Supreme Court to Revisit Patentable Subject Matter Eligibility

Patent

Mayo Collaborative Services v. Prometheus Laboratories, Inc. (Supreme Court 2011)

by Dennis Crouch

The Supreme Court has agreed to hear Mayo’s petition on the patentable subject matter eligibility of medical diagnostic methods.  The issue raised on appeal is stated as follows: 

Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between blood test results and patient health, so that the claim effectively preempts all uses of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve “transformations” of body chemistry.

The claims asserted by Prometheus are directed toward a method of “optimizing therapeutic efficacy” by first administering an active drug (6-thioguanine) to a subject and then using the subject’s metabolite blood-level to adjust future doses of the drug.  (U.S. Patents 6,355,623 and 6,680,302). Thus, most of the claims are centered around three ordered-steps of:

  1. administering the drug to the subject;
  2. determining the amount of drug in the subject’s blood; and
  3. re-calibrating the drug dosage based on step-2.

A broader claim (claim 46 of the ‘632 patent) eliminates the administering step of claim 1 above.

The district court found the claims invalid as lacking patentable subject matter under 35 U.S.C. 101.  On appeal, the Federal Circuit reversed — holding that the steps of “administering a drug” and “determining the level of 6-thioguanine” were both sufficiently transformative of “a particular article into a different state or thing.”  That Federal Circut decision was based on the court’s machine-or-transformation test that was subsequently discredited by the Supreme Court in Bilski v. Kappos (2010).  In the wake of its Bilski decision, the Supreme Court vacated the Federal Circuit’s Prometheus decision and remanded for a new opinion.  On remand, the Federal Circuit again affirmed that the Prometheus claims are eligilble for patent protection. [See Rantanan’s post]

Obviousness Decisions at the BPAI

Patent,

Everyone understands that KSR v. Teleflex changed the way that obviousness is treated at the US Patent Office. In that case, the Supreme Court encouraged examiners to rely upon common sense when determining whether a claimed invention is obvious and also eliminated some of the rules against combining various elements of the prior art to into a composite that renders the claimed invention obvious.

I wanted to take a look at how the BPAI is using the KSR decision in its obviousness cases. Using my set of 10,000 recent ex parte BPAI decisions (2009–2011), I looked at the set of decisions involving the question of obviousness and compared the decisions that cited KSR with those that did not cite the case. The results are not surprising. Decisions that cite to KSR are much more likely to affirm examiner rejections as compared with those that do not cite KSR. Namely, in obviousness cases that cite KSR, the examiner rejections are reversed only 15% of cases. In obviousness cases that do not cite KSR, the examiner rejections are reversed in 39% of cases.

 

Appeal Outcome 
 

Affirmed 

Affirmed in Part 

Reversed 

KSR Cite 

67% 

18% 

15% 

No KSR Cite 

47% 

13% 

39% 

The 10,000 case sample size makes these results easily statistically significant.

My take is that the BPAI is not selectively citing KSR but rather that applicants are less likely to win obviousness issues that relate to KSR issues. Thus, in Ex parte Ramchandani the BPAI cited KSR in rejecting the applicant’s argument “that the Examiner has not established a proper motivation to combine” the two cited references. And, in Ex parte Pickering the BPAI felt no need to cite KSR as it agreed with the applicant that the sintered silicon carbide found in the prior art was different from Pickering’s claimed chemical vapor deposited silicon carbide.

 

BPAI Judicial Diversity and Appeal Win Rate

Patent,

I recently created a database of 10,000 recently released ex parte decisions by the Board of Patent Appeals and Interferences (BPAI) with dates ranging from November 2009 to June 2011. These ex pare BPAI decisions are easy to work with because they always involve a patent applicant appealing an examiner’s rejection of one or more claims. As I discussed in previous work, vast majority of ex parte BPAI decisions involve questions of obviousness and the remainder most often involve anticipation.

General Results: Of BPAI opinions in my sample decided on the merits, about 52% fully affirmed the examiner rejections, 34% reversed, and 14% affirmed-in-part. (About 8% of the decisions were not included in this study because they involved other outcomes such as remands and decisions on motions for rehearing). 

Judicial Diversity: These averages hide what appears to be major differences within the ranks of BPAI Administrative Patent Judges.  To reach this conclusion, I identified the judge that authored each opinion as well as the other judges associated with the decision.  For the 76 most active judges, I then calculated for each judge the percentage of cases where he or she at least partially sided with the patent applicant — i.e., either reversed or affirmed-in-part.  The chart below shows a histogram of the outcomes — showing that there is a wide diversity in expected outcomes depending upon the judges on the panel.

PatentLawImage136

At the low end, about 14 of the 76 judges at least partially side with the patent applicant in less than 40% of cases. At the high end, 10 of the 76 judges at least partially side with the patent applicant in more than 60% of cases.

The statistics here are fairly powerful because each judge in the sample is involved with at least 100 decisions and the median judge was involved with 370 decisions.  Thus, based upon our sample size we can easily reject the null hypothesis that the judges all have the same likelihood of at least partially siding with the patent applicant. And, while there are some differences between appeals arising from the various technology centers, those differences do not explain the judicial diversity shown above.  An additional potential confounding factor is the fact that the assignment of judges is not entirely random — however, in these ex parte cases judges appear to be chosen based on technical expertise rather than the likelihood that the patentee should win.

BPAI Backlog: As an important aside, the BPAI’s backlog of pending appeals continues to grow. Thus far in FY2011, the backlog has grown more than 25% and now rests at over 22,000 pending appeals.

Inventio v. ThyssenKrupp: Functional Claiming

Patent,

By Jason Rantanen

Inventio AG v. ThyssenKrupp Elevator Americas Corporation (Fed. Cir. 2011) Download 10-1525
Panel: Lourie (author), Prost, Moore

Patent claims may be indefinite due to their use of functional language untethered to any structure.  Prevailing on such an argument, however, can be quite difficult, as Inventio v. ThyssenKrupp illustrates.

The patents in this case relate to a device that allows elevator passengers to enter their floor destination as they call for the elevator.  Central to the claimed invention are two components: a "computing unit," which processes the passenger's input, and a "modernizing device," which acts as an intermediary between the computing unit and the elevator control.  During claim construction, the district court concluded that both claim terms "lacked sufficient structure to avoid § 112 ¶ 6," slip op. at 7, further holding that they were indefinite because the written description failed to disclose corresponding structure to perform the recited functions.  Inventio appealed.

Strong Presumption Against Means Plus Function Construction
Patentees are permitted to include purely functional language in their claims under § 112 ¶ 6.  Under that provision, such limitations "shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof."  Slip Op. at 9.  Whether § 112 ¶ 6 applies depends principally on whether the limitation uses the term "means."  When that term is not used, "we presume that the limitation does not invoke § 112 ¶ 6."  Id.  The presumption "is a strong one that is not readily overcome."  Id. at 10.

Presumption Not Overcome
Given the absence of the term "means" in the disputed limitations, the court focused its analysis on whether ThyssenKrupp had overcome the "strong presumption" against application of § 112 ¶ 6, concluding that it had not.  In reaching this conclusion, the court agreed with Inventio that it should consider the written description in determining whether the claims recite sufficient structure. "[I]t is proper to consult the intrinsic record, including the written description, when determining if a challenger has rebutted the presumption that a claim lacking the term "means" recites sufficiently definite structure."  Slip Op. at 12.  Applying this rule, the court found that the terms "modernizing device" and "computing unit" provided, at least in the context of the two patents at issue, sufficient structure:

"In this case [] the claims recite a “modernizing device,” delineate the components that the modernizing device is connected to, describe how the modernizing device interacts with those components, and describe the processing that the modern-izing device performs. The written descriptions addition-ally show that the modernizing device conveys structure to skilled artisans. Thus, this is not a case where a claim nakedly recites a “device” and the written description fails to place clear structural limitations on the “device.”"

Slip Op. at 15.  The CAFC applied similar reasoning to "computing unit."

Is The Court Effectively Applying a Presumption Against Indefiniteness of Functional Claim Elements?
Under Supreme Court precedent, a claim may be invalid for indefiniteness if it contains functional claim limitations.  See General Electric Co. v. Wabash Appliance Corporation, 304 U.S. 364, 371 (1938); United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 234 (1942); c.f. Halliburton Energy Services, Inc. v. M-I LLC, 514 F.3d 1244, 1255 (Fed. Cir. 2008). Section 112 ¶ 6 provides the exception discussed above.

I question how viable this aspect of the indefiniteness doctrine is in practice, however, at least under the Federal Circuit's current approach.  Under cases such as Inventio, the CAFC's framework for analyzing indefiniteness based on functional claiming operates like this: (Question One) Is this a means-plus-function claim element?  If No, then it is not indefinite.  If Yes, (Step Two) Does the written description recite sufficient structure? If No, the claim is indefinite; if Yes, it is not.  Since there is a strong presumption in favor of answering "No" to Question One unless the term "means" is used, the effective result is a strong presumption against indefiniteness unless the patent drafter elects otherwise.   This makes it extremely difficult for a party challenging the definiteness of a functional claim element to prevail, and seems somewhat inconsistent with the broader ideas of General Electric and United Carbon.

I could see the CAFC's rule as perhaps being justified on the ground that patents are entitled to a presumption of validity, and the indefiniteness issue is, after all, one type of validity analysis.  But that does not appear to be how the court has justified its rule thus far.  Instead, it has treated it solely as a claim construction question in which deference is given to the patent drafter's choice of language. 

ThyssenKrupp's Motion to Strike
Following the completion of merits briefing, ThyssenKrupp filed a motion to strike portions of Inventio's reply brief on various grounds, including that it contained new and misleading arguments about the disclosure of the '861 and '465 patents.  Unimpressed by ThyssenKrupp's motion, the court rejected it.  "ThyssenKrupp simply disagrees with Inventio's legal arguments, and its motion seems to us to be an improper attempt to obtain the final word in the appeal, a practice that we strongly discourage."  Slip Op. at 3.  FIling such a motion, the court commented, "borders on the type of frivolous and wasteful litigation tactics that we have previously frowned upon."  Id.

Update: For those interested in reading the offending brief, a copy can be downloaded here:  Download SchmitMotionToStrike.  Thanks to Hal Wegner for circulating a copy in his email newsletter. 

Identifying the Invention as part of the Claims

Patent

by Dennis Crouch

PatentLawImage135

I see the above chart is indicative of patent applicants’ shift away from filing patent applications that particularly identify the inventive features of the inventions being patented.  “Whereby” clauses have traditionally been used in patent claims as a mechanism of particularly identifying the new result of the claimed invention. In his guide for inventors, David Pressman recommends “adding a ‘whereby’ clause to specify the advantage or use of the invention to hammer home to the examiner, or anyone else who reads your claims, the value of your invention.”  Patent It Yourself (2009).  

As the chart shows, whereby clauses have fallen out of fashion.  I attribute the reduced reliance on the whereby clauses as largely driven by a perception that whereby clauses do not narrow the claim scope during prosecution but may well be limiting during a later infringement analysis.  Even if not limiting, a whereby clause may also cause a patentee to lose face before a jury if the cited advantage turns out to not exist or already be well known in the prior art.  

In Hal Milton’s recent article, he focuses more on the identification and disclosure of the new result and not on particularly claiming the new result.  This particular statistic that I have identified here does not pick up whether applicants are identifying the new result within the specification (outside of the claims).

Note: I created the chart above by counting the number of patents that included the word “whereby” within the claims and then divided that sum by the total number of utility patents issued during the relevant time period.

A Modest Proposal?: Identifying the Invention within the Patent Application

Patent, Patent Prosecution, ,

Well known patent attorney Hal Milton recently published a new article in John Marshall’s Review of Intellectual Property Law (RIPL) that argues for the presentation of a “new result” within every patent application.  The majority of newly drafted patent applications do not follow Milton’s approach and instead seem to obscure the innovative elements of the claimed invention and fail to identify the problem being solved by the invention.  Milton writes:

Fifty years of examining, drafting, and prosecuting patents, including the patent at issue in KSR International Co. v. Teleflex, Inc., coupled with the KSR opinion and the lessons therefrom, led the author herein to the objective standard of a new result.  Inventors should be counseled that a new result should be sought out to justify the exclusive right of a patent.

Milton’s approach builds upon Paul Cole’s 2008 post-KSR article also published in RIPL. In that article, Cole reiterated that that evidence showing a new result is “necessary” under the European Patent Convention (EPC).

Milton’s approach also complements Ron Slusky’s approach to claim drafting that focuses a claim drafter’s attention first on the problem being solved by the invention. A major difference, however, is that Slusky does not explicitly advocate identifying the new result as part of the application itself.

Milton again:

In addition to identifying the new result or function to justify the exclusive right
of a patent, … that new result [should be] systematically recited throughout all sections of a patent application.  Because a court may interpret a patent based upon the intrinsic patent alone, without regard to extrinsic evidence presented in advocacy outside the patent document, extreme care should be exercised in preparing the original patent application with consistency throughout.  It is important to realize that patent offices, for the most part, grant patents based upon claims whereas the courts enforce patents based upon the entire patent.

Intellectual Property Watch

Patent

For those of you who care about following international issues in intellectual property law, the not-for-profit Intellectual Property Watch (IP Watch) offers accurate and current, high level reporting most often written by its Director William New.   Although Mr. New has been stationed in Geneva for a number of years, he a trained American journalist and writes extremely well.  My only problem with IP Watch over the years has been the high cost of subscriptions.

In any event, IP Watch is urgently looking for a few donors over the next couple of weeks to help it continue its mission. 

Spectralytics v. Cordis: The Jury Black Box; Teaching Away; Commercial Success; and Treble Damages

Patent,

Spectralytics v. Cordis (Fed. Cir. 2011)

In a post-verdict opinion, the district court wrote that “if this case had been tried to the Court, the Court likely would have found the ‘277 patent invalid [as Obvious].” However, the lower court refused to substitute its view of the evidence for that of the jury. On appeal, the Federal Circuit affirmed and in the process rejected Justice Breyer’s recent call for special jury verdict forms that separate the factual underpinnings of obviousness from the ultimate legal conclusion.

Obviousness: Here, the jury form simply asked “Did Cordis and Norman Noble prove by clear and convincing evidence that claim 1 of U.S. Patent No. 5,852,277 is invalid for obviousness?” and the jury checked “No.”

The black box of jury decision making is difficult to overturn on appeal because the Federal Circuit upholds jury verdicts unless there is no way that the jury’s conclusion could have been drawn from evidence presented at trial. As the Federal Circuit wrote: “for Cordis to prevail it must establish that the jury’s actual or inferred factual findings were not supported by substantial evidence, or that the evidence was not sufficient to support the findings and conclusions necessarily drawn by the jury on the way to its verdict.” In the recent Microsoft v. i4i decision, Justice Breyer wrote in concurrence that district courts should take steps to help juries separate their factual conclusions from the legal conclusions “by using instructions based on case-specific circumstances that help the jury make the distinction or by using interrogatories and special verdicts to make clear which specific factual findings underlie the jury’s conclusions.” In this case, however, the appellate court agreed that the jury had received proper instruction and the defendant did not challenge the appropriateness of the jury verdict form.

Teaching Away: An obviousness conclusion is less likely when the prior art “teaches away” from the claimed invention. In an interesting aspect of the decision, the appellate panel found that teaching-away does not require words per se, but rather the prior art design itself can teach away from an innovation. Here, the patent at issue involved a laser-cutting device for manufacturing medical stents. The prior art “Swiss-style” devices included a vibration damper to improve cutting accuracy. The claimed invention, however, “embraced” vibration in the entire device and instead improved accuracy by rigidly connecting the work-piece to the laser. The court wrote: “the jury could find, based on the expert testimony, that prior Swiss-style machines taught away from embracing vibrations to improve cutting accuracy because all prior machines improved accuracy by dampening vibrations.”

Commercial Success: Patent law allows a patentee (or patent applicant) to present “secondary indicia” of non-obviousness when attempting to overcome arguments against patentability. Here, Spectralytics argued that the commercial success of the defendants infringing products served as evidence that the invention was non-obviousness. The secondary indicia argument rests on an assumption that any obvious advances would have already been identified and accepted by the industry and thus would not lead to any particularized commercial success. Commercial success is most often disregarded by courts because patentees are unable to prove a close nexus between the patented invention being asserted in litigation and a product’s commercial success. Rather, the commercial success could be due to many other factors that might not be related to the patented invention such as marketing, high quality workmanship, technical advances other than those claimed in the patent-in-question, or low prices. Here, however, the court allowed the nexus to be proven based largely upon the defendant’s advertising:

Spectralytics points to the evidence that Norman Noble stated that its new machine was the reason why its product was better than then-competing products, and that Cordis described the new Noble machine as “superior” and “advanced technology,” with “cutting capabilities and precision not attainable” by the prior laser-cutting system. There was substantial evidence whereby a reasonable jury could have found copying and commercial success, and could have weighed these factors in favor of nonobviousness.

Damages: The jury also awarded a 5% royalty for the infringement. The defendants argued that the royalty was clearly too high because it would result in damages that were well above what its costs would have been to use a non-infringing mechanism at the time that the infringement began. The court accepted that argument in theory, but rejected it on the evidence. Holding that, based upon the evidence, the jury could have rejected the defendant’s argument that the alternatives were both available and acceptable. The appellate panel’s affirmance of the damage award may serve as an important counterbalance to recent Federal Circuit cases that demanded more specificity and analytics in damage calculations.

Willful Infringement: The jury also found the patent willfully infringed, but the district court refused to award enhanced damages or attorney fees to the patentee. On appeal, the Federal Circuit vacated that holding and remanded for a new determination as to whether the Read factors support enhanced damages. Quoting its i4i decision, the court wrote: “Although a finding of willfulness is a prerequisite for enhancing damages under § 284, the standard for deciding whether – and by how much – to enhance damages is set forth in Read, not Seagate.” Much like in a criminal sentencing hearing, the appellate court here wrote that the decision on whether to enhance damages after a finding of willful infringement may be based on a wider set of evidence than can the underlying decision of whether the infringement was willful. In particular, the court found that it when deciding whether to award enhanced damages, it is “inappropriate to discount evidence relating to whether there was adequate investigation of adverse patent rights. That is only one of the Read factors, but Seagate did not hold that it should be ignored.”

Professor Kieff: Problems with First-to-File

Patent

Professor F. Scott Kieff (GWU) notes that debate over the constitutionality of a first-to-file patent system hides the major policy concerns associated with FTF and more specifically with the major amendments proposed in the patent reform measures winding their way through Congress.

Kieff writes:

Basically, the efficiency gains of switching to FTF can be easily eclipsed by a marked increase in uncertainty and other costs as we try to figure out how to really handle these different real world situations. What is more, the way many of the rules in the proposed bill stack up is to favor incumbents by a large margin.

In a series four short essays, Kieff outlines his position against FTF:

First-To-File and the Constitutional Argument

Patent

The pending patent reform bill and the Supreme Court’s recent decision in Stanford v. Roche have combined to re-invigorate a longstanding academic discussion of the constitutionality of a first-to-file patent system that allows patents to be awarded to a “second inventor” so long as the second inventor independently created the invention and was the first one to file for patent protection. Two groups of law professors have drafted letters to Congress. Among patent academics, the main-line argument (promoted by Professors Mark Janis and Tim Holbrook) is that a first-to-file regime fits well within the constitutional bounds. The heterodoxy (led by Professors Adam Mossoff and Dan Ravicher) argue that the constitution only allows patent rights to be granted to “first inventors.”

The Patent & Copyright Clause of the constitution gives Congress the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

In my view, the debate should begin with a clear recognition that our patent system has long allowed patent rights to be granted to “second inventors.” We know generally that the prior-use of an invention by an earlier inventor does not invalidate a later-filed patent filed by an independent second inventor – unless the prior-use qualifies as prior art under some provision of 35 U.S.C. § 102. Further, under the law of priority disputes outlined in 35 U.S.C. 102(g), second inventors have regularly obtained patent rights because the first inventor either failed to diligently work toward reduction to practice or somehow abandoned, suppressed, or concealed their invention. In addition, the US has long given short shrift to evidence of prior-invention that occurred abroad and instead awarded US patent rights to second inventors who were the first -to-file. In one way or another, all these elements of the current patent regime acknowledge that there can be more than one true inventor. If the proposed first-to-file regime is unconstitutional by granting rights to other than the “first inventor,” then these longstanding elements of the law are as well.

On the flip side, it seems obvious that there are some limits on Congressional power to define the scope of the inventor – for instance Congress could not award patent rights to non-inventors as was done prior to the Statute of Monopolies.

Both groups are actively seeking IP academics to join their letters as signatories and are planning to send their competing letters on Monday, June 13. (If you are interested in signing, contact them by Monday morning.)

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Patent Trial Program Could be a Good Idea

  • California’s Northern District has seen a large increase in the number of patent lawsuits. As a result, this District was picked to participate in a 10-year pilot program that could route patent cases to judges who request them. This program is intended to send patent cases to judges who have an expertise in patent law. If a judge receives a patent law case and does not want it he or she may decline the case, and the case will be sent to the judge with the patent law expertise. Should this program be applied in all District Courts in order to get judges with patent law knowledge to hear patent law cases? [Link]

The House Appropriations Committee Doesn’t Think the USPTO Should Keep Fees

  • The House Appropriations Committee strongly opposes the USPTO to keep funds that it makes. The committee argues allowing the USPTO to keep all their fees would make it financially independent of the budget process and therefore essentially free from congressional oversight. This could possibly mean the language in the Patent Bill that gives the USPTO the right to keep their fees could be removed, in order to pass the remaining parts of the Bill. If this language is removed the USPTO’s budget could possibly get cut again or stay the same, which in both cases the USPTO would remain underfunded. Underfunding the USPTO will cause the USPTO not to be able to effectively decrease the number of patent applications that are backlogged. [Link]

Another Federal Judge Holds the False Marking Law Unconstitutional

  • The first case in which a judge held the false marking statute unconstitutional was Unique Product Solutions Ltd. v. Hy-Grade Valve Inc., which was decided in Ohio. Now a judge in Pennsylvania held in the case of Rogers v. Tristar Products Inc., that the law is unconstitutional. The reasoning this court used was that, the false marking statute has been held to be a criminal law, but that, under its qui tam provision, "the what, when, where, and how of the litigation remain subject to the whims of whomever sees fit to bring the suit." While this decision has practically no precedence, this could be a sign that the false marking law is on its way to the Supreme Court, in order to determine if it is in fact unconstitutional. [Link]

Patent Jobs:

  • Kaleidescape is looking for an in-house patent attorney or patent agent with 3 years of patent experience to work in their California location. (telecommuting is an option) [Link]
  • Meso Scale Diagnostics is seeking a patent attorney with an engineering background and 3-10 years of patent experience to work at their Maryland location. [Link] 
  • Aspen Aerogels is searching for a patent agent or an IP analyst with 5 years of experience to work at their Massachusetts location. [Link]
  • The Coca-Cola Company is seeking to fill 3 patent agent positions at their Atlanta location; individuals must have 2-4 years of patent experience. [Link]

Upcoming Events:

  • The fourth IP Business Congress (IPBC) will take place on June 19-21 in San Francisco. IPBC 2011 will bring together leaders from the worlds of IP business and finance to discuss issues that center on the creation and management of IP value. There will be over 50 highly regarded guest speakers such as; Judge Michel, Judge Rader, Teresa Rea, Tracey Thomas, Loria Yeadon, Benjamin Lee, and Peter Menell just to name few. [Link]
  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]

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

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Patent Trial Program Could be a Good Idea

  • California’s Northern District has seen a large increase in the number of patent lawsuits. As a result, this District was picked to participate in a 10-year pilot program that could route patent cases to judges who request them. This program is intended to send patent cases to judges who have an expertise in patent law. If a judge receives a patent law case and does not want it he or she may decline the case, and the case will be sent to the judge with the patent law expertise. Should this program be applied in all District Courts in order to get judges with patent law knowledge to hear patent law cases? [Link]

The House Appropriations Committee Doesn’t Think the USPTO Should Keep Fees

  • The House Appropriations Committee strongly opposes the USPTO to keep funds that it makes. The committee argues allowing the USPTO to keep all their fees would make it financially independent of the budget process and therefore essentially free from congressional oversight. This could possibly mean the language in the Patent Bill that gives the USPTO the right to keep their fees could be removed, in order to pass the remaining parts of the Bill. If this language is removed the USPTO’s budget could possibly get cut again or stay the same, which in both cases the USPTO would remain underfunded. Underfunding the USPTO will cause the USPTO not to be able to effectively decrease the number of patent applications that are backlogged. [Link]

Another Federal Judge Holds the False Marking Law Unconstitutional

  • The first case in which a judge held the false marking statute unconstitutional was Unique Product Solutions Ltd. v. Hy-Grade Valve Inc., which was decided in Ohio. Now a judge in Pennsylvania held in the case of Rogers v. Tristar Products Inc., that the law is unconstitutional. The reasoning this court used was that, the false marking statute has been held to be a criminal law, but that, under its qui tam provision, "the what, when, where, and how of the litigation remain subject to the whims of whomever sees fit to bring the suit." While this decision has practically no precedence, this could be a sign that the false marking law is on its way to the Supreme Court, in order to determine if it is in fact unconstitutional. [Link]

Patent Jobs:

  • Kaleidescape is looking for an in-house patent attorney or patent agent with 3 years of patent experience to work in their California location. (telecommuting is an option) [Link]
  • Meso Scale Diagnostics is seeking a patent attorney with an engineering background and 3-10 years of patent experience to work at their Maryland location. [Link] 
  • Aspen Aerogels is searching for a patent agent or an IP analyst with 5 years of experience to work at their Massachusetts location. [Link]
  • The Coca-Cola Company is seeking to fill 3 patent agent positions at their Atlanta location; individuals must have 2-4 years of patent experience. [Link]

Upcoming Events:

  • The fourth IP Business Congress (IPBC) will take place on June 19-21 in San Francisco. IPBC 2011 will bring together leaders from the worlds of IP business and finance to discuss issues that center on the creation and management of IP value. There will be over 50 highly regarded guest speakers such as; Judge Michel, Judge Rader, Teresa Rea, Tracey Thomas, Loria Yeadon, Benjamin Lee, and Peter Menell just to name few. [Link]
  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]

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

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Patent Trial Program Could be a Good Idea

  • California’s Northern District has seen a large increase in the number of patent lawsuits. As a result, this District was picked to participate in a 10-year pilot program that could route patent cases to judges who request them. This program is intended to send patent cases to judges who have an expertise in patent law. If a judge receives a patent law case and does not want it he or she may decline the case, and the case will be sent to the judge with the patent law expertise. Should this program be applied in all District Courts in order to get judges with patent law knowledge to hear patent law cases? [Link]

The House Appropriations Committee Doesn’t Think the USPTO Should Keep Fees

  • The House Appropriations Committee strongly opposes the USPTO to keep funds that it makes. The committee argues allowing the USPTO to keep all their fees would make it financially independent of the budget process and therefore essentially free from congressional oversight. This could possibly mean the language in the Patent Bill that gives the USPTO the right to keep their fees could be removed, in order to pass the remaining parts of the Bill. If this language is removed the USPTO’s budget could possibly get cut again or stay the same, which in both cases the USPTO would remain underfunded. Underfunding the USPTO will cause the USPTO not to be able to effectively decrease the number of patent applications that are backlogged. [Link]

Another Federal Judge Holds the False Marking Law Unconstitutional

  • The first case in which a judge held the false marking statute unconstitutional was Unique Product Solutions Ltd. v. Hy-Grade Valve Inc., which was decided in Ohio. Now a judge in Pennsylvania held in the case of Rogers v. Tristar Products Inc., that the law is unconstitutional. The reasoning this court used was that, the false marking statute has been held to be a criminal law, but that, under its qui tam provision, "the what, when, where, and how of the litigation remain subject to the whims of whomever sees fit to bring the suit." While this decision has practically no precedence, this could be a sign that the false marking law is on its way to the Supreme Court, in order to determine if it is in fact unconstitutional. [Link]

Patent Jobs:

  • Kaleidescape is looking for an in-house patent attorney or patent agent with 3 years of patent experience to work in their California location. (telecommuting is an option) [Link]
  • Meso Scale Diagnostics is seeking a patent attorney with an engineering background and 3-10 years of patent experience to work at their Maryland location. [Link] 
  • Aspen Aerogels is searching for a patent agent or an IP analyst with 5 years of experience to work at their Massachusetts location. [Link]
  • The Coca-Cola Company is seeking to fill 3 patent agent positions at their Atlanta location; individuals must have 2-4 years of patent experience. [Link]

Upcoming Events:

  • The fourth IP Business Congress (IPBC) will take place on June 19-21 in San Francisco. IPBC 2011 will bring together leaders from the worlds of IP business and finance to discuss issues that center on the creation and management of IP value. There will be over 50 highly regarded guest speakers such as; Judge Michel, Judge Rader, Teresa Rea, Tracey Thomas, Loria Yeadon, Benjamin Lee, and Peter Menell just to name few. [Link]
  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]

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

Microsoft v. i4i: Supreme Court Affirms Strong Presumption of Patent Validity

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Microsoft Corp. v. i4i Limited Partnership (Supreme Court 2011)

The patent act indicates that issued patents are “presumed valid.” 35 U.S.C. § 282. In this case, Microsoft challenged the strength of that presumption — arguing that a low “preponderance” standard for proving invalidity should be sufficient rather than the higher “clear and convincing” standard required by the Court of Appeals for the Federal Circuit. In straightforward language, the Supreme Court writes: “We consider whether §282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.” Microsoft will now likely be forced to pay the $250+ million judgment for infringing i4i’s patents.

With unanimous agreement, the Supreme Court has rejected Microsoft’s argument and affirmed the Federal Circuit’s strong presumption of proof. Justice Sotomayor delivered the opinion for seven of the justices. Justice Breyer joined the majority but also wrote a concurring opinion that was signed by Justices Scalia and Alito; Justice Thomas concurred, but based upon his own unique historical reasoning. Chief Justice Roberts recused himself. With the absence of Justice Stevens, the court appears to now be tilted to the right on core patent issues. (I.e., toward patents as property rights and away from a more policy-based regulatory paradigm).

The court’s opinion rests largely on its 1934 RCA opinion that required “clear and cogent evidence” to overturn an issued patent and a conclusion that the 1952 patent act intended to codify the common law holding of RCA.

[B]y the time Congress enacted §282 and declared that a patent is “presumed valid,” the presumption of patent validity had long been a fixture of the common law. According to its settled meaning, a defendant raising an invalidity defense bore “a heavy burden of persuasion,” requiring proof of the defense by clear and convincing evidence. That is, the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof. Under the general rule that a common-law term comes with its common-law meaning, we cannot conclude that Congress intended to “drop” the heightened standard proof from the presumption simply because §282 fails to reiterate it expressly.

The Supreme Court similarly rejected Microsoft’s alternative proposal that the presumption of validity be weakened for validity challenges that were not considered by the USPTO during prosecution of the application. However, the Court did agree with Judge Rich’s American Hoist opinion that “new evidence” of invalidity likely carries more weight than evidence that had been previously considered and rejected by the Patent Office. In what may become the most litigated aspect of the decision, the Supreme Court writes:

Simply put, if the PTO did not have all material facts before it, its considered judgment may lose significant force. And, concomitantly, the challenger’s burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain. In this respect, although we have no occasion to endorse any particular formulation, we note that a jury instruction on the effect of new evidence can, and when requested, most often should be given. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO had no opportunity to evaluate before granting the patent. When it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, the jury may be instructed to consider that question. In either case, the jury may be instructed to evaluate whether the evidence before it is materially new, and if so, to consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence. Although Microsoft emphasized in its argument to the jury that S4 was never considered by the PTO, it failed to request an instruction along these lines from the District Court. Now, in its reply brief in this Court, Microsoft insists that an instruction of this kind was warranted. That argument, however, comes far too late, and we therefore refuse to consider it.

In its opinion, the court acknowledged policy arguments both for and against a strong presumption of validity (Citing Lemley & Lichtman), but in the end decided that it was bound to follow Congress and the common law precedent.

In his concurring addendum, Justice Breyer attempted to cabin-in the decision by indicating that the clear and convincing evidence standard of proof “applies to questions of fact and not to questions of law.” He suggested that jury instructions should include detailed interrogatories that separate-out factual determinations made by a jury from the legal conclusions. That distinction is extremely important in the patent landscape because the ultimate question of obviousness is a legal conclusion based upon a set of facts generated by following the process set out in Graham v. John Deere. If Justice Breyer’s prescription is followed, it creates a major loophole in the strong presumption because the most difficult and debatable aspect of the obviousness analysis is the leap from the factual underpinnings to the ultimate conclusion. As an aside, Justice Breyer suggests in his opinion that “novelty” is a question of law while the Federal Circuit has long held that to be a factual conclusion.

Justice Thomas agreed that the standard for proving invalidity should be did not agree with the majority that the standard was “codified” in the Patent Act of 1952 but rather that the common law clear and convincing evidence standard was left unchanged by the Act.

Boston Scientific v. Johnson & Johnson

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By Jason Rantanen

Boston Scientific Corp. v. Johnson  & Johnson (Fed. Cir. 2011) Download 10-1230
Judges: Bryson, Gajarsa (concurring-in-part), Moore (author)

The line between written description and enablement analyses is often unclear; Boston Scientific makes it even blurrier, at least in the eyes of one Federal Circuit judge.

The patents involved in this appeal relate to drug-eluting coronary stents using a particular chemical compound.  One set of patents ("the 1997 patents") claims stents using either rapamycin or a macrocyclic lactone analog of rapamycin, while the other patent-in-suit, the '662 patent, claims stents using either rapamycin or a macrocyclic triene analog of rapamycin.  In both cases, the the analog limitations were added well after the patents' priority date.  For purposes of the appeal, both analogs were broadly defined to be any molecule with structural similarity to rapamycin.

The district court granted summary judgment of invalidity of the 1997 patents based on a lack of enablement and lack of adequate written description, and granted summary judgment of the '662 patent based on lack of adequate written description.  The patent holders appealed.

Species-Genus Analysis
On appeal, the majority applied the "species-genus" framework to hold the patents invalid for lack of adequate written description.  Under that approach, "a sufficient description of a genus requires the disclosure of either a representative number of species falling within the scope of the genus or structural features common to the members of the genus so that one of skill in the art can 'visualize or recognize' the members of the genus."  Slip Op. at 17, quoting Ariad, 598 F.3d at 1350.  Here, the 1997 patents contained no examples of macrocyclic lactone analogs of rapamycin and gave no essentially guidance as to how to determine whether a compound falls into that category.  Similarly, the '662 patent, although disclosing the broad genus of "analogs" of rapamycin, failed to disclose the sub-genus of "macrocyclic triene analogs" of rapamycin.

Lack of Examples is Telling
In reaching its conclusion, te majority paid particular heed to the lack of any examples of the claimed genera.   "Although examples are not always required to satisfy the written description requirement, the lack of any disclosure of examples may be considered when determining whether the claimed invention is adequately described."  Slip Op. at 18.

Use of POSITA Knowledge to Fill In the Blanks
Although acknowledging that in some cases it may be appropriate to look to the knowledge of one of skill in the art when performing a written description analysis, the majority imposed a substantial limit on this approach.  "Because the specification is viewed from the perspective of one of skill, in some circumstances, a patentee may rely on information that is "well-known in the art" for purposes of meeting the written description requirement….However, when the four corners of the specification directly contradict information that the patentee alleges is "well-known" to a person of skill at the effective filing date, no reasonable jury could conclude that the patentee possessed the invention."  Slip Op. at 22-23. In this instance, the majority concluded that "specification of the 1997 patents itself refutes any conclusion that the structural elements and its mechanism of action and biological activity was known….Thus, there is insufficient correlation between the function and structure of rapamycin and its analogs to provide adequate written description support for the entire genus of macrcyclic lactone analogs of rapamycin."  Slip Op. at 23 (internal citation omitted).

Judge Gajarsa: Stop Using Written Description When Enablement Will Do
Concurring in the judgment of invalidity and with the majority's ruling on the '662 patent, Judge Gajarsa wrote separately to express the view that "[t]he enablement requirement of 35 U.S.C. § 112 ¶ 1 is the appropriate tool for invalidating claims that are broader than their disclosure."  The result is a blurring of the line between enablement and written description:

The majority’s opinion further extends the written description requirement into the realm of enablement. Much of the confusion in this case is due to the difficulty of determining what constitutes a genus or a subgenus, the relationship between the structure and the function of compounds, and how the written description requirement applies to novel compounds as opposed to novel combinations of known elements. These are legal inquiries predicated on disputed issues of material fact. Applying the enablement requirement would help to clear the thicket of jurisprudence regarding § 112 ¶ 1. As discussed briefly below, in this case, the enablement analysis is simpler and more appropriate.

Advice on Kindle vs Nook vs iPad

Patent

I am considering purchasing an e-reader. I am currently leaning toward the Kindle, but am also considering the Nook and the iPad. In addition to novels and casebooks, I’m also hoping to use the device to read law review articles and Federal Circuit patent decisions that are currently in PDF format.  Why?: I am looking for a lightweight dedicated reading device to help me avoid distractions and weight of my Thinkpad.  I am also enamored by the e-ink and have the idea that it would help reduce eye strain.  

Any advice before purchasing? Is 3G valuable? Is there an easy way to access the newest Federal Circuit patent decisions on the Kindle or Nook (or should Patently-O begin offering that service?)

In re Klein – a breakthrough for arguments as to non-analogous art before the USPTO?

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Guest Post by Professor Paul Cole, Bournemouth University; European Patent Attorney, Lucas & Co, UK.

The above decision has been comprehensively reviewed in yesterday’s posting by Dennis Crouch, but it is of interest because it provides a sign that the analogous art tests in Europe and in the US may not be as different as previously believed

For a primary reference, the black-letter law of the EPO as explained in the Case Law of the Boards of Appeal is that it is normally a prior art document should be selected disclosing subject-matter conceived for the same purpose or aiming at the same objective as the claimed invention and having the most relevant technical features in common, i.e. requiring the minimum of structural modifications. As regards selection of a secondary reference, T 176/84 MÖBIUS/Pencil sharpener is a widely followed appeal board decision. The primary reference concerned a known pencil sharpener and the question was whether that disclosure should be considered in combination with a second reference disclosing a securing mechanism for the slot of a savings box. It was held that a skilled person would, as well as considering the state of the art in the specific technical field of the invention, look for suggestions in neighbouring fields and/or in a broader general technical field of which the specific field was part, i.e. any field in which the same technical problem or one similar to it arose and of which the person skilled in the art should be expected to be aware.

The US analogous art test as explained in In re Bigio 381 F.3d 1320 would be accepted by most European practitioners as no more and no less than a summary of the test adopted by the EPO Appeal Boards:

Two separate tests define the scope of analogous prior art:  (1) whether the art is from the same field of endeavor, regardless of the problem addressed and, (2) if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.

With this similarity in their underlying legal tests it is surprising how far the EPO and the USPTO have diverged in practice. A classic example is found in the Bigio case itself i.e. that toothbrush references are analogous art to hairbrushes, both being brushes having a handle segment and a bristle substrate segment. Judge Newman was more appreciative of the difference between a hairbrush and a toothbrush but she was in the minority. The more recent decision in Innovention Toys v MGA Entertainment (Fed Cir., Mar 21 2011) though perhaps less factually clear-cut also ruled that the art there cited was analogous.

As regards field of endeavour Klein nailed his colours firmly to the mast of nectar feeding with no less than four references to nectar in his main claim and two references to the hummingbirds, orioles and butterflies that were to receive the nectar:

21. A convenience nectar mixing device for use in preparation of sugar-water nectar for feeding hummingbirds, orioles or butterflies, said device comprising: a container that is adapted to receive water, receiving means fixed to said container, and a divider movably held by said receiving means for forming a compartment within said container, wherein said compartment has a volume that is proportionately less than a volume of said container, by a ratio established for the formulation of sugar-water nectar for hummingbirds, orioles or butterflies, wherein said compartment is adapted to receive sugar, and wherein removal of said divider from said receiving means allows mixing of said sugar and water to occur to provide said sugar-water nectar.

The objection as set out in the government’s appeal brief was that the art taught multiple examples of containers with compartments separated by removable dividers, that Mr Klein was not entitled to a patent just because he sought to put these containers to a particular use to which these prior art containers had not been put and that substantial evidence supported the Board’s conclusion that the prior art containers would have commended themselves to someone like Klein who faced the problem of finding a container capable of being divided into separate compartments. However, the government’s contention that the problem was simply one of “compartment separation” did not resonate with the CAFC. They dismissed this broadening from the narrower nectar-related formulation of the problem found by the Board for procedural reasons. It is difficult to see what basis there could be for broadening the problem in this way except for wilful blindness as to the nature of the invention and creation of an improper hindsight mosaic of prior art. However, it seems doubtful that Klein would have succeeded on this issue but for the forthright way in which he had defined his field of endeavour in his claim.

In the previous posting it has been noted that Klein’s narrow “purpose” of the invention goes against common patent attorney practice because the narrow purpose can also lead courts to narrow the claim scope during claim construction and in their analysis of infringement under the doctrine of equivalents. Attorneys may want to rethink that approach in light of this case. A European practitioner would say “amen” to that. Klein was in the business of jugs for nectar mixing and nothing else. There was no mileage for him in extending his claim scope into unrelated and wholly speculative fields from which he could not expect ever to receive revenue, but which would expose him to unknown and potentially fatal prior art.

The USPTO’s decision to select e.g. an accounting drawer as starting point prior art seems to a European practitioner to be putting the cart before the horse. European practice follows the approach of the Irish farmer asked by an English visitor lost in the back roads of Kerry: “Can you direct me to Dublin?” He replied: “If I wanted to go to Dublin, I definitely wouldn’t start from here!” Arguably the natural starting point for development of the invention was the nectar and how to dispense its ingredients accurately. That the drawer was an unnatural starting point is supported by the reasoning in EPO Appeal Board in T 570/91 AE PLC/Pistons which with modification to follow the facts in the present case would read as follows:

“If … a person skilled in the art prefers and decides to start from a specific accounting drawer, he can further develop that drawer but at the end of that development the normal result will still be an accounting drawer and not a nectar mixing device.”

In its opinion the CAFC adopted a similar approach to AE PLC, following a dictum in In re Clay 966 F.2d 659 that “If [a reference]is directed to a different purpose the inventor would accordingly have had less motivation or occasion to consider it.” None of the references of this type showed a partitioned container that was adapted to receive water or contain it long enough to be able to prepare different ratios in the different compartments, and the Board’s finding that the five references at issue were analogous art was not supported by substantial evidence.

As to the merits of the case, useful guidance is given in the opinion of Jacob L.J. in Schlumberger v Electromagnetic Geoservices [2010] EWCA Civ 819 where he was grappling with the same problem of a combination of prior art A and B in dissimilar arts and asked in what circumstances a marriage of skills in dissimilar arts could be obvious to either notional partner. He observed:

“In the case of obviousness in view of the state of the art, a key question is generally “what problem was the patentee trying to solve?” That leads one in turn to consider the art in which the problem in fact lay. It is the notional team in that art which is the relevant team making up the person skilled in the art. If it would be obvious to that team to bring in different expertise, then the invention will nonetheless be obvious. Likewise if the possessor of the “extra expertise” would himself know of the other team’s problem. But if it would not be obvious to either of the notional persons or teams alone and not obvious to either sort of team to bring in the other, then the invention cannot fairly be said to be obvious. As it was put in argument before us the possessors of the different skills need to be in the same room and the team with the problem must have some reason for telling the team who could solve it what the problem is.”

The value of the insight in Schlumberger is amply demonstrated by the fact pattern in the present case, although admittedly the invention discussed in Schlumberger lies at the opposite end of the scale in terms of commercial importance and technical difficulty. In the present case the state of the art had not progressed beyond retailers selling nectar feeding equipment and giving advice as to the ratio of sugar to water for the various creatures that it was desired to feed. On the evidence of what was said in the specification customers had been confused and forgetful for years, but until Mr Klein’s invention nobody had identified this as a technical problem, still less thought of looking in the receptacle art for a potential solution. In the words of Jacob L.J. in Schlumberger:

“They did not say: “this is our problem. If only we had a solution to it.” Instead they simply put up with things as they were. Then the essence of the invention is the insight that there was a solvable problem at all.”

If the less plausible starting point in the receptacle art is taken as the starting point, what realistic prospect was there of a designer of receptacles with removable dividers e.g. for business or accounting purposes realising that there was a problem associated with nectar feeding that could be solved by making the receptacle water-tight and adapting the divider positions for sugar and water to make nectar?

On either view the objection sustained by the Board was based on impermissible hindsight and was correctly reversed by the CAFC. The nectar feeding people and the receptacle designers would never have got engaged, still less married, if they had not somehow been introduced, and there was no straightforward mechanism in the prior art for such an introduction to have been made.

The mechanical examples in the MPEP at 2141.01(a) all reflect cases where the government view as to how the analogous art test should be applied succeeded. Klein provides a counter-example of applicant success that it is hoped will soon find its way into MPEP. As regards Bigio, while that decision can usefully be cited for the rule that it affirms, it is submitted that it is an outlier which while possibly correct on its special facts should not be held up to examiners as a good way of arguing the normal run of cases.

Therasense v. Becton Dickinson: A First Impression

Patent

by Jason Rantanen

I've got a new essay (with Lee Petherbridge) in which we provide an early analysis of what we think are substantial law and policy concerns raised by Therasense.  In the essay we argue that Therasense could have a much more significant, complex, and nuanced impact on the legal infrastructure of American innovation than the opinion for the court appears to appreciate.  In view of these complexities, we explain why the court may be too sanguine in its expectations for the instrumental effect of its decision.

In a nutshell, we consider the possible impact of Therasense on the efficiency of patent prosecution, on the amount of low quality patents, and on the cost of patent litigation.  In view of the significant impact that newly appointed judges had on the outcome of the appeal, we also consider what, if anything, Therasense may reveal about the characteristics of the new Federal Circuit. 

The essay is available here.  As this is a draft, we welcome any comments.  They can be provided in response to this post or sent to me at rantanen [at] uchastings [dot] edu.

In re Klein: Analogous Art Test as the New Structure for Non-Obviousness Determinations

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In re Klein, ___ F.3d ___ (Fed. Cir. 2011) (Judges Newman, Schall, and Linn)

by Dennis Crouch

In an important nonobviousness decision the Federal Circuit has sided with the patent applicant, Arnold Klein and rejected the USPTO’s obviousness conclusions.  In its opinion, the court held that none of the five cited prior art references could be considered “analogous art.”  Under the Federal Circuit’s exclusionary test, as non-analogous art the references were then entirely excluded from consideration in the nonobviousness analysis. 

A prior references is considered analogous if it is either (1) in the same field of endeavor as the invention or (2) “reasonably pertinent” to the problem with which the inventor is involved.  In turn, a reference is reasonably pertinent if it logically would have commended itself to an inventor’s attention in considering his problem.

Simple Invention; Powerful Opinion: The power of the opinion is amplified by the fact that Klein’s invention is an extremely simple mechanical device. 

Klein’s patent application is directed toward a device for measuring and mixing sugar and water for bird feeders.  Ornithologists have discovered that different species of birds prefer different sugar-water ratios. One embodiment of Klein’s device looks like a measuring cup with a movable divider that separates the space into an area for sugar and another area for water.  The placement of the divider is set according to the bird species being fed. With the divider in place, sugar and water can then be added to their respective areas.  The proper ratio is guaranteed so long as water and sugar are added to the same level or “line of sight.”

The figures below show the invention fairly well. The basic embodiment has three slots for Hummingbirds, Orioles, and Butterflies. (Hummingbirds prefer more sugar).  The divider can be inserted and held in place by the chosen slot. Sugar & water would then be added to same level or line of sight.  Once the ingredients are added, the divider can be removed and the solution mixed together.

PatentLawImage130

Of importance to this case, Klein’s broadest independent claim is fairly narrow in terms of both the claim elements and in reciting a purpose of the invention. 

21.    A convenience nectar mixing device for use in preparation of sugar-water nectar for feeding hummingbirds, orioles or butterflies, said device comprising:

a container that is adapted to receive water,

receiving means fixed to said container, and

a divider movably held by said receiving means for forming a compartment within said container, wherein said compartment has a volume that is proportionately less than a volume of said container, by a ratio established for the formulation of sugar-water nectar for hummingbirds, orioles or butterflies, wherein said compartment is adapted to receive sugar, and wherein removal of said divider from said receiving means allows mixing of said sugar and water to occur to provide said sugar-water nectar.

Rejecting the Five Rejections: In the application, Klein admitted that the ratios for the various species were known in the prior art. Based on that admission, the USPTO issued five separate obviousness rejections of Claim 21 — each using a different prior art reference in combination with the admitted ratios. 

PatentLawImage131Three of the references were directed toward containers with movable dividers used to separate solid items such as screws or bolts. (See figure).  In determining that those references were non-analogous, the court first considered the problem being solved by Klein and arrived upon a somewhat narrowly defined single problem of: “making a nectar feeder with a movable divider to prepare different ratios of sugar and water for different animals.”  The court then quickly concluded that the three solid item separators were not pertinent to Klein’s problem “since none of these three references shows a partitioned container that is adapted to receive water or contain it long enough to be able to prepare different
ratios in the different compartments.”

The two remaining references were directed at dividing liquids that would be later mixed.  The court found neither of these pertinent to Klein’s invention because they did not address the multiple ratio problem and did not have movable dividers.

Because none of the references were pertinent the obviousness conclusion had no basis.

(As a note, the Federal Circuit did not address whether any of the references were in the same field of endeavor because the USPTO had based its rejection only on the reasonably pertinent test for analogous art.)

Singular Narrow Purpose of the Invention: One explanation for Klein’s success on appeal is the singular narrow purpose of his invention.  The narrow purpose then allowed him to argue that the cited references were well outside of that purpose.  On appeal, the USPTO Solicitor had argued that the problem being solved was really a broader “compartment separation problem.”  However, the Federal Circuit rejected that argument as untimely because it had not been raised before the Board of Patent Appeals, citing Sec. & Exch. Comm’n v. Chenery Corp., 318 U.S. 80, 94 (1943) (“[A]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.”). Going forward, a savvy Board of Patent Appeals may alter its approach and more broadly define the problem being solved.

Prior Art Addressing only Portions of Purpose: The most important aspect of the decision is likely the implicit holding that a prior art reference in a separate field of endeavor will not be analogous unless it is pertinent to the entire problem being solved.  Here, all of the references were pertinent to some aspect of the stated problem, but they failed the test because none was related to the problem as a whole.  

Duck, Duck, Goose: The force of the opinion is severely limited by the fact that the court did not cite or consider how the Supreme Court’s decision in KSR v. Teleflex altered the scope of analogous art. Although KSR did not directly discuss the analogous art test per se, the USPTO has previously interpreted that as expanding the scope of analogous art.  See M.P.E.P. 2141.01(a). 

The New Structure for Non-Obviousness Determinations: A criticism of KSR has been that it removed almost all structural methodology from the nonobviousness analysis and left the test too loose and open to subjectivity in decision making.  If it sticks, the Klein approach to the consideration analogous art has the potential reinvigorate a more rule-based analysis.

Notes:

  • As mentioned above, Mr. Klein’s case is interesting because he has been largely representing himself pro se during the patent prosecution process.  After Klein filed his own opening brief to the Federal Circuit, Louis Tompros of WilmerHale stepped in and likely transformed the case from a Rule 36 affirmance to a major win.
  • Klein’s narrow “purpose” of the invention goes against common patent attorney practice because the narrow purpose can also lead courts to narrow the claim scope during claim construction and in their analysis of infringement under the doctrine of equivalents.  Attorneys may want to rethink that approach in light of this case.

Supreme Court: Inventors Can Retain Rights Even for Federally Funded Inventions

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StanfordImageStanford v. Roche, 563 U. S. ____ (2011)

In a 7-2 decision, the Supreme Court has ruled that a federally funded contractor does not necessarily own the patent rights to inventions resulting from funded projects. Here, the Board of Trustees of the Leland Stanford Junior University unsuccessfully argued that such rights automatically vest under the Bayh-Dole Act of 1980.

Ownership of patent rights and inchoate pre-filing rights are somewhat confusing because they involve a mixture of federal patent law and state laws of contracts, employment, and trade secrets. Here, the majority led by Chief Justice Roberts has held that US patent rights have always (since 1790) initially vested in “the inventor” and that the non-specific language of the Bayh-Dole Act does nothing to change the original setup.

The Bayh-Dole Act has revolutionized the way that universities look at technology and innovation by allowing research institutions to “elect to retain title” to inventions generated through federal funding. 35 U.S.C. § 202(a). Today, most major research universities hold dozens if not hundreds of patents and have extensive licensing offices. The Association of University Technology Managers (AUTM) now boasts more than 3,500 members.

This case involves a Stanford researcher (Mark Holodniy) who was under a prior contractual duty to assign invention rights to Stanford but who actually assigned rights to Cetus. When Stanford sued Roche (Cetus’ successor in interest) for patent infringement, Roche’s defense was that a co-owner could not be held liable for patent infringement. The Court of Appeals for the Federal Circuit agreed with Roche — holding that Holodniy’s duty to assign rights to Stanford did not block him from actually assigning rights to Cetus and that Roche therefore held rights in the invention.

At the Supreme Court, Stanford argued that the contractual rights did not matter and instead that its statutory right to “elect to retain title. . . any invention of the contractor” conceived or reduced to practice under a federally funded agreement gave it precedence over Cetus/Roche. The court rejected Stanford’s argument as both against the tradition of patent law and not in accord with the statute.

Stanford’s reading of [the Statute] is plausible enough in the abstract; it is often the case that whatever an employee produces in the course of his employment belongs to his employer. No one would claim that an autoworker who builds a car while working in a factory owns that car. But, as noted, patent law has always been different: We have rejected the idea that mere employment is sufficient to vest title to an employee’s invention in the employer. Against this background, a contractor’s invention—an “invention of the contractor”— does not automatically include inventions made by the contractor’s employees.

This case is largely a moot point because the Federal Circuit has established a particular federal-patent-law interpretation of employment agreements that allows contracting parties to choose language that optionally includes either a promise to cooperate and assign rights or else an automatic assignment that occurs constructively at the moment of invention. If Stanford had chosen the more stringent automatic assignment language for its employment contract, then it would have automatically taken rights. The only problem, of course, is whether Universities have the bargaining power to require its employees to sign the more stringent contracts.

At the same time, however, the decision here offers some cause for caution in relying fully on the Federal Circuit’s usurpation of exclusive jurisdiction over this employment and contract law issue. In Footnote 2, the Supreme Court noted that, in this decision, the court had “no occasion to pass on the validity of the lower court’s construction of those agreements.” As discussed below, Justice Breyer explicitly criticized the Federal Circuit’s contract interpretation.

In dissent, Justice Breyer wrote:

Ultimately, the majority rejects Stanford’s reading (and the Government’s reading) of the Act because it believes that it is inconsistent with certain background norms of patent law, norms that ordinarily provide an individual inventor with full patent rights. But in my view, the competing norms governing rights in inventions for which the public has already paid, along with the Bayh-Dole Act’s objectives, suggest a different result.

Breyer also challenged the Federal Circuit rule distinguishing between a promise to transfer and an automatic transfer agreement. Relying upon history and tradition, Justice Breyer saw the initial contract as creating equitable title in the invention and then looked to old decisions historically did not enforce contracts to automatically transfer of legal title to patent rights.

Given what seem only slight linguistic differences in the contractual language, this reasoning seems to make too much of too little. Dr. Holodniy executed his agreement with Stanford in 1988. At that time, patent law appears to have long specified that a present assignment of future inventions (as in both contracts here) conveyed equitable, but not legal, title. See, e.g., G. Curtis, A Treatise on the Law of Patents for Useful Inventions §170, p. 155 (3d ed. 1867) (“A contract to convey a future invention . . . cannot alone authorize a patent to be taken by the party in whose favor such a contract was intended to operate”); Comment, Contract Rights as Commercial Security: Present and Future Intangibles, 67 Yale L. J. 847, 854, n. 27 (1958) (“The rule generally applicable grants equitable enforcement to an assignment of an expectancy but demands a further act, either reduction to possession or further assignment of the right when it comes into existence”).

Under this rule, both the initial Stanford and later Cetus agreements could have given rise only to equitable interests in Dr. Holodniy’s invention. And as between these two claims in equity, the facts that Stanford’s contract came first and that Stanford subsequently obtained a postinvention assignment as well should have meant that Stanford, not Cetus, would receive the rights its contract conveyed.

In 1991, however, the Federal Circuit, in FilmTec, adopted the new rule quoted above—a rule that distinguishes between these equitable claims and, in effect, says that Cetus must win. The Federal Circuit provided no explanation for what seems a significant change in the law. Nor did it give any explanation for that change in its opinion in this case. The Federal Circuit’s FilmTec rule undercuts the objectives of the Bayh-Dole Act. While the cognoscenti may be able to meet the FilmTec rule in future contracts simply by copying the precise words blessed by the Federal Circuit, the rule nonetheless remains a technical drafting trap for the unwary. It is unclear to me why, where the Bayh-Dole Act is at issue, we should prefer the Federal Circuit’s FilmTec rule to the rule, of apparently much longer vintage, that would treat both agreements in this case as creating merely equitable rights.

Justice Breyer realized that his argument regarding equitable title had not been briefed by the parties and therefore indicated his preference to remand for briefing of that issue.