Split Court Denies Rehearing En Banc in Sun Pharmaceuticals v. Eli Lilly

Obviousness, Patent, Patent Cases 2010, Rantanen,

By Jason Rantanen

Sun Pharmaceutical Industries, Ltd. v. Eli Lilly and Company (Fed. Cir. 2010) (denial of rehearing and rehearing en banc)

In Sun Pharmaceutical, a Federal Circuit panel affirmed a district court determination that Eli Lilly's patent for a method of using gemcitabine to treat cancer was invalid due for obviousness-type double patenting based on another application, filed the same day, claiming the compound gemcitabine and disclosing its use for treating cancer.  (The previous Patently-O write-up is here).  This morning the Federal Circuit issued an order denying Eli Lilly's petition for rehearing and rehearing en banc.  The court was closely split on the latter, with four of the nine currently sitting judges dissenting on the decision not to rehear the decision en banc.

The dissent's principal concern was that, in its view, the panel opinion involved a departure from precedent, thus creating an intra-circuit split.  According to the dissent,

the panel held the claims to the anticancer use to be invalid for double patenting because the anticancer use was mentioned (but not claimed) in the continuation-in-part specification that is not prior art, stating that “[t]he asserted claims of the later ’826 patent simply claim the anticancer use disclosed in the specification of the ’614 patent,” reported at 611 F.3d at 1389.

The dissent pointed out that this approach, which focused on the disclosure of the simultaneously filed patent, not its claims, was contrary to precedent:

Uniformly, unlike examination for obviousness based on prior art, the issue of obviousness-type double patenting is directed to whether the invention claimed in a later patent is an obvious variant of the invention claimed in an earlier patent. The panel opinion violates a vast body of precedent.

Furthermore, according to the dissent, expanding the doctrine of obviousness-type double patenting to the facts of this case serves no good policy purpose and creates a schism in the law – a schism that should be addressed by the court en banc:

A change of law “in ways that negatively impact the patentability of important later-discovered uses” serves no public purpose in areas in which commercial development requires patent protection. Id. If the majority of the court now believes, as a matter of policy, that the law should be changed in this new direction, en banc treatment is particu-larly appropriate, for the court’s rule is that the earlier precedent prevails unless overruled en banc. A situation in which the court ignores this rule, and applies whatever law the panel prefers, is an indictment of the ability of this court to provide stable law in the areas entrusted to us.

Comment: Given that there are currently only nine sitting Federal Circuit judges, it seems unlikely that the court will grant a rehearing en banc absent extraordinary circumstances – especially in cases where the panel decision was unanimous.  In that situation, in order for an appeal to be reheard en banc, at least five of the six judges who did not participate on the panel would need to vote to rehear the decision en banc.  Of course, there are instances when this would not apply, as senior judges and visiting judges frequently participate in panel determinations, but it is something to keep in mind for the near future.

Supreme Court to hear Bayh-Dole Patent Ownership Dispute: Stanford v. Roche

Bayh-Dole, Ownership, Patent

Bd. of Trustees of Leland Stanford Jr. University v. Roche Molecular Systems, 09-1159 (Supreme Court 2010)

The Supreme Court has granted Stanford's petition for a writ of certiorari in Stanford v. Roche on an issue of patent ownership. Although the case may turn on federal patent law statutes, it looks substantially like derivative title issues considered in the law of property. The rule of derivative title generally bars a property owner from transferring rights greater than his own. One exception to the rule of derivative title is that, in certain situations, a bona fide purchaser can take title free of prior claims to the property.

The patents in this case involve methods for using PCR techniques to measure HIV concentration in blood plasma. Stanford scientists first created the invention while subject to a contractual duty to assign any inventions to Stanford. After agreeing to assign rights, but prior to the invention, one of the inventors (Holodniy) assigned his rights in his future inventions to Cetus (who later became Roche). Rather than a promise-to-assign, the assignment to Roche was an actual assignment of future inventions. Thus, on the contracts, Holodniy first promised-to-assign rights to Stanford but first actually-assigned rights to Cetus. Stanford later filed for patent protection and then demanded a royalty from Roche. The Federal Circuit held that Roche could not be liable for infringement because it held ownership rights based on the Holodniy assignment.

On appeal to the Supreme Court, Stanford has argued that its receipt of federal funding for the research somehow results in a superior claim to title. Stanford framed the question as follows:

Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35 U.S.C. §§ 200-212, in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor's rights to a third party.

The US Department of Justice filed a brief supporting the petition and argues that the Bayh-Dole Act does indeed establish a "framework for determining ownership interests in federally funded inventions." The Government brief argues that the Bayh-Dole Act flips the normal statutory rule that patent rights first vest with the inventor. Instead, in their view, by virtue of receiving federal funding, the university or federal contractor automatically receives title to the invention and then may "elect" to not "retain title." Under that interpretation of the law, Stanford retains full title because it received federal funding for the research and elected to pursue patent protection. The Government frames the question as follows:

Whether an inventor who is employed by a [federal] contractor that elects to retain rights in an invention may defeat the contractor's right to retain title under the Bayh-Dole Act by contractually assigning his putative rights in the invention to a third party.

The Federal Circuit rejected these questions – holding instead that the Bayh-Dole Act was not designed to automatically void contractual transfers made by an inventor simply because the research received federal funded.

In addition to the Government Brief, additional petitions-stage briefs were filed by a number of universities and university-controlled organizations that all supported the petition.

Comment: The cause of Stanford's plight is the University's failure to negotiate a tight assignment agreement with its researchers and scientists. If it has not done so yet, Stanford could fix the issue by forcing its students and employees to agree to a new assignment agreement. Thus, this particular issue is solved by contract law. A real ongoing question that the Supreme Court should focus-on with this decision involves the rights of third-party inventors who are not under any contractual duty to assign rights to a university or federal contractor. Does that third party retain rights when the University can show that the invention process was at last partially federally funded. This issue arises in collaborative projects where the work of a subset of inventors receives federal funding.

US Government Argues in Court that Isolated Genes are Unpatentable

Amicus Brief, Patent, Patentable Subject Matter, Science

AMP v. Myriad (Fed. Cir. 2010)

In March, 2010, District Court Judge Robert Sweet held Myriad's gene patent claims invalid for failing to satisfy the subject matter eligibility requirements of 35 U.S.C. 101.  The ruling was directed toward claims that cover particular isolated DNA molecules (genes) and processes of detecting and screening for those genes, but was written broadly enough to essentially invalidate all patents covering genes that were isolated from an organism. 

Last month, I heard a rumor that Obama administration science and legal advisors outside of the USPTO supported Judge Sweet's ruling.  At the time I disregarded that suggestion as unlikely. I was wrong. [Andy Pollack at the NYTimes has the scoop]

The US Department of Justice (DOJ) has now filed an amicus brief supporting the lower court decision — arguing that isolated genes are unpatentable because they improperly claim a product of naturer [Link to Brief]:

The district court correctly held . . . that genomic DNA that has merely been isolated from the human body, without further alteration or manipulation, is not patent-eligible. Unlike the genetically engineered microorganism in Chakrabarty, the unique chain of chemical base pairs that induces a human cell to express a BRCA protein is not a “human-made invention.” Nor is the fact that particular natural mutations in that unique chain increase a woman’s chance of contracting breast or ovarian cancer. Indeed, the relationship between a naturally occurring nucleotide sequence and the molecule it expresses in a human cell — that is, the relationship between genotype and phenotype — is simply a law of nature. The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is “isolated” from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth.

. . . .

Thus, the patent laws embrace gene replacement therapies, engineered biologic drugs, methods of modifying the properties of plants or generating biofuels, and similar advanced applications of biotechnology. Crossing the threshold of section 101, however, requires something more than identifying and isolating what has always existed in nature, no matter how difficult or useful that discovery may be.

. . . .

A product of nature is unpatentable because it is not the inventive work of humankind. That essential rule cannot be circumvented by drafting claims for the same natural product removed from its natural environment and proclaiming the result “pure.”

Several other amici have filed briefs:

IP Hall of Fame 2011

Bits and Bytes, Patent

The IP Hall of Fame was the brainchild of the publisher Intellectual Asset Management (IAM). Over the past five years, forty-two individuals have been inducted into the hall of fame. [Link]  

Inductees are first nominated by the public at large.  A maximum of five inductees for 2011 will then be selected by the IP Hall of Fame Academy.  The Academy itself is made-up of all living inductees as well as a handful of others, including myself, Todd Dickinson (AIPLA), and Ciarán McGinley (EPO).

Nominations can be submitted online. [Link]. New inductees will be announced in February 2011.

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • Professor Lichtman has introduced a new IPColloquium podcast: A chat between the UCLA law professor and Chief Judge Rader. The podcast is setup to provide free CLE for many states. [Link]
  • 10% discount for Patently-O readers at the IBC Legal Conference in London on “Standards & Patents.”  Nov. 16–17, 2010. Discount Code: KW8099PTBG. [Link]
  • Upcoming Hearings:
    • Nov 8: Supreme Court will hear oral arguments in Costco v. Omega. The case involves the concept of copyright exhaustion in the international context.  The decision will likely directly impact the parallel patent law doctrine.
    • Nov 9: The Federal Circuit will hear en banc oral arguments on two cases: (1) Therasense v. BD (rethinking the law of inequitale conduct); and (2) TiVo v. EchoStar (post-judgment treatment of modified product-lines).
  • Satellite Offices are currently under consideration at the USPTO.  In some recent statements, Commerce Secretary Locke suggested that Detroit may a chosen spot. [Link] I contacted PTO officials who indicated that no final decisions had been made, but that some announcement may be forthcoming this calendar year.  I expect that some cities are seriously lobbying at this point.

Guest Post: Counting Defendants in Patent Litigation

Guest Post, Patent, ,

PatentLawImage024Guest Post by Kyle Jensen of PIPRA.

I recently looked at some historical litigation trends and was surprised to learn that the number of patent lawsuits filed annually was roughly constant over the past decade. This year, of course, there are a large number of qui tam complaints being filed for false marking (largely by a small handful of plaintiffs); however, the number of infringement cases will not be dramatically different than 2009.

The relative constancy of litigation activity is a bit perplexing and certainly incongruent with the patent-system-gone-awry stories so commonplace in the popular media. I thought there was an "NPE problem" spinning out of control. I thought costs were spinning out of control. Well, they might be, but it's not reflected in increased lawsuit filings. I pulled back-data from PACER to produce the chart below, which shows the number of patent lawsuits and defendants in those lawsuits as a percentage of their levels in 1990.

There are some striking observations here. * The total number of patent litigations filed increased about 300% between 1990 and 2002, but has been nearly constant for the rest of this decade. (Many others have shown this previously. See, e.g. Shrestha, 2010) * The number of cases with more than one defendant followed a similar trend (data not shown). * The number of named defendants increased nearly 600% between 1990 and 2010.

In short, the number of cases filed per year is constant, but the number of defendants keeps growing.

I don't know why this is. The most obvious hypothesis is that it's driven by an increase in many-defendant filings by NPEs. That is, maximizing the ratio of defendants named to cases filed will 1) maximize potential revenue and 2) decrease costs for an NPE or contingency counsel. I can't think of many reasons that a practicing entity would behave similarly.

Numerous sources report that the number of NPE lawsuits is growing and now make comprise about 1/5th of all filings. For example, according to PatentFreedom, NPE lawsuits increased from less than 100 per year in 1998 to roughly 500 in 2009. (There were about 2,600 total cases that year). Also, Colleen Chien showed that in the IT sector NPE suits account for 1 in 6 cases. Given these statistics, it would be interesting to if those cases account for a disproportionate fraction of the named defendants. (This is somewhat more complicated to show.)

If the number of defendants is growing, costs are certainly growing as well. Assuming each case costs each defendant $1MM (many studies show it's higher), defendants would be spending an extra $400MM/yr on litigation each year.

Where's that money go? Certainly attorneys capture some of it. Below I've overlaid the number of attorneys assigned to patent litigations over the years. As you can see, the growth in attorneys outstrips both cases and defendants.

(All this data is available in PACER, so you can verify my numbers. Also the raw data are online. There are a few obvious caveats, e.g. I haven't removed cases in which multiple subsidiaries of the same company are named in the same suit. About me: I work for the Rockefeller-funded non-profit PIPRA where I teach scientists and entrepreneurs in developing economies about IP. I also own the website PriorSmart, which publishes a daily patent complaint alert. It's free, and includes PDFs of the pleadings. You can sign up here if you'd like to get it.)

Federal Circuit: Patentability of Isolated Genes

Declaratory Judgment, Patent, Patentable Subject Matter, Science, Standing,

Association for Molecular Pathology v. USPTO and Myriad Genetics (Fed. Cir. 2010)

In a landmark 2010 declaratory judgment decision, a Southern District of New York court invalidated claims from seven Myriad patents associated with the BRCA1/2 breast and ovarian cancer genes.  The patents include both composition claims covering isolated DNA molecules and method claims covering the processes of detecting and screening for BRCA mutations.  The lower court held that these claims all fail the patentable subject matter eligibility test of 35 U.S.C. §101.  A typical invalidated claim includes Claim 1 of Patent No. 5,747,282 which reads “1.  An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.” (The amino acid sequence No. 2 was provided as a part of the patent filing).

Myriad has now filed its Federal Circuit appeal brief on the merits and argues two main points: (1) that the declaratory judgment plaintiffs had no standing to sue because there was no actual case or controversy between them and Myriad and (2) that Myriad's patents cover inventions that fit well within the broad scope of Section 101 subject matter eligibility. As I wrote earlier, I believe that the Federal Circuit will reverse.

Standing: A general rule of appellate advocacy is to lead with your best argument. One caveat involves standing — when standing is argued, it is invariably argued first. Although the weaker of its two primary arguments, Myriad led with its case for no standing.

It is important to remember how this case arose — with twenty plaintiffs joining together to sue Myriad and to ask the Federal Court to declare Myriad's patents invalid.

Declaratory Judgment Jurisdiction is governed by Article III of the US Constitution, the Declaratory Judgment Act of 1934, and most recently, the 2007 Supreme Court case of MedImmune v. Genentech which eliminated the reasonable-apprehension-of-suit test that had been previously followed by the Federal Circuit. 

The basic question for this case is whether sufficient controversy and adversity exists between the parties or, as Myriad argues, did the lower court improperly provide an advisory opinion.  The Supreme Court restated its standing test in MedImmune — asking “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Myriad argues that there is no controversy between the parties because Myriad has not taken any (recent) action toward the plaintiffs and that any controversy between the parties lacks “sufficient immediacy.”

Here, neither plaintiffs’ complaint nor the district court’s opinion identifies any “affirmative act” by Myriad within the past ten years putting plaintiffs at risk of an infringement suit. There is no allegation, much less evidence, that Myriad ever identified the patents-in-suit (or any claim thereof) to any plaintiff, or identified any plaintiff’s product or conduct as infringing. In fact, there is no allegation that Myriad was even aware of any plaintiff’s “ability and desire” to infringe (A1034-64), let alone that Myriad evaluated any product or conduct to determine infringement. Accordingly, plaintiffs have no basis for declaratory judgment jurisdiction because “the totality of the circumstances analysis in the instant case is that which has not occurred.”

The district court disagreed with these arguments — holding that a controversy existed based on Myriad's activity against researchers along with an understanding “within the research community . . . [that] Myriad has taken the position that any BRCA1/2 related activity infringes its patents and that Myriad will assert its patent rights against parties engaged in such activity.” 

Discovering the Importance of a Mutation: The important scientific discovery in this case is the knowledge that BRCA mutations predict breast and ovarian cancer.  Of course, that informational discovery by-itself cannot be patented because it represents an abstract idea rather than a useful implementation.  The mutation itself occurs in nature and therefore is not sufficiently new to be patentable. The patents therefore were drafted to cover “isolated” forms of the mutated gene and methods of isolating the gene.  As with many software algorithm patents that are “tied” to a computer, the core of the Myriad invention rests in the unpatentable information/algorithm but the claims are drafted to include technical features that ground the invention in a specific, practical use of the information discovered.  Here, once the information regarding BRCA mutations was known, the actual isolation of the genes arguably did not take any further inventing because the generic isolation process was already well known.

With this setup, the Federal Circuit will be asked to determine whether tying the informational discovery to the isolated compound or method of isolation is sufficient to move the patent outside of the scope of abstract ideas and natural phenomena.  The question may be whether the Court should follow Diehr or instead follow Flook and Benson. The Bilski decision does not help in analyzing the claim here other than by revitalizing the precedential value of Flook and Benson.

Amicus briefs supporting Myriad will be filed shortly.

A First Look at USPTO Petitions Data

Patent, Petitions

Earlier this week, one of my excellent patent law students (Lawrence Higgins) plowed through 64 sets of recent USPTO petitions decisions. The decisions came from a group of randomly selected patent applications with application serial numbers 11/900,000 –  11/999,999. The vast majority of petitions were granted (78%) although about 20% were first rejected before being later granted after the applicant provided further information or argument. 

I categorized the petitions into groups.  The largest group consisted of petitions requesting revival of an abandoned application. 25% of the petitions were revival petitions with 94% being granted. 22% of the petitions involved the applicant attempting to establish a priority date. The next largest category of petitions were petitions to make special. In this group, all nine of the petitions to make special were based on the inventor's age (over 65 years) and all were granted. The remaining petitions involved a hodgepodge collection of issues such as attorney requests to withdraw representation, patent term adjustment corrections, refunds, corrections, and republication.  None of the petitions in our sample challenged a restriction requirement.

  • I'm working on a more complete study of the petitions decisions data.
  • Petitions are Available for Download Here

 

USPTO Petitions

Patent, Petitions

[Updated] The USPTO has made a large set of its petitions decisions available via Google's Bulk Patent Download center. [Link]

I was browsing through them this morning and came across a lonely petition decision that was sent from the Office of Petitions on July 20, 2010.  The decision is a response to a petition filed July 16, 2006 requesting that the USPTO overturn a thirteen-way restriction requirement.   The meat of the decision reads as follows:

A Notice of Abandonment was mailed March 4, 2009. As the application is now abandoned, the petition to overturn the decision of the Technology Center Director is DISMISSED as moot.

As the quote suggests, this particular case involved a petition to the PTO Director following an unsuccessful petition to the Tech Center Director.  Although the first petition was decided fairly quickly, the timing of petitions decisions and the associated fees continue to make it somewhat impractical to challenge restriction requirements. 

Another recent petition decision was in Application No. 12/266,477 where the PTO granted Quantumsphere's petition to make the application “special” based upon the application's association with “green technologies.” Designating the application as “special” speeds the prosecution process.  The application claims a lower-energy method of synthesizing ammonia.

Patently-O Bits and Bytes

Bits and Bytes, Patent

Patently-O Bits and Bytes

Bits and Bytes, Patent

Getting a Patent Examiner Job through Peer-to-Patent Volunteerism

Patent

The USPTO is hiring patent examiners. [Link] The first priority in hiring is to locate individuals who can do a quality job of examining in the areas of technology where expertise is needed. The Office is also looking to hire individuals likely to happily stay on the job and that can be quickly trained for the job (high morale, low turnover, low training time). One problem with these criteria is that very few hopeful patent examiners are able to provide evidence that they fit these criteria.

Over the past week, I spoke with several individuals from the USPTO who agreed that a hopeful examiner's participation as a volunteer reviewer with Peer-to-Patent could help persuade the Office that its criteria are satisfied. (To be clear, there is no official USPTO policy on considering Peer-to-Patent experience in the hiring process.)

The Peer-to-Patent project offers a mechanism for third-party volunteers to provide input into the patent system by identifying and discussing prior art associated with pending patent applications. According to the USPTO press release, "volunteer scientific and technical experts [will] discuss the applications and submit prior art they think might be relevant to determining if an invention is new and non-obvious, as the law requires. After the review period, the prior art is sent to the USPTO patent examiners for their consideration during examination." Although the written comments & discussions are not sent to the patent examiner, examiners are free to read those comments as part of the examination process.

Although certainly not a complete examination, the work of volunteer reviewers incorporates many skills of examination such as searching for applicable prior art and (potentially) explaining how the identified art relates to the presented claims. This process gives volunteer reviewers an opportunity to show their skills at searching and applying the search. The job of examining patent applications is not for everyone. Time as a volunteer reviewer also gives job applicants an opportunity to figure out if the job is a good fit.

The Peer-to-Patent project begins next week. In the meantime, potential volunteers who are not experienced with the patent law system may want to review the Peer-to-Patent tutorial material. [Link]

AIPLA Meeting

Conference or CLE, Patent

This Friday, I will be at the AIPLA annual conference in Washington DC as part of a panel on Blogging.  I have not done a blogging seminar in a long time — one of the last ones was in 2006 when Cathy Kirkman and I co-hosted a conference on the law of blogs and business of legal blogs.

The session is 2:00 pm –  3:30 pm on Friday, October 22. I will be speaking along with my former colleague Don Zuhn (MBHB, Patent Docs), Aaron Feigelson (Leydig, 1201 Tues), Karen Hazzah (Thomas Kayden, AllThingsPros), Jonathan Frieden (Odin Feldman, ECommerceLaw), and Jake Ward (Fraser Clemens, AnticipateThis).

I look forward to seeing you there!

Read the Annual Meeting Program

Guest Post: Origins of the Clear and Convincing Standard

CAFC, Guest Post, Invalidity, Patent

Guest Post by Professor Jeffrey Lefstin (U.C. Hastings)

Microsoft’s petition for certiorari in the i4i case challenges the Federal Circuit’s rule that patent invalidity must be proven by “clear and convincing evidence,” even when the defense rests on prior art not considered by the PTO. Nearly all of the briefs filed in the case, and nearly all academic commentary as well, assume that the rule was devised by the Federal Circuit early in its history. For example, one brief asserts that the “position of the Federal Circuit traces to dicta in a 1983 Federal Circuit panel decision [Connell v. Sears, Roebuck & Co.] that gave no reasoning and cited no authority whatsoever.”

The actual history of the rule challenged in i4i is rather different. The rule was not a creature of the Federal Circuit, but rather of its predecessor court, the Court of Customs and Patent Appeals. The CCPA held in Astra-Sjuco v. ITC, 629 F.2d 682 (CCPA 1980) that patents must be proven invalid by clear and convincing evidence. It had already held, in Solder Removal Co. v. ITC, 582 F.2d 628 (CCPA 1978), that the statutory presumption of validity is not weakened when a challenger introduces prior art not considered by the PTO.

In its first decision, South Corp. v. United States, 690 F.2d 1368 (Fed. Cir. 1982), the Federal Circuit adopted the CCPA’s case law as controlling precedent. The Federal Circuit’s early cases were quite clear: in holding that the presumption of validity was unaffected by prior art not before the PTO, the court was following the binding precedent of the CCPA, rather than creating a new rule of law.[1]

How did the CCPA, which ordinarily heard appeals from the PTO, come to create a rule governing patent litigation? Under the Trade Act of 1974, the International Trade Commission was given the power to bar importation of articles that would infringe U.S. patents. In its final years, the CCPA heard a handful of appeals – Astra-Sjuco and Solder Removal among them – from infringement complaints decided by the ITC.

It is probably not coincidental that the CCPA devised a patentee-friendly rule. For most of its history, the CCPA heard only appeals from the PTO. From this perspective it saw only the benefits of the patent system: inventors bringing their inventions to the PTO. Even in the ITC infringement cases, the CCPA saw only domestic patentees who might be injured by foreign competition.

In contrast, the regional Circuit Courts of Appeals, in their many years’ experience with infringement cases, routinely saw the costs of the patent system: infringers, perhaps even innocent infringers, who were nonetheless forced to pay heavy damages and abandon otherwise legitimate and productive activity. Given that perspective, it is not surprising that prior to 1982, several of the Circuit Courts of Appeals had held that the presumption of validity should be weakened when a challenger presents prior art not considered by the PTO. But intentionally or not, when the Federal Circuit adopted the CCPA’s precedent in South Corp., it instantly consigned any conflicting precedent from the Circuit Courts to the dustbin of history.

However, the precedent from the CCPA is not the end of the story. In South Corp., the Federal Circuit adopted not only the precedent of the CCPA, but also of its other predecessor court:  the United States Court of Claims. The Court of Claims heard patent infringement actions brought against the United States government under 28 U.S.C. § 1498, and the Federal Circuit has repeatedly held that the patent jurisprudence of the Court of Claims is binding upon it. (Most notably, the Federal Circuit maintained that the Court of Claims’ decision in Pitcairn v. United States compelled its narrow view of the experimental use defense in Roche, Embrex, and Madey.)

There was a long line of precedent from the Court of Claims holding unequivocally that the presumption of validity was weakened when a challenger introduced prior art not considered by the PTO: General Elec. Co. v. United States, 572 F2d 745, 761 (Ct. Cl. 1978); Douglas v. United States, 510 F.2d 364, 369 (Ct. Cl. 1975); Nossen v. United States, 416 F.2d 1362, 1371 (Ct. Cl. 1969); Ellicott Mach. Corp. v. United States, 405 F.2d 1385, 1392 (Ct. Cl. 1969); Martin-Marietta Corp. v. United States, 373 F.2d 972, 977 (Ct. Cl. 1967). As far as I can determine, the Federal Circuit has never taken note of these decisions. But under the Federal Circuit’s own case law, the line of authority descending from the Court of Claims is just as binding as that of the CCPA.

Note: Prof Lefstin discusses the how the CCPA’s unique perspective shaped the law it bequeathed to the Federal Circuit in a paper forthcoming in the Loyola of Los Angeles Law Review, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1565818.

[1] See, e.g., D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147 n.2 (Fed. Cir. 1983).

Business Method Patenting in Canada

Patent, Patentable Subject Matter

Amazon.com v. Canada (Canada Fed. Ct. 2010).

The Canadian Commissioner of Patents rejected Amazon's one-click patent application — pejoratively calling the invention a “business method.”  The Commissioner's legal hook for rejection was that business methods do not fit within the legal definition of “invention” required by s. 2 of the Canadian Patent Act. The text that provision was derived from United States law and closely follows the language of the 35 U.S.C. 101.

“[I]nvention” means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.

On appeal, the Federal Court of Canada (J. Phelan) reversed — holding that business methods “can be patented in appropriate circumstances.” Namely, the court indicated that a “mere business scheme” or “disembodied idea” are not patentable because they have no “practical embodiment.” Although the court rejected a “technology” test, it went on to hold that Amazon’s invention qualified under s. 2 because (1) the system claims require a machine as an essential element of the invention and (2) the method claims are “put the into action through the use of cookies, computers, the internet and the customer’s own action” and results in a “physical effect” on those elements.

Although the Court had the power to grant the patent, it decided instead to remand the decision for “expedited re-examination” – noting that the Patent Office’s decisions on other patentability doctrines may have been tainted by the Office’s desire for this to serve as a test case on patentable subject matter eligibility.

Comparative International Law: Canadian courts often welcome a comparative analysis of the laws of its neighbors – especially the laws of the United Kingdom and United States. In the patent realm, the European Patent Convention (EPC) is also influential.  While those laws often help the courts in making policy decisions, the Canadian decision “must correspond to Canadian law. . . . International jurisprudence, and certainly the policies advocated therein, is not determinative, but at most a potential guide when applied correctly and mindfully.”  Here, the Court appears to have closely followed the US Supreme Court’s recent decision in Bilski v. Kappos, 130 U.S. 3218 (2010).

 

US Patent Law Provides Prior-Inventor Rights, NOT Prior-User Rights

Anticipation, Patent, Patent Cases 2010, Priority Rights

Solvay v. Honeywell (Fed. Cir. 2010)< ?xml:namespace prefix ="" o />

This case presents a nice fact pattern for a law school examination question on the operation of the novelty rules of 35 U.S.C. § 102.  Solvay’s patent covers a method for manufacturing a non-ozone-depleting form of penta-flouro-propane (HFC-245fa) that is primarily used in spray-foam insulation products. Honeywell manufactures and sells over 1,000,000 pounds of the compound each year.

Prior-User Facts: Honeywell (at that time, AlliedSignal), the accused infringer, was in possession of a working model of the invention in the United States (US) prior to Solvay’s invention date. However, Honeywell was not the original inventor. Rather, Honeywell had copied its working model from one created by a Russian agency (in Russia, but under contract with Honeywell).  Honeywell engineers continued to work on the project as they moved toward commercialization. However, by the time that Honeywell began to commercially use or publicize the invention, Solvay had already independently invented the method and filed for patent protection.

The question on appeal is whether any of the novelty provisions of Section 102 render Solvay’s patent claims invalid.  The two primary statutory candidates are 35 U.S.C. § 102(a) and § 102(g)(2). 

A patent claim is invalid under Section 102(a)  if the invention was “known or used by others” in the US prior to the patentee’s date of invention.  If the statute is construed according to the plain meaning of its terms, then Honeywell wins and the patent is invalid.  Several US-based individuals at Honeywell knew of the invention prior to Solvay’s invention date – seemingly satisfying the “known or used by others” in the US requirement of the statute. Unfortunately for Honeywell, courts require that the prior knowledge or use of the invention be somehow public.  In this case, Honeywell had kept its work in the US confidential.  Therefore, Honeywell’s prior knowledge and use of the invention is insufficient to invalidate the asserted claims under Section 102(a).  Many accused infringers (and others) have argued that the law should provide a prior-user defense for situations such as this one.  That defense does not exist except for the limited (now severely limited) case of business method patents.

Section 102(g)(2) creates a prior-inventor defense that can also render a patent claim invalid. However, that defense has a number of important limitations. Under Section 102(g)(2), a claim will be held invalid if, before the patentee’s invention date, the claimed invention “was made in [the US] by another inventor who had not abandoned, suppressed, or concealed it.”  Section 102(g) ends with the statement that the question of invention priority will consider “not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”

As I mentioned, Section 102(g)(2) creates a prior-inventor defense, not a prior-user defense.  The original inventor was the Russian agency operating in Russia.  That invention cannot satisfy the elements of the statute because Section 102(g)(2) requires that the prior invention be made in the US. For its part, Honeywell is not a prior inventor because it simply copied the work of the Russian agency. Thus, the patent skates-by Section 102(g)(2) as well.

* * * * *

More Information: The district court held the patent invalid based on Section 102(g)(2). In reaching that conclusion, the district court decided that the made by “another inventor” element of the provision did not actually require that the prior-user be an original-inventor.  Rather, the district court held that for the purposes of Section 102(g), all that is required is that the prior-user “appreciate” the invention.  In coming to that conclusion, the court distinguished the language of  Section 102(f), which does require that the applicant “he … himself invent.”  On appeal, the Federal Circuit rejected that argument — holding that “when the statute uses the words ‘the invention was made in this country,’ it is referring to the act of inventing in the United States” because “originality is . . .  inherent to the notion of conception.”  In its analysis, the Federal Circuit appears to have added some detail to the common definition of conception which should now read: “the formation in the mind of the inventor, of [the inventor’s own] definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.”

Not the First Inventor: Honeywell argued strongly that it does not make sense for Solvay to have a patent since it was clearly not the first inventor and, if you follow the chain of title, the prior invention had never been abandoned, suppressed, or concealed.  Although seemingly sympathetic to Honeywell’s policy argument, the appellate court decided that it was bound by the statute.

Whether this holding ignores the realities of globalization and outsourcing by modern-day research companies, as Honeywell contended at oral argument, is not the question before us. The question before us is whether, under the undisputed facts, Honeywell qualifies as “another inventor” under 35 U.S.C. § 102(g)(2). Because Honeywell did not itself conceive the RSCAC process of making HFC-245fa, under 35 U.S.C. § 102(g)(2), as this court has construed the statute, it is not “another inventor” of the subject matter claimed in the ‘817 patent.

Although perhaps only shorthand, it is interesting that the court focuses on the question of whether the corporate entity –  Honeywell –  was the inventor.  Although some proposed amendments to the Patent Act would lead toward corporate inventorship, the current law is that all inventors must be real persons.
 

Inducement of Infringement: Should We Even Think of its Fault Element in Mens Rea Terms?

Infringement, Patent, Rantanen

By Jason Rantanen

The conventional approach to the fault elements1 of indirect and willful infringement is to speak of them in mens rea (or state of mind, if you prefer) terms.  But describing fault this way is largely nonsensical when dealing with modern indirect and willful infringement.  In my current work-in-progress, I suggest that the fault element of these doctrines should instead be conceived of as an objective inquiry that focuses on the degree of risk of infringement to a person in the accused party’s shoes.  Given the Supreme Court's grant of certiorari this morning in Global-Tech v SEB, questioning whether we should even be talking about the issue in mental state terms seems particularly timely.

Inducement of infringement is the poster child for the problems associated with viewing the fault elements for certain doctrines in mens rea terms.  For years, both the Federal Circuit and scholars struggled to define the state of mind necessary for inducement.  Did it require intent to infringe a patent, or just intent to cause the underlying acts that constituted infringement?  Even after the court settled this issue in DSU Medical, it continued to conceive of the requirement in mental state terms – in i4i v Microsoft, for example, the court stated that inducement requires that the accused party “knowingly induced infringement and possessed specific intent to encourage another’s infringement.”   598 F.3d 831, 851 (Fed. Cir. 2010).  And perhaps the strongest evidence of how deeply this view is entrenched is the Court’s Question Presented in SEB, which assumes that the fault element must be described in mental state terms – asking whether the accused infringer must possess a certain “state of mind,” be it one of deliberate indifference or purposeful conduct.

In my paper, I offer several reasons why viewing the fault element of inducement in mental state terms is wrong.  Among them are the following:

  • The “people” who are accused of inducement are not people at all.  They are corporations.  To speak of a corporation as having a specific state of mind is borderline meaningless.  Is it sufficient that an engineer’s purpose is to infringe a patent?  Or does one look to the legal department?  Or must senior management “intend” to infringe a patent?   These questions are particularly problematic in the patent infringement context, which involves assessments not just of factual consequences, but also of legal questions.
  • No one ever has the “purpose” of infringing a patent.  Of course, one may purposefully engage in acts that constitute infringement.  One may even purposefully copy another’s technology.  But no one’s purpose is to infringe a patent.
  • Nor does the alternate mens rea concept of “knowledge” work.  Knowledge is typically established when one is “substantially certain” of certain consequences.  Given the uncertainties associated with patent law, one can virtually never be “substantially certain” that conduct infringes a patent short of a final judgment.
  • Indeed, the facts of past opinions involving inducement suggest that, notwithstanding the court’s framing of the legal issue, what is really required is the existence of an obvious, high risk that the relevant conduct infringes a particular patent – not actual knowledge that it infringes a patent or purpose to infringe a patent.  Thus, although the fault element of inducement is commonly articulated as requiring “intent to infringe a patent,” I suggest that the normative standard that is actually being applied is one of recklessness. 

Rather than continue to attempt to articulate the fault element of inducement as if it required a subjective mental state, I suggest that an objective inquiry akin to civil recklessness is more appropriate.  Specifically, I argue that the better approach would be to ask whether, given the information known to the accused party at the relevant time, a high risk that the relevant conduct infringed a patent would be obvious to a person in the accused party’s place.   Obviously, my articulation is by no means perfect (and I’m dealing with some of the imperfections in my paper), but I think it provides a more intelligible articulation of the fault element for inducement than currently exists.

1 By "fault element," I simply mean the component that transforms a doctrine into something other than a strict liability claim.

Patentable Subject Matter at the Board of Patent Appeals

BPAI, Patent, Patentable Subject Matter, , , , ,

The work of the Board must go on . . . . In several recent decisions, the Board of Patent Appeals (BPAI or Board) has continued to affirm rejections of claims on patentable subject matter eligibility grounds under 35 U.S.C. § 101.

In Ex parte Kelkar, App. No. 2009–004635 (BPAI, September 24 ,2010), the applicant had claimed a method of determining the similarity between two genetic profiles and a computer program stored on a recordable medium for accomplishing the method. The method involves the broad steps of iteratively matching gene expression profile pairs in clusters until a best match is found. Because the method neither recites any particular machinery nor transforms an article into a different state or thing, the Board held that it failed the machine-or-transformation test. Citing Flook (1978), the Board then held that the claim was improperly directed to an abstract algorithm because the underlying innovation was the unpatentable mathematical algorithm. Some of the method claims included a preamble statement that the method occurred “in a computer.” The Board found that limitation at most a “a field-of-use limitation that is insufficient to render the otherwise ineligible process . . . patent eligible.”

The Board went on to affirm the rejection of the computer program claims that were “stored on a recordable medium.”  The Board agreed with the examiner that those the storage medium limitation was broad enough to encompass unpatentable “carrier wave storage.” (See Nuijten (Fed. Cir. 2007)). The Board wrote:

When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering nonstatutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to statutory subject matter). See also, Subject Matter Eligibility of Computer Readable Media, 1351 Off. Gaz. Pat. Office 212 (Feb. 23, 2010).

In Ex parte MacKenzie, App. No. 2009–-7332 (BPAI, October 4, 2010), the Board issued a new grounds of rejection under Section 101 because the claimed method was directed to an abstract process under Bilski. MacKenzie's rejected claim 1 reads as follows:

1. A method for use in a device associated with a first party for performing a signature operation on a message substantially based on the digital signature algorithm (DSA), the method comprising the steps of:

generating in the first party device a first component associated with the signature operation based on assistance from a device associated with a second party, wherein the assistance from the second party device is received as a first message from the second party device;

transmitting the first component to the second party device;

generating in the first party device a second component associated with the signature operation based on further assistance from the second party device, wherein the further assistance from the second party device is received as a second message from the second party device, wherein the second message comprises results generated using the transmitted first component; and

outputting a form of the first component and the second component as a result of the DSA signature operation.

Although MacKenzie's claim does recite various devices, the Board saw these as “nominal” limitations to “generic devices.” The Board wrote:

As the unpatentability of abstract ideas was reaffirmed by the U.S. Supreme Court in Bilski (2010), clever claim drafting involving the nominal addition of generic structures cannot circumvent the principles articulated by the Court. That is, even when a claim appears to apply an idea or concept in combination with a nominal claim to generic structure(s), one must ensure that it does not in reality seek patent protection for that idea in the abstract.

In Ex parte Venkata, App. No. 2009–007302 (BPAI, October 5, 2010), the Board held that “the claim’s body recites nothing more than software [and therefore] lacks statutory subject matter.” Venkata's claim was directed to a “system” that included two “discovery agents” that operate either via a local network or via an Internet host.

Kelkar's patent application is owned by IBM and prosecuted by its in-house patent department. MacKenzie's patent application is owned by Lucent and prosecuted by the small firm of Ryan, Mason & Lewis. Venkata's patent application is owned by Nokia and prosecuted by the small firm of Hollingsworth & Funk.

Notes:

The USPTO's January 2010 guidance on the Subject Matter Eligibility of Computer Readable Media is repeated as follows. I would argue that the Nuijten decision – if read to categorically exclude transitory embodiments, is no longer good law post-Bilski.

The United States Patent and Trademark Office (USPTO) is obliged to give claims their broadest reasonable interpretation consistent with the specification during proceedings before the USPTO. See In re Zletz, 893 F.2d 319 (Fed. Cir. 1989) (during patent examination the pending claims must be interpreted as broadly as their terms reasonably allow). The broadest reasonable interpretation of a claim drawn to a computer readable medium (also called machine readable medium and other such variations) typically covers forms of non-transitory tangible media and transitory propagating signals per se in view of the ordinary and customary meaning of computer readable media, particularly when the specification is silent. See MPEP 2111.01. When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering non-statutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to
statutory subject matter) and Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101, Aug. 24, 2009; p. 2.

The USPTO recognizes that applicants may have claims directed to computer readable media that cover signals per se, which the USPTO must reject under 35 U.S.C. § 101 as covering both non-statutory subject matter and statutory subject matter. In an effort to assist the patent community in overcoming a rejection or potential rejection under 35 U.S.C. § 101 in this situation, the USPTO suggests the following approach. A claim drawn to such a computer readable medium that covers both transitory and non-transitory embodiments may be amended to narrow the claim to cover only statutory embodiments to avoid a rejection under 35 U.S.C. § 101 by adding the limitation "non-transitory" to the claim. Cf. Animals – Patentability, 1077 Off. Gaz. Pat. Office 24 (April 21, 1987) (suggesting that applicants add the limitation "non-human" to a claim covering a multi-cellular organism to avoid a rejection under 35 U.S.C. § 101). Such an amendment would typically not raise the issue of new matter, even when the specification is silent because the broadest reasonable interpretation relies on the ordinary and customary meaning that includes signals per se. The limited situations in which such an amendment could raise issues of new matter occur, for example, when the specification does not support a non-transitory embodiment because a signal per se is the only viable embodiment such that the amended claim is impermissibly broadened beyond the supporting disclosure. See, e.g., Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998).

DAVID J. KAPPOS
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office

USPTO Preliminary Examination Report for FY2010

Patent, Patent Applications

By Dennis Crouch

Earlier this week, I wrote about the dramatic increase in the number of patents being granted in calendar year 2010 as compared with prior years. [Link] Several outlets expanded upon my report and condemned the USPTO based on a conclusion that the higher issuance numbers must have resulted from reduced examination standards. I disagree with that conclusion. The reality is that we have no evidence of reduced standards. Along with more allowances, FY2010 also saw more abandoned applications, more office action rejections, and more final rejections.

Most patent applications are associated with at least one other family member and multiple claims that can each be amended during the examination process. In that context, it is wrong to think about the patent examination as simply seeking a yes or no answer. In the recent past, however, many patent examiners took their role like that of a professional baseball umpire – calling balls and strikes, i.e., rejecting and allowing. That approach is probably not the most efficient way to reach the more nuanced answers necessary in the patent context. The USPTO's new model is to approach examination in a way that allows for more applicant-examiner dialogue and that that hopefully leads to better patents with fewer rounds of negotiation.

Of course, a major factor in the general increase in cases being concluded may be the reluctance of many corporations to spend money fighting protracted examination battles.

The USPTO has provided some preliminary data looking-back on patent examination during Fiscal Year 2010. The first chart shows the number of patent applications allowed each fiscal year for the past decade. FY2010 saw a 27% rise over FY2009. At the same time, the total number of abandoned applications has increased about 7%.


The second chart (below) counts the number of allowances per examiner (APE). As the chart shows, the APE figure has increased over the past two years. However, the APE rate is much lower than 2001-2004.

USPTO Jobs

Patent,

The USPTO is hiring.  In addition to a number of patent examiner positions, the office is also hiring new executive-level leaders.

  • Chief Administrative Patent Judge: The Board of Patent Appeals and Interferences (BPAI) is charged with managing and deciding internal patent appeals as well as interference proceedings.  Former Chief Judge Mike Fleming recently moved to a PTO management position working directly under Director Kappos and opened a new position.  The new Chief Judge will move into a role that has become increasingly public. An increasing percentage of rejections are being appealed and the Board has a rapidly growing backlog.  An additional new challenge/potential of the position Director Kappos has recently shifted the organizational chart so that the BPAI Chief Judge reports directly to the PTO Director rather than being part of the Office of the General Counsel. [JOB POSTING]
  • Associate Commissioner for Innovation Development: The  Associate Commissioner would work with Commissioner Robert Stoll in an outreach-role to work with inventors, entrepreneurs, non-profits, and the US innovation community to help ensure that the US intellectual property protection system continues to work well with these groups. [JOB POSTING]
  • IPR Commercial Officer for the International Trade Administration in Bangkok Thailand (Not a USPTO Job): The ITA is a branch of the department of commerce that is designed to help US firms compete globally. This position would be situated at the US Embassy in Bangkok and would focus helping US companies protect their intellectual property rights. [JOB POSTING] 

PatentLawImage014In an e-mail, Hal Wegner highlighted other organizational changes in PTO management. The former public relations office has been revitalized under Peter Pappas in his role as the “Chief Communications Officer and Senior Advisor to the Under Secretary.” [Org Chart] [Pappas Bio] [Management Bios]

Professor Arti Rai recently left her role as Administrator for External Affairs and returned to teaching at Duke Law School.  Paul Salmon has stepped-in to fill her role as the Acting Administrator. However, the Office is looking to fill that position on a more permanent basis.

Recent Patently-O Job Postings:

  • Marjama Muldoon Blasiak & Sullivan LLP is looking to hire an experienced patent attorney for its Syracuse office.
  • A Charlotte, N.C. firm is looking to hire a docket administrator.
  • Holland & Hart is seeking an experienced transactional attorney to work in one of its mountain-west offices. 
  • Lee & Hays is looking for an experienced patent attorney with some portable business to join one of its Washington-state offices.
  • Buchanan Ingersoll & Rooney is seeking a patent agent or patent attorney for its Alexandria office.
  • Dorsey & Whitney is seeking an experienced patent attorney for its Seattle office.
  • Design IP is looking for a patent attorney for its Allentown office.
  • Morgan Lewis is seeking an entry or junior level associate for its patent litigation practice in Houston.
  • Frost Brown LLC is seeking a Mechanical Engineering focused Patent Prosecution Associate with at least 3 years of experience for its Cincinnati office.