Obviousness-Type Double Patenting and Splitting Ownership (CAFC Says Don’t Do It)

Obviousness, Patent, Patent Cases 2009,

In re Fallaux pic-29.jpg (Fed. Cir. 2009) 08-1545.pdf

The Fallaux family of patents began with a PCT filing in June 1995. The first US patent issued in November 1999. Three more patents issued from continuation applications in 2001, 2003, and and 2006. The application at issue here was filed in 2003.

The PTO’s appellate board – the BPAI – rejected the most recent application under the judge-made doctrine of obviousness-type double patenting. Obviousness-type double patenting is equitable in nature and operates as a mechanism to prevent “unjust extension of patent exclusivity beyond the term of a patent.” Thus, an obviousness-type double patenting rejection requires a link between the two applications – either in terms of inventorship or ownership. The doctrine is only relevant when a prior patent cannot be considered prior art as defined by Sections 102 and 103(a) of the Patent Act. (If it is prior art, then the reference is applied under those statutory provisions.)

The change in the patent term and publication of pending applications eliminated most of the need for this judge-made regime. Because patent term is calculated from the filing date, it is now difficult to extend the term while claiming priority. Likewise, published applications ordinarily create a statutory bar that operates to prevent an applicant from extending the term by not claiming priority to an earlier filing. Here, the Federal Circuit recognized the significance of the change in the law, but was not prepared at this juncture to eliminate the doctrine.

It is true that the unjustified patent term extension justification for obviousness-type double patenting has limited force in this case. Indeed, this is surely true of many double patenting rejections today, in no small part because of the change in the Patent Act from a patent term of seventeen years from issuance to a term of twenty years from filing. … Nonetheless, we do not think that we may disregard all of our cases relying on this justification for obviousness-type double patenting. In some cases there may still be the possibility of an unjust time-wise extension of a patent arising from patent term adjustment under § 154 or patent term extension under § 156.   

Furthermore, there is a second justification for obviousness-type double patenting—harassment by multiple assignees. … The harassment justification for obviousness-type double patenting is particularly pertinent here because the Fallaux application and the Vogels patents are not commonly owned.

Of course, careful Patently-O readers will realize that the Court’s use of mismatched patent term extensions as a justification for a double patenting rejection does not sit well with the law. In 2007, the Federal Circuit in Merck v. HI-TECH held that the patent term extension should apply to further extend the patent term despite a terminal disclaimer. Id. (Holding that a patent term extension under the Hatch-Waxman Act, 35 U.S.C. § 156, may be applied to a patent subject to a terminal disclaimer under 35 U.S.C. § 253, filed to overcome an obviousness-type double-patenting rejection.) The dicta of this Fallaux decision will tend to confuse the issue.

Common Inventorship: As the court notes, in this case, the double patenting rejection is based on second patent family. Both families list multiple inventors, and the link between the families is a single common inventor. Originally, the families were commonly owned by IntroGene, but some of the patents were assigned to Crucell and others to Galapagos Genomics.

No Common Ownership: The division of ownership rights here puts the applicant in a bind. Notably, it could not file a terminal disclaimer because the prior patent and the pending application were not commonly owned.

One Way versus Two Way Test: In most obviousness determinations, the examiner applies a “one way test” – asking “whether the application claims are obvious” over the prior art. This same approach is used in obviousness-type double patenting except that the prior patent is generally not considered “prior art.” More particularly, because the focus is on extending patent term, the question is whether the pending claims are only obvious variations of the already patented claims. Occasionally, courts have required a more stringent two-way test where the examiner additionally considers “whether the patent claims are obvious over the application claims.”

The two way test can be required if the PTO “is at fault” for a delay that causes an improvement patent to issue prior to the basic patent. Here, the court agreed with the PTO that

Dr. Fallaux was entirely responsible for the delay that caused the Vogels patents to issue prior to the filing of the Fallaux application. . . . there [is no] evidence to suggest—that the PTO shared any responsibility for the delay. . . . Dr. Fallaux elected to prosecute other applications and delay filing the Fallaux application [for] six years after the [original US] application was filed. During this six year period, the Vogels patents were filed for and issued. In view of the Board’s fact findings, we hold that the PTO was not responsible for the delay.

Because the PTO had not caused the delay in prosecution, it could apply the less stringent one-way test of obviousness. And, as a consequence, the Federal Circuit affirmed the rejection.

Notes:

  • The Fallaux panel of Judges Schall, Archer, and Moore* have no overlapping authors with the Merck v. HI-TECH panel of Judges Linn*, Friedman, and Plager. The direct contradiction of this case and the dramatic shift in the statutory law opens it to en banc rehearing.
  • Patent term adjustments (due to PTO delay) are definitely limited by terminal disclaimers. Meck (“Section 154(b)(2)(B) expressly excludes patents in which a terminal disclaimer was filed from the benefit of a term adjustment for PTO delays.”).

Patently-O Bits and Bytes No. 110

Articles and Publications, Bits and Bytes, Patent, ,
  • Tom Bakos and Mark Nowotarski have posted their own inventions on the Peer-to-Patent site. You can review them and add prior art: Invention 1, a Risk Assessment Company; Invention 2, SoberTeen Driving Insurance
  • I am expecting an announcement of the next PTO director on Friday (May 8). Jim Pooley is being nominated as deputy director of WIPO and is apparently out of the running for the job of PTO director. The two leading candidates thus appear to be Todd Dickinson and David Kappos.
  • If Kappos is nominated, the Peer-to-Patent system (originally funded by IBM) will receive a boost.
  • Speaking of WIPO, the US has proposed “comprehensive” PCT Reform “which would result in the establishment of a new Patent Cooperation Treaty, PCT II. The new treaty would serve to better facilitate workload sharing between the patent offices.
  • I just looked at Prof. Margo Bagley new article on First-to-Invent published in the Berkeley Technology Law Journal. Her conclusions: “The US First-to-Invent system may be unique in the world but it offers significant benefits to small entity entrepreneurs and others.” Bagley sees these benefits as primarily coming through the “robust grace period.” When should FITF be adopted? “Only when such a move will provide a clear advantage for small entities by facilitating the adoption of a one-year grace period outside of the US.” See The Need for Speed (and Grace).
  • Bagley’s short article is well received. My one quibble is that she perpetuates the idea that a desire to end interferences is a major motivation in the debate. She says “Eliminating interferences and the uncertainty associated with them appears to be a prime motivation for the FITF legislation.” Lets be clear, in the US, proponents of the first to file legislation want to make it easier to invalidate patents by creating more prior art.

Patently-O Bits and Bytes No. 110

Articles and Publications, Bits and Bytes, Patent, ,
  • Tom Bakos and Mark Nowotarski have posted their own inventions on the Peer-to-Patent site. You can review them and add prior art: Invention 1, a Risk Assessment Company; Invention 2, SoberTeen Driving Insurance
  • I am expecting an announcement of the next PTO director on Friday (May 8). Jim Pooley is being nominated as deputy director of WIPO and is apparently out of the running for the job of PTO director. The two leading candidates thus appear to be Todd Dickinson and David Kappos.
  • If Kappos is nominated, the Peer-to-Patent system (originally funded by IBM) will receive a boost.
  • Speaking of WIPO, the US has proposed “comprehensive” PCT Reform “which would result in the establishment of a new Patent Cooperation Treaty, PCT II. The new treaty would serve to better facilitate workload sharing between the patent offices.
  • I just looked at Prof. Margo Bagley new article on First-to-Invent published in the Berkeley Technology Law Journal. Her conclusions: “The US First-to-Invent system may be unique in the world but it offers significant benefits to small entity entrepreneurs and others.” Bagley sees these benefits as primarily coming through the “robust grace period.” When should FITF be adopted? “Only when such a move will provide a clear advantage for small entities by facilitating the adoption of a one-year grace period outside of the US.” See The Need for Speed (and Grace).
  • Bagley’s short article is well received. My one quibble is that she perpetuates the idea that a desire to end interferences is a major motivation in the debate. She says “Eliminating interferences and the uncertainty associated with them appears to be a prime motivation for the FITF legislation.” Lets be clear, in the US, proponents of the first to file legislation want to make it easier to invalidate patents by creating more prior art.

Patently-O Bits and Bytes No. 110

Articles and Publications, Bits and Bytes, ,
  • Tom Bakos and Mark Nowotarski have posted their own inventions on the Peer-to-Patent site. You can review them and add prior art: Invention 1, a Risk Assessment Company; Invention 2, SoberTeen Driving Insurance
  • I am expecting an announcement of the next PTO director on Friday (May 8). Jim Pooley is being nominated as deputy director of WIPO and is apparently out of the running for the job of PTO director. The two leading candidates thus appear to be Todd Dickinson and David Kappos.
  • If Kappos is nominated, the Peer-to-Patent system (originally funded by IBM) will receive a boost.
  • Speaking of WIPO, the US has proposed “comprehensive” PCT Reform “which would result in the establishment of a new Patent Cooperation Treaty, PCT II. The new treaty would serve to better facilitate workload sharing between the patent offices.
  • I just looked at Prof. Margo Bagley new article on First-to-Invent published in the Berkeley Technology Law Journal. Her conclusions: “The US First-to-Invent system may be unique in the world but it offers significant benefits to small entity entrepreneurs and others.” Bagley sees these benefits as primarily coming through the “robust grace period.” When should FITF be adopted? “Only when such a move will provide a clear advantage for small entities by facilitating the adoption of a one-year grace period outside of the US.” See The Need for Speed (and Grace).
  • Bagley’s short article is well received. My one quibble is that she perpetuates the idea that a desire to end interferences is a major motivation in the debate. She says “Eliminating interferences and the uncertainty associated with them appears to be a prime motivation for the FITF legislation.” Lets be clear, in the US, proponents of the first to file legislation want to make it easier to invalidate patents by creating more prior art.

Holman: A Contrarian Law Professor’s Two Cents on the Arkansas Carpenter’s (Ciprofloxacin) Petition for Certiorari

Academic Studies, Articles and Publications, Patent,

By Christopher M. Holman, Ph.D., J.D., Associate Professor at UMKC Law School

Professor Mark Lemley recently filed an amici curiae brief on behalf of himself and a cohort of prominent professors of law, economics, and business in support of a petition for certiorari in Arkansas Carpenter's Health and Welfare Fund v. Bayer (the "Professors’ Brief").[1] Joining the professors as amici on the brief are the American Antitrust Institute, the Public Patent Foundation, and AARP. These professors and organizations are asking the Supreme Court to review and reverse the Federal Circuit's decision in In re Ciprofloxacin Hydrochloride Antitrust Litigation.[2] Arkansas Carpenter's is the latest in a string of certiorari petitions that have been filed in cases involving an unsuccessful antitrust challenge to a so-called “reverse payments settlement” between a drug patent owner and a potential generic competitor. So far the Supreme Court has denied all of the petitions.

The defining characteristic of a reverse payments settlement is the transfer of some form of consideration, often but not always cash, from the patent owner to the alleged infringer. In most settlements of patent infringement suits any payment typically flows from the alleged infringer to the patent owner, i.e., in the "forward" direction. Reverse payment settlements of challenges brought against prescription drug patents under the Hatch-Waxman Act have been controversial for years. The FTC and others charge that these agreements are anti-competitive and result in substantially higher prescription drug prices for consumers (and ultimately third-party payers such as the government). The atypical direction of the payment is considered suspect by many who view it as evidence that the merits of the patent case must be weak, and argue that the branded drug company is in effect paying the generic company to stay off the market and using the patent as a mere pretense to skirt antitrust liability. Clearly, absent the patent a naked agreement by a generic drug company to stay off the market in exchange for cash would constitute an antitrust violation.

Nonetheless, courts who have considered the legality of reverse payment settlements have repeatedly concluded that, in view of the incentives and dynamics created by the unique structure of a patent infringement suits brought under the Hatch-Waxman Act, it is neither surprising nor particularly suspicious to find payments flowing from the patent owner to the alleged infringer in the settlement of these suits. In fact, even the FTC has acknowledged that at least some reverse payment settlements are legitimate and even pro-competitive. In most patent infringement litigations, the alleged infringer faces the prospect of potentially large money damages based on its past infringement, so there is often an incentive to pay the patent owner to settle the lawsuit and avoid this risk. In contrast, Hatch-Waxman litigation generally occurs before the potentially infringing generic drug goes on the market. The generic drug company typically faces no risk of money damages for past infringement. At the same time, the drug patent owner faces huge potential financial losses if even one court finds its patent invalid or not infringed, and given the uncertainty patent litigation, particularly at the district court level, it is not surprising that some patent owners would be willing to pay to settle the lawsuit and resolve the uncertainty.

The Professor's Brief is essentially an updated version of a brief Professor Lemley filed in 2006 in support of a petition for certiorari in In re Tamoxifen, a reverse payment settlement antitrust challenge arising out of the Second Circuit. In 2006, I seriously considered signing on to his Tamoxifen amici brief; without having delved into the issue, the notion of reverse payments settlements as characterized by Professor Lemley and others struck me as suspicious and anti-competitive . After all, why would a patent owner pay an alleged infringer to settle a lawsuit unless the merits of the patent case were weak? Under these circumstances, is it not logical to infer that the parties are using the patent lawsuit as a mere pretense to provide cover for what is in actuality an agreement between potential competitors not to compete? However, before I signed on to the brief I decided to read the Second Circuit'sTamoxifen decision, as well as the reverse payments settlement decisions that had already been issued by the Sixth and Eleventh circuits. In his brief, Professor Lemley argued that the decisions from these other circuits were in conflict with the Second Circuit's decision in Tamoxifen. After reading the cases, I found that I disagreed with Professor Lemley's interpretation of the decisions, and concluded that in fact there is no split between the circuits. In fact, the decisions by the Second, Sixth and Eleventh circuits (and now the Federal Circuit) are all quite consistent, taking into account that each case involves its own unique settlement agreements and other surrounding facts, and that the decisions necessarily reflect the facts of the individual case being decided.

Reading these decisions sparked my curiosity, particularly since my interpretation of the case law diverged substantially from that of Lemley and many other academic commentators. I decided to research the topic, and in 2007 I published an article entitled “Do Reverse Payments Settlements Violate the Antitrust Laws?”[3] In the article, I survey the diverse array of patent settlements that have been lumped together under the imprecise label "reverse payment settlement,” and explain the factors that motivate the structure of these settlements. After reviewing the facts surrounding specific settlement agreements, and considering the well reasoned explanations of various judges who have rejected the notion that the mere presence of a reverse payment can render an otherwise legitimate patent settlement illegal, I came to disagree with the position propagated by the FTC and academics such as Professor Lemley, i.e., that the mere inclusion of a reverse payment in an otherwise legal patent litigation settlement renders the agreement per se or presumptively in violation of the antitrust laws. Moreover, my view is aligned with that of the vast majority of courts that have addressed the issue. After a close reading of the decisions, it is clear to me that the purported split between the circuits has so far failed to materialize, although the situation could change if and when other circuits weigh in on the issue.

In this short article penned for Patently-O, I will challenge some of the specific assertions made in the Professors’ Brief. For simplicity, many of the citations in this article are to my law review article. Those interested in a more expansive treatment of the subject are encouraged to consult the law review article, which includes primary cites to the cases and other authorities.

(more…)

Supreme Court Reverses: Finding that the Federal Circuit has Appellate Jurisdiction to Review Remand to State Court

Patent, Patent Cases 2009

Carlsbad Tech v. HIF Bio (Supreme Court 2009) 07-1437-1.pdf

This involves the power of a federal appellate court to review a district court order to remand a case back to state court. In its opinion, the Federal Circuit held that it lacked such power. The Supreme Court has now reversed that decision and instead followed lead of the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits.

HIF first sued Carlsbad in California state court seeking a declaratory judgment of ownership and inventorship of various anti-angiogenesis drugs under California state law. The complaint also alleged various issues of slander, conversion, fraud, etc. The case was removed to federal court based on one federal RICO allegation. However, once that claim was dismissed, the district court refused to continue to exercise its supplemental jurisdiction to hear the remaining state claims — thus remanding the case back to state court. The Federal Circuit refused to review the remand for an abuse of discretion – instead finding that it lacked subject matter jurisdiction to hear the appeal.

The Federal Circuit’s outcome makes sense if you look at the statute. 28 U.S.C. §1447(d) says: ‘An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . .’ However, the Supreme Court has clearly moved beyond the words of the statute in this situation. Here, the Supreme Court reversed — finding that the remand may be appealed in federal court.

When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§1447(c) and (d). The judgment of the Court of Appeals for the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

On remand, the Federal Circuit will need to determine whether the remand was properly within the discretion of the lower court.

Although the decision was unanimous, the decision is accompanied by three concurring opinions by Justices Stevens, Scalia, and Breyer. Justice Stevens was honest about the court’s failure to follow the text of the statute: “If we were writing on a clean slate, I would adhere to the statute’s text.”

When the Federal Circuit’s decision was issued in 2007, I noted that “[t]his case would have a good shot of being granted certiorari. Its impact on patent law, however, is nil.” [Link]

Pointing Out the Problem to be Solved or Objects of the Invention

Enablement, Patent, Patent Cases 2009

Revolution Eyewear v. Aspex Eyewear (Fed. Cir. 2009) 08-1267.pdf [UPDATED 5/7/09 – To correct a mix-up of parties]

The patents at issue in this litigation focus on eyeglasses configured to be fitted with a second set of sunglass lenses using magnets. Magnetic auxiliary frames were already in the prior art, but the apparent advance is that the magnets are located in projections rather than embedded in the frames — thus allowing for a stronger magnetic bond. The patent also identified a second deficiency in the prior art: insufficient “stability support.”

The district court held that Revolution infringes claim 22 of Patent No. RE37,545.

On appeal, Revolution argued that that the claim was invalid — raising three separate arguments: (1) failure of written description under Section 112 ¶ 1 because the apparatus as claimed does not address both deficiencies in the prior art; (2) failure to claim the “original” invention in the reissued patent under Section 251; and (3) improper expansion of claim scope in the reissue application under the recapture rule. The Federal Circuit rejected each of these invalidity arguments.

Written Description: The written description requirement is often raised when the issued claims are different than those originally filed. New claims must find support in the original specification in a way that “convey[s] with reasonable clarity to those skilled in the art that, as of the filing date sought, [the inventor] was in possession of the [claimed] invention.”

Revolution admits that all of the claimed elements are found in the original drawings. Of course, that is not conclusive for written description. Rather, in cases such as LizardTech and Liebel-Flarsheim, the Federal Circuit found claims invalid even though all the explicitly claimed limitations and arrangements were originally disclosed. The problem with the claims in those cases was that they did not include enough limits.

The invalidity argument in this case is actually more akin to Gentry Gallery. Here, Revolution argues that the patent is invalid because the claimed apparatus does not address both of the stated functions of the invention. The Federal Circuit found that argument lacked legal grounding: “when the specification sets out two different problems present in the prior art, it is unnecessary for each and every claim in the patent to address both problems.” Of course, the negative implication of the court’s statement is that the claim must address at least one of the stated problems. “Inventors can frame their claims to address one problem or several, and the written description requirement will be satisfied as to each claim as long as the description conveys that the inventor was in possession of the invention recited in that claim.” In this case, the claim addressed the magnetic strength problem – and thus satisfied the written description requirement.

Claiming the Same Invention: 35 USC Section 251 focuses on requirements of reissue applications. Under the statute, a reissued patent must be for the same “invention disclosed in the original patent.” Here, the Federal CIrcuit found that this requirement is “analogous to the written description requirement.” “Because we have held that the written description requirement is satisfied, we similarly hold that claim 22 complies with § 251.”

Recapture Rule in Reissue Patents: Reissue patents are intended to correct errors in the originally issued patents. Courts have created the recapture doctrine which would exclude certain intentional acts from the list of correctable ‘errors.’ In particular, under the recapture rule, an intentional and deliberate act of narrowing claims or disclaimer of claim scope in order move the patent application toward issuance will not be considered an “error” under Section 251. Akin to prosecution history estoppel, “the recapture rule is aimed at ensuring that the public can rely on a patentee’s admission during prosecution of an original patent.” On appeal, the Federal Circuit could find no admission or disclaimer being recaptured.

Affirmed.

Notes:

  • Pointing out deficiencies in the prior art: Most patent attorneys no longer discuss the prior art in the patent application because of the potential problems raised by this and other cases. Almost as an aside, this case also notes that by “pointing out the two deficiencies in the prior art, [the inventor] disclaimed an auxiliary frame that is not stably supported in top-mounting configuration and a primary frame that has embedded magnetic members.”

Patently-O Bits and Bytes No. 109

Bits and Bytes, Patent
  • Quote of the week: “Am I starting to grow nostalgic for Jon Dudas? At least he hated all applicants, big and small. Jon, Jon, Jon – should I have not doubted your wisdom?” Greg Aharonian, on contemplating the potential that Dave Kappos (IBM) will be the next PTO director.
  • My Discussion of Kappos: Here.
  • Section 2 of the Sherman Act: The Truth on the Market Blog is hosting a series of interesting articles on reforms of Section 2 (unilateral monopolization). Expect a post from IP/Antitrust leader Hovenkamp on Tuesday or Wednesday. [Link].

Patently-O Bits and Bytes No. 109

Bits and Bytes, Patent
  • Quote of the week: “Am I starting to grow nostalgic for Jon Dudas? At least he hated all applicants, big and small. Jon, Jon, Jon – should I have not doubted your wisdom?” Greg Aharonian, on contemplating the potential that Dave Kappos (IBM) will be the next PTO director.
  • My Discussion of Kappos: Here.
  • Section 2 of the Sherman Act: The Truth on the Market Blog is hosting a series of interesting articles on reforms of Section 2 (unilateral monopolization). Expect a post from IP/Antitrust leader Hovenkamp on Tuesday or Wednesday. [Link].

Patently-O Bits and Bytes No. 109

Bits and Bytes
  • Quote of the week: “Am I starting to grow nostalgic for Jon Dudas? At least he hated all applicants, big and small. Jon, Jon, Jon – should I have not doubted your wisdom?” Greg Aharonian, on contemplating the potential that Dave Kappos (IBM) will be the next PTO director.
  • My Discussion of Kappos: Here.
  • Section 2 of the Sherman Act: The Truth on the Market Blog is hosting a series of interesting articles on reforms of Section 2 (unilateral monopolization). Expect a post from IP/Antitrust leader Hovenkamp on Tuesday or Wednesday. [Link].

Bits and Bytes No. 108

Bits and Bytes, Patent

Bits and Bytes No. 108

Bits and Bytes, Patent

Bits and Bytes No. 108

Bits and Bytes

Federal Circuit Applies Phillips to Limit Gift Card Claim Construction

Claim Construction, Patent, Patent Cases 2009,

Every Penny Counts, Inc. v. American Express, Visa, Green Dot, MasterCard, First Data, etc. (Federal Circuit 2009)

Dr. Burke is a psychoanalyst who never liked change. I’m not talking Obama style change. No, Burke patented a method for donating leftover change (“excess cash”) to charities (or to store it in a separate savings account.)

Burke’s company (EPC) sued a host of defendants. who sell gift cards — alleging that the retail sale of gift cards along with merchandise infringe upon his patents because the gift card sales “loading value onto accounts at a point-of-sale terminal.” EPC’s argument was that the purchaser was using “excess cash” to buy the gift card.

On appeal, the Federal Circuit rejected the patentee’s argument for a broad claim construction – instead holding that the claimed “excess cash” was an “amount selected by the payor beyond the total amount due at the point of sale.”

Looking at the specification as “the primary basis for construing the claims,” the appellate panel noted that the specification repeatedly described the method’s purpose as allowing someone to conveniently donate to charities or to painlessly save money. From the specification:

In current shopping situations a clerk inputs the price of all items in a cash register and the latter totals the price. The consumer offers either the exact amount of cash or a sum exceeding the price, and the clerk enters that amount. The cash register then subtracts the price from the cash.

The excess cash offers the customers an opportunity to save small amounts of money painlessly. It also affords the consumer to donate [sic] small amounts of money to charity.

Interpreting this, the Federal Circuit determined that the claimed “excess cash” must be only what is left over after all items (including gift cards) are paid for. “Where the consumer does not offer a sum in excess of the total displayed on the cash register, then there is no excess cash.”

Non-infringement affirmed.

Notes:

  • Read the Opinion: 08-1434.pdf.
  • The Federal Circuit remarked that EPC wasted its appellate time arguing process – that it didn’t get a fair chance to argue claim-construction below. Claim construction is reviewed de novo, and the appellant needs to focus on why it should win on the merits, not on whether the district court was listening. “EPC has surprisingly little to say about what it alleges is substantively wrong with the district court’s construction, or why its proposed construction would be better on the merits. Instead, it attempts to assign error to the district court’s construction on a number of procedural grounds. Principally, it argues that the court erred by (1) spending a portion of the claim construction hearing considering the meaning of the phrase “sales price,” which was not a disputed claim term; and (2) using the accused products to tailor a construction of the patent claims that would make it impossible for EPC to prove infringement. Neither of these arguments has merit.”
  • As a rule, the Federal Circuit is respectful to both parties as well as their arguments and positions. Here, Senior Judge Cudahy went about as far as the Court ever does by describing Burke’s invention only within quotation marks (Burke’s “invention”) and once referring to the “‘invention’, such as it is.” The court more explicitly showed its disdain by awarding costs to the defendants.
  • Some of you may have heard of Bank of America’s “Keep the Change” program. According to the company brochure: “Each time you buy something with your Bank of America Check Card, we’ll round your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change and grow your savings. What could be easier?” EPC’s litigation against BOA continues.

Bits and Bytes No. 106: Patent Reform

Bits and Bytes, Patent, Patent Legislation, , , ,
  • [UPDATED] Hal Wegner Reports the Following:
    • Phil Kiko of Foley Public Affairs reports that Secretary of Commerce Gary Locke has announced that he has chosen the next Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office. The chosen candidate, who is being vetted, was not named.
  • Congress is Moving Forward with Patent Reform:
    • April 30, 2009 hearing of the House Judiciary Committee.
    • Here are some comments on the testimony:
      • Jack Lasersohn (venture capitalist): Venture capital requires strong and certain patents. The damage reforms create potential problems because sometimes a relatively minor product innovation will dramatically change the market position. “A new coating on a solar cell , that increases it’s conversion efficiency just a little bit, can dramatically shift the market for entire multi-billion dollar solar energy plants. A better drug on a drug eluting stent can shift the entire stent market. In either case, the question is ‘who is entitled to the profits arising from the use of the invention, the inventor or the infringer’?”
      • Dean Kamen (Inventor & Businessman): patents should be strong and policy should be directed to support small innovative organizations.
      • David Simon (Intel): patents are meant to allow manufacturing companies to fight each other – not for non-manufacturing inventors or their assigns to slow-down manufacturers. [This is a very rough paraphrase of Simon’s 13 page rant against non-practising entities.]
      • Philip Johnson (J&J) on behalf of the 21st Century Patent Reformers wants money for the PTO, international harmonization (first-to-file), expanded post-grant review (12–month window), no change to the current damages system, only a codification of Seagate, no changes to venue law.
      • Jay Thomas (Georgetown) argues that patent infringement damages are too unpredictable and that additional rules of evidence and practice can help solve the problem.
      • Mark Chandler (Cisco) supports the reforms to halt the problem of non-practising entities who demand licenses.
      • Bernard Cassidy (Tessera): Please do not change the patent law in ways that hurt small companies. The courts have already done enough through eBay, KSR, Medimmune, Microsoft v. AT&T, Seagate, Bilski, and TS Tech.
      • [WRITTEN TESTIMONY.zip (3794 KB)]
  • Absent from this testimony: Any representative from the Patent Office. At least three candidates are rumored to have been interviewed for the post of PTO Director – including former PTO Director Todd Dickinson and IP Hall of Fame member Mike Kirk. [See updated news above]

Federal Circuit Revises: Amgen v. ITC

Patent, Patent Cases 2009

Amgen v. ITC and Roche Diagnostics (Fed. Cir. 2009).

Issues: FDA Safe Harbor; Joint Interpretation of Patent and Tariff Act; ITC Jurisdiction

Section 271(e)(1) of the Patent Act excuses would-be infringing uses of a patented invention that “reasonably relate to the development and submission of information under a Federal Rule which regulates the manufacture, use, or sale of drugs or veterinary biological products.” The language of the provision is that those activities will not be considered “act[s] of infringement.” In its 2005 Merck decision, the Supreme Court indicated a policy preference for broadly interpreting the exception in order to encourage drug development and FDA approval. Patent cases at the International Trade Commission (ITC) do not derive their authority from the Patent Act. Rather Section 337 of the Tariff Act (19 USC § 1337) authorizes the ITC to halt imports of articles that either (i) “infringe a valid and enforceable US patent” … or (ii) are made … by means of, a process covered by the claims of a valid and enforceable US patent.”

The distinction came to light in Kinik (Fed. Cir. 2004). In that case, the Federal Circuit distinguished between the Patent Act and the Tariff Act with regard to importation of a product made by a patented process. Section 271(g) of the patent act includes the caveat such importation is not infringement if the product is “materially changed by subsequent processes.” The court held that caveat did not apply to ITC cases based on the differences in the statutes and the explicit limitation in the Patent Act that the 271(g)(1) caveat applied “for the purposes of this title.”

In Amgen, Roche hoped to claim immunity under Section 271(e)(1) for its research use of imported EPO. Thus, when the Amgen case arose, the Federal Circuit was forced to decide between the statutory distinctions highlighted in Kinik and the Supreme Court’s broad reading of the 271(e)(1) defense. In their 2008 decision, the appellate panel (led by Judge Newman) held that the 271(e)(1) safeharbor applies to the ITC action.

Following the 2008 decision, Amgen petitioned for a rehearing en banc. After some apparent inter-chamber negotiations, the court sitting en banc has vacated the 2008 decision and the original panel has issued a revised opinion. The new opinion again confirms that the 271(e)(1) defense applies to ITC actions. Instead, the new opinion removes all discussion of whether the ITC has jurisdiction over non-sales based “imminent importations” except to note that resolution of that dispute was “not necessary … to decide this case.” (Here, Amgen’s allegations that Roche had imported IPO was sufficient to create subject matter jurisdiction.)

“In this case, the Commission had jurisdiction as a result of Amgen’s allegation that Roche imported an article made by a process covered by the claims of a valid and enforceable United States patent. See 19 U.S.C. § 1337(a)(1)(B)(ii). The Commission therefore was correct to reach the merits of Amgen’s claim. We need not and do not address whether the Commission would have had jurisdiction if Amgen had not asserted actual importation and relied instead entirely on its “imminent importation” theory.”

The ITC previously held that it did not have jurisdiction without an “importation, sale for importation, or sale within the US after importation.”

On remand, the ITC must determine “whether all of the EPO that Roche imported was entitled to the protection of the safe harbor.”

Judge Linn’s dissent remains unchanged. He argues that the plain language of 271(e)(1) cannot be read to extend to excuse imports of products made by patented process since that activity is not defined as “infringe[ment]” under Section 337.

Patently-O Bits and Bytes No. 105

Patent
  • Irreparable Injury: I have written about this before, but I am still struggling with a basic question from eBay v. MercExchange: Is there any distinction between the first two elements of eBay’s test for permanent injunctive relief [Irreparable injury vs. the inadequacy of available remedies at law]? Ordinarily, the first element of irreparable injury is defined as a substantial injury that cannot be fully compensated by available remedies at law (such as money damages). The ordinary test for preliminary injunctive relief collapses these and only looks at irreparable injury.
  • Future Harms?: Second, what should we make the eBay’s use of the present perfect tense in the irreparable injury requirement: “A plaintiff must demonstrate: (1) that it has suffered an irreparable injury.” I guess that this makes sense if it is an indication that the irreparable harm must be an ongoing harm rather than a merely future harm?
  • Patent Litigation Data: Professor Colleen Chien’s new article uses the newly taboo troll label in its title. I report on the article here because of her data-derived conclusion that it would be improper to “blame non-practicing entities (“NPEs”) for a majority of the problems with the patent system.” In fact “public and large private companies” have initiated the largest share of patent litigation in the past 8 years. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1396319 .
  • History: Professor Adam Mossoff is posting this week at the Volokh Conspiracy on his new article “A Stitch in Time: The Rise and Fall of the Sewing Machine Patent Thicket.” The story is 150 years old, but it amazingly shows that today’s arguments on patent reform are nothing more than rehash http://volokh.com/posts/1240974253.shtml .

Patently-O Bits and Bytes No. 105

Patent
  • Irreparable Injury: I have written about this before, but I am still struggling with a basic question from eBay v. MercExchange: Is there any distinction between the first two elements of eBay’s test for permanent injunctive relief [Irreparable injury vs. the inadequacy of available remedies at law]? Ordinarily, the first element of irreparable injury is defined as a substantial injury that cannot be fully compensated by available remedies at law (such as money damages). The ordinary test for preliminary injunctive relief collapses these and only looks at irreparable injury.
  • Future Harms?: Second, what should we make the eBay’s use of the present perfect tense in the irreparable injury requirement: “A plaintiff must demonstrate: (1) that it has suffered an irreparable injury.” I guess that this makes sense if it is an indication that the irreparable harm must be an ongoing harm rather than a merely future harm?
  • Patent Litigation Data: Professor Colleen Chien’s new article uses the newly taboo troll label in its title. I report on the article here because of her data-derived conclusion that it would be improper to “blame non-practicing entities (“NPEs”) for a majority of the problems with the patent system.” In fact “public and large private companies” have initiated the largest share of patent litigation in the past 8 years. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1396319 .
  • History: Professor Adam Mossoff is posting this week at the Volokh Conspiracy on his new article “A Stitch in Time: The Rise and Fall of the Sewing Machine Patent Thicket.” The story is 150 years old, but it amazingly shows that today’s arguments on patent reform are nothing more than rehash http://volokh.com/posts/1240974253.shtml .

Patently-O Bits and Bytes No. 105

Patent
  • Irreparable Injury: I have written about this before, but I am still struggling with a basic question from eBay v. MercExchange: Is there any distinction between the first two elements of eBay’s test for permanent injunctive relief [Irreparable injury vs. the inadequacy of available remedies at law]? Ordinarily, the first element of irreparable injury is defined as a substantial injury that cannot be fully compensated by available remedies at law (such as money damages). The ordinary test for preliminary injunctive relief collapses these and only looks at irreparable injury.
  • Future Harms?: Second, what should we make the eBay’s use of the present perfect tense in the irreparable injury requirement: “A plaintiff must demonstrate: (1) that it has suffered an irreparable injury.” I guess that this makes sense if it is an indication that the irreparable harm must be an ongoing harm rather than a merely future harm?
  • Patent Litigation Data: Professor Colleen Chien’s new article uses the newly taboo troll label in its title. I report on the article here because of her data-derived conclusion that it would be improper to “blame non-practicing entities (“NPEs”) for a majority of the problems with the patent system.” In fact “public and large private companies” have initiated the largest share of patent litigation in the past 8 years. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1396319 .
  • History: Professor Adam Mossoff is posting this week at the Volokh Conspiracy on his new article “A Stitch in Time: The Rise and Fall of the Sewing Machine Patent Thicket.” The story is 150 years old, but it amazingly shows that today’s arguments on patent reform are nothing more than rehash http://volokh.com/posts/1240974253.shtml .