In re Kao: Important Decision Controlling BPAI Obviousness Holdings

Patent,

In re Kao, ___ F.3d ___ (Fed. Cir. 2011)

In an important decision for patent prosecutors, the Court of Appeals for the Federal Circuit has partially overturned a PTO obviousness decision. The question on appeal for all three related patent applications was whether the Board of Patent Appeals & Interferences (BPAI) had properly held the pending claims obvious.

Background: Endo Pharmaceuticals has three pending patent applications that were all rejected on obviousness grounds and those rejections were affirmed by the BPAI. The applications relate to controlled-release oxymorphone tablets and were all found obvious as compared to Patent Cooperation Treaty (PCT) Pub. No. WO 01/08661 (“Maloney”).

Obviousness: The Section 103(a) of the patent act states that a claimed invention is unpatentable “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.” In Graham v. John Deere, the Supreme Court outlined a set of factual inquiries that should serve as the basis for the ultimate legal question of obviousness. When a BPAI decision is appealed directly to the Federal Circuit, the appellate court affirms factual findings so long as they are supported by “substantial evidence,” but reviews ultimate obviousness conclusion de novo. Theh substantial evidence requirement offers substantial deference to the BPAI and will be accepted so long “as a reasonable mind might accept [the evidence as] adequate to support [the] conclusion [being drawn].” Quoting In re Kumar, 418 F.3d 1361 (Fed. Cir. 2005).

BPAI Factual Findings Lack Substantial Evidence for the ‘432 application: The parties all recognized that controlled-release oxycodone was within the Maloney prior art. The Board made the further factual conclusion that the claimed invention, including a claimed dissolution rate, would be realized by taking a chemical formula provided by Maloney and replacing the known oxycodone with the claimed oxymorphone. On appeal, the Federal Circuit held that this factual finding was not supported by substantial evidence.

Accepting that it would be obvious to substitute oxymorphone in Maloney’s Formula 6, the Board’s reasoning nonetheless does not pass the substantial evidence threshold as to whether such a substitution would indeed fall within the dissolution profile of pending claim 1.

The problem was that the dissolution rate reported in Maloney was measured in a different way than that claimed by Endo, and the USPTO provided no “direct factual support in the record for the view that the claimed range of dissolution rates actually over-laps with the dissolution rate disclosed in Maloney.” In this case, testimony before the board (from Endo’s expert) was that “there is no general correlation” between the two measurement methods. The expert also “cited prior art literature that supported this conclusion.” On remand, the claim may still be held obvious, but the USPTO will need to do a better job linking the prior art to the patent as claimed. However, the Federal Circuit was clear that: “the Board should neither rely upon conclusory reasoning nor its own conjecture in assessing the weight of evidence.”

Secondary Considerations Nexus: The court also held that, when presented, the BPAI must consider secondary considerations of nonobviousness. The doctrine requires a nexus between the claim scope and the secondary consideration. The nexus requirement has seemingly been more and more strictly applied over the years. In the recent Tokai decision, the court held that “if commercial success is due to an element in the prior art, no nexus exists.” In this case, the court wrote “Where the offered secondary consideration actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.” (emphasis added) (I would inquire what the court means by “novel in the claim.”)

The nexus requirement is a two-way requirement in the secondary consideration will be rejected if either (1) overbroad so as to be a result of prior art aspects of the claim or (2) overly narrow so that only small number of potential embodiments exhibit the asserted secondary benefits. However, the court here (and elsewhere) have held that the applicant need not provide hard evidence that every embodiment covered by the claim has that nexus.

[A]n applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success, so long as what was sold was within the scope of the claims.’

Quoting In re DBC, 545 F.3d 1373 (Fed. Cir. 2008).

Obviousness and its Interplay with Patentable Subject Matter of Section 101: Endo’s ‘740 application claimed a method of treatment that included the step of “providing information” about a correlation between renal failure and bioavailablity of oxymorphone. Citing King Pharma, the Federal Circuit held that, even if novel, the informing step “cannot confer patentability absent a functional relationship between the informing and administering steps.” Here, the court distinguished from “transformative” and therefore patentable information delivery – such as a method of adjusting dosage based upon the informing step.

Waiving Rights to Appeal Particular Claim Issue: In its BPAI brief, Endo had grouped together all twenty claims of one of the pending applications under representative claim 1. On appeal, the Federal Circuit held that Endo had therefore waived its right to separately argue any of the other claims.

Pre-Examination Interview Program Formalized and Expanded to All Art Units

Patent

The USPTO has expanded its “First Full Action Interview” pilot program to include all areas of technology.  Under the program, patent applicants may request (and must be granted) an interview with the patent examiner assigned to the case prior to the first Office action on the merits.

To be eligible, the pending application must not have more than three independent and twenty total claims all directed to a single invention (i.e., not subject to a restriction requirement).  To participate, an applicant must electronically file a request for a first action interview at least one day before an Office action is entered into PAIR.  An application that does not originally fit within the requirements can become eligible through a preliminary amendment.

Timing: Requests may be filed as of today, May 16, 2011.  The pilot program will run for one year.

Prior to the interview, the examiner is required to prepare a “pre-interview communication” that indicates references to be cited and outlines any potential rejections/objections. 

Since taking office as USPTO Director, David Kappos has pushed for more direct interaction between patent applicants and patent examiners.  In the USPTO press release, Kappos is quoted saying

We’re expanding this pilot program because we’ve seen that, by enhancing the interaction between the applicant and the examiner early in the examination process, it helps both applicants and the USPTO.  We hope that by expanding the pilot to even more technology areas, we will see many more applicants take advantage of this program and realize its benefits.

In the prior pilot, the USPTO found that about 1/3 of applications were allowed in the first office action on the merits. (Outside the program, only about 11% of applications receive a first-action allowance.)

No additional fees are required to participate in the program. However, applicants must waive their right to request a pre-examination refund of fees.

Notes:

   

  

The Rambus Opinions: CAFC rules on the “reasonable forseeability” of litigation

Patent,

By Jason Rantanen

Micron Technology, Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1263
Hynix Semiconductor Inc. v. Rambus Inc. (Fed. Cir. 2011) Download 09-1299-1347
Panel: Newman (concurring and dissenting in part on Hynix), Lourie, Bryson, Gajarsa (concurring and dissenting in part on Micron and Hynix), and Linn (author of both Micron and Hynix)

Rambus is a company founded to commercialize inventions related to DRAM computer memory, including its RDRAM product.  It is currently engaged in several patent suits against manufacturers of SDRAM, an alternate type of memory technology.  Central to these cases is the issue of whether Rambus's destruction of documents – particularly a "shred day" during which thousands of pounds of documents were destroyed – prior to the commencement of the litigation constituted spoliation.  Given this case's discussion of document retention obligations, it has particular relevance for in-house counsel and outside counsel advising companies prior to the commencement of litigation.  Irrespective of the legal question discussed below, the specific factors discussed at pages 16-23 of Micron are worth reading.

Procedural Posture
Although addressing the same fundamental issue, Micron and Hynix arrived at the court in diametrically opposed postures.  In the district court proceedings on appeal in Hynix, Judge Whyte of the Northern District of California concluded that no spoliation occurred, while in the proceedings leading to Micron, Judge Robinson of the District of Delaware ruled that Rambus had engaged in spoliation and entered judgment in Micron's favor as a sanction.

Litigation Must Be Reasonably Forseeable
The resolution of the two appeals turned on the issue of when litigation became "reasonably forseeable," thus triggering Rambus's duty to preserve evidence.  Rambus argued that "to be reasonably forseeable, the litigation must be imminent, at least in the sense that it is probable and free of significant contingencies."  Micron and Hynix, on the other hand, aruged that reasonable forseeability incorporates no requirement of imminence. 

The five-judge panel unanimously concluded that the "reasonably forseeable" standard does not carry an imminence requirement.  While "[t]his standard does not trigger the duty to preserve documents from the mere existence of a potential claim or the distant possibility of litigation…it is not so inflexible as to require that litigation be imminent, or probable without significant contingencies,' as Rambus suggests."  Micron Slip Op. at 12-13. 

Applying this standard, the CAFC determined that the Micron district court had not clearly erred when it concluded that litigation was reasonably foreseeable prior to the critical 'shred day.'  In particular, the CAFC noted that (1) Rambus's document retention policy was not adopted for purposes of business management, but instead to further Rambus's litigation strategy; (2) Rambus was on notice of potentially infringing activities by particular manufacturers; (3) Rambus took several steps in furtherance of litigation prior to the key shredding party; (4) Rambus is the plaintiff-patentee [but see note below], and its decision whether to litigate or not was the determining factor in whether or not litigation would ensue; and (5) the relationship between Rambus and the DRAM manufacturers was not one of mutual benefit that subsequently turned sour, but rather was naturally adversarial. 

Arriving at a consistent outcome in Hynix, three of the five judges (Lourie, Byrson, and Linn) concluded that Judge Whyte erred in determining that litigation was not reasonably forseeable by inappropriately applying the stricter "imminent, or probable without significant contingencies" requirement for reasonable foreseeability.  "In Micron II, this court held that that standard does not carrry a gloss requiring that litigation be "imminent, or probable without significant contingencies….The district court here applied just such a standard. This is evident for three reasons." Hynix Slip Op. at 13 (internal citation omitted).

Yet although the reversal is clear, the majority's reasoning for its conclusion is not.  The majority first held that the district court erred not by considering the presence of contingencies at all, as one might expect given its preceding statement, but by failing to decide "that the resolution of these contingencies was reasonably foreseeable."  Id. at 14.  The majority's reason thus implicitly assumes that contingencies are, in fact, relevant to the foreseeability inquiry.  The second and third reasons – that the evidence of non-foreseeability was insufficient and the Hynix district court was the only court out of four to conclude that litigation was not reasonably foreseeable as of the critical date – similarly have little to do with whether the Hynix district court applied the correct legal standard.  The majority's actual analysis thus seems at odds with its statement that the foreseeability standard does not include a 'probable without significant contingencies' requirement given that its only relevant basis for reversal applies exactly such an analytical framework.  It is further puzzling because it involves an assessment of purely factual issues, not legal standards, to which it applies a de novo standard of review.

The Dissent
Writing in dissent in Hynix, Judge Gajarsa joined by Judge Newman takes the majority to task for its overriding drive to arrive at a consistent result in Hynix and Micron, a drive that in their view produced an erroneous result:

Seizing on the district court’s alleged grafting of an overly strict “gloss” on the reasonably foreseeable litigation standard, the majority claims that the district court erred as a matter of law by applying the wrong standard for spoliation. In so doing, the majority ignores the district court’s well-articulated understanding of the relevant Ninth Circuit law and its factual findings, which demonstrate that the district court applied the very standard that the majority now requires. The majority obtenebrates the facts presented in the district court’s opinion to resolve the conflict between the spoliation determinations in this case and in Micron.

Hynix dissent at 2.  In particular, the dissent criticizes what it perceives to be the majority's attempt to cloak its review of a factual determination as a legal issue in order to avoid applying a deferential standard of review, thus leading to an inconsistent result:

The majority created this standard in Micron with the intention of reconciling the district court’s spoliation determination in that case with the present one. The desires of an appellate tribunal, however, should not drive the outcome of decisions. Divergent district court opinions do not necessarily mean that the trial courts applied different “glosses” on a particular standard. Rather, this court must review district court opinions with the applicable standard of appellate review, which, in this case, is clear error or an abuse of discretion. In refusing to do so, the majority shirks its duties and performs its own factual analysis. The majority castigates the district court here for using a narrower “gloss” on the standard for spoliation just as the majority in Micron castigates the district court for holding the asserted patents unenforceable as a sanction for spoliation.

Id. at 3.

A Meaningless Remand?
Although affirming the Micron district court's conclusion that litigation was reasonably foreseeable, the majority nevertheless vacated the district court's sanction determination.  This move is unlikely to produce in any meaningful change.  The majority's basis for the remand was that the Micron district court opinion failed to provide sufficient detail or analysis in support of its conclusion that Rambus acted in bad faith, that Micron suffered prejudice, or that judgment in Micron's favor was the appropriate sanction to impose.  Given Judge Robinson's prior opinion, however, the inevitable result will be a more detailed opinion that reaches precisely the same conclusion on these issues. 

Judge Gajarsa dissented from this determination as well, again criticizing the majority for reviewing the facts and weighing the evidence "before it substitutes its judgment for that of the district court, deciding that based on the district court's thorough factual analysis, it would not have granted the dispositve sanctions."  Micron dissent at 2.

Note on consistency: In concluding that the Micron district court correctly concluded that litigation was reasonably foreseeable, the CAFC relied on the fact that Rambus was the plaintiff-patentee (and thus controlled the initiation of the litigation). Micron Slip Op. at 22.  Yet both the caption and the opinion's procedural background indicate that Rambus did not initate the lawsuits; rather they were declaratory judgment actions brought by Micron and Hynix. 

Disclosure: Although I had minimal exposure to the Rambus litigations while an attorney with Munger, Tolles, & Olson, note that my former employer did and continues to represent Rambus.

Tivo v. Echostar: En Banc Opinion Stands

Patent

By Jason Rantanen

TiVo Inc. v. EchoStar Corp. (Fed. Cir. 2011) (en banc nonprecedential order) Download Tivo 2009-1374 5 10 11 adl order to aso_new
Before Rader, Newman, Mayer, Lourie, Bryson, Gajarsa, Linn, Dyk, Prost, Moore, O'Malley, and Reyna

The saga of TiVo v. EchoStar plays on.  Shortly after the Federal Circuit issued its en banc opinion on April 20, 2011, discussed here, TiVo and EchoStar reached a widely publicized settlement.  On May 2, the parties informed the CAFC of the settlement and asked the court to dismiss the appeal.

The court, again ruling en banc, declined to do so as it would effectively nullify the en banc opinion.  Drawing upon the law of the Seventh, Ninth, and Eleventh Circuits, the CAFC concluded that "[i]f we were to grant the parties’ motion, the judgment  would be that the appeal is dismissed. Although the parties do not ask us to vacate our decision, at this stage, days before issuance of a mandate, we determine that granting the motion to dismiss, which would result in a modification or vacatur of our en banc judgment, is neither required nor a proper use of the judicial system."  Slip Op. at 2. 

Unless and until: In noting that the parties are free to request that the district court dismiss the complaint and vacate its previously imposed sanctions, the CAFC commented that the district court would lack jurisdiction to take this action "unless and until we return the case to its docket."  Slip Op. at 3.  Presumably the CAFC does not intend to modify its en banc opinion, but the court's choice of words leaves open that possibility.

Odom v. Microsoft: Using Your Own Patents as Prior Art

Patent

[UPDATED August 18, 2011 to Reflect the Fact that the Christopher Brown mentioned here is not Christopher Brown, CTO of OPSCODE]

Odom v. Microsoft (Fed. Cir. 2011)

By Dennis Crouch

I previously wrote about the Federal Circuit affirmation of the lower court’s summary judgment ruling that Odom’s claims are obvious when judged against a single prior art patent.  

The prior art patent in this case is Patent No. 6,057,836 and is owned by the defendant, Microsoft. The inventors on Microsoft’s ‘836 patent include Jude Kavalam (now CTO at Spoken Communications), Christopher Brown (now CTO at Opscode) and Jeff Bogdon (named inventor on 25+ patents).  The ‘836 patent provides a mechanism for users to re-size toolbar groups and has a number of similarities to the invention that Odom claimed in his patent and the appellate panel identified the advances offered by Odom as “insignificant.” Odom has now petitioned the Federal Circuit for a rehearing.

An interesting aspect of this set-up is the way that Microsoft used its patent as a priority document to help establish its freedom to operate rather than as intellectual property per se.  Microsoft could have achieved the same results by simply publishing its prior invention. Likewise, in the US, Microsoft could have relied on its prior-inventor rights under 35 U.S.C. 102(g).  However, the patent-as-prior-art approach has a number of advantages over these alternatives. Of course, alternative approaches are not mutually exclusive and instead can each be part of a layered strategy of protection.

Creating Prior Art – Patent versus Publish: Under 35 U.S.C. 102(a) & (b), any prior publication has the same weight as a prior patent or published patent application. An issued patent additionally offers intellectual property rights. However, even apart from those IP rights, there are several reasons why a company may choose to file for patent rights when attempting to create prior art to forestall infringement litigation.  First, because a patent application will be considered prior art as of the date of filing (once published or patented) under 35 U.S.C. 102(e), the company can establish a prior art priority date without actually publicly disclosing the invention for at least 18 months. This delay in publication will often be seen as valuable.  The patent approach also comes with a guarantee that the document will qualify as prior art as of a specific, known date — as opposed to a non-patent publication that will be judged and timed according to the sufficiency of distribution or indexing. In addition, the patent rules force a more complete disclosure and therefore may result in better documentation of the invention and a broader scope of disclosure than what would have been otherwise published.  Finally, a patent may well provide a sense of authority and an equitable claim-to-right that would not accompany a mere publication.

Creating Prior Art – Patent versus Prior Inventor Rights: In the US, a prior inventor can also invalidate a patent by proving prior invention under 35 U.S.C. 102(g).  However, that approach is fraught with potential doctrinal difficulties and a patent disclosure offers a much cleaner mechanism.  These difficulties may well have arisen in this case. For instance, Odom presented evidence of Microsoft’s recognition that the Kavalam project was unable to achieve the the results claimed by Odom. And, several years later (well after Odom’s priority date), Microsoft finally filed for patent protection on what is arguably Odom’s invention — arguably recognizing that Odom’s invention is distinct when compared with Kavalam.  These facts suggest that perhaps Microsoft would not fare well in a 35 U.S.C. 102(g) argument.  Adding to this difficulty is the extensive paper trail requirement for proving 35 U.S.C. 102(g). 

Four Corners of the Prior Art?: The district and appellate court decisions considered the Kavalam patent on its face and did not bite on any of Odom’s arguments regarding Microsoft’s actual activities and admissions that could have limited the interpretation of the disclosure.  This approach simplifies the analysis, but it is probably wrong once the case steps into the question of obviousness — especially when the alleged prior art was created by one of the parties to the lawsuit.  In KSR v. Teleflex, the Supreme Court ordered that courts apply a flexible, common sense approach obviousness. Here, that guidance seems to mean that a court should consider extrinsic facts that tend to expand or limit the interpretation of the prior art reference. 

Notes:

  • Odom’s patent issued from a continuation application. Odom cited the Kavalam patent in the parent case, but did not re-submit the patent in the child case (examined by the same examiner) and the Kavalam patent is not listed on the face of the asserted patent.  The Federal Circuit opinion implicitly suggests that this prior art was not considered by the examiner. Those who disagree may want to support the rehearing request.

Aristocrat v. IGT: Attorney Negligence, Revival, and Inequitable Conduct

Patent

Aristocrat Techs. v. Int’l. Game Tech. & IGT (N.D. Cal. 2011) (File Attachment: AristocratIneqCond.pdf (125 KB))

Patent attorneys regularly have hundreds of patent applications pending, each with their own due dates – far too many for anyone remember on their own. We keep track through docketing systems, paralegals, and attorney cross-checks. We are often overwhelmed – especially when firms change and staff leaves (as happened in this case). One of the comments to this post astutely introduced the old adage: “there but for the grace of God go I.”

The Aussie slot-machine manufacturer Aristocrat missed its US national stage patent filing deadline by one day. The patent was saved when the USPTO granted Aristocrat’s US attorney’s petition to revive the abandoned application based on the claim that the “entire delay” in filing the appropriate papers was “unintentional.”  During infringement litigation against market leader IGT, the district court first held the patent invalid based on a defense of improper revival. In particular, the district court held that the USPTO lacked authority to revive national stage applications unless the abandonment met the much higher standard of being unavoidable.  On appeal, the Federal Circuit reversed — holding that improper revival did not constitute a cognizable defense to allegations of infringement under 35 U.S.C. 282.

On remand, IGT shifted its focus to unenforceability — alleging that Aristocrat committed inequitable conduct in the revival of its abandoned application.

Late Filing and Hiding Abandonment from Client: The district court used one-hundred-twelve paragraphs to described the facts relating to the abandonment and revival.  Here are a few key facts:

  • January 10, 2000: On the day of the 30–month deadline, Aristocrat’s US patent counsel (Shahan Islam) used US Express mail to file the necessary documents to enter US national stage examination.  The USPTO received the documents the next day (January 11, 2000). However, according to the USPTO, Islam did not include sufficient evidence to prove the January 10, 2000 mailing date. And, Mr. Islam’s firm did not retain the filing evidence in a locally held file.
  • June 2001: The USPTO dismissed Islam’s petition to correct the filing date and indicated that the application remained abandoned.  Mr. Islam later testified that he did not remember receiving the June 2001 decision.  The court found that Mr. Islam likely saw the decision shortly after it was mailed.
  • November 2001: Aristocrat requested a status update on the application from Mr. Islam. (Up to that time, Aristocrat had been told nothing of the abandonment issues).  In December 2001, Mr. Islam responded in an e-mail that “we have learned that the application won’t be examined for at least another nine months(!) [or] so in view of the backlog.”  The e-mail did not indicate anything about the abandonment.  Mr. Islam also forwarded his response to another attorney at his law firm saying “lets discuss.”
  • During this same time period, eight other Aristocrat applications being prosecuted by Mr. Islam also went abandoned based on failure to respond to PTO notices mailed in 2001.
  • July 18, 2002: Mr. Islam (at this point with the KMZ firm) filed a petition for revival for unintentional abandonment — included a statement that “the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition under 37 CFR 1.137(b) was unintentional.”  In addition, Mr. Islam filed a preliminary amendment and petition for accelerated examination.  In a letter to Aristocrat, Mr. Islam incorrectly (and apparently intentionally) stated that the amendment & petition to accelerate had been filed in January 2002.  The letter did not mention the petition for revival.
  • September 3, 2002: USPTO granted the petition to revive. 
  • 2003: KMZ attorneys informed Aristocrat of the abandonments & revivals.

Revival: The USPTO typically does not require documentation to revive under the unintentional delay standard. Rather, the office relies on the applicant’s statements that the entire delay in filing a response was unintentional.  Here, the USPTO did not require specific documentation.

Unintentional versus Not Intentional: In its analysis, the district court held that the facts did not provide clear and convincing evidence that Mr. Islam had intentionally delayed the petition filing. In particular, the court could find no motive for the delay.  Instead, the delay appeared to be the result of Mr. Islam’s ongoing negligence rather than intentional misbehavior.  Negligence is the foundational non-intentional tort and therefore a finding of negligence does not suggest that the delay was intentional. In an odd logical analysis, Judge Whyte concluded that Islam’s failure to notify Aristocrat of the abandonment “actually suggests that the delay was unintentional.”

Mr. Islam did not want to disclose his errors [to Aristocrat] because he was likely embarrassed by his failure to act in accordance with his client’s instruction. Had it been granted, Mr. Islam’s Petition to Correct would have avoided abandonment altogether. Mr. Islam’s deflections in December 2001 show that he was fully aware that Aristocrat wished to proceed with the ‘717 application. Mr. Islam’s comments to Mr. Owen’s regarding the PTO backlog at the time further avoided acknowledging any personal responsibility for delay but it may have been correct, especially considering that the ‘717 application remained in an abandoned state even after the PTO had officially revived it. Still further, Mr. Islam’s incorrectly dated Second Preliminary Amendment is further evidence that Mr. Islam’s chief motive was to hide his failures from Aristocrat. Once the June 2001 Decision was sent, a decision to deliberately delay reviving the ‘717 application would not have helped to hide his errors from Aristocrat.

Although Judge Whyte found “Mr. Islam’s testimony was disturbingly vague and his lack of memory difficult to believe,” the Judge agreed with the notion the delay was entirely explained by Mr. Islam’s disorganization and the “out of control” state of his practice at the time. “Even if Mr. Islam failed to properly prosecute the ‘717 application, ‘unintentional’ delay does not require that the delay have occurred despite the exercise of due care and diligence (as does ‘unavoidable’ delay).”

After holding that the delay was not intentional, the court concluded that the statement regarding unintentional delay could not be a material misrepresentation and therefore that the defense of inequitable conduct could not stand.

Expert Opinion: Two leading patent law experts testified at the inequitable conduct hearing: Charles Van Horn for Aristocrat and Paul Gardner for IGT. While the court found the testimony helpful for explaining the prosecution of PCT applications, it found the experts’ extensive legal conclusions filled with “blatant advocacy” to be “not helpful.” Judge Whyte has been known to speak critically against expert testimony in patent cases.

Trade Secrets and Published Patent Applications

Patent, Trade Secret, ,

Tewari De-Ox Systems v. Mountain States (5th Cir. 2011)

In 2005, Tewari’s CEO (Dr. Tewari) visited Mountain Systems (MTSR) to demonstrate his “zero ppm oxygen meat-packing method” that greatly extends the shelf life of packaged meats. Prior to the demonstration, the two companies signed a non-disclosure agreement (NDA).  When MSTR allegedly began using the method without permission.

The major catch in Tewari’s breach of trade secret argument was that the bulk of the disclosed method could also be found in Tewari’s already published patent application. (The application was abandoned after receiving a final rejection on obviousness grounds).

Trade secret is derived from state law.  Under Texas law (the law of this case), a successful trade secret plaintiff must prove that (1) a trade secret existed; (2) the trade secret was “acquired through a breach of a confidential relationship or discovered by improper means;” and (3) that the trade secret was then used without authorization.

Patent Publication Eliminates Trade Secret: In a straightforward opinion, the appellate panel held once published, the information in a patent application should be considered “generally known and readily available” and therefore are no longer amenable to trade secret protection.

Tewari argued that the patent application publication should not matter in this case because the defendants obtained their information from him in a confidential transaction rather than from the public source. The appellate court, however, rejected that argument because the application was already published at the time of his disclosure.  (The court noted that the source of defendant’s trade secret knowledge may be important for trade secret analysis if the publication occurred subsequent to the fiduciary relationship.)

Although the material disclosed in the patent application is not protectable under Texas trade secret law, the court held that Tewari may have transferred protectable information that was not in the patent application — such as specific information regarding making and using the invention that was not particularly identified in the patent application.

Remanded for further consideration.

USPTO BPAI to Reconsider Restriction Practice and Markush Claims

Patent,

Ex parte DeGrado (BPAI 2011)

The University of Pennsylvania’s pending patent application No. 10/801,951 is directed to the treatment of microbial infections with an amphiliphilic oligomer. The amended claims define the oligomer with seven functional variables that are each independently selected from separate Markush-style groupings and ranges.  (Formula R1-[-x-A1-x-y-A2-y-]m-R2). The result is that millions of different oligomers fit within the claim scope. 

The case is now on appeal before the BPAI on grounds of obviousness-type double patenting based on a prior similar patent also coming from Professor Degrado’s Lab.  Penn has refused to file a term-limiting terminal disclaimer.

In a recent decision, USPTO Commissioner Robert Stoll asserted his role as an Administrative Patent Judge in joining a BPAI decision in the case. The particular decision here does not relate to the obviousness-type double patenting rejection, but rather to “whether Applicants may be required to restrict their claims to a single invention” and whether the claim as drafted is a “proper Markush Claim.” The BPAI has asked for further briefing on those issues.

Limits on Restrictions: The USPTO’s authority for restriction practice stems at least in part from 35 U.S.C. 121. That Section authorizes the USPTO Director to require applications “to be restricted to one” invention. However, in the 1978 Webber case, the CCPA limited that power –  holding that Section 112 gives applicants authority to present claims structured as they see fit. In that case, the court specifically held that patent applicants had the right to include multiple independent and distinct inventions within a single claim.  The BPAI has asked the parties in this dispute to brief this conflict between Webber and the language of Section 121.

Markush Claims: The BPAI has also requested briefing on the question of whether the claims here are proper Markush-type claims.

This case is likely to result in a precedential BPAI opinion and CAFC appeal and may have an important impact on restriction practice and Markush-style claiming.

File Attachment: DeGradoAppealBrf.pdf (1407 KB)

 

 

Malpractice: Failure to Thoroughly Advise in Settlement Negotiations

Patent

Viking Corp. v. Van Dyke Gardner (Mich. Ap. Ct. 2011) (VikingMalpracticeOpinion.pdf)

First Lawsuit & Settlement: In 2003, Viking and several other fire sprinkler manufacturers were sued for infringing Central Sprinkler's patent rights.  In 2005, the parties settled the case with a non-exclusive license agreement that included the payment of ongoing royalties and $1,000,000 for past damages. Although Central Sprinkler was (and still is) a subsidiary of Tyco International, the agreement did not expressly bind Tyco or its other divisions.

Second Lawsuit & Settlement: In 2007, Tyco sued Viking for infringement of two additional patents and Viking again settled the case by paying additional royalties and damages. One of the patents had already issued by time of the 2005 agreement. The other did not issue until 2007.

Malpractice Allegations: Viking then sued its original litigation counsel for malpractice.  Viking's position was that it had understood the 2005 agreement to bind the entire family of Tyco companies and that Viking would have no further liability to Tyco with respect to its large “K factor sprinklers.”  The particular alleged acts of malpractice were (1) advising Viking to enter into the 2005 agreement, (2) failing to include the new Tyco patents in the 2005 agreement or to at least advise Viking that they were excluded, and 3) failing to bind Tyco in the 2005 agreement or to at least advise Viking that Tyco was not bound.

On summary judgment, the trial court dismissed the case — holding that Viking was estopped from claiming that it did not understand the 2005 settlement agreement.  Critical to this holding were the conclusions that the law firm made no affirmative misrepresentations regarding the agreement and, as a signatory to the agreement, Viking was presumed to have read and understood the terms of the agreement.

On appeal, the Michigan appellate court affirmed — holding that absent fraud, coercion, or mistake, the law generally presumes that a signatory to an agreement knows the nature of the agreement.

Defendants claim, and we agree, that because plaintiff signed the 2005 agreement, it should be presumed to know and understand the nature of the document—especially the fact that Tyco was not a party to the agreement and Tyco would not be bound by it. In addition, plaintiff offers no evidence that defendants advised it otherwise. Plaintiff's executives claim that a release from Tyco was one of the goals of the 2005 settlement negotiations and that they believed Tyco and Central were the same entity. However, Van Dyke testified, and [Viking's Vice President] confirmed, that Van Dyke never told plaintiff that Tyco would be bound by the 2005 agreement. On the contrary, Van Dyke explained that Central flatly rejected a draft including Central and its parents, but plaintiff's executives thereafter continued reviewing and negotiating drafts that excluded Central's parents.

Here, the court went on to hold that there was no malpractice liability even if the firm's actions rose to the level of negligence because the alleged negligence was not the proximate cause of harm.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential. Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [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]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

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

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential. Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [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]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

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

Patently-O Bits & Bytes by Lawrence Higgins

Patent, ,

Although in the midst of final exams, Lawrence Higgins was still able to complete this week’s installment of Bits and Bytes – DC

Indiana University Maurer launches Center for IP Research

  • The Center for IP Research just launched and has named Mark Janis as the director of the center. The purpose of the center is support the study of all aspects of IP law and related fields. The center will promote a dialogue on IP law among scholars, judges, policymakers, practitioners and students. The center also has created an online journal titled IP Theory, which can be accessed through the site, or directly at iptheory.org. [Link]

2 millionth PCT application filed

  • Qualcomm filed the 2 millionth PCT application near the end of April, marking a significant milestone. The PCT makes it easier for companies and inventors to seek patent rights in multiple countries. A single international patent application under the PCT has legal effect in all 142 countries bound by the treaty. The PCT system, first launched in 1978 and up until recent was mostly used by the US and Europe. However, in recent years Asia has accounted for the largest number of PCT applications. [Link]

Nortel patent bidding update

  • Nortel has set up a database with details about the patents that potential bidders can access after signing an agreement to keep the information confidential.
    Qualified bidders will be required to submit offers for the patent portfolio by June 13, to participate in the June 20 auction according to the bidding rules. [Link] The next bidder must at least make a $929 million dollar bid, to outbid Google’s $900 million dollar offer. [Link]

Patent Jobs:

  • Ballard Spahr is looking for a patent attorney with 2-5 years of experience to work in their Atlanta office. [Link]
  • Ventana Medical Systems is seeking a patent attorney with at least 8 years of experience. [Link]
  • Klarquist Sparkman is searching for an IP litigation attorney with 1-2 years of experience to work in their Portland office. [Link]
  • University of Notre Dame Law School is seeking a Director of IP and Entrepreneurship Clinic. [Link]

Upcoming Events:

  • The 3rd Annual Corporate IP Counsel Forum will be held May 24-25 in New York. The Corporate IP Counsel Summit is the premier forum to hear about solutions to maximize IP assets, avoid costly litigation, create and maintain efficient infrastructure, fully integrate IP strategies into business plans, prepare for anticipated patent law changes, and much more. Guest speakers include Michael Bishop, Mony Ghose, Mark Costello, Michael Springs, Charles Kwalwasser, and Timothy Wilson. Patently-O readers will receive a $100 discount by using promo code FZA884. [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]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

     

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

Odom’s patent confirmed invalid by Federal Circuit

Patent

Gary Odom v. Microsoft (Fed. Cir. 2011)

Gary Odom runs his own patent search firm as well as his own patent law blog – the Patent Prospector – where he provides piquant comments on patent law and practice.  Odom is also a patent holder. His Patent No. 7,363,592 is directed toward a modification of the “toolbar” and “tool groups” that are familiar aspects of most computer software displays.  

PatentLawImage122

At their broadest, the claims are directed to a method of (1) first displaying a toolbar made up of a set of tool groups with user-manipulable dividers located at the ends of the groups; and then (2) changing the position of the dividers based upon user input.

Odom filed for patent protection in 2000. In 2008, Odom sued Microsoft, arguing that the new “Ribbon” of Office 2007 infringed upon the patent. On summary judgment, the Oregon district court held the asserted claims (1) invalid as obvious and (2) not infringed either literally or under the doctrine of equivalents.

The district court based its obviousness holding on the conclusion that Odom had merely “cobbled together various pieces of what was already out there in a manner . . . that would have been obvious to anyone skilled in the art at the time of the invention.”  On appeal, the Federal Circuit affirmed.

The obviousness analysis began with Microsoft’s previously filed patent directed to a “composite toolbar” that can be manipulated by a user. (Patent No. 6,057,836 to Kavalam, et al.).  The Kavalam patent provides a mechanism for users to re-size toolbar groups.  The appellate panel found only one difference between Kavalam’s disclosure and Odom’s claim — that Odom’s tool groups “are on a single toolbar.”  However, the court found that difference merely “an insignificant advance over Kavalam.”  The court went on to hold that the “weak” secondary considerations presented by Odom could not overcome “strong prima facie” evidence of obviousness.

Considered by the Examiner? Odom’s patent at issue in this case issued as a continuation.  In the parent case, Odom had submitted the Kavalam patent in an information disclosure statement and Kavalam is cited as one of 11 references considered by the examiner. The same USPTO examiner worked on both the original and the continuation. However, Odom did not re-submit the Kavalam patent as material art (nor did he submit any other references) in the continuation case and the new patent cites only one reference on its face.  As David Jaglowski notes in the comments below, the MPEP indicates that the patent examiner is supposed to review and consider all information that had been filed in any parent application. M.P.E.P. Section 609.02.

The examiner will consider information which has been considered by the Office in a parent application when examining: (A) a continuation application filed under 37 CFR 1.53(b), (B) a divisional application filed under 37 CFR 1.53(b), or (C) a continuation-in-part application filed under 37 CFR 1.53(b). A listing of the information need not be resubmitted in the continuing application unless the applicant desires the information to be printed on the patent.

That rule of examination is followed by a subsequent admonition in M.P.E.P. Section 707.05: “In all continuation and continuation-in-part applications, the parent applications should be reviewed for pertinent prior art.”  The actual rules of practice (37 C.F.R. 1.98)  state that material must be resubmitted in a continuation unless the information was properly submitted in the prior application.

Whether the Kavalam patent was considered by the examiner is important because it relates to the the pending Supreme Court case of Microsoft v. i4i. In that case, the Supreme Court is likely to approve of some type of divided analysis between invalidity arguments previously considered by the examiner, and those not previously considered.  In my estimation, however, the court is unlikely to spell out the dividing line of when an argument may be deemed to have been previously considered.  I suspect that the situation presented here will likely fall on the side of not considered because, despite the rules, there appears to be no evidence that the examiner actually considered the reference in the continuation application. Of course that legal and factual conclusion may depend upon which panel of Federal Circuit judges is the first to decide the issue post-i4i.  (Note –  This issue is merely an aside for Odom’s case as the examiner’s consideration of the reference was not addressed by the Federal Circuit opinion.)

Judicial Bias: The Federal Circuit did address Odom’s argument regarding judicial bias by the Oregon court.  Odom’s argument was based on the court’s rulings on Odom’s motion to strike; Odom’s motion to stay;  Odom’s motion to block his (former) attorneys from withdrawing from the case; and by allowing Odom’s former attorneys to (allegedly) breach attorney-client privilege by talking with the judge.  The Federal Circuit rejected all of those arguments as lacking merit.

Impermissible Recapture Rule Curtails Potential for Broadening Reissue

Patent,

by Dennis Crouch

In re Mostafazadeh (Fed. Cir. 2011)

In 2001, National Semiconductor filed a broadening reissue request for its Patent No. 6,034,423 that had issued the year prior.  The invention itself is related to semiconductor packaging supports. During original prosecution of the application, the claims were amended to include a “circular attachment pad” limitation in order to overcome anticipation and obviousness rejections.  In the re-issue, the company is seeking claims not bound by the “circular” limitation.  The Examiner and BPAI both rejected the proposed amendment as an “improper recapture of subject matter surrendered during prosecution” of the original application.

The reissue process is designed to allow a patentee to alter the scope of the patent rights.  However, there are several limits on the ability of patent applicants to expand patent scope during reissue. First, claims can be broadened only if the broadening reissue is filed within two-years after issuance of the original patent. See MPEP 1412.03. Second, a patentee may not use a reissue to recapture subject matter that was surrendered in the original prosecution in an effort to obtain allowance of the originally filed claims. 

Because impermissible recapture is judged as a matter of law, USPTO determinations are reviewed de novo on appeal. The Federal Circuit has set out a three-step process for determining whether scope has been impermissibly recaptured:

  1. Consider whether aspect of the pending reissue claims are broader than the patented claims.
  2. Consider whether the broader aspects relate to material that was surrendered in order to overcome a prior art rejection.
  3. Determine whether a substantial portion of surrendered material “has crept into the reissue claim.”  

The key is to look to see whether the reissue claims cover embodiments that were not covered by the issued  but that were covered by the originally filed claims. 

The impermissible recapture rule is not strict — some small amount of recapture is allowed. The court has ruled, for instance, that attempting to recapture a portion of previously surrendered scope is permissible if the reissue “materially narrows” the claims relative to the originally filed claims in a way that relates to the subject matter surrendered.  According to the court, a narrowed limitation may be “modified . . . so long as it continues to materially narrow the claim scope relative to the surrendered subject matter such that the surrendered subject matter is not entirely or substantially recaptured.”  However, entirely eliminating a previously added limitation will always trigger the recapture rule prohibition.  Of course, this begs the question of “what is a limitation?”

Here, the patentee added the “circular attachment pad” limitation during prosecution and now want to eliminate the “circular” limitation.  The patentee argues that the claim is still substantially narrowed as compared to the original claims. The Federal Circuit rejected that argument because any broadening of scope in the reissue must be coupled by a material narrowing within the reissue in a way that relates to the subject matter being recaptured.

In an e-mail today, Hal Wegner of Foley & Lardner suggested prudent patent applicants should not rely on broadening reissues. Rather, the best practice is to file a continuation application to “cover miscellaneous embodiments that could not be fit within the claims as allowed by the examiner.”

Billups-Rothenberg v. ARUP: The Dangers of FIling Too Early…Or Too Late

Patent, ,

By Jason Rantanen

Billups-Rothenberg, Inc. v. Associated Regional and University Pathologists, Inc. (Fed. Cir. 2011) Download 10-1401
Panel: Gajarsa (author), Linn, and Moore

Billups is a classic example of the difficulties companies face when engaging in patent races.  Patent races occur when two or more entities are in competition to be the first to develop and patent a new technology.  In these sitautions, companies race to file patent applications, hoping to gain a competitive advantage.  Sometimes, however, the applications are filed before the inventors have really developed a patentable invention; othertimes, the applications are filed too late, after a competitor has filed its own application or published crucial information. In this case, Billups filed Patent No. 5,674,681 too early and Patent No. 6,355,425 too late, losing on both ends.

The patents-in-suit relate to a genetic test for Type I hereditary hemochromatosis that involves the detection of specific mutations in genes involved in regulating iron absorption.  The district court granted summary judgment of no written description for the '681 patent and anticipation of the '425 patent.

Lack of Written Description of Earlier Patent
On appeal, the CAFC first affirmed the district court's ruling that the '681 patent lacked written description, applying its customary approach to biotechnology inventions.  Here, Billups disclosed only the approximate location of the relevant mutation in the '681 patent, a disclosure that it argued was sufficient to place the inventor in possession of the invention (which in this case included the step of detecting the mutation) when combined with the knowledge that existed at the time of invention.  The CAFC disagreed.  "Given the lack of knowledge of sequences for the hemochromatosis gene and its mutations in the field, the limited extent and content of the prior art, and the immaturity and unpredictability of the science when the '681 patent was filed, Billups cannot satisfy the written description requirement merely through references to later-acquired knowledge."  Slip Op. at 11. 

The panel also, unnecessarily in my opinion, addressed the problem in genus-disclosure terms.  After quoting the relevant case law regarding disclosure of genus claims, the court concluded that the the patent failed because it "does not not identify even a single species that satisfies the claims.  In this case, the eventual discovery of only one species…within the claimed genus does not constitute adquate written description of that genus."  It is opaque to me what relevance a post-filing discovery of a species, let alone one by a third party, has to a species-genus analysis.

Anticipation of Later Patent
At the same time that Billups was conducting its  research, another group of scientists isolated and sequenced the hemochromatosis gene, published their results, and obtained Patent No. 6,025,130, filed nearly three years before the '425 patent.  The CAFC agreed with the district court that the '130 patent was anticipatory.

The inquiry focused on whether the '130 patent disclosed the diagnosis of an iron disorder using a specific mutation, the S65C mutation.  The '130 patent reports the genetic sequence of the S65C mutation, among with others that the inventors believed relevant to hemochromatosis, and describes techniques for conducting genetic assays that it states can be used to design a diagnostic device and method for screening the mutations.  Billups argued that this disclosure was not anticipatory because the '130 patent did not conclude that the S65C mutation was related to a hemochromatosis disease state, merely that there was a correlation and thus, Billups argued, the S65C mutation may have been only  a clinically insignificant polymorphism. 

Relying on the doctrine that a "reference is no less anticipatory if, after disclosing the invention, the reference then disparages it" (Slip Op. at 15), the CAFC rejected BIllups argument.  Here, "the '130 patent disclosed using the S65C mutation when diagnosing hemochromatosis, but qualifies that disclosure with the obseravation that the mutation "may only be a polymorphic variant."  Id., quoting '130 patent (emphasis in opinion).  Although the prior art questioned the utility of the application of the disclosed invention, it nevertheless disclosed it, thus rendering the '425 patent anticipated. 

Dir. Kappos Brings in New Chief Judge: James D. Smith

Patent

The USPTO has announced a new Chief Administrative Patent Judge to lead the Board of Patent Appeals and Interferences (BPAI). James Donald Smith will be leaving his role as Chief IP Counsel for Baxter International to take on the difficult task of shoring up the important section of the Office. Smith is expected to begin serving as Chief Judge on May 8, 2011 and is replacing Michael Fleming who stepped down in 2010 and Jay Moore who has been the Acting Chief Judge for the past several months.

The BPAI is struggling with a caseload that has grown dramatically over the past several years and a backlog of over 20,000 pending appeals. In addition a large and growing number of hotly contested inter partes reexaminations are reaching the Board and creating a heavy workload. These proceedings increasingly involve high profile patents involved in parallel infringement litigation. In many cases, courts stay litigation pending outcome of the reexamination and are looking to the USPTO for accurate and timely conclusions. The Board’s profile and its workload would likely both increase under the patent reform measures now pending in Congress.

Mr. Smith has a long background in patent law. He is currently the Associate General and Chief Intellectual Property Counsel of Baxter International. He previously clerked for former Federal Circuit Chief Judge Paul Michel, served in private practice as a patent attorney at Arnold White & Durkee and Dewey Ballantine (now Dewey Le Boeuf). He also spent time at Nokia (Director of IP Licensing), Lexmark (Chief IP Counsel) and Emory University School of Law (Dean of Students and Professor).

Mr. Smith has been a registered patent attorney since 1988. He graduated from Duke University (J.D.) and the University of Maryland at College Park (B.S.E.E.).

The upper management of the USPTO is now solidly in the hands of patent law professionals with extensive experience in corporate patent law and management practice. This includes Director David Kappos (20+ years at IBM); Deputy Director Theresa Stanek Rea (25 years law firm practice); BPAI Chief Judge James D. Smith (20+ years in law firm and corporate practice); and Administrator for Policy and External Affairs Albert Tramposch (years in law firm practice followed by governmental work). Two exceptions to this “rule” are the Patent Commissioner Robert Stoll and Deputy Commissioner Peggy Focarino. Both Stoll and Focarino started their patent careers as examiners and have been at the USPTO collectively for more than 60 years. Although very much a “political” position, the role of Commissioner is most often filled by individuals who have dedicated the bulk of their careers to the USPTO.

USPTO Press Release

 

Rembrandt v. AOL: Licensing and Indefiniteness

Indefinite, Patent,

By Jason Rantanen

Rembrandt Data Technologies, LP v. AOL, LLC (Fed. Cir. 2011) Download 10-1002
Panel: Gajarsa (Linn), Linn, and Dyk

In 2008, Rembrandt sued Canon and Hewlett-Packard, among others, for infringement of Patent Nos. 5,251,236 and 5,311,578.  Rembrandt contended that Canon and HP infringed by marketing office products containing modem chips capable of implementing International Telecommunications Union protocol V.32.  The modem chipsets in the accused products are manufactured by a third party, Conexant.

At the trial court level, the district court granted summary judgment in favor of the defendants on the basis that because Conexant was a licensee of the '236 and '578 patent, Rembrandt's rights were exhausted and it could not recover from Canon and HP.  The court further held that claims 3-11 of the '236 patent were invalid for indefiniteness as they improperly mixed method and apparatus elements and that claims 1-11 (all of the asserted claims) were invalid for indefiniteness for failing ot disclose algorithms corresponding to functions set out in the claims.  Rembrandt appealed.

Patent Rights Exhausted Through Prior License
The patents-in-suit were originally owned by AT&T, who granted a license to Rockwell International in the late 1980's.  Under a 1995 side letter, AT&T also granted Rockwell the right to sublicense "to any future divested present business of Rockwell."   That license was subsequently assigned to a reorganized Rockwell ("New Rockwell"), and then to Conexant as part of a spin-off of its modem business.  The patents themselves changed hands several times through a series of divestitures and acquisitions until  finally owned by Rembrandt.

On appeal, Rembrandt argued that patent exhaustion did not apply because Conextant was not a valid licensee under the terms of the agreements.  Looking to the terms of the contact, the CAFC held that contrary to Rembrandt's argument, sublicensing did not require AT&T's consent as long as it occured as part of a divestiture of Rockwell's present business.  Nor did the general rule that "the law does not recognize any right of a nonexclusive licensee to assign the license or to further sublicense" apply because the contract expressly allowed for such sublicenses to be granted.   

The CAFC also applied a pro-licensee interpretation of the scope of the license.  In connection with the sublicense provision, the 1995 Side Letter limited that right "only to the extent applicable to products and services sold by the future divested business prior to its divestiture."  Rembrandt contended that this meant the specific models being sold by Rockwell in 1996, when it divested its semiconductor business to New Rockwell.   The CAFC disagreed.  Looking to the 1988 and 1995 agreements, the court noted that neither refers to specific models of modems, instead specifying product types in general, functional terms.  Thus, because Old Rockwell sold modems prior to the transfer to New Rockwell, and because New Rockwell sold V.34 protocol-compliant modem chipsets prior to the divestiture to Conexant, the court concluded that the sublicensing conditions were satisfied. 

Indefiniteness
The CAFC also addressed three separate indefiniteness issues.  The court first affirmed the district court's grant of summary judgment that claims 3-11 of the '236 patent were indefinite because they contained both apparatus and method claims.  "[R]eciting both an apparatus and a method of using that apparatus renders a claim indefinite under section 112, paragraph 2."  Slip Op. at 15, quoting IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005).  Rembrandt's only argument in response was to request that the court insert apparatus language into claim 3, from which claims 4-11 depended.  Unsurprisingly, the court declined to do so.  "[T]he correction suggested by Rembrandt is "not minor, obvious, free from reasonable debate or evident from the prosecution history.'"  Slip Op. at 17 (quoting district court opinion).

Rembrandt fared somewhat better on claims 1 and 2.  The district court invalidated these claims (as well as claims 3-11), construing them to contain several means-plus-function elements and holding them indefinite due to the patent's failure to disclose an algorithm able to perform the recited functions. 

The CAFC disagreed that two of these elements were drafted in means-plus-function form.  Although the elements contained the word "means," that created only a presumption that the limitation was drafted in means-plus-function format.  "This presumption can be rebutted if the claim limitation itself recites sufficient structure to perform the claimed function in its entirety."  Slip Op. at 19.  That determination involves a 'one skilled in the art' analysis:  "When determining whether a claim term recites sufficient structure, we examine whether it has an understood meaning in the art."  Id.  

Here, there was no dispute that two of the claim elements, "fractional rate encoding means" and "trellis rate encoding means" recited sufficient structure.  Rembrandt's expert testified that these terms were used in publications and published patents in the early 1990's and were self-descriptive to one of ordinary skill in the art, testimony that went undisputed by the parties.   Thus, these elements recited sufficient structure by themselves to overcome the presumption of treatment under § 112, ¶ 6.

The CAFC did recognize a dispute over two other terms, "buffer means" and "combining means."  Here, the panel appears to have agreed with the district court's interpretation of these elements being in means-plus-function format.  However, the panel could not agree that the specification failed to disclose algorithms for these elements.  Remrandt's expert testified that the figures, text, and table in the '236 patent disclose complete algorithms to a person skilled in the art; Canon argued that they did not.  Thus, the court reversed the district court's grant of summary judgment of invalidity of claims 1 and 2 of the '236 patent.

Jurisdiction in Patent Declaratory Judgment Actions

Patent,

Radio Systems Corp. v. Accession, Inc. (Fed. Cir. 2011) – Part III

The jurisdiction of US Federal Courts is limited in several important ways. One usual doctrinal divide is between subject matter jurisdiction and personal jurisdiction. Because patent enforcement is clearly a matter a Federal Law, the subject matter jurisdiction question normally boils down to whether an “actual case or controversy” exists between the parties as required by Article III of the US Constitution (as interpreted). In MedImmune, the Supreme Court suggested that this actual case or controversy inquiry should be flexible and open.

Personal jurisdiction is a separate question and asks whether a court holds power over the actual parties to the lawsuit. Because plaintiffs are deemed to waive personal jurisdiction objections in the filing of the complaint, the more usual question is whether the court holds power over the defendants to a lawsuit.

Federalism: Personal jurisdiction is one area of the law where the power of the various fifty-states has been deemed to somewhat outweigh the power of the national government. In a seemingly odd system, the question of personal jurisdiction in Federal Courts boils down to whether a State Court in the state where the Federal Court is sited would have power over the defendant. State Court personal jurisdiction tends to then be limited by reference back to US Constitutional principles of due process. Thus, the question asked by the Federal Courts sited in a particular state is whether it would “comport with due process notions of fair play” for a State Court in that state to exercise control over a defendant based on the facts as they are stated in the case.

The usual approach is to look at the extent of the defendant’s contacts with the state and consider whether those meet some minimum threshold level. Normally, each state is seen as a separate entity. Thus, contacts with Mississippi will not give rise to personal jurisdiction across the border in Tennessee. Under the doctrine of Specific Jurisdiction, contacts with the forum state that relate directly to the controversy between the parties tend to be more likely to create personal jurisdiction. However, sufficient unrelated contacts with the forum state can separately lead to a finding of personal jurisdiction under a the doctrine of General Jurisdiction. A final important point is that the jurisdiction tests are separate and distinct from the venue inquiry. Thus, even when a court properly has jurisdiction over a case and the parties, it may still refuse to hear the case based on arguments of improper or inconvenient venue. See TS Tech.

In the case at hand, Radio Systems sued Accession in the Eastern District of Tennessee – asking the court for a declaratory judgment that Accession’s patent was invalid and not infringed. The district court dismissed the case – holding that the Federal Court based in Tennessee lacked personal jurisdiction over Accession. On appeal, the Court of Appeals for the Federal Circuit affirmed.

Accession is a small New Jersey based private corporation. Mr. Sullivan owns the company. He is also the company’s sole employee. During a three year period prior to the declaratory judgment lawsuit, Sullivan contacted Radio Systems on multiple occasions looking to create a business relationship between the parties. The contacts involved letters, e-mails, telephone calls and one trip to Radio Systems’ main office in Tennessee where Sullivan demonstrated his product. (At the face-to-face meeting, Sullivan refused to leave his prototype behind, but did sign a non-disclosure agreement that included Tennessee as the exclusive forum for actions arising from the non-disclosure agreement). There is plenty of evidence that the proposed business relationship would center on the manufacturing and marketing of Mr. Sullivan patented invention – a pet-entrance module for sliding glass patio doors. However, there is no evidence that Sullivan threatened a lawsuit or that Radio Systems challenged the validity of the Sullivan patent during any of the meetings. As a side-show, after it was clear that no deal was going to happen, Sullivan’s patent attorney contacted the USPTO as an informal protest to one of Radio Systems’ pending patent applications. In September 2009, Accession’s counsel also sent letters to Radio Systems “outlining Accession’s infringement allegations and suggesting that the dispute be settled through a licensing agreement.” In November 2009, Radio Systems then filed the declaratory judgment lawsuit in Tennessee.

In its want to lay down clear guidance, the Federal Circuit has previously ruled that “ordinary cease-and-desist notices sent by a patentee to an alleged infringing party in a different state are not sufficient to subject the patentee to specific jurisdiction in that state.” Rather, for a finding of specific personal jurisdiction, the infringement-alleging letter must be accompanied by some other activities related to the allegations that are directed to the forum state. See Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1019 (Fed. Cir. 2009). As a dividing line for specific jurisdiction, the Federal Circuit only “counts” activities related to enforcement of the patent or defenses against infringement. Other activities directed at the forum state that are merely related to the licensing, marketing, manufacturing or development of the invention do not count toward a finding of specific personal jurisdiction. As the court wrote in Autogenomics:

[O]nly enforcement or defense efforts related to the patent rather than the patentee’s own commercialization efforts are to be considered for establishing specific personal jurisdiction in a declaratory judgment action against the patentee.

The court held that interference with Radio Signal’s pending application at the USPTO does not bolster the claim for personal jurisdiction in Tennessee because the USPTO is not located in Tennessee (even though Radio Signal owns its patents in Tennessee).

We made clear in Avocent that enforcement activities taking place outside the forum state do not give rise to personal jurisdiction in the forum, and that decision is controlling here.

Radio Systems did not claim a violation of the non-disclosure agreement, but argued that Sullivans agreement to be subject to personal jurisdiction in Tennessee for actions arising from that agreement should be sufficient fair warning to Sullivan that his company may be subject to action in Tennessee. The Federal Circuit rejected that argument because the agreement did not relate directly to the enforcement or validity of the patent at issue but rather only involved the subject matter of the invention and potential commercialization of the invention.

Finding of no personal jurisdiction affirmed. Federal Courts in Tennessee courts have no jurisdiction over Accession for this patent non-infringement action.

Third Party Attempts to Protest or Otherwise Oppose the Grant of a Published Application

Patent,

Radio Systems Corp. v. Accession, Inc. (Fed. Cir. 2011) – Part II

As the facts are alleged in this case, after learning that Radio Systems had received a notice of allowance on its “SmartDoor” patent application, Accession’s patent counsel telephoned the USPTO Examiner handling the Radio Systems. Because the Examiner did not answer the telephone call, Accession’s attorney left a voice message. Six days later, the Examiner returned the telephone call and spoke directly with Accession’s attorney. During the conversation, the examiner apparently learned about the existence and relevance of the Sullivan prior art patent. (Mr. Sullivan is the founder of Accession). After considering the prior art, the examiner withdrew the patent from issue and filed a new rejection of independent claim 17 based on the Sullivan prior art. Without comment, Radio Systems cancelled claim 17 and the patent issued.

These conversations all occurred in August 2009. For the three years prior to that time, Radio Systems and Accession had been engaging in a slow conversation regarding the Sullivan patent and whether Radio Systems would license the patent rights. During that time, Radio Systems never submitted the reference as prior art to the patent examiner.

To recap, a patent attorney representing a third party (who was interested in ensuring that no patent issued) provided the USPTO Examiner with valuable prior art and likely an explanation of how the prior art related to the patent application under examination. The Examiner had a verbal conversation with the patent attorney and concluded that the prior art rendered the pending claims invalid. The patent applicant had previously been made aware of the prior art but had failed to inform the Examiner of its existence. Without argument, the patent applicant cancelled its claim after it was rejected by the Examiner.

Illegitimate Means to a Legitimate End?: From all appearances, the result of this sequence of events is that third-party contact helped the USPTO avoid issuing a patent with invalid claims. The problem is that the examiner and attorneys had to violate USPTO rules to achieve that beneficial result. When rules in-place frustrate beneficial ends, the proper solution may well be to change the rules.

Legitimizing the Means: What is needed here is a simple straightforward mechanism for third parties to provide information to patent examiners regarding reasons why a particular pending application should be rejected. The submission should be written and preferably in the English language, but there is no reason why it must follow any other formality requirements. At that point, the patent examiner should have independent authority to consider the submission on its merits. Written correspondence (such as e-mail correspondence) between the third party and the examiners could also be allowed to give the examiner a better opportunity to understand the submission. The written record is helpful to avoid the appearance of any secret or improper dealings between the examiner and a third party.

Background on Third Party Attempts to Protest or Otherwise Oppose the Grant of a Published Application

US patent applications were not published prior to 2001. As Congress considered implementing the publication system, some patent applicants complained that competitors and others would raise the cost of patenting by filing needless oppositions. Thus, the law was written to limit third party oppositions. The relevant statute, 35 U.S.C. § 122(c), states that:

The Director shall establish appropriate procedures to ensure that no protest or other form of pre-issuance opposition to the grant of a patent on an application may be initiated after publication of the application without the express written consent of the applicant.

The USPTO has given a somewhat narrow interpretation to the restrictions blocking any post-publication “protest or other form of pre-issuance opposition to the grant.” In its rulemaking for 37 C.F.R. § 1.99, the USPTO decided to allow third parties to submit prior art during a limited two-month period after publication but prohibited any explanation of the patents or publications or the submission of any other information. 1239 Off. Gaz. Pat. Office 71. Thus, according to the rulemaking, the mere third-party submissions of prior art is not considered a “protest” or “pre-issuance opposition.”

In 2003, Steve Kunin was the Deputy Commissioner for Patent Examination Policy at the USPTO. In March of that year, Kunin published a notice in the USPTO Official Gazette explaining further limitations on the examination corps in dealing with non-party contact with examiners during ex parte prosecution. Kunin writes:

[T]he USPTO is instructing the Patent Examining Corps to: (1) not reply to any third-party inquiry or other submission in a published application that is still pending before the USPTO; (2) not act upon any third-party inquiry or other submission in a published application, except for written submissions that are provided for in 37 CFR 1.99 and written submissions in applications in which the applicant has provided an express written consent to protest or pre-issuance opposition; and (3) decline to accept oral or telephoned comments or submissions about published applications from third parties. When refusing third-party telephone or oral discussions, examiners may call the party’s attention to the statutory prohibition on initiating protests, to this Notice, or to 37 CFR 1.2 (all Office business should be transacted in writing), if appropriate. The USPTO may also refer third-party inquiries or submissions not provided for in 37 CFR 1.99 by registered practitioners in published applications in which the applicant has not provided an express written consent to protest or pre-issuance opposition to the Office of Enrollment and Discipline for appropriate action.

The USPTO’s interpretation of the law is that examiners should refuse to consider any submissions by non-parties. However, Kunin’s notice further indicated that the USPTO retains the right to use the material submitted if it is relevant to patentability:

[T]he provisions of 35 U.S.C. § 122(c) and 37 CFR 1.99, 1.291, and 1.292 limit a third party’s ability to protest, oppose the grant of, or have information entered and considered in an application pending before the USPTO. However, these provisions (and this notice) do not limit the USPTO’s authority to independently re-open the prosecution of a pending application on the USPTO’s own initiative and consider information deemed relevant to the patentability of any claim in the application.

This approach follows a recent examiner comment on Patently-O that “what has been seen cannot then be unseen.”

Changing the Rule without Changing the Law: The law forbids non-party “protests” and other forms of “pre-issuance opposition to the grant of a patent” subsequent to publication of the application. The law also requires the USPTO Director to establish appropriate procedures to ensure that those activities do not take place. However, USPTO has already decided that the law does not forbid submission of prior art documents during a limited time period post-publication so long as the examiner retains independent authority to analyze for patentability and craft rejections. The USPTO would likely be well within its powers to expand the document submission program in a way that (1) allows for submission of explanations; (2) extends the timing of submissions; and (3) reduces or eliminates the fee associated with the submission.

Ex Parte Contact with USPTO Examiners

Patent,

Radio Systems Corp. v. Accession, Inc. (Fed. Cir. 2011)

Accession is a small private New Jersey corporation. Its owner, Thomas Sullivan, is also the sole employee and named inventor of the company’s patent. Accession makes and sells a pet door (the “Wedget”) that installs within a sliding glass patio door. Accession’s Patent No. 7,207,141 issued in April 2007 and claims this “portable pet portal insert for use with a sliding patio door.” Radio Systems is headquartered in Tennessee and makes pet-related products, including a patented electronic pet access door (the “SmartDoor”).

The personal jurisdiction holding in this case will be discussed in a different post, but here I wanted to bring up the interesting facts regarding Accession’s ex parte contact with the USPTO regarding Radio System’s pending patent application. Judge Bryson explains the facts as follows:

On August 20, 2009, Accession’s counsel left a voice message with the PTO examiner for the [Radio Corp] SmartDoor application, alerting the examiner to the existence of Accession’s ‘141 patent. On the same day, Accession’s counsel telephoned Radio Systems’ counsel and stated his position that the SmartDoor infringed the ‘141 patent and that interference proceedings would be warranted between the ‘141 patent and the SmartDoor application. Later that day, Accession’s counsel left a voice message with Radio Systems’ counsel indicating that Mr. Sullivan should be named as a co-inventor on the SmartDoor application. On August 25, 2009, Accession’s counsel sent an e-mail to Radio Systems’ counsel asking whether Radio Systems had brought the ‘141 patent to the attention of the PTO. The next day, the PTO examiner returned the phone call of Accession’s counsel. As a result of that conversation, the PTO withdrew the notice of allowance previously issued for the SmartDoor application. On August 28, 2009, Accession’s counsel sent an e-mail to Radio Systems’ counsel informing him of the communication with the examiner.

Of course, third-party contact with an examiner is expressly prohibited under the Manual of Patent Examining Procedure unless expressly authorized by the applicant. Further violating procedure, the USPTO Examiner then returned the telephone call and based upon the information learned issued a “Notice of Withdrawal from Issue.”

Once an examiner learns of important prior art it, that examiner should use the prior art. Here, the examiner cited the Sullivan patent as prior art against claim 17 of the SmartDoor application and indicated that the “pertinent prior art document” had been disclosed in a telephone conversation with Accession’s patent attorney on August 26, 2009. In response, Radio Corp cancelled claim 17.

In its brief, Accession attempted to rebut the argument that its attorney had done anything wrong – writing that:

Nothing in the record could establish that the Patent Office considered Accession’s contacts to be “wrongful.” Indeed, after the first contact, a voicemail left by Accession’s counsel with the patent examiner, the Patent Office reached out to Accession’s counsel and subsequently took action it believed appropriate. That action did not include sanctions against Accession. There is nothing in this record (or elsewhere) suggesting that the Patent Office found Accession’s counsel’s actions to have violated any rule, policy, or law. Further, the record demonstrates that the sole purpose of the contacts was to alert the Patent Office to the fact that the Radio Systems pending application was deficient.

What should happen here?