The Federal Circuit had done a nice job summarizing their outcomes for the past year. Looking at cases decided on the merits, patent cases arising from district court were affirmed 55% of the time; affirmed-in-part 24% of the time; and reversed 19% of the time.
Tech Law Reporter Andrew Noyes has indicated that 2009 will likely see a repeat of the same patent reform measures of 2008. [LINK]. I thought it would be important to look at a few faces that might ordinarily be behind the scenes in the legislation process.
Dr. Christal Sheppard will be the House staffer leading the charge on Patent Reform from within the House Judiciary Committee. Sheppard is a patent attorney and has been working on the Hill since 2003. Her official title is Chief Counsel for the Subcommittee on Courts and Competition Policy (there is no IP subcommittee). Sheppard holds a PhD with a focus on molecular biology from the University of Michigan and has remained active in the patent bar. Other patent attorneys in the House include Garg Sampak (committee on rules) and Jonathan Pawlow (assistant to Rep. Adam Smith (D-Wa)). Susan Davies – who was the staffer in charge of patent reform at the Senate under Senator Leahy has moved to the White House. Davies is a resume superstar — a University of Chicago Law School graduate who clerked for both Justices Kennedy and Breyer. Aaron Cooper (formerly of the Covington firm) has apparently replaced Davies in the Senate.
The Judiciary Committee is headed by Representative Conyers of Michigan. Members include Berman (D-Cal), Boucher (D-Va), Smith (R-Tex), and Issa (R-Cal).
Tech Law Reporter Andrew Noyes has indicated that 2009 will likely see a repeat of the same patent reform measures of 2008. [LINK]. I thought it would be important to look at a few faces that might ordinarily be behind the scenes in the legislation process.
Dr. Christal Sheppard will be the House staffer leading the charge on Patent Reform from within the House Judiciary Committee. Sheppard is a patent attorney and has been working on the Hill since 2003. Her official title is Chief Counsel for the Subcommittee on Courts and Competition Policy (there is no IP subcommittee). Sheppard holds a PhD with a focus on molecular biology from the University of Michigan and has remained active in the patent bar. Other patent attorneys in the House include Garg Sampak (committee on rules) and Jonathan Pawlow (assistant to Rep. Adam Smith (D-Wa)). Susan Davies – who was the staffer in charge of patent reform at the Senate under Senator Leahy has moved to the White House. Davies is a resume superstar — a University of Chicago Law School graduate who clerked for both Justices Kennedy and Breyer. Aaron Cooper (formerly of the Covington firm) has apparently replaced Davies in the Senate.
The Judiciary Committee is headed by Representative Conyers of Michigan. Members include Berman (D-Cal), Boucher (D-Va), Smith (R-Tex), and Issa (R-Cal).
The Federal Circuit has taken another valuable step toward transparency in its operations. Notably, the court has begun to post electronic versions of orders resolving motions that are processed through its Senior Staff Attorney. Publication began on January 30, 2009. I have sought some clarification from the Court on its statement that “certain orders are not posted on this page.”
The outcomes of motions are important to the parties involved as well as amicus filers. There have also been occasions when the outcome of a motion impacts stock prices. Perhaps the most common stock-swinging issue involves the Federal Circuit’s decision on whether to stay injunctive relief pending appeal. Previously, these orders were difficult to obtain electronically or remotely.
Certain motions may be decided by the Clerk – especially when a motion is unopposed. Others go to a Federal Circuit judge assigned to handle motions that month. My understanding is that the Senior Staff Attorney will ordinarily present the motion (and response) to the judge with a potential order as well. If a case is already scheduled on the hearing calendar, motions will be transmitted to the panel for adjudication.
Most of the orders are mundane. Here is a sample from last week:
Links:
Cardiac Pacemakers v. St. Jude Medical (On motion for en banc rehearing)
35 U.S.C. § 271 defines various types of patent infringement including direct infringement and contributory infringement. Section 271(f) details a special cause of action that captures some transnational activities. In particular, Section 271(f) creates a cause of action for supplying components of a patented invention to be assembled abroad.
In 2007, the Supreme Court ruled on a 271(f) case — finding that software per se cannot be considered a “component” under the statute. Microsoft v AT&T, 550 U.S. 437 (2007). In December 2008, the Federal Circuit decided Cardiac Pacemaker and held that the Microsoft v. AT&T did not overrule a prior precedential ruling that Section 271(f) does extend to cover components of a claimed method. “[T]he Supreme Court’s decision does not alter [the] holding” that “271(f) applies to components used in the performance of patented methods and processes.” The precedent in question is Union Carbide v. Shell. Although the Federal Circuit denied a request to rehear the Union Carbide case, Judges Lourie, Michel, and Linn, argued then that the issue was ready for en banc review. Judge Dyk also dissent from the en banc denial in Union Carbide.
In their decision, the panel (Judges Newman, Mayer, & Lourie) practically begged for en banc rehearing: “As a panel, we cannot reverse the holding of another panel of this court. We thus affirm the district court’s decisions relating to damages.” [Link] Of course, Judge Mayer signed-on to Judge Rader’s original Union Carbide opinion.
Now, the defendant (St. Jude) has asked for a rehearing en banc. If unsuccessful, we can expect a petition for a writ of certiorari. The FCBA and AIPLA joined forces in an amicus brief supporting the rehearing en banc and for a reversal of the Union Carbide analysis. Writing on behalf of Cisco, Intel, Microsoft, Oracle, and Symantec, Ed Reines also argues that the rule should be overturned. The tech companies argue in particular that the limit on exports creates major adverse economic incentives.
“A very common business arrangement is for United States companies to export instructions, materials, recipes, and other knowledge-exports to Asian and other off-shore locations where manufacturing processes takes place. An overbroad extraterritorial interpretation of § 271(f) to apply to process patents creates potential worldwide liability for companies based in the United States that export anything that can properly be considered a process step. Yet, if their competitors exist outside the United States, they are not exposed to liability for United States patent infringement for supporting foreign manufacturing processes.”
A good handful of judges have at least loosely indicated that they would support an en banc rehearing — making this a very likely candidate.
Notes:
Briefs:
Kinetic Concepts v. Blue Sky Medical Group (Fed. Cir. 2009)
Virtually every theory or defense in patent law requires claim construction before coming to a final conclusion. This case focused on obviousness and considered how the results turn on the construction of the claim term “treating a wound.” A two-member majority (Judges Prost and Bryson) narrowly construed the term to only include treatment of surface wounds (instead of internal organs) and affirmed a nonobviousness holding. The dissent (Judge Dyk) saw a broader definition leading him to a conclusion that the claims were obvious in light of the prior art.
Hal Wegner aptly notes that it would be “difficult without an intensive study of the record to determine whether the majority or the dissent has properly construed the claims under Federal Circuit precedent: Indeed, it is possible that both constructions are acceptable. Kinetic Concepts thus once again points to the continued imperative of statutory claim construction reform.”
As per usual, Judge Dyk’s dissent is sharp – finding that the majority erred first by finding that the term should be limited to the disclosed embodiments and erred again by narrowly misreading the scope of the disclosed embodiments:
“In my view, the majority improperly holds that the claim term “wound” can be limited to the disclosed embodiments in the specification, and, having done so, then misreads the specification as showing only embodiments treating harm to the surface of the body or skin wounds. Under the correct construction of this claim term, the asserted claims of U.S. Patent Nos. 5,636,643 (“’643 Patent”) and 5,645,081 (“’081 Patent”) would have been obvious.”
Notes: Read the decision 07-1340.pdf.
In Classen v. Biogen, the Federal Circuit issued a one paragraph non-precedential opinion rejecting Dr. Classen's claimed method for evaluating a vaccine immunization schedule. The problem with the claims stems from the Bilsmane or transformation test. The appellate panel found that "the claims are invalid under 35 U.S.C. § 101. Dr. Classen's claims are neither "tied to a particular machine or apparatus" nor do they "transform[] a particular article into a different state or thing." Bilski, 545 F.3d at 954."
Now, Classen has filed its request for a rehearing en banc and is looking for further amicus support. The brief cites only one case — Bilski — and argues the facts: that at least the claim limitation of "immunizing mammals" is a qualifying transformation of matter.
Notes:
Ex parte Atkins (BPAI 2009)
The BPAI has again raised the issue of Post-Bilski patentable subject matter sua sponte. Like most claims challenged under Section101, Atkins claims also have serious nonobvousness and indefiniteness problems.
Atkins claims a method of “converting a unidirectional domain name to a bidirectional domain name.” In reviewing the claim under Bilski, the BPAI noted that the claims do not “recite any machine or apparatus or call for transforming an article into a different state or thing. A domain name is simply a series of characters representing the address of a resource, such as a server, on the World Wide Web. All of the steps are data manipulation steps.”
Atkins also claims a parallel “system” for converting the domain name. The BPAI rejected the system claims under Bilski since “those claims encompass any and all structures for performing the recited functions. As a result, [the system claims] are at least as broad as method claims … which we have determined recite patent ineligible subject matter under Bilski.”
Section 273 of the Patent Act mentions the possibility of a patent covering “a method of doing or conducting business.” Part of Bilski’s petition for certiorari relies on that section as an argument that Congress intended for Section 101 to cover business methods. That argument is a red herring — The Federal Circuit's Bilski decision did not eliminate business method patents. Rather, the decision only requires that any claimed process meet the machine-or-transformation test.
In his Federal Circuit amicus brief, professor Joshua Sarnoff wholly rejected the implication that Section 273 proves that Congress intended the Patent Act to extend coverage to novel business methods. He argues as follows:
Sarnoff: … [T]he State Street Bank decision did not motivate the enactment of Section 273’s prior user rights provision. Rather, it motivated restriction of that provision to business methods from an earlier and broader proposal.[2] Congress did not approve of this Court’s decision, but focused on business methods because it felt that the strongest fairness arguments for a prior user defense existed in regard to the newly patentable subject matter.[3] As stated by Senator Schumer, Section 273 “should be viewed as just the first step in defining the appropriate limits and boundaries of the State Street decision…. I believe that it is time for Congress to take a closer look at the potentially broad and, perhaps, adverse consequences of the State Street decision.”[4]
Ratification should not be found here, given that Congress did not amend Section 101 or otherwise specifically address patent eligibility.[5] Instead, Congress created only an isolated change to the law that responded to specific concerns raised by this Court’s changed interpretation of Section 101. See, e.g., Alexander v. Sandoval, 532 U.S. 275, 292 (2001) (“when, as here, Congress has not comprehensively revised a statutory scheme but has made only isolated amendments, we have spoken more bluntly: ‘It is “impossible to assert with any degree of assurance that congressional failure to act represents” affirmative congressional approval of the Court's statutory interpretation.’”) (citations omitted). Similarly, ratification should not be found here, given that the State Street Bank holding was a significant change to the law and conflicted with binding Supreme Court precedent. See, e.g., Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 185 (1994) (ratification is implied when Congress “reenact[s] statutory language that has been given a consistent judicial construction”).[6] Had Congress thought that adopting a new defense to liability might affect subsequent interpretation of Section 101, it could have expressed its intent either to alter or to preserve earlier law – as it did with regard to Sections 102 and 103. See 35 U.S.C. § 273(b)(9) (2000).[7]
Moreover, ratification of the “useful, concrete, and tangible result” test as applied in State Street Bank would pose serious constitutional concerns by authorizing patents for claims reflecting only insignificant post-solution activity. The test would thereby encroach on permissible public uses of categorically excluded public domain information, potentially extending protection beyond any inventive concept properly attributable to the applicant and retarding rather than promoting sequential innovation. It would require patents for non-technological inventive concepts, extending protection to activities that may not be within the useful arts (however broadly or narrowly that category is construed).
Given the reasonable alternative interpretation discussed above, this Court should not construe Section 273 to have ratified the “useful, concrete, and tangible result” test as applied in State Street Bank. See, e.g., Gomez v. United States, 490 U.S. 858, 864 (1989) (describing “settled policy to avoid an interpretation of a federal statute that engenders constitutional issues if a reasonable alternative interpretation poses no constitutional question”); Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 346-48 (Brandeis, J., concurring) (establishing the policy). Finding such ratification would force the Court to decide whether Section 101 (at least since 1999) is constitutional. Cf. Richardson v. United States, 526 U.S. 813, 820 (1999) (“We have no reason to believe that Congress intended to come close to, or to test, those constitutional limits when it wrote this statute”). Without ratification, the binding Diehr-Flook precedent remains the law and avoids any such constitutional concerns.
[1] See, e.g., H.R. Rep. 106-464, 121 (1999) (Conf. Rep.) (“business methods and processes, many of which until recently were thought not to be patentable”); id. at 122 (the “1998 opinion … in State Street Bank … which held that methods of doing business are patentable, has added urgency to the issue.… [T]housands of methods and processes used internally are now being patented.”). See also H.R. Rep. 106-287, 45-46 (1999) (“many businesses … thought secrecy was the only protection available,” and such methods “previously had been thought to be unpatentable”); Cong. Rec. E1789 (Aug. 5, 1999) (speech of Rep. Coble) (same); Cong. Rec. S13259 (Oct. 27, 1999) (statement of Sen. Hatch) (same).
[2] See, e.g., Cong. Rec. H6944 (Aug. 3, 1999) (statement of Rep. Rohrbacher). Cf. H.R. Rep. 106-464, 121 (noting importance of the “earlier-invention defense” to “any business that relies on innovative business processes and methods”).
[3] See, e.g., Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer) (the “decision has raised questions about what types of business methods may now be eligible for patent protection…. It has created doubt regarding whether or not particular business methods … might now suddenly become subject to new claims under the patent law.”); Cong. Rec. H6947 (Aug. 3, 1999) (statement of Rep. Manzullo) (Congress “felt that those who kept their business practices secret had an equitable cause not to be stopped by someone who subsequently reinvented the method”). Congress limited the defense to business methods because it believed that the law had been changed only in regard to such methods. See id.
[4] Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer)
[5] Congress expressly acknowledged that State Street Bank altered the law in regard both to “the business method exception” and to “the essential question of whether the invention produced a ‘useful, concrete, and tangible result.’” H.R. Rep. 106-464, 122. However, Congress did not approve of that result. Rather, it noted only that the new defense applied to systems as well as to processes. See id. at 123.
[6] Cf. Food and Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 157 (2000) (finding effective ratification from enactment of a specific set of separate regulatory provisions, at a time when the agency’s interpretation had historic “consistency”); Brown v. Gardner, 513 U.S. 115, 121 (1994) (“‘[w]here the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.’”) (citation omitted); Fogerty v. Fantasy, 510 U.S. 517, 532 (1994) (rejecting effective ratification and noting that “this is hardly the sort of uniform construction that Congress might have endorsed.”).
[7] See also H.R. Rep. 106-464, 124-25; H.R. Rep. 106-287, 49.
A few days ago I was discussing TS Tech with a patent law guru. I suggested that TS Tech would not have a major impact on the location of patent cases – largely because local judges still retain a large amount of discretion in determining whether another venue is more convenient. . . . What do I know.
Odom v. Microsoft (E.D. Tex, Jan 30 2009)
Famed patent blogger Gary Odom sued Microsoft in the Eastern District of Texas – alleging that the Office 07 toolbar infringes Odom's software patent. Judge Love was assigned the case — but now he has granted Microsoft's motion to transfer the case to Oregon. You see, Odom is located in Oregon, Microsoft in Washington, the Klarquist firm (who once worked with both Odom and Microsoft) is in Oregon.
Judge Love relied on the Federal Circuit's TS Tech (J. Rader) opinion and the 5th Circuit's VW opinion (en banc) in determining that the suit should continue in the Northwest rather than Texas.
Under the circumstances presented here, the convenience of witnesses and localized interests weigh in favor of transfer with the other factors neutral or weighing slightly in favor of transfer. This is a case that is significantly localized in the Northwest. Both parties are residents of the Northwest, and Microsoft’s equitable defenses all arise out of conduct and contracts in the Northwest. No Texas resident is a party to this litigation, nor is any Texas state law cause of action asserted. All identified witnesses—with the possible exception of one—are located in the Northwest. This is not a case where witnesses are expected to be traveling from all over the country or world. In summary, there is little convenience to the parties for this case to remain in Texas, while there are several reasons why it would be more convenient for the parties to litigate this case in Oregon.
Case transferred.
In three recent cases, the BPAI has continued its trend of applying the Federal Circuit’s en banc Bilski decision to reject software-style method claims as lacking patentable subject matter. The BPAI is not asserting that software is unpatentable — the Board is simply failing to find ties to a particular machine; transformation of a physical object; or transformation of articles “representative of physical objects.” In two of the cases, the BPAI applied its power to issue new grounds of rejection — raising the Section 101 issue sua sponte.
In ex parte Gutta (BPAI 2009), Gutta (Philips) claimed a “computerized method performed by a data processor.” The claims include elements such as “a history;” “a plurality of clusters;” a “target user;” and “preferences of a third party.” The final step in the method involved “displaying” a score. In Bilski, the Federal Circuit found that the transformation of data into a visual depiction could render a claimed method patentable. Here, however, the generically worded step was merely “post-solution activity [insufficient] to impart patentability to a claim involving the solving of a mathematical algorithm.”
In ex parte Barnes (BPAI 2009), Barnes (Landmark Graphics) claimed a “fault identification method” that obtains seismic data and determines “a planarity value for discontinuities” in each “analysis window” in the seismic data. In this case, the BPAI entered a new ground of rejection under Section 101. The BPAI recognized that the claim called for both gathering and analyzing data, but those steps – without explicit limitations of how they are done – are insufficient to render the claim patentable.
In ex parte Becker (BPAI 2009), Becker and his fourteen co-inventors (Siemens) claimed a “method for maintaining a user profile.” As in Barnes, the BPAI entered a new ground of rejection under Section 101 — finding again that the method claims failed to satisfy the machine or transformation test.
Read the Opinions
Note: This was originally posted on Jan 26, but was inadvertently un-published. I this version is slightly modified to take-into account an insightful comment regarding the transformation of data into a visual depiction.
Bernard Bilski’s petition for certiorari is due within days (unless an extension is granted). I think that there is a real question of whether (and how) the patent community should react to presentation of the case. Should the patent community support this case for Supreme Court review, wait for a better situated case, or sit content with the machine-or-transformation test outlined by the Federal Circuit in the en banc Bilski decision? Each position has its merits.
The case is well developed, parties and amici have already invested time standing behind the case. Yet, the underlying invention is not compelling (a method of hedging the risk of bad weather by using commodities trading) and issues of obviousness would almost certainly cloud the issues. There are many other potential cases in the pipeline, and the Supreme Court may properly wait to see how the new Bilski rule develops before weighing-in.
The Electronic Frontier Foundation (EFF) and Public Patent Foundation (PubPat) started the ball rolling with public interest challenges to patents via reexamination. Now the Center for Patent Innovations at NYLS have set their sights on post grant reviews. By leveraging their peer-to-patent system, the group hopes to help discover prior art that will invalidate issued claims. "Our citizen-experts have already found a number of items of prior art relevant to patents being asserted againt Microsoft, Google, and Facebook." (Post-Issue) The project is looking for law students to help. Not relying on altruism — Article One Partners has offered $50,000 for helping invalidate several Rambus patents. "If one or more references show a patent to be invalid, the first respondent who found the research earns the reward." (Article One) If you do find the Rambus prior art, please post a note here first so that we can all sell short.
* Note — I am an Advisory Board Member of the Center for Patent Innovations (although I did not know about this recent development until it had already been released).
In Prometheus Labs. v. Mayo, the patentee's claim focuses on a method of "optimizing therapeutic efficacy" by first administering a particular drug to a subject and then using the subject's metabolite level to adjust future drug doses. The district court found the claims invalid as lacking patentable subject matter under 35 U.S.C. 101. On appeal Prometheus has asked the Federal Circuit to restore its patent rights. (U.S. Patent No. 6,680,302).
In an amicus brief, the AIPLA has also asked the appellate court to uphold the patent rights. The bar association argues that (1) the requite Bilski transformation can be found in the subject's transformation of the drug into metabolites in the body and (2) that no weight should be given to the dissent from denial of certiorari in LabCorp. Other briefs are expected, including several arguing that the method should not be considered patentable.
Notes:
Upcoming Events
New Blogs:
We’ve seen that Ty is selling Sasha and Malia dolls. Can the Obamas do anything to stop this? They have a couple of options.
The Obamas could sue Ty for under the federal law of false endorsement as well as for infringing their common law and statutory rights of publicity based on state law. However, there is no federal law that protects the right of publicity. A First Amendment defense of artistic expression can likely be brought in response to a state claim of right of publicity.
A federal false endorsement claim may be based on the unauthorized use of a celebrity’s identity when the use of the identity is likely to confuse consumers to believe that the celebrity sponsored or approved the product of another. Sasha and Malia may be able to bring a claims for false endorsement against Ty as their name and likeness is being used to sell the dolls.
The right of publicity protects the commercial value of an individual in the commercial use of that person’s identity. Many states protect the right of publicity with regard to name, voice, signature, photograph, and likeness. Some states provide more expansive protection that protects the image, distinctive appearance, gestures and mannerisms of a person.
For example, in California, statutory protection is limited to appropriation of the actual photograph or likeness. For a likeness to be appropriated under California statutory right of publicity, the doll would need to clearly show features of a celebrity. Although the dolls do not have the precise features of the Obama girls on which they are based, the girls have a case because elements evocative of the girls are included in the dolls.
In response, Ty could assert a First Amendment defense. The California Supreme Court stated that there is “a balancing test between the First Amendment and the right of publicity based on whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation.” To prevail with a First Amendment defense, Ty must successfully show that “the value of the work does not derive primarily from the celebrity’s fame.” This seems to be near impossible here.
So, Malia and Sasha could take action in federal or state court to have the sale of the dolls stopped. This leaves us with two questions – First, what was Ty thinking when they did this? Don’t they have lawyers on retainer? Second, will the Obamas take action against Ty? Or will Ty stop on their own? We’ll have to wait and see.
In one of his first official actions, President Obama (through Rahm Emanuel) has ordered that new federal rulemaking cease until the White house Office of Information and Regulatory Affairs (OIRA) can review the rules. At this point, it is unclear how this will impact any of the already-finalized rules (Continuations, Claims, Appeals). It will further delay finalization of the expected forthcoming rules on IDS limitations and Markush claim limitations.
As a side-note, the new director of the OIRA is expected to be University of Chicago Law Professor Cass Sunstein. Sunstein is one of the most well known law professors in the country. While the OIRA position is normally quite obscure, I suspect that it will not be obscure for long. Sunstein written extensively on using regulations to shape behavior
Notes:
Listening to Obama’s inauguration speech today, I noted two portions that could relate to patent law and innovation policy. In thinking about governmental offices and programs, Obama is looking to (1) consider whether programs work and (2) change (or eliminate programs that don’t work). Along this same line, government programs should be prepared to act transparently:
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The question we ask today is not whether our government is too big or too small, but whether it works. . . . Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public’s dollars will be held to account – to spend wisely, reform bad habits, and do our business in the light of day – because only then can we restore the vital trust between a people and their government. |
Of course, the patent office remains in need of both a dramatic increase in transparency and focused reform in a few key areas.
As Lincoln did, Obama also recognized the value of the spirit of invention as one of the key and ongoing strengths of the American people:
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Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions – that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America. |
This is a test post using my new blogging software…
