent attack.

This week's lawsuit, more than the others IV previously waged, demonstrates the obvious power of massive patent aggregation.  The fifteen patents identified in the suit come from at least 10 different sources, including major companies, research institutions, one university and some individual inventors.  Separately, any given patent could be vulnerable to non-infringement arguments, or susceptible to a momentum-killing reexamination.  Combined, however, the patents are inherently much stronger.  Assume, for example, that for each patent asserted, the wireless carriers believed they had a 90% chance of invalidating all relevant claims at trial.  To prevail, the carriers must prevail in fifteen independent events, which carries only about a 20% likelihood of success.  And there is good reason to treat invalidation and infringement of each patent as an independent event because, although the patents are all related in general subject matter, most come from different sources and thus describe distinct inventions.

In fact, only three patents come from the same original owner–Conexant–who provided 6,977,944, 7,343,011 and 7,136,392.  Remaining contributors to IV's pool of asserted patents are responsible for only one patent each, and include Verizon (the only major wireless carrier absent from the suit), Motorola, Nokia, Telecordia Technologies (formerly BellCore, the Baby Bell's version of Bell Labs), and Hong Kong University of Science and Technology.

Interestingly, while Verizon contributed patents to IV's collection, and managed to avoid this latest lawsuit, Motorola's deal with IV apparently did not come with rights, at least to some portfolios.  Motorola's contribution was part of a 344-asset sale to Torsal Technology Group back in 2008.  Torsal subsequently transferred the Motorola patent to Antozskij Research LLC, which merged with Intellectual Ventures I LLC earlier this month.  All three transactions used the same law firm to record the deal: Schwabe, Williamson & Wyatt in Portland.  Telecordia's contribution is part of a transaction involving 45 assets sold to TTI Inventions B LLC in 2010.  TTI Inventions merged with Intellectual Ventures II, LLC earlier this month as well.  Telecordia is currently owned by Ericsson, but the sale to IV's holding company occurred during the ownership tenure of two notable private equity firms: Providence Equity Partners and Warburg Pincus.

Listed as lead counsel for IV is Martin Black of Dechert LLP, marking the sixth different law firm used as lead counsel for the aggregator.  Several are large, well-known law firms (including Susman Godfrey Weil Gothshall, and Irell & Manella).  This is the first lawsuit filed in 2012 for IV, and the first in nearly four months (John Desmarais' firm sued Nikon over five different patents in late October).  While IV's next move remains to be seen, it's safe to say things just got a lot more interesting.

Deference to BPAI: Federal Circuit Affirms Ruling that Monsanto’s Late-Filed Claims Win Priority over Pioneer’s Issued Patent

Patent, , , ,

By Dennis Crouch

Pioneer Hi-Bred International, Inc. ("Pioneer") v. Monsanto Technology LLC ("Monsanto") (Fed. Cir. 2012)

Both Pioneer and Monsanto claim to have invented the genetically modified variety of Zea Mays corn. In 1988, Pioneer filed its patent application and received U.S. Patent No. 6,258,999 in 2001 with a simple broad claim:

1. A fertile transgenic Zea mays plant comprised of stably incorporated foreign DNA, wherein said foreign DNA consists of DNA that is not from a corn plant and that is not comprised of a T-DNA border.

Monsanto filed its related GM Zea mays patent application in 2005 but asserted priority back to a 1990 filing date. The Board declared an interference in 2009 and assigned Pioneer as the senior party based upon its earlier filing date.

Both parties filed motions to the Board asking that the respective priority claims be denied. The board sided with Monsanto – finding that Monsanto's patent claim drafted in 2005 properly claimed priority to the 1990 filing document but that Pioneer's patented claim was not sufficiently disclosed in its 1988 application. That ruling made Monsanto the new senior party. On appeal, the Federal Circuit has affirmed.

Interference Claim Filing Date: On appeal, Pioneer argued that Monsanto's late-filed patent claim was time-barred by 35 U.S.C. § 135(b)(1). Under the statute, an interference can only be declared if the junior party makes a claim "prior to one year from the date on which the [senior party's] patent was granted." Here, the Federal Circuit affirmed the BPAI's ruling that Monsanto's patent claim submitted in 2005 was not time-barred even though it was filed four years after Pioneer's patent. That odd conclusion is based upon the [factual] conclusion that the 2005 was "sufficiently congruent" to patent claims filed by Monsanto before the critical date, even though no prior claim included all of the limitations found in the 2005 claim.

Burden of Proving/Disproving Priority: The second point on appeal focused on whether Pioneer's patent could properly claimed priority to its 1998 filing. Pioneer argued that the BPAI had improperly shifted the burden onto Pioneer for justifying an early priority date rather than forcing Monsanto to prove that Pioneer's patent claim was not entitled to the early filing-date priority. On appeal, the Federal Circuit agreed that Monsanto had the burden of showing why Pioneer should be deprived of its interference priority. However, the court agreed with the Board that Monsanto had met that burden by demonstrating that Pioneer's original application lacked any express reference to an embodiment in which the foreign DNA did not comprise a T-DNA border.

Deference: The case is perhaps most interesting for the clear deference that the appellate panel gives to the USPTO Board of Patent Appeals and Interferences – repeatedly focusing on whether the board committed reversible error rather than jumping to the underlying question of whether the Board made the correct decision. The Supreme Court's decision in Dickinson v. Zurko requires substantial deference be given for BPAI factual findings, although questions of law are still reviewed de novo.

Notes:

  • How this Relates to Marine Polymer: For this statute, the court provides a broad interpretation of the word "claim" that is not bound to the actual and literal text of the claim that is the subject of the interference. It is a parallel approach that led Judge Dyk to his conclusion in Marine Polymer that arguments made during prosecution change the scope of the claim and therefore should count as "amendments" under 35 U.S.C. 252. The issue of claim amendments under is important for reexaminations and reissue patents because those post-grant amendments (when "substantial") lead to absolute intervening rights for anyone using the invention prior to the amendments. The Federal Circuit has agreed to rehear the Marine Polymer case en banc later this year.
  • My Friend Dr. Zuhn has more at PatentDocs
  • Factual: In the text is bracket the word "factual" because it is not clear to me whether the conclusion of sufficiently congruent claims is a factual question regarding the scope of invention or a question of law based upon claim construction.

Political Candidates Sued for Patent Infringement

Patent,

by Dennis Crouch

EveryMD v. Rick Santorum, Mitt Romney, and Newt Gingrich (C.D. California)

In a recent filing, Hollywood patent attorney and inventor Frank Weyer has sued Rick Santorum, Mitt Romney, Newt Gingrich, and an estimated 4 million FaceBook business account holders for infringing Weyer's U.S. Patent No. 7,644,122. The lawsuit was filed by Weyer's company EVERYMD. That company provides communications services to over 300,000 medical doctors.

The complaint alleges that FaceBook business account holders infringe the patent by creating individual home pages for members of a group of members that contain controls for sending messages to and for submitting comments about the members. Download Complaint. In 2011, the patentee offered an open license to FaceBook business account holders for $500 per account. The complaint states that that reduced price license program "has ended."

The patent itself is in the midst of an inter partes reexamination originally requested by FaceBook. ?See Reexam No. 95/001,411. In the reexamination, all of the claims are currently on appeal to the Patent Office's internal Board of Appeals (BPAI) following a final rejection of the claims by an examiner in the Central Reexamination Unit (CRU). At least two other continuations of the application are pending and claim priority to the original 1999 filing date.

022812_1403_PoliticalCa1 In 2005, I reported on Weyer's case against Ford for infringing his patent on user-selectable multi-color instrument panel illumination. In an earlier case Weyer sued Network Solutions and Register.com for violating his patent on the selection of an e-mail address based on a domain name. He has also sued Harley Davidson, Bosch, and MySpace. Those cases have all settled. Prior to law school, Weyer was a Peace Corps Volunteer in Lesotho and now works as a volunteer engineer in Antarctic expeditions. I should also mention that Weyer's book M.I.T. Can Be Murder is for sale on Amazon. His screenplay based upon the book has received multiple honors.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, , , ,

Conference on Industry/Academic Collaborations: Lessons from the Trenches

  • Innovation remains a major driver of economic growth in this country, and research universities provide a key reservoir of innovation. Increasingly, universities and industry have joined forces to translate that potential into jobs and commercial industries. Designing the complex legal and business frameworks for these collaborations is an evolving art, which will be discussed by those at the forefront of these transactions. On February 29, at UC Hastings College of Law, individuals from some of the biggest companies in the world will discuss their relationships with Universities. Google, Hoffman-LaRoche, Intel, Pfizer and BP will speak about their collaborations. The Keynote Speaker will be Chris Vein, The White House Office of Science and Technology Policy. Guest speakers include: Robin Feldman, Susan Capello, Paul Willems, Louisa Daniels, Jeff Walz, Laura Berner, and many others. This event will also be streamed online for individuals who are unable to attend. [Link]

Federal Court Dismisses OSGATA Lawsuit

  • The OSGATA suit against Monsanto has been dismissed by the US District Court for the Southern District of NY. OSGATA claimed that they did not want or intend to grow crops containing Monsanto patented gene traits and they feared being sued by Monsanto. Judge Naomi Buchwald noted that, Monsanto averages about 13 patent infringement lawsuits targeted towards farmers per year, which is considered insignificant compared to the number of farms in the US. The court held that there was no case or controversy because Monsanto has yet to take action against any of the plaintiffs. [Link]

USPTO Detroit Office Update

  • The Elijah J. McCoy United States Patent and Trademark Office (USPTO) will open in Detroit, Michigan in July 2012. The USPTO plans to hire for more than 100 positions, including patent examiners and Board of Patent Appeals and Interferences judges. The USPTO hopes to fill more than 50 percent of the positions by the end of the summer. Vacancy announcements for patent examiner positions and judges have been posted on the USA Jobs website.

Student Writing Contest

  • The Pennsylvania Bar Association IP Law Section is accepting papers for its annual IP writing contest. The competition is open to all students enrolled in one of the Pennsylvania law schools and Pennsylvania residents enrolled at other law schools within the US. The first place winner will receive $2500 and the paper will be published. [Link]

Patent Jobs:

  • Banner & Witcoff is seeking an International IP Manager with a minimum of 10 years of experience in management to work in their DC or Chicago office. [Link]
  • Axiom is looking to hire patent attorneys with 7+ years of experience to work remotely. [Link]
  • Sterne, Kessler, Goldstein & Fox is looking for electrical IP attorneys with 1-4 years of experience to work in their DC office. [Link]
  • Hiscock & Barclay is seeking patent attorneys/agents with a minimum of 3-5 years of experience to work at their Syracuse & Rochester offices. [Link]
  • The Coca-Cola Company is searching for a patent agent with 2-4 years of experience to work at their Atlanta location. [Link]
  • The USPTO is looking for patent examiners with a BS degree in engineering to work at their Alexandra location. [Link]
  • Steptoe & Johnson is seeking IP associates with a minimum of 4 years of experience in IP litigation to work in their DC office. [Link]
  • Fish & Richardson is looking for technical advisors with a background in EE, physics, or CS to work at one of their several offices. [Link]
  • Klemchuk Kubasta is searching for a patent associate with at least 4 years of experience to work in their Dallas office. [Link]
  • Guntin Meles & Gust is seeking patent attorneys with 3+ years of experience and a degree in EE or Computer Engineering to work in their Chicago office. [Link]
  • Levine Bagade Han is looking for a patent associate with 2-6 years of experience to work in their Palo Alto office. [Link]
  • Myers Wolin is searching for a patent attorney with 3-5 years of experience and a degree in EE to work at their Morristown, NJ office. [Link]
  • Young Basile is seeking a patent attorney with 2+ years of experience and a degree in ME, EE, or CS to work in their Ann Arbor office. [Link]

Upcoming Events:

  • The Florida Bar 3rd Annual IP Law Symposium will be held on March 1-2 on Orlando. The IP Symposium will address recent developments and important issues in IP law, including: Perspectives on the America Invents Act, Copyright Law and the First Sale Doctrine, Third Party Liability in IP, Enforcing IP on the Internet, Latest Developments in Patent, Trademark, and Copyright Law, and Recent Developments at the TTAB. Guest speakers include; Anne Gilson LaLonde, Scott Bain, John Welch, and many others. [Link]
  • Section 101 Gatekeepers: Finding the Patentable Subject Matter Line in a Judicial Sandstorm, webinar will be hosted by AIPLA on March 7. The webinar will be presented by Professor Christopher Holman and attorney Robert H. Fischer. [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Patently-O readers save $100 with code PO1. [Link]
  • The New Jersey Intellectual Property Law Association will hold a half-day Patent Litigation Seminar on Wednesday, March 14, 2012 11:45 am to 5:45 pm. Guest speakers include: Paul Berghoff, Kara Stoll, William McElwain, Richard Bress, Barbara Fiacco, and Lewis Ho. [Link]
  • C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conference brings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
  • American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
  • American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]
  • The ABA Section of IP Law will hold its 27th Annual IP Law Conference March 28-30 in Arlington, VA. The conference is recognized for its national and international scope and preeminent programming. It attracts IP practitioners from across the nation and around the world. Speakers and moderators include: Sharon Marsh, Keisha Hylton-Rodic, Alexander Wilson, Steven Emmert, Teresa Rea, James Bikoff, David Kappos, and many others. The discounted early registration deadline is March 14. [Link] [Link]
  • The IP Section of the Atlanta Bar Association and Georgia State University Law School will hold its 8th annual SpringPosium at the Barnsley Gardens resort on April 13 &14. Some example seminars will include: the new America Invents Act, Federal Court best practices, IP law and life practice management, and recent developments in damages law. Guest speakers include: Clerk of Court and Chief Deputy Clerk of the US Court of Appeals for the Federal Circuit, Jan Horbaly and Pamela Twiford and Clerk of Court of the US District Court for the North District of Georgia, James Hatten.
  • The European Generic Medicines Association is hosting the 10th EGA International Symposium regarding Biosimilar Medicines on April 19-20 in London. Greenblum & Bernstein is providing a pre-symposium workshop on April 19, 2012 titled: Biosimilars In America: IP Strategy and Due Diligence. The workshop will explore the mechanics of the Biologics Act with an emphasis on how the Act relates to the involved intellectual property and how the intellectual property may impact the biosimilar applicant's strategy for entering the market. [Link]
  • ACI will hold its 6th Annual Paragraph IV Disputes conference on April 24-25 in New York City. The conference will cover topics such as: the impact of the AIA on Hatch-Waxman litigation, claim construction, prior art obviousness and obvious-type double patenting, and many other topics. (Patently-O readers register with PO 200 for a discount). [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, , , ,

Conference on Industry/Academic Collaborations: Lessons from the Trenches

  • Innovation remains a major driver of economic growth in this country, and research universities provide a key reservoir of innovation. Increasingly, universities and industry have joined forces to translate that potential into jobs and commercial industries. Designing the complex legal and business frameworks for these collaborations is an evolving art, which will be discussed by those at the forefront of these transactions. On February 29, at UC Hastings College of Law, individuals from some of the biggest companies in the world will discuss their relationships with Universities. Google, Hoffman-LaRoche, Intel, Pfizer and BP will speak about their collaborations. The Keynote Speaker will be Chris Vein, The White House Office of Science and Technology Policy. Guest speakers include: Robin Feldman, Susan Capello, Paul Willems, Louisa Daniels, Jeff Walz, Laura Berner, and many others. This event will also be streamed online for individuals who are unable to attend. [Link]

Federal Court Dismisses OSGATA Lawsuit

  • The OSGATA suit against Monsanto has been dismissed by the US District Court for the Southern District of NY. OSGATA claimed that they did not want or intend to grow crops containing Monsanto patented gene traits and they feared being sued by Monsanto. Judge Naomi Buchwald noted that, Monsanto averages about 13 patent infringement lawsuits targeted towards farmers per year, which is considered insignificant compared to the number of farms in the US. The court held that there was no case or controversy because Monsanto has yet to take action against any of the plaintiffs. [Link]

USPTO Detroit Office Update

  • The Elijah J. McCoy United States Patent and Trademark Office (USPTO) will open in Detroit, Michigan in July 2012. The USPTO plans to hire for more than 100 positions, including patent examiners and Board of Patent Appeals and Interferences judges. The USPTO hopes to fill more than 50 percent of the positions by the end of the summer. Vacancy announcements for patent examiner positions and judges have been posted on the USA Jobs website.

Student Writing Contest

  • The Pennsylvania Bar Association IP Law Section is accepting papers for its annual IP writing contest. The competition is open to all students enrolled in one of the Pennsylvania law schools and Pennsylvania residents enrolled at other law schools within the US. The first place winner will receive $2500 and the paper will be published. [Link]

Patent Jobs:

  • Banner & Witcoff is seeking an International IP Manager with a minimum of 10 years of experience in management to work in their DC or Chicago office. [Link]
  • Axiom is looking to hire patent attorneys with 7+ years of experience to work remotely. [Link]
  • Sterne, Kessler, Goldstein & Fox is looking for electrical IP attorneys with 1-4 years of experience to work in their DC office. [Link]
  • Hiscock & Barclay is seeking patent attorneys/agents with a minimum of 3-5 years of experience to work at their Syracuse & Rochester offices. [Link]
  • The Coca-Cola Company is searching for a patent agent with 2-4 years of experience to work at their Atlanta location. [Link]
  • The USPTO is looking for patent examiners with a BS degree in engineering to work at their Alexandra location. [Link]
  • Steptoe & Johnson is seeking IP associates with a minimum of 4 years of experience in IP litigation to work in their DC office. [Link]
  • Fish & Richardson is looking for technical advisors with a background in EE, physics, or CS to work at one of their several offices. [Link]
  • Klemchuk Kubasta is searching for a patent associate with at least 4 years of experience to work in their Dallas office. [Link]
  • Guntin Meles & Gust is seeking patent attorneys with 3+ years of experience and a degree in EE or Computer Engineering to work in their Chicago office. [Link]
  • Levine Bagade Han is looking for a patent associate with 2-6 years of experience to work in their Palo Alto office. [Link]
  • Myers Wolin is searching for a patent attorney with 3-5 years of experience and a degree in EE to work at their Morristown, NJ office. [Link]
  • Young Basile is seeking a patent attorney with 2+ years of experience and a degree in ME, EE, or CS to work in their Ann Arbor office. [Link]

Upcoming Events:

  • The Florida Bar 3rd Annual IP Law Symposium will be held on March 1-2 on Orlando. The IP Symposium will address recent developments and important issues in IP law, including: Perspectives on the America Invents Act, Copyright Law and the First Sale Doctrine, Third Party Liability in IP, Enforcing IP on the Internet, Latest Developments in Patent, Trademark, and Copyright Law, and Recent Developments at the TTAB. Guest speakers include; Anne Gilson LaLonde, Scott Bain, John Welch, and many others. [Link]
  • Section 101 Gatekeepers: Finding the Patentable Subject Matter Line in a Judicial Sandstorm, webinar will be hosted by AIPLA on March 7. The webinar will be presented by Professor Christopher Holman and attorney Robert H. Fischer. [Link]
  • LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Patently-O readers save $100 with code PO1. [Link]
  • The New Jersey Intellectual Property Law Association will hold a half-day Patent Litigation Seminar on Wednesday, March 14, 2012 11:45 am to 5:45 pm. Guest speakers include: Paul Berghoff, Kara Stoll, William McElwain, Richard Bress, Barbara Fiacco, and Lewis Ho. [Link]
  • C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conference brings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
  • American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
  • American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]
  • The ABA Section of IP Law will hold its 27th Annual IP Law Conference March 28-30 in Arlington, VA. The conference is recognized for its national and international scope and preeminent programming. It attracts IP practitioners from across the nation and around the world. Speakers and moderators include: Sharon Marsh, Keisha Hylton-Rodic, Alexander Wilson, Steven Emmert, Teresa Rea, James Bikoff, David Kappos, and many others. The discounted early registration deadline is March 14. [Link] [Link]
  • The IP Section of the Atlanta Bar Association and Georgia State University Law School will hold its 8th annual SpringPosium at the Barnsley Gardens resort on April 13 &14. Some example seminars will include: the new America Invents Act, Federal Court best practices, IP law and life practice management, and recent developments in damages law. Guest speakers include: Clerk of Court and Chief Deputy Clerk of the US Court of Appeals for the Federal Circuit, Jan Horbaly and Pamela Twiford and Clerk of Court of the US District Court for the North District of Georgia, James Hatten.
  • The European Generic Medicines Association is hosting the 10th EGA International Symposium regarding Biosimilar Medicines on April 19-20 in London. Greenblum & Bernstein is providing a pre-symposium workshop on April 19, 2012 titled: Biosimilars In America: IP Strategy and Due Diligence. The workshop will explore the mechanics of the Biologics Act with an emphasis on how the Act relates to the involved intellectual property and how the intellectual property may impact the biosimilar applicant's strategy for entering the market. [Link]
  • ACI will hold its 6th Annual Paragraph IV Disputes conference on April 24-25 in New York City. The conference will cover topics such as: the impact of the AIA on Hatch-Waxman litigation, claim construction, prior art obviousness and obvious-type double patenting, and many other topics. (Patently-O readers register with PO 200 for a discount). [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Bar to Courts: Please Define “Unpatentably Abstract”

Patent, , ,

By Dennis Crouch

Fort Properties, Inc. v. American Master Lease LLC, __ F.3d __ (Fed.Cir. 2012)(Judge Prost joined by Judges Schall and Moore.

American Master Lease (AML) owns a patent that covers a method of creating a tax-deferred real estate investment instrument. U.S. Patent No. 6,292,788. Claim 1 includes three primary steps: aggregating title to real property to form a real estate portfolio; encumbering the property in the real estate portfolio with a master agreement; and creating a plurality of deedshares by dividing title in the real estate portfolio into a set of tenant-in-common deeds with each of the deedshares subject to a reaggregation provision in the master agreement. This method is designed to take advantage of a federal income tax loophole that allows investment properties to be traded tax free in some circumstances.

This litigation arose after AML threatened Fort Properties with an infringement lawsuit and Fort Properties filed an action in the Central District of California asking for a declaratory judgment of invalidity. In a decision predating Bilski v. Kappos, the district court ruled the patent invalid for failing the machine-or-transformation test (MoT). On appeal, the Federal Circuit affirmed – finding the invention unpatentably abstract.

Unpatentably Abstract: Courts have long recognized patent claims as abstractions that tend to generalize and broaden the scope of a particular invention. That small level of abstraction is acceptable and encouraged. However, if a claim is too abstract then it becomes unpatentably abstract. At a conference this weekend, Chief Judge Rader, USPTO Solicitor Chen, and I held an interesting discussion on drawing that line. In my view, “preemption” is largely unhelpful because it falls into the same line drawing trap: A patent is only useful if it sufficiently preempts (i.e., excludes) others, but at some point too much preemption renders a claim unpatentably preemptive. I believe that all three of us see the current jurisprudence on abstract ideas as problematic. It leaves the courts and patent examiners without any real standards for determining an outcome other than asking whether the particularly claimed invention is “too much like Bilski, Benson, or Flook?”

Here, the appellate panel reviewed the tax strategy patent and decided that it counts as abstract because the invention is too much like Bilski.

We view the present case as similar to Bilski. Specifically, like the invention in Bilski, claims 1-31 of the ‘788 patent disclose an investment tool, particularly a real estate investment tool designed to enable tax-free exchanges of property. This is an abstract concept. Under Bilski, this abstract concept cannot be transformed into patentable subject matter merely because of connections to the physical world through deeds, contracts, and real property. . . . When viewing the claimed invention as a whole, the physical activities involving the deeds, contracts, and real property are insufficient to render these claims patentable.

Some of the claims included a computer limitation. However, the court held that limitation did not impose any meaningful limits on the claim scope for subject matter eligibility purposes. “AML simply added a computer limitation to claims covering an abstract concept—that is, the computer limitation is simply insignificant post-solution activity. Without more, claims 32-41 cannot qualify as patent-eligible.”

The problem with the court’s jurisprudence here is that “unpatentably abstract” is not defined. Rather, the court simply recited the core function of the invention and the conclusion that it is abstract.

Does Agency Funding Affect the PTO’s Decisionmaking?

Patent

By Jason Rantanen

Both practitioners and academics constantly debate the extent to which factors other than the "true" patentability of an invention affect the patent office's decision to grant or deny an applicant a patent.  A recent empirical study by professors Michael Frakes of Cornell and Melissa Wasserman of Illinois explores one such potential externality: the influence of the PTO's budgetary structure on the decision whether or not to grant a patent.

In Does Agency Funding Affect Decisionmaking?: An Empirical Assessment of the PTOs' Granting Patterns (available here), Frakes & Wasserman theorize that elements of the PTO's fee schedule that are collected only in the event that patents issue create incentives for the PTO to grant additional patents, and that these incentives have their greatest effect in times of agency underfunding.  If this hypothesis is correct, the current funding structure of the PTO may bias it in unintended directions, such as towards granting patents associated with large enterprises rather than individuals and small entities.

The authors then empirically test their predictions using a natural experiment approach revolving around the Omnibus Reconciliation Act of 1990, an Act that both greatly increased the fees assessed by the PTO and left the PTO essentially fully funded by user fees.  After applying sophisticated statistical techniques to address a variety of complications flowing from the nature of the problem examined, they present results suggesting that the PTO's fee structure induces the agency to grant at an incrementally higher rate to high renewal rate technologies and to applicants with large entity status, and that these effects are consistent with a PTO that seeks to maximize its funds during times in which it is in greater need of funds as opposed to a PTO that acts in all instances as a self-interested budget maximizing entity. 

A copy of the article can be downloaded here. 

Political Candidates Sued for Patent Infringement

Patent,

by Dennis Crouch

EveryMD v. Rick Santorum, Mitt Romney, and Newt Gingrich (C.D. California)

In a recent filing, Hollywood patent attorney and inventor Frank Weyer has sued Rick Santorum, Mitt Romney, Newt Gingrich, and an estimated 4 million FaceBook business account holders for infringing Weyer's U.S. Patent No. 7,644,122. The lawsuit was filed by Weyer's company EVERYMD. That company provides communications services to over 300,000 medical doctors.

The complaint alleges that FaceBook business account holders infringe the patent by creating individual home pages for members of a group of members that contain controls for sending messages to and for submitting comments about the members. Download Complaint. In 2011, the patentee offered an open license to FaceBook business account holders for $500 per account. The complaint states that that reduced price license program "has ended."

The patent itself is in the midst of an inter partes reexamination originally requested by FaceBook. See Reexam No. 95/001,411. In the reexamination, all of the claims are currently on appeal to the Patent Office's internal Board of Appeals (BPAI) following a final rejection of the claims by an examiner in the Central Reexamination Unit (CRU). At least two other continuations of the applicatoin are pending and claim priority to the original 1999 filing date.

022812_1403_PoliticalCa1 In 2005, I reported on Weyer's case against Fordfor infringing his patent on user-selectable multi-color instrument panel illumination. In an earlier case Weyer sued Network Solutions and Register.com for violating his patent on the selection of an e-mail address based on a domain name. He has also sued Harley Davidson, Bosch, and MySpace. Those cases have all settled. Prior to law school, Weyer was a Peace Corps Volunteer in Lesotho and now works as a volunteer engineer in Antarctic expeditions. I should also mention that Weyer's book M.I.T. Can Be Murder is for sale on Amazon. His screenplay based upon the book has received multiple honors.

New IP Hall of Fame Members

Patent,

Several years ago, Intellectual Asset Management (IAM) Magazine started the Intellectual Property Hall of Fame.  Each year, the organization requests nominations from the public and then asks members of its IP Hall of Fame Academy to vote for inductees. The fifty–member Academy is made up of living Hall of Fame inductees and a handful of others (including myself).

This year, six inductees were selected, including USPTO Director Dave Kappos and former Director Q. Todd Dickinson, former Copyright Register Marybeth Peters, trademark expert Professor Thomas McCarthy, Beatrix de Russe who has built Technicolor’s amazing patent licensing operations, and Alan Drewsen who is retiring from his position as longtime executive director of INTA. Congratulations on these new inductees.

Link

Mettler-Toledo v. B-Tek: Limiting Claim Elements to the Preferred Embodiment

Patent, , , ,

By Jason Rantanen

Mettler-Toledo, Inc. v. B-Tek Scales, LLC (Fed. Cir. 2012) Download 11-1173-1200
Panel: Bryson, Moore (author), Reyna

547 patentIn my Introduction to Intellectual Property class this week we discussed the classic tension between (1) reading the claims in light of the specification and (2) not importing limitations from the specification into the claims.  In most instances the court attempts to strike a balance between these two canons (exemplified by Phillips).  When means-plus-function claims are involved, however, different rules apply – as this case illustrates.

At issue in Mettler-Toledo was technology for weighing objects, such as large commercial trucks. The first of Mettler's asserted patents, No. 4,815,547, describes an individual load cell; the second, No. 4,804,052, describes a system and method for correcting weight measurements based on the location of objects on a scale.  Following jury findings that the patents were not infringed and that the '052 patent would have been obvious, the district court denied Mettler's JMOL.  Mettler appealed.

On appeal, Mettler challenged a key construction of the '547 patent claims: that several of the means-plus-function terms require a multiple slope integrating A/D converter, and equivalents thereof, rather than any generic A/D converter.  Mettler contended that by limiting the claims in this way the district court erred by importing the structure of only the preferred embodiment into the claims. 

The CAFC rejected this argument.  "Our case law is clear that a means-plus-function claim limitation is limited to the structures disclosed in the specification and equivalents."  Slip Op. at 7.  Here, the patentee chose to disclose only a single embodiment; thus, the means-plus-function claim was necessarily limited to that embodiment.  "If a patentee chooses to disclose a single embodiment, then any means-plus-function claim limitation will be limited to the single disclosed structure and equivalents thereof."  Id.  Nor was a single reference to an "A/D converter" in the Abstract sufficient to compel a broader structural disclosure because it was not linked to any claimed function.

Obviousness: The CAFC also affirmed the district court's denial of JMOL of nonobviousness of the '052 patent.  Mettler's challenge was based on the argument that a prior art reference did not teach correcting for load position, an element of each claim of the '052.  The CAFC rejected this argument, first noting that the issue of what is disclosed by a prior art reference is a question of fact, then concluding that substantial evidence supported the jury's finding as to the teaching of the 'prior art reference. 

B-Tek's Cross Appeal for Sanctions: During the litigation B-Tek requested documents relating to Mettler's manufacturing capacity in order to rebut Mettler's lost profits damages claim.  Although Mettler stated that it had no such documents, during trial a Mettler employee admitted that certain documents existed (a production schedule and plant diagram).  Mettler further admitted that it provided some of these documents to its damages expert.  The district court denied B-Tek's motion for sanctions on the grounds that the possible existence of these documents had been disclosed during a deposition, these documents were of marginal relevance, and that B-Tek could not show any harm or prejudice given that it prevailed on the issue of infringement. 

On appeal, the CAFC concluded that the district court did not abuse its discretion in declining to sanction Mettler, correctly considering the relevance of the documents and the any harm to B-Tek.

Edited to clarify the first sentence. 

Federal Circuit: COACH not a sufficiently famous brand and therefore cannot oppose a similar mark on a trademark dilution principle.

Patent,

Coach Services v. Triumph Learning (Fed. Cir. 2011)

Coach is a famous American handbag maker.  Coach bags sell for $300 or more each and the company typically earns billions of dollars in revenue each year selling Coach branded products.  Triumph Learning makes test prep materials it also sells under the trade name "Coach."  Triumph's success has been driven by the no-child-left-behind testing requirements and the company sells most of its Coach-branded products to schools hoping to prepare their students for state mandated exams.

The dispute here arose when Coach Services opposed Triumph's trademark registration for use of the COACH mark. Triumph won at the Trademark Trial and Appeal Board (TTAB) and has now won on appeal.

Here, Coach Services had little success showing a likelihood of confusion because the two companies operate in such distinct market areas and offer products that are distinct from one another.  The most interesting aspect of the appeal for trademark law is the court's rejection of Coach Services' dilution claim under the Trademark Dilution Revision Act of 2006 ("TDRA"), 15 U.S.C. § 1125(c).  For patent attorneys considering practicing before the future Patent Trial and Appeal Board (PTAB) the most important aspects of the opinion focus on the odd but forceful rules of evidence applied by the Board and supported here by the Federal Circuit.

Trademark Dilution: The holder of a famous mark has trademark rights that go beyond the normal likelihood of confusion test found in the Lanham Act. In a dilution claim a famous mark holder can also stop uses that are likely to blur or tarnish the mark even in the absence of potential customer confusion.  Here, Coach Services argued that Triumph's use of COACH for its services blurred the power of the mark by using it for non-related, non-luxury goods.

Not Famous: In a dilution claim, the law requires that the mark holder prove that its mark is widely recognized by the general public. When the mark is also a common word – such as COACH – the mark holder must also demonstrate that those ordinary "uses of the mark are now eclipsed by the owner's use of the mark . . .  in almost any context" and that the mark has become "a household name."  Coach services failed to convince the judges that its mark was sufficiently famous to qualify.

For its case, Coach presented a set of facts to prove that its mark was sufficiently famous. These included: (1) sales and advertising figures for years 2000-2008; (2) its sixteen federal trademark registrations on the mark; (3) extensive unsolicited media attention referring to the mark; (4) joint marketing efforts for the mark; (5) two Second Circuit decisions finding the Coach hang-tag, which features the COACH mark, to be famous; and (6) Coach Services' internal brand awareness survey showing extensive awareness among 18-24 year old consumers.

None of these factual arguments persuaded the judges that the COACH mark was famous. In particular, the court rejected the company's sales and advertising figures because they had not been properly authenticated and admitted as evidence before the TTAB. Further, none of the facts presented by Coach Services actually lead to the conclusion that the word mark COACH is a household name that overwhelms the ordinary use of the word coach.

Notes:

  • In some of my courses, I have historically used an image of a Coach brand bag to think through some trademark and trade dress principles. This year, I had to go through three students before someone recognized the brand.